Written by Jeff Scott, President, Business Innovation Partners
Since the 1990s, the importance of agility in the success of organizations has gradually come into the spotlight. As a result, more and more organizations are striving to increase their agility. This article serves as a foundation for a series of upcoming articles aimed at helping organizations in these efforts. Its purpose is to identify and clarify the nature of the four dimensions of business agility.
Most new business architecture teams jump right into defining business architecture models and frameworks. They spend incredibly little time defining the practice itself, what they want it to be, and how they are going to drive results. Yet this is where the challenge is. I rarely see an enterprise or business architecture team that can’t produce great architecture; but I see many that can’t create a successful practice.
Here are ten steps every business architecture team should take to ensure long-term success.
Step 1 – Identify and refine your mission. You are not creating a business architecture practice to build business architecture. You are creating a practice to solve business problems. You should know what those problems are. Business architecture missions vary widely from facilitating organizational transformation to guiding technical architecture development. IT-centric business architects typically focus on business-IT alignment while business-centric business architects most often focus on improving business effectiveness. Whatever your mission is, it should be crystal clear for everyone involved.
Step 2 – Create your vision. With a well-defined mission in hand you should develop your vision. Not the architecture-focused vision – the vision for the business architecture practice. Before thinking about where you want to take the enterprise, you should be clear about where the practice wants to go. A strong vision supports the practice’s potential to grow in effectiveness and impact over time. When you build the practice’s vision, you should also identify the big picture challenges you expect to face in realizing it.
Step 3 – Identify and assess stakeholders. Understanding the difference between stakeholder roles and who plays those roles is essential to success. This is often more difficult than it looks, as many people play multiple roles depending on the context. Most business architects can identify their investors – those who are focused on the overall outcome, and their consumers – those they actually provide services to. However, many miss partners, downstream beneficiaries, and competitors. Yes, competitors are stakeholders too. They care about your success – just not the same way you do.
Step 4 – Understand your context. If I had to name a single reason for architecture practice failure, it would be a lack of appreciation of how much culture, organizational structure, management style, and other contextual factors affect a business architecture practice’s chance for success. At the end of the day it isn’t about creating a great architecture – it’s about influencing people. And if you don’t have an appreciation for and understanding of the factors that drive their thinking and decision making, you don’t stand a chance.
Step 5 – Identify products and services. Every business architecture practice should have a well-defined set of products and services. This isn’t just for your clients; it’s for you too. Once you have defined discreet products and services, you can then move to detailed product design. For example, if one of your products is a business capability model you should have a documented process for developing the model, a structure for defining the details, a template for displaying it, a method for updating and refinement, and so on. Most importantly, with well-defined products and services, you now have a baseline you can begin improving on after each client engagement.
Step 6 – Assess your team’s skills. Whether you are a small centralized group, a highly matrixed and distributed team, or a lone business architect practitioner, a critical evaluation of your skills is important to ensure a successful launch. A SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) is a quick and easy way to understand what skills you can quickly leverage and which you need to grow. Or create a business architecture practice capability map with a skills-oriented heat map for a more robust view. The skills assessment will point you to both short-term wins (working on projects that fit your skills) and a longer-term development plan to gain the skills you need.
Step 7 – Identify potential value network members. Take a good look around to identify where you can build partnerships that enhance the business architecture practice’s value. Who is working on strategy? Who has really strong business relationships? Who has the skills your team needs? Where are there opportunities to collaborate? What other “business architecture like” work has been done that you can leverage? Many business architecture teams miss big opportunities by failing to look for partnership and collaboration opportunities.
Step 8 – Identify the top challenges. New business architecture teams invariably want to base their practice design on theory – what should work as opposed to what does work – and many consultants help them do just that. But successful business architects structure their practices to deal with their specific organizational contexts. They understand that overcoming challenges is an integral part of the role, not an afterthought to be dealt with later. For example, the lack of executive sponsorship is a challenge for many new business architecture efforts. Teams that acknowledge this at design time might choose to create a business architecture practice that doesn’t require sponsorship. Understanding challenges guides good decisions.
