Business agility: What is it and why is it important?

Business agility
Business agility

Business agility: What is it and why is it important?

The COVID-19 pandemic presented significant challenges to businesses around the world. Changes in consumer behaviours, supply chain slowdowns and remote workplaces caught many enterprises off guard. This world-changing event is the latest reminder to business leaders that tomorrow’s success may not be possible with yesterday’s playbook.

Companies that weathered or even thrived during the pandemic exhibited the hallmarks of business agility. An agile business isn’t beholden to what has worked in the past because its leaders know that times change. Business agility allows enterprises across industries and countries to quickly respond to new challenges.

Definitions of Business Agility

Agility refers to the ability to quickly and easily move from objective to objective. An agile person can complete puzzles or jump over hurdles on a race track with minimal difficulty. Business professionals may wonder, “What does agile mean in business?”

McKinsey’s Wouter Aghina uses the concept of fragility to help define business agility. He argues that “the opposite of fragile is something that gets stronger when I exert force or stress on it.” Aghina believes that an agile organisation is at its best when using innovation and flexibility to stay ahead of the competition.

Letting Go of Traditional Structures

Agile businesses are dynamic in their structure and how their personnel are used to achieve goals. Flatter and more dynamic org charts allow forward-thinking leaders to effectively pivot organisations during times of change. A 2020 McKinsey report on business agility during COVID-19 summarised this point:

“Companies across industries are moving from efforts to optimise their performance within siloed functions to capturing the value between them.”

Reinforcing Good Practices

Organisational expert Aaron de Smet argues that businesses “cannot be agile without some sense of stability.” Agile organisations keep practices and procedures that can apply to changing situations while undertaking frequent reviews for relevancy. This toolkit of practices may include change management and risk management tools applicable to all business areas.

Unleashing Employee Talents

The recent shift to distributed and remote workforces is accompanied by new collaborations not possible within traditional business settings. Accenture’s 2020 Business Agility Report refers to these collaborations as “networks of competence” focused on the best possible outcomes. These networks improve customer experiences and bottom lines by maximising the use of employee skills.

Different Approaches to Business Agility

New startups begin with clean slates as they aim for business agility. Existing companies have to adopt agile practices while staying competitive in the marketplace. The recent trend toward agile enterprises has produced examples of success for businesses of all sizes.

There are common traits for companies that became or stayed nimble in the midst of recent economic tumult. Workday found the following agile practices in its survey of 1,024 executives worldwide:

  • Real-time access to reliable data (50%)
  • Smart technologies like artificial intelligence and machine learning (49%)
  • Cloud-based technology (45%)
  • Clear lines of communication across the business (42%)
  • Upskilling and reskilling (42%)

Every path to business agility requires a culture devoted to outcomes rather than processes. PMI’s Pulse of the Profession 2021 differentiated corporate cultures at traditional and agile companies. The top priorities for nimble enterprises include:

  • Centring on delivery of customer value (80%)
  • Alignment of organisational values (71%)
  • Embracing digital solutions (67%)
  • Support for flexible work options (66%)
  • Fostering diversity, equity and inclusion (63%)

Business Agility Case Studies

McKinsey studied telecommunications companies TDC and Spark in its search for paths to business agility. Denmark-based TDC is considered an agile accelerator or a business that uses a few agile teams to spread best practices across the organisation. New Zealand company Spark chose enterprise-wide agile adoption with the reorganisation of employees into agile tribes.

TDC started with a single squad of product experts, specialists, and designers needed for a particular product. This squad was given greater autonomy over the life cycle of their product to improve customer experiences. An additional 12 squads were created for a cascade effect of change through core areas.

Executives at Spark realized that their competition wasn’t regional operators but international tech companies. Extensive study of agile organisations led to an all-in reorganisation of staff into product, segment and enabling tribes. Each tribe has leaders trained in agile practices and employees are empowered to self-organise based on business needs.

The Positive Impacts of Business Agility

impact of business agility

Significant changes to how your business operates can seem daunting at first. Leaders should frequently consider the long-term benefits of business agility as they pursue mindset shifts and reorganisation. ING COO Bart Schlatmann described the tradeoffs found when the financial services company went agile:

“We gave up traditional hierarchy, formal meetings, overengineering, detailed planning, and excessive “input steering” in exchange for empowered teams, informal networks, and “output steering.”’

Schlatmann concluded that ING was ready for any challenge after its agile conversion. Executives and managers have to be vocal promoters of business agility to achieve positive impacts. The Business Agility Institute (BAI) found the following impacts of agile practices among 254 global firms:

  • Cultures of relentless improvement and experimentation
  • Improved product and service speed to market
  • Increases in product and service quality
  • Significant improvements in key performance indicators within two years of adoption

Business agility is gaining popularity but widespread adoption requires an influx of innovative leaders. BAI’s 2021 Business Agility Report listed an average business agility maturity rating of 4.9 out of 10 for participating companies. Twenty-seven per cent of respondents received scores of 7 or more based on significant investments in agile practices.

Building Dynamic Management Skills at Aston University

Aston University’s MSc Business and Management Suite trains leaders to exhibit business agility principles. Experienced faculty members and courses centred on current challenges prepare students for the ebbs and flows of the business world. You can choose from the following distance programmes to advance your career:

  • MSc Business & Management
  • MSc Management & Finance
  • MSc Global Business Management
  • MSc Business & Entrepreneurship
  • MSc Management in a Digital Economy

Aston University is an internationally recognised school that attracts students from around the world. CEO Magazine placed the Aston Business School 39th in its Global Online MBA Rankings for 2020. The university also holds accreditations from AACSB, AMBA, and EQUIS, placing it among the top 1% of global business schools.

Learn more about how Aston University’s MSc Business and Management Suite can help you adapt to changing business conditions.