Business Agility

Business Agility is the ability of an organization to:

• Adapt quickly to market changes - internally and externally
• Respond rapidly and flexibly to customer demands
• Adapt and lead change in a productive and cost-effective way without compromising quality
• Continuously be at a competitive advantage

Business agility is concerned with the adoption and evolution of values, behaviors and capabilities. These enable businesses and individuals to be more adaptive, creative and resilient when dealing with complexity, uncertainty and change leading to improved well-being and better outcomes.

Definition of Business Agility

SAFE® defines Business Agility as: “The ability to compete and succeed in the digital age by responding quickly to market changes and opportunities with innovative business solutions. It requires that all those involved in providing solutions – business and technology leaders, development, IT operations, law, marketing, finance, support, compliance, security and others – apply lean and agile procedures to continuous providing innovative, quality products and services faster than the competition."

source: Pedco

It is important to remember, Business Agility happens when the entire organization—business and tech leaders, compliance, development, finance, legal, marketing, operations, sales, security, support—use Lean and Agile practices to continually and proactively deliver innovative business solutions faster than the competition.

Origins of Business Agility

The history of business agility as a concept begins with software development. It is part of the agile framework that was a means to address the problems of changing requirements and uncertain outcomes because of the complexity of the technological project. The complexity of systems also lent themselves to a fast-changing environment.

Some of the ideas that find themselves in business agility came from the study of complexity science and the notion of complex adaptive systems, where a perfect understanding of parts of the process doesn’t translate into a perfect understanding of the whole system’s behavior.

The outcomes of software teams in such complex adaptive systems is unpredictable but does eventually form a recognizable pattern. The agile framework was developed to take advantage of the ever-changing project environments.

Business Agility Value Stream

In his analysis in the book, Project to Product, Mik Kersten notes that with respect to production capital “The productivity of software delivery at enterprise organizations falls woefully behind that of the tech giants, and the digital transformations that should be turning the tide are failing to deliver business results.” This means that many large and successful enterprises today face an existential crisis, the distinctive competencies and massive tangible assets that got them there — distribution, real estate, manufacturing, retail, local banking centers, insurance agents — will not be adequate to assure survival in the digital age. So how can traditional enterprises thrive in the digital age? Simply, they need to master the ‘Business Agility Value Stream’, which is the ability to quickly respond to an emerging opportunity — as the figure below illustrates.

source: Scaled Agile, Inc

As seen in this figure, it’s not a trivial undertaking to accelerate value this way and traditional approaches using stage-gated, waterfall delivery simply won’t get you there. Instead, a number of different steps are involved in this new value stream: Sensing an opportunity involves market research, customer feedback, and direct observation of the customers in the marketplace. Even more importantly, it demands that senior executives have a thorough involvement with the customer and the market, the “go see” mentality that provides a rich source of ideas and possibilities to create value. Quickly leveraging an identified opportunity requires a flexible, lean approach to funding the people and material resources needed to produce the Minimum Viable Product (MVP) – an initial solution sufficient to both test the business hypothesis and deliver a first solid increment of value. The quick development of the MVP hinges on the ability to bring together professionals from different skills areas and form cross-functional teams and trains, that are organized or reorganized around customer value. These teams-of-teams connect to the customer by applying design thinking to intimately exploring the nature of the customer problem and define solution capabilities that help customers achieve their objectives. Through rapid, synchronized iteration and PI cycles, the teams quickly deliver the MVP which provides a strong empirical foundation for further product management, development, and funding decisions. Depending on the learnings from the MVP, the organization will choose to pivot or persevere, either abandoning the initiative, pivoting to a new opportunity, or continuing to invest in the solution as the facts and economics dictate. If the decision is made to persevere, the continuous delivery pipeline substantially minimizes the cost of delay and provides the ability to deliver value continuously. The ability to measure and adapt is integral to the process and provides routine opportunities to measure, learn and adjust direction as necessary. The business goal is simple: to establish a fast flow of value through this set of steps—the entire business agility value stream—and to ensure that what is being delivered enables the business opportunity.

Benefits of and Risks of Business Agility

Benefits of Business Agility

• Challenge management. Organizations adopting business agility can easily react and respond to opportunities and threats in the marketplace while remaining customer-centric. Freed of long-term plans and strategies, these organizations can adapt to situations much faster than their more bureaucratic counterparts.
• Competitive advantage. Agile businesses can seize upon short-term opportunities, giving them the ability to be a first mover. They can learn from their mistakes and setbacks, readjust trajectories quickly and not remain committed to their plans. And they can confidently react proactively to keep pace with (or outpace) the competition.
• Cross-functional collaboration. Business agility can also break down organizational silos and foster creativity and innovative problem-solving thanks to the cross-pollination of ideas and supportive environment. But decentralized decision making comes with its own share of drawbacks.

Risks of Business Agility

• Short-term solutions. Agility sometimes sacrifices long-term competitiveness. This can create disadvantages versus organizations that have invested in new technologies and strategies that require a longer development cycle. If an organization is solely in read-and-react mode, it’s difficult to define, build, and bring to market completely new solutions.
• Lack of innovation. There is a high risk of different parts of the organization reinventing the wheel, duplicating efforts or creating conflicting versus complementary solutions. The larger the organization, the harder it is to effectively implement business agility at scale.