How Workplaces Scale and Adapt Using Strategic Agility

How Workplaces Scale and Adapt Using Strategic Agility

In the bestselling book The Goal, author Eliyahu M. Goldratt works as a manager for a chaotic production plant that’s drowning in work-in-process inventory and chronically misses shipping deadlines. He seeks the advice of an old friend, Jonah, who counsels using the Socratic method, focusing on the simple question: “What is the goal of your manufacturing organization?”

Eli swings and misses with his first attempts to answer the question, surmising that the goal is either to improve efficiency, or to increase power or market share. Then he recognizes the obvious answer staring him in the face: the goal of his plant is to make money.

“And, by the way, there is only one goal, no matter what the company,” says Jonah, while going on to advise Eli on how to organize his production processes around this goal, with a method now known as the theory of constraints.

Even in our rapidly changing market, where both products and the needs of customers seem to change overnight, Jonah’s claim still rings true. The goal of any company is to turn a profit, while remaining true to its core values.

Achieving this goal, however, requires adaptability and continually innovating processes and products to solve customer problems and needs.

Strategic agility is the science behind this constant demand for change. It entails forward thinking and requires organizations to adapt its vision to suit the evolving market.

Are you struggling to be adaptable and agile in your organization? If so, you’re not alone. Oftentimes, companies incorporate expensive technologies that don’t really improve the bottom line. Or they’re too fixated on current processes and systems to make any changes at all.

From identifying what fosters innovative thinking, to looking at what gets in the way, to identifying where to start with a transformation, let’s take a look at the ins and outs of strategic agility in the workplace.

Three Components of Strategic Agility (With Examples)

For many businesses, simply keeping up on orders and getting the product out the door on time is enough to keep every person on staff working until late into the night. The organization may have an excellent product or service, but adding adaptive frameworks really squeezes existing resources.

Amanda Steili, author of the book Agility Advantage, says that organizations must set aside resources exclusively dedicated to innovative and forward thinking.

She has outlined the three key aspects of strategic agility: market agility, decision agility, and execution agility. Let’s look at all three.

Market Agility

This entails closely looking at what is going on in the market right now, and from there, anticipating what’s going to happen next. Market agility means looking two to five years ahead, and forecasting what’s up around the bend.

Decision Agility

Once an organization develops an understanding of the market and its direction, the next step is applying this knowledge. What opportunities do market changes offer to the company’s existing products and services?

Execution Agility

And finally, execution refers to an organization’s ability to make changes to products and services, and to remain open to more changes further down the pike. Soliciting feedback from employees is helpful at this stage, as they offer hands-on insight into what works with the current processes and what doesn’t.

Strategic agility entails not simply forecasting and looking ahead, but also an ability to really make changes. A truly agile company incorporates all three components.

Examples of Strategic Agility

When an organization doesn’t see telltale signs or read the writing on the wall, it ends up missing shifting trends in the market. At other times, companies listen closely to customers and acclimate quite well.

Take the company Netflix, for example. It started out as a little tadpole back in the 90s, when Reed Hastings got frustrated with the existing system: he didn’t like paying late fees to rent movies! And, as the story goes anyway, the idea for a mail-in movie service was born. As the demands of the market changed, Netflix shifted its products from DVDs to streaming. And as it became more international, it began investing in locally-produced programs and series, in order to suit the needs of its new customers.

On the other hand, Coke has come out with some real doozies. When it released Dasani water bottles in London in 2008, it didn’t take long for the market to realize they were being sold tap water at an astronomical price. Or in the 80s, when it released a sweetened “New Coke” to match its rival, Pepsi, it failed to read the market and understand that its core customers were loyal to the same old Coca Cola taste.

Just recently, Coke has released hard seltzers and caffeinated beverages into the market, presumably to reach millennial customers, who’re less keen on beer than their predecessors. How will these products fare? We have yet to know.

And so as you can see, when a company is being strategic and agile, it’s not only reading the market, but executing on a product that meets the customer’s needs.

The Focus: the Customer and the Bottom Line

Strategic agility is like being a chameleon. It means adapting your product or services, depending on the environment you find yourself in. In order to do this, it’s critical to have the right orientation. Going back to The Goal, the chief reason Eli struggled at his plant is that he wasn’t clear about the organization’s ultimate goal: to make money.

A happy customer is at the crux of financial success, and so in order to effectively apply strategic agility, the organization must be customer-oriented.

This requires, first and foremost, understanding