“Cumulonimbus clouds indicate stormy weather. This type of clouds, which can reach a height of 20 km from the ground, can cause hail, strong wind, thunder, lightning, heavy rain, and even hurricanes.” The hurricane Katrina, which hit the southern coasts of America in August 2005, began with these clouds. It caused the biggest destruction in history with a loss of $ 125 billion. It was very difficult for people to meet their immediate needs during this natural disaster, but Walmart’s agility in this “stormy time” helped solve this problem. Walmart followed the meteorological information through its own emergency center, following the direction changes of the hurricane. They determined when, where, what was needed, and led all the shipments accordingly. Walmart succeeded in surviving this hurricane by improving its reputation which was shredded due to various reasons. More importantly, it helped people survive.
When we look at the situation of today’s business world, we see a stormy environment as we mentioned above. Many factors such as technological changes, fast innovation, regulations, liberalization of daily life and so on cause complexity and uncertainty. It would not be wrong to say that this started with the invention of the internet. This complexity and uncertainty particularly occurred when the internet has become the center of our lives as a communication and interaction infrastructure. With factors such as social realities, competitive business environment, digitalization of consumer habits, and even natural disasters, we will have a more complex environment in the future.
In such an environment, it is no longer reasonable for companies to make new projects that extend over long periods of time while offering their ideas, services, and products to customers. It is now a necessity to present this new idea, service or product very quickly to the market, get customer feedback, and find ways to adapt to this new situation. That’s what we call Business Agility.
Business Agility seems to be a new concept, but it actually has a history of nearly 30 years. The idea put forth in the US at the beginning of the 90s was founded with the production organization strategy report prepared by 15 senior managers from the production sector in the same country. It has also been affected by the Agile Software Development trend in the software industry around the same time. When we look at the values and principles of the two approaches, we can see that they are almost the same.
Business Agility is defined as “an organization’s perception of changes in the internal and external environment and behaving according to this new situation in order to provide value to its customers”. Business Agility is a must for any organization that faces uncertainty and rapid change.
Based on the definition by management guru Steve Denning, Business Agility is based on 3 laws:
- The law of the customer: An obsession with delighting customers by continuously adding value for customers is the first keystone of Business Agility. According to Denning, as a result of globalization, deregulation, knowledge work, and new technology, power in the marketplace has shifted from seller to buyer: the customer has now become the boss. As a result of this, changes have occurred in the management and hierarchical structures of organizations. Steve Denning likens this to Copernican revolution.
- The law of the small team: Disaggregation of works into small batches and performing them by small cross-functional autonomous teams is the second keystone of Business Agility. According to Denning, this facilitates the solution of big problems. Fast feedback can be received from customers as a result of working iteratively in short cycles. This increases customer satisfaction by creating a state of flow.
- The law of the network: The third and the most important rule of Business Agility is the recognition that, to achieve full business agility, the whole organization needs to embrace the entrepreneurial mindset: the entire firm functions as an interactive network, not merely a top-down bureaucracy with a few teams implementing Agile tools and processes. To achieve that, Agile should not just be applied for IT departments, but it should form the basis of the way that the whole organization works.
It is worth mentioning that the third law is the hardest to be adopted by the organizations. The full functioning of this law will be possible not only by changing the hierarchical structure, but also by changing the organizational culture. However, a process, patience, and management leadership are needed to change the concept of culture.
In my next article, I will talk about some practices that will facilitate the implementation of the Business Agility concept…