Organisational Agility: A Critical Strategy to Business Performance and Sustainability
Organisations operate within a complex and dynamic environment which can either make or mar them. Peter Drucker describes it as an era of the 3 Cs — accelerating change, increasing complexity and tremendous competition. Others have described the external environment as a VUCA — volatile, uncertain, complex and ambiguous.
No business strategy or structure works in perpetuity. In fact, the lifecycle of business strategies today is shorter than they have ever been in human history. Little wonder some global corporations like Research in Motion (makers of BlackBerry) that were market leaders barely ten years ago are now a shadow of themselves. This underscores the criticality of adapting the business to the changing times.
Organisational agility is the capacity of a company to rapidly change or adapt in response to changes in the market and the larger external environment. A high degree of organisational agility can confer an inherent competitive advantage on an organisation by enabling it to successfully react and leverage change to its advantage.
More often than not, businesses that die or decline due to changing environment do not do so because they fail to adapt, they wind up or retrogress because they adapt relatively late compared to their successful peers. Therefore, maintaining an anticipatory posture is key to organisational agility. An anticipatory posture makes an organisation more proactive to change rather than reactive.
The survival of any organisation depends largely on its ability to evolve as changes within the business environment occurs. Nokia is a case in point — the mobile phone manufacturer had 50.9% market share in the fourth quarter of 2007, however, by the first quarter of 2018, Nokia was only able to capture an abysmal 1.1% of the smartphone market.
The decline in Nokia’s market share can be attributed to its inability to evolve rapidly to changing technological trends. Nokia maintained its strategy without taking cognisance of changing environmental trends and the result was an inevitable decline that happened over time.
Change management is an integral part of agile organisations. It involves moving people, processes and structures from the old to the new. According to a survey by Mckinsey, 70% of failure in change management is the result of employees’ resistance to change and the organisational culture’s susceptibility to change. The major factors responsible for resistance to change includes:
- Fear of the unknown
- The misunderstanding regarding the reason for a change, the nature of change and benefits of change
- Love for the old way of doing things
- Lack of consultation
- Lack of competence
Communication is the key to resolving resistance to change. Managers need to understand the reason for the resistance and then address employees’ concern regarding it. Although, a very exhausting process, it is more beneficial than diving through the change management process head-on.
Before the change is implemented, people should be clear about the value to be derived from it, the direction of the change, resources required, elements to be prioritised, and KPIs that ensure its sustenance. There must be a plan that guides the transition process.
Is the dynamism in the business environment likely to reduce? Most like not. In fact, the rate of change is forecasted to increase with experts saying change itself will begin to change faster.
Therefore, smart organisations have to consciously build capacity to take advantage of a change in a proactive manner; cascading it across their the organisation’s people, processes and systems.