Step 9 – Build the business architecture practice’s business architecture. A business architecture team, just like any other business unit, needs to clarify its own architecture. This means developing a clear set of goals, strategies, capabilities, and processes, and then using these elements to clarify the practice’s operating model and identify where and when to invest in its success. If you can’t architect your own practice, how do you expect to architect others?
Step 10 – Build an action plan. Now – with a well thought out design – you need to get busy. Develop a three-level plan. First, create a three- to five-year roadmap for the practice. How will it evolve over time? How will its influence grow? How will skills be developed? Second, create an 18-month roadmap that adds more specific details for these items and sets quarterly goals. And third, develop a 90-day action plan that lays out objectives for the next three months, the specific actions you need to take to attain those objectives, and the specific people who will take those actions.
Step 11 – GO!
In the business world, agility is defined as the ability of an organization to respond quickly and effectively to changes in market demands (Brown and Bessant, 2001). Agility is not something an organization has or does not have. Indeed, every organization has a certain speed and effectiveness in meeting changes to market demands. The performance and longevity of an organization, however, tends to increase with its degree of agility (Bazigos et al., 2015; Vázquez‐Bustelo et al., 2007; Worley et al., 2014). This is especially true for organizations that are more agile than their competitors.
Becoming more agile does not occur by happenstance or by merely telling employees to work in more agile ways. To become more agile, organizations must undertake initiatives specifically conceived for that purpose. These initiatives can take the form of internal transformation projects (e.g., change a process) or courses of actions designed to bring about changes in the external environment of the organization (e.g., get a law changed). While some of these initiatives may take just a few months to accomplish, others may be more important and require years of effort.
For these initiatives to be successful, organizations must first understand the nature of the four dimensions of business agility and decide which ones are most important for them to progress along in the next few years. Second, they must understand what the internal and external factors that determine their degree of agility along each of the four dimensions are. Third, they must understand upon which of these factors they can act to increase their agility as desired, and what types of initiatives are required to do so. This understanding is especially important since ill-conceived initiatives can appear to improve agility in the short-term but diminish it in the mid- to long-term.
The purpose of this article is to identify and clarify the nature of the four dimensions of business agility. This conceptualization is based on an extensive literature review and research on our part. It will serve as a foundation for a series of upcoming articles aimed at helping organizations become more agile.
The Importance of Agility
Agility is important for all organizations and especially so for those operating in rapidly evolving markets. There are three reasons for this. First, the more agile organizations are, the faster and the more effectively they can adapt themselves to deprive their competitors of any advantage they may have recently gained.
Second, being more agile than their competitors enables organizations to advance to the head of the pack by making strategic moves at a faster pace than their competitors can. When combined with an ability to continuously and successfully innovate, being more agile than their competitors enables organizations to go further than just responding to market changes. It allows them to regularly cause market demand changes that their competitors have to catch up to.
Third, in addition to being a tool used to counter the strategic moves of competitors or gain a competitive advantage, being more agile than competitors can, in some circumstances, be a competitive advantage in itself. Indeed, it can enable organizations to respond to market demands without having to complete lengthy transformation or R&D projects first. For example, a commuter train manufacturer with a proven platform, a flexible assembly plant, and an agile R&D capability may be able to deliver trains customized to its customers’ exact specifications in less time and at a lesser price than its competitors.
The importance of being highly agile and more so than competitors is further heightened by the increasing number of organizations actively working to improve their agility. This growing interest has created a race towards greater agility in which the laggards may very well pay a bitter price.
Organizations that lack agility can easily put themselves in adverse situations. For example, their inability to maintain their products and services relevant to current market demands is likely to lead to a progressive loss of market share. Also, their inability to quickly scale-up production can force their customers to migrate to other suppliers. Finally, their inability to quickly reduce costs during bad times can lead to financial difficulties. A lack of agility can even be deadly. Indeed, the situation of organizations that lack agility can get untenable to the point that they force organizations to either get acquired, downsize until they become shadows of their former self, or go bankrupt. History is filled with once successful businesses that faded away because they failed to recognize and respond to market-demand changes in an effective and timely manner. What is more, globalization and the ever-increasing rate of innovation are continuously accelerating the pace of market-demand changes. The organizations that lack agility cannot keep up and get weeded out at an increasing rate. The fact that the life expectancy of companies in the Fortune 500 has fallen from 75 to 15 years over the last 50 years (Denning, 2011) is especially telling in that matter.
