How 'Agile' Is Your Business?
Agility in business isn't paid much attention to because many people think it's not that relevant. Focus is put more into the fundamentals, analyzing the data, generating revenue etc. However, this is true only in the beginning, as businesses expand and gain more market share they tend to lose their agility muscle which eventually becomes entropy.
Business agility simply means how fast a business is able to adapt, implement a change or pivot into a new direction. How fast it is able to do that depends on a number of factors like data, resources and flexibility of the business. In most cases, the determining factor is the level of bureaucracy.
In this post, I share with you how agility becomes a problem and a few ways to solve them.
Bureaucracy Is Always A ProblemBureaucracy is the hierarchical structure of a business. The flow of the top-down level in a business. A five person or less working on a business isn't a problem when it comes to agility because it's a small team. Information can flow easily and plans can be executed immediately.
It becomes a whole different thing when you scale and have hundreds or even thousands of employees working at the business. Although with the help of technology information can still flow easily, the problem lies in the assimilation and implementation phase. Approval is needed on different levels. Implementation has to happen gradually or in phases if not everyone wouldn't be able to catch up. Change can't happen abruptly, you risk tumbling your business structure.
A good example is hotels and car manufacturers. When a new model or direction is to be introduced. There are months or sometimes years of preparation before it's fully implemented and launched to the public.
When it comes to agility, big businesses are at a huge disadvantage. However, there are two ways to go about it.
1. Staying LeanWith technological advancement, staying lean has become possible. However, it's not suitable for all businesses. Some need the numbers if they want to scale and achieve profitability or reach massive valuations. Most hotels or restaurants can't go lean, they need the numbers. The advancement in technology for them to automate most of the work isn't massively available yet. Maybe in a decade or so. Besides, I don't think most of us would like robots to be cooking and serving us foods at a restaurant, do we?
Being lean doesn't only mean having less people. It also means streamlining the processes in a way that enables fast execution. This can be achieved through leveraging automation tools and 'smart coding'. With these, bureaucracy is no longer a problem because everything is done based on a set of pre-defined parameters. No approval or discussion is needed. Coordination trumps Collaboration.
Staying lean can easily be done with modern businesses who have leveraged the digital world and a large part of their business is based online. With the rise of blockchain technology and cryptocurrencies, a new model is slowing emerging where it will become possible to be a fully lean business.
2. Acquire New Businesses.This is a lucrative option that big businesses are heavily utilizing. Companies like Amazon make 12 deals or more per year.
If you think about it. It's an easier option for non agile big businesses. Instead of changing course and making a turn over, they gobble up a small company that's moving towards that direction. Like a hunter, they first make a strategic assessment on how it will benefit them before they make the kill.
There is a crucial work on synergy and integrating the values of both companies. This is not easily achieved and sometimes the 'eater' doesn't fully assimilate the 'eaten' but leaves it as a separate entity under the parent company. For example, eBay owns PayPal but PayPal retains it's independent structure instead of merging fully into eBay.
With this method, the main question is how sustainable it is? It might seem 'nice' to go on a shopping spree but you run the risk of losing your identity. The more businesses you acquire the bigger you become and the bigger you become the less agile you are. Eventually, the vision of what you set out to do is forgotten and you lose a 'sense of structure' or solidity. This is when the business becomes 'ripe' for disruption.
In Conclusion.Being big is not always better. In business, being big can be the beginning of your downfall. However, there's a solution with every problem. Just like I mentioned above, You can either deflate the business and stay lean which gives you more agility and flexibility to move about or you can acquire new businesses and build a mammoth empire. The dilemma(sort of) is that, the first is the better option but it isn't suitable for all businesses while the later isn't sustainable enough.
However, In the real world, things aren't very clear cut so you can dabble with both, that's the third option. Reality is fluid and multifaceted.
How important is it for businesses to achieve agility? Should they even try?
Thanks for reading!
Profile: Young Kedar
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