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Managing extreme uncertainty with agility

Agility, a must-have ingredient in company strategy, is the flexibility a company acquires when it can perform the constant balancing act between different poles and tensions.

How would you define agility in the business context? Or are you convinced it’s just a buzzword? The opening participant polls to this webinar, which appeared live on Friday 8th May at 11am, set the scene with these questions.

Because after all, as Stéphane J.G. Girod, Professor of Strategy and Organizational Innovation at IMD, and Goutam Challagalla, IMD Professor of Strategy and Marketing explore, agility means different things to different cultures, companies and even company units if it is not properly understood and implemented as a concept grounded in several key principles.

No company can do without agility in their long-term strategy, and particularly during crisis and times of high uncertainty.

Take Clarins, the cosmetics brand, which recently displayed agility by focussing on e-commerce as stores were forced to closed, and their reliance on intermediaries – some of whom were facing bankruptcy – left the firm re-strategizing.

“Even before the crisis, most non-digital native companies were struggling with digital transformation,” says Professor Girod.

It is a common scenario; investing in digital but struggling with certain rigidities, including resistance internally. Other common blocks to digital innovation and agility more broadly include matrix structures which slow down how quickly you can shift resources round.

Reaching a state of agility is no easy task. The first tension you typically see, says Professor Girod, comes from the fact that “companies have to deal with splitting their attention between being nimble and being stable” to be well-prepared for uncertainty.

Another frequent tension, he says, is the result of moving towards simplifying the complexity of the organization. This is because, “what works in the Middle East might not work in Europe. So, you have to build on that complexity to find right solutions for the right setups.”

Professor Goutam Challagalla raises the question: how many paths to agility are there? He proposes that in fact, “A lot of agility is about balancing demand and supply, or balancing surpluses and shortages.”

In some parts of the company, there may be a surplus (for instance, in manufacturing if it has not been working for months, or in certain departments that depend on customers physically meeting). Clarins’ surplus was its stores, and its shortage was online; it swapped the balance between surplus and shortage to become more agile.

You can also “lend your people,” according to Professor Challagalla. He cites the example of Qantas airlines, lending staff to the booming groceries economy in Australia, and a similar exchange between McDonalds and Audi as “agile moves”.

Finally, the pair discuss a potential framework for agility, beyond COVID. Is your agility episodic (if it’s come about as a response to COVID probably, at least for now) or continuous? Is your firm going about agility in a localized way, or taking an organization-wide approach?

Many COVID agility initiatives are episodic and localized. But that’s fine; it’s a good starting point for companies, in Professor Challagalla’s eyes.

DBS bank is an example given by Professor Challagalla of a firm that has won a collection of agility awards. It’s a real turnaround situation given the bank once went by the false acronym of “Damn Bloody Slow”.

It achieved this change by worked on company aspirations together with the required tools to achieve them, and then adding the “connecting tissue” needed to make it happen. Concretely, this amounted to five intense days of “process improvement events” and a follow-on plan for dedicating two months to engineering the changes. Importantly, DBS employed a matrix of “customer hours saved” to measure progress.

This is agility, although the firm might not have called it that.

“If you want agility to take hold, don’t think of it as agility, but reduce uncertainty and discover opportunities in a smarter way than you’re doing today,” says Professor Challagalla.

You can do this in part by having more eyes and windows into the world in order to generate ideas, and opening up the floor to employees to share them. Listen to the stories presented here of Booking.com and Amazon and you’ll understand why.

To view all webinars, please visit our Leading in Turbulent Times page here.

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