As discussed above, organizations must be more agile than their competitors to survive and thrive in today’s market. However, for their agility to be sustainable, organizations must carefully choose the initiatives they undertake to improve their agility. Indeed, some initiatives may help respond quickly to current market demands but result in hard-to-remove hindrances that will restrict agility in the future. For example, to accelerate decision making, some organizations have eliminated the planning and control activities that were put in place in the past to ensure the long-term soundness of decisions. Without this guardrail, these organizations have quickly slipped into short-termism. In such a context, managers are quick to understand that to get promoted they have to demonstrate their ability to deliver quickly and as a result, start making shortsighted decisions that latter curtail their organization’s agility. The negative impacts of these short-signed decisions are the worst when they pertain to expensive assets such as information systems and production equipment. Opting for the cheapest and fastest way to make changes to these assets can very easily make future changes much longer and expensive to accomplish. In fact, we have come across many situations where changes that should have been relatively simple to do, had become so large and expensive that they were now economically unviable.
The Four Dimensions of Business Agility
The degree of agility of an organization can vary along each of the following dimensions (in alphabetical order): Operations, Research & Development, Transformation and Strategy.
Operation agility is the ability to quickly increase or decrease the operations’ throughput or shift from manufacturing or supplying one set of products and services to another in a manner that has no significant penalty on time, cost, quality, and functionality.
- The ability of a city to make rapid adjustments to the size of its workforce to cope with seasonal changes in the services demanded by its citizens.
- The ability of a production line to manufacture multiple models of household appliances and to switch instantly from the production of one to that of another with no significant quality degradation or costs increase.
- The ability of a manufacturing plant to produce a range of products, including new ones, with no or limited physical changes to its equipment.
Research & Development agility is the ability to quickly develop and market new or improved products and services that meet evolving customer demands in terms of price, quality and functionality. This includes the ability to quickly make changes to the R&D project portfolio in response to internal and external events, and to reallocate resources when needed.
- The ability of a manufacturer to leverage its proven platform to rapidly design new tramway cars to the specific requirements of a major city.
- The ability of a business unit to quickly shift its R&D efforts from one product to another that utilizes new technologies to better meet customer demands.
- The ability of a software company to deliver a small set of new customer-requested features every six months instead of providing only major upgrades every three years.
Transformation agility is the ability to quickly and effectively make lasting changes to the functioning and assets of the organization and bring about changes in the external environment of the organization. It includes the ability to quickly make changes to the portfolio of transformation initiatives in response to internal and external events and to reallocate resources as needed.
- The ability of an organization to leverage business architecture and change management to accelerate the transformation of its culture, organizational structure, and processes.
- The ability of a company to use its fine-tuned merger and acquisition capability to rapidly integrate a newly acquired firm.
- The ability of an organization to use the Agile software development methodology to deliver the information systems it needs to improve its capabilities rapidly.
- The ability of an organization to work with its suppliers to improve the quality of the component parts it buys from them.
Strategy agility is the ability to quickly and effectively make changes to the strategy of the organization, at the corporate or business-unit level, in response to internal and external events.
- The ability of a mortgage lending firm to identify a coming slowdown in the residential market and, quickly shift its strategic focus to the commercial market.
- The ability of a manufacturer to quickly uncover opportunities in a geographic market it is trying to penetrate and, in response, adjust its product mix to properly serve that market.
Although R&D and Transformation agility are conceptually distinct, they can, in some situations, be difficult to distinguish from each other. For instance, nowadays the ability of a financial institution to bring new products to market (i.e., R&D agility) is strongly tied to its ability to rapidly and effectively make changes its information systems and processes (i.e., transformation agility).