What is Business Agility?

Business agility and Agile are not one and the same. But with the methods, techniques and behaviors of Agile, business agility is possible. Find out how.

The Business Agility institute defines business agility as “a set of organizational capabilities, behaviors, and ways of working that affords your business the freedom, flexibility, and resilience to achieve its purpose.”

Wikipedia defines it as “rapid, continuous, and systematic evolutionary adaptation and entrepreneurial innovation directed at gaining and maintaining competitive advantage.”

What’s clear is that there’s no one commonly accepted definition. At best, “business agility” is an umbrella term that covers a number of ideas that aim to help you:

  • Adapt quickly to market and environmental changes, both internal and external.
  • Respond rapidly and flexibly to customer needs.
  • Lead change in a productive and cost-effective way without compromising quality.
  • Reduce inefficiencies, and increase overall efficiency as a result.
  • Continuously learn from feedback, and improve on the value delivered.

The focus on fast, efficient change management, and… well… agility mean that some confuse business agility with Agile.

Let’s break it down.

Agile is a methodology. Yes, it focuses on rapid responses, continuous and valuable delivery, and the flexibility to meet changes. But it’s made up of values, principles, methods, and practices. However, when you transfer some of these to your business practices, you can achieve better business agility.

8 Agile Concepts That Improve Business Agility

1. Structured and Fluid Information Flows

Identifying changes in the market place, and circulating them back to decision makers, can allow you to deliver value more quickly.

The tricky thing is to get that information to the right people and surface it over the avalanche of other messages they receive.

A core behavior in Agile is customer focus. We can see this in Scrum, where the product owner’s job is to understand customers’ needs, their reactions to project developments, and their experience with the company managing the project. But because Scrum product owners also understand the capabilities of everyone working on the project, they can take customer feedback and translate it into achievable goals.

Scrum, of course, is an Agile methodology, with the product owner a set role. But, you can take the idea of structured informational flow and apply it to your organization.

People in the trenches are usually in touch with impending changes early. Salespeople understand shifting customer demands before management does; financial analysts are the earliest to know when the fundamentals of a business change.
– Andrew S. Grove, Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company

Talk to the people who have direct dealings with your customers, and those who are more likely to have faster insights into the market place. Make these conversations regular, and make it a rule to immediately follow up with the decision-makers who can green-light changes.

2. Small, Self-organized Teams that Work in Iterations (Agile Project Management)

Steve Denning says it’s “a presumption” in Agile that teams will be small and self-organizing, working in short cycles and focused on delivering value to customers. In fact, he defines these kinds of teams as 1 of the 3 “laws” of Agile, going on to say:

Unless you are obeying all these “laws”, you can’t really call your organization Agile. I am here talking about the agility of the entire firm, or business agility, since experience suggests that the main fruits of Agile are only generated if the entire firm is operating from the same script.

Consider Jeff Bezos’ two pizza rule. To encourage productivity, Bezos said that every internal team should be small enough for two pizzas to feed them. This stipulation is grounded in organizational science:

No work team should have membership in the double digits (and my preferred size is six), since our research has shown that the number of performance problems a team encounters increases exponentially as team size increases.
J. Richard Hackman, Professor of Social and Organizational Psychology

The larger the team, the more time they will spend on communication. Small teams, however, will have more time to produce work in rapid iterations.

3. Flexible, Cross-functional Organizational Structures

Cross-functional teams are closely associated with Agile. They’re made up of individuals with different specialties, usually pulled from different departments, who can share their diverse knowledge to work towards a common goal.

When organizations have the ability to create these sorts of teams on an ad hoc basis, it means they can react to immediate challenges and tackle issues as they arise. It ties into Steve Denning’s Law of the Network :

A continuing effort to obliterate bureaucracy and top-down hierarchy so that the firm operates as an interacting network of teams, all focused on working together to deliver increasing value to customers.

Of course, for this “law” to work, it needs everyone in your organization on board.

