Posted on 2 October, 2019 | 4 mins
To sharpen your competitive advantage, you need to optimise performance across growth, profitability, sustainability, and customer trust – you need to operate with business agility
“The pace of change has never been this fast, yet it will never be this slow again,” Canadian Prime Minister Justin Trudeau said at the 2018 World Economic Forum.
Change can be a challenge for small and medium-sized businesses (SMBs). Business structures are evolving, as are customers’ needs and expectations, and technology is advancing rapidly; SMBs need to understand, react to and reflect these developments – they need to be agile. The focus must be on strategies that embrace innovation, flexibility, scalability and technology to drive sustainable growth and profitability.
Building growth stories
In Move fast to thrive (2019), professional services company Accenture highlights that three-quarters of businesses report an increase in the disruptive effects of constantly changing customer demands, as well as market entrants. The report found that these same businesses are slow to change operating models or are unable to keep pace with change.
Also revealed in the report is that agile organisations benefit from ‘a nearly threefold earning advantage’, and that agile organisations achieve ‘long-term EBITDA [earnings before interest, tax, depreciation and amortisation] growth of 16%, compared to just 6% for non-agile organisations’. The next logical question is, how does a business achieve agility?
According to McKinsey & Company, agile businesses are stable and dynamic. To reach these operational heights requires a business to establish core elements – structures, governance and processes – as well as more dynamic ones that enable it to quickly adapt to new challenges and opportunities. At the heart of this are five ‘key trademarks’ around strategy, structure, process, people and technology. Summarised by McKinsey & Co as follows:
‘The trademarks include a network of teams within a people-centric culture that operates in rapid learning and fast decision cycles which are enabled by technology and a common purpose that co-creates value for all stakeholders.'
Put simply, to be agile you need a shared purpose and vision with buy-in across your team(s), a structure with strong leadership supported by a network of empowered people, each with a clear and accountable role. A robust operational process means that you can make quick decisions and, underpinned by next-generation technology, you'll maintain a competitive edge. Easy!
Technology for agility
Technology is revolutionising how SMBs operate and supporting business agility. Where a small business might lack the people power or skills to implement comprehensive operational strategies, technology provides scalable solutions, so they gain an additional resource that brings them up to speed in a competitive market. These are often enterprise-level tools but, brought in on a subscription basis, have less of an initial investment cost for small businesses.
Cloud technology, or cloud computing, is one area driving change. It enables businesses to store and access data and programmes online rather than on a computer’s hard drive, bringing greater flexibility to workflows – i.e. access anywhere – and how teams work together by opening new channels for communication. What cloud-based software offers is access to a suite of technologies that enhance operations, promote flexibility and offer a more agile way of working.
Similarly, business apps create new operational opportunities. With apps covering the broad remit of business functions – from accounting and inventory management to marketing and content management – small businesses can improve cash flow, customer billing and time management to improve workflows, cash flows and profitability.
Learn more about what apps can do for you.
As with any change, there are challenges to agile transformations, but nothing a little change management can’t handle. Key things for business owners to remember, as recommended in a McKinsey & Co report, ‘How to create an agile organisation’, are:
Embrace the magnitude of the change. The report found that the biggest challenges during agile transformations are cultural – for example, a mismatch between agile ways of working and job requirements, a lack of collaboration, and employee resistance. To manage this change in culture, McKinsey & Co advise you to focus on the following:
organisational alignment on mindsets and behaviours needed to move toward;
leaders role-model new mind-sets and behaviours and hold each other accountable for making these changes;
employees are supported in developing skills needed to succeed in the ‘future organisation’;
formal mechanisms are put in place to reinforce change, rewarding and incentivising people to demonstrate new behaviours.
Be clear on the vision. Agility thrives where there are a shared vision and purpose underpinned by ‘actionable strategic guidance’. The vision must be held and believed in by all and should inform how different functions are approached – be that sales, marketing or customer services.
Decide where and how to start. The root of success is a well-informed plan. When making your business more agile there’s no one-size-fits-all approach to be taken, but there are certain points to consider.
identify the part(s) of the organisation you want to transform and how;
assess the best approach to achieve agility and apply coherently, so that the actions are taken across strategy, structure, process, people and technology are mutually reinforcing;
determine the resources and time frame that the transformation requires.
Why be agile?
The future is unpredictable. An agile business is a business that can quickly adapt to changes as they happen, is scalable, and can remain customer-focused in a challenging business environment.