Transforming the Business to Operate at Market Speed
As a term in business, “agile” is typically used to refer to a project management methodology, especially for software development. But there is a different, more strategic connotation of agility that merits close attention by boards as markets evolve.
A global survey reports resistance to change as a top 10 risk looking out both 12 months and 10 years. CEOs and their executive teams face the challenge of transforming their businesses while preparing their organizations to adapt and adjust to the realities of rapidly shifting markets. The bottom line is that leaders acknowledge the inevitability of disruption while also expressing concern regarding their organizations’ agility to pivot in response to change. This incongruence does not engender confidence.
Leaders need only reflect on the reimagining of business since the turn of the century to gauge the implications of accelerated change over the next decade. Speed and scale are being augmented with greater bandwidth at lower costs, enabling new ways to connect with customers and transforming how companies and whole industries operate. That’s why companies should undertake appropriate steps over the near term to help ensure they remain connected to the customer experience, invest in future growth, and position themselves to innovate and compete in the evolving global economy over the longer term. If an economic recession develops, leaders need to keep an eye on the future while preserving near-term financial health.
So, the message is clear: As markets evolve, so should companies. But what should leaders do to enable their organizations to function at the speed of the market? The following eight points offer a holistic approach for directors to consider in boardroom discussions.
Focus on improving the customer experience continuously. In inculcating agility into an organization’s culture, this mindset is ground zero. Companies are competing on customer experience now — for, in the marketplace, customer loyalty exists only until something better comes along.
Draw from data-driven customer insights. Leaders should view their organizations as living organisms. The faster the organization learns, the faster it evolves. Improvement initiatives are fueled by attention to speed in gathering and learning from continuous feedback.
Speed up the decision-making process. Remember the “change or die” urgency requiring rapid decisions at the onset of the COVID-19 pandemic? That same philosophy is needed in an environment where customers’ preferences are constantly changing, leading them to always gravitate toward something that’s better, faster and lower cost. To break down the silos that slow execution, the end-to-end customer experience should be at the heart of the decision-making process.
Connect technology to customer value. Technology should be viewed in terms of the customer experience rather than the customer process. This means combining a sales, service and marketing perspective and customer behavioral insights to break through internal barriers and drive improvements to the customer experience.
Weave innovation into the fabric of the operating model. In today’s marketplace, efforts to differentiate the business or customer strategy are harder to sustain and may result in advantages of shorter duration than in the past. Ways of working that infuse innovation into the business — with the intention of continuously differentiating the business in the market — are required to sustain competitive advantage.
Employ agility as a business mindset versus just a methodology. Uncertainty is here to stay. Yet, with uncertainty also comes opportunity. Organizations need to create flexibility and infuse agility into operating principles and processes to navigate continued waves of change. They can do this by adjusting their priorities and focus to take advantage of new potential value streams, rapidly solve for jobs to be done, and facilitate pivots in response to changing customer needs, shifts in supply and demand, or advances in enabling technology.
Set the tone for lean behaviors with a supportive organizational structure. With the board’s support, the CEO should encourage an open, flexible and agile organizational structure with a flat hierarchy that drives efficiencies; speeds up innovation cycles; and facilitates collaboration, communication, and rapid decision-making and execution.
Select the talent that will lead to success and embrace learning at market speed. The war for talent is over. Talent won. Directors and executive leaders should understand technology and digital business models, take an active role in digital leadership and encourage the investments needed to recruit, develop and train employees and retain critical talent. Companies should also assess their digital capabilities as a core competency on a regular basis.
In summary, directors and CEOs face two givens. First, speed matters. Speed is dictated by the market and influenced by external and internal factors. Markets evolve, and so must companies — at speed. The tailwind effect of embracing change at market speed breeds confidence in the C-suite and boardroom.
For more information on this topic, including suggested questions for directors to raise in discussions with management, read the article here.
(Board Perspectives — Issue 162)
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