4. Relentless Focus on the Customer

Steve Denning defines the Law of the Customer - a core Agile behavior- as "an obsession with delivering value to customers as the be-all and end-all of the organization.”

No need to reinvent the wheel here. Take China. Instead of inventing new products, Chinese innovators often create new versions that solve niche problems for their customers. Meaning they can meet customer needs more quickly.

They also prioritize customers over stakeholders. Huawei, for instance, “turn their eyes to the customers and their backs to the bosses”.

This customer focus pays off, and puts them head and shoulders above competitors on their home turf. Consider the example of the rat problem. In rural areas of China, rats were gnawing through telephone wires, severing connections. While other providers didn’t see this as their problem, Huawei set about creating sturdier equipment, including chew-proof wires. This gained them international attention, and several large accounts in the Middle East.

5. Innovation is Not an Afterthought

Innovation fosters growth. Few businesses today can maintain their market share by selling the same product again and again. Innovation (whether it’s incremental or disruptive) is the engine you need to keep fine-tuning, so you can steal market share from your competitors or expand your existing market.

Innovation cannot be a role or a step in a process though. It’s at the heart of business agility. It’s a mindset. Curiosity fuels creativity among history’s greatest innovators. From Steve Jobs to Jennifer Doudna, curious individuals look past the status quo, and identify where things can be better—sometimes, to astounding success.

Again, we can look to Amazon, and AWS. At a company retreat, employees engaged in an exercise to identify their core competencies. What soon became apparent was that their skills went beyond the ability to sell and ship a broad selection of products.

They had also become quite good at running infrastructure services like compute, storage and database . . . What’s more, they had become highly skilled at running reliable, scalable, cost-effective data centers out of need. As a low-margin business like Amazon, they had to be as lean and efficient as possible.
– Ron Miller, TechCrunch

It made sense to make this infrastructure and technology available to the public. Now, AWS leads the $200 billion cloud market, with 34% percent of the market share.

6. The Support of Top Management

54% of businesses are practicing Agile. But only 5% of these companies become more adaptable as a result.

Alongside a resistance to change, the biggest issue is a lack of leadership participation. Conversely, when the C-suite lead the journey towards Agile, business agility improves significantly.

The job of a conventional agile team is to create profitable, innovative solutions to problems—come up with a new product or service, devise a better business process, or develop an advanced technology to support new offerings. The job of an agile leadership team is different. It is to build and operate an agile system—that is, an agile enterprise.
– Darrell Rigby, Sarah Elk and Steve Berez Harvard Business Review

7. IT as a Business Partner

With digital transformation well under way, the role of IT is shifting from support to a business partner that helps the organization make the most of its digital transformation.

This means allowing IT to expand beyond its standard domain, where they can implement digitization in other departments and transform your business model as a result.

Consider Finance and HR as examples. Digitization could reduce the number of manual tasks and boost efficiencies in these departments, while applying automation to help them more easily adhere to industry regulations and compliance. So they’ll be able to gain more value from the same resources—or perhaps reduce their resources and still achieve the same value.

Your IT team can help change the culture in your organization. It feeds into the idea of collaborative development as a valuable Agile technique. When you give them the reigns to make innovative changes, you’ll start to ask, what else can you change? Go forth. Find out. And remember, there are no stupid questions.

8. People as a Major Source of Agility

Your company culture must empower employees to bring new ideas forward. Everyone, not just the CEO, must feel they have a voice, and know that it’s okay, *great* actually, to suggest new ways of working.

This means breaking down old hierarchical structures and nurturing your people. The core Agile behavior of [continuous learning is critical here. The more your staff learn, the more you benefit. So, if you want to achieve business agility, you have to make time for them to develop.

And, when your employees’ ideas don’t quite hit the mark, consider Carol Dweck and The Power of Yet. Her research into people’s capacity to learn and solve problems shows two ways to think about a problem that’s slightly too hard to solve:

 Are you not smart enough to solve it …. or have you just not solved it yet?

Those who answer “not yet” have a “growth mindset”—an attribute that truly Agile, and agile, organizations champion.