How to stay agile

How do you survive in these tough times? You need agility - the capacity to spot opportunities and threats early, and to respond quickly. Here are five ways to make your business more agile.

by Julian Birkinshaw
Last Updated: 09 Oct 2013

Use peripheral vision

It is easy to focus on the stuff you know about and miss new trends. For example, in the late 1990s, Nokia dominated the mobile handset industry. But customer preferences changed and rivals emerged in the form of RIM, Apple and Google. By the time Nokia had figured out the new rules, it was too late.

Agile companies have what we can call peripheral vision - they keep an eye out for what is happening on the margins. Some use scenario planning to map out changes to their industry and what impact these might have on the business. Others have scouting units. For example, BT has a team in Silicon Valley keeping an eye on trends in telecoms technology.

Encourage dissent

Spotting the weak signals on your radar is important but it's not enough. In many major corporate failures - from Enron to Lehman Brothers to Kodak - the warning lights were on, but the executives were unable or unwilling to change course.

One of the main reasons is hubris or complacency at the top. When Fred Goodwin proposed buying ABN-Amro in 2007, there were plenty of sceptics, but Goodwin ignored them. It is sometimes called the Icarus Paradox - the thing that makes you successful is also the seed of your downfall.

The most successful executives have a high level of self-awareness and recognise the fragility of their success. They encourage people to challenge them and they build a culture that legitimises debate.

Experiment

Disruptive technology is another challenge. Kodak saw digital technology coming in the 1980s and realised that it was a threat. But it was very reluctant to push digital, because it needed a lot of investment, offered uncertain returns and threatened to cannibalise its existing business. This is the classic disruptive-technology trap. The solution is to experiment with the new opportunity, typically in a separate unit, and to pursue it aggressively, even if it means taking business away from other parts of the company.

Simplify and flatten

Agility isn't just about the executive team being more responsive; it is also about pushing decision-making responsibility down to those on the front line, so that they can respond to opportunities as they arise. Agile companies are typically very flat, with clear lines of accountability. And they often make major use of outsourcing, so that they can ramp up or shed capacity more rapidly.

Act quickly

Finally, moving fast is important, but, paradoxically, it is sometimes smart to wait. In an unpredictable world, you don't know when the big opportunity or threat is going to hit and you must be prepared. My colleague Don Sull calls this active waiting - building a reserve of cash, keeping costs under control, and making small bets, so that when an opportunity comes your way you can capitalise on it. Sometimes, watching and waiting is the best policy.

- Julian Birkinshaw is professor of strategy and entrepreneurship at London Business School and the author of Reinventing Management (Jossey-Bass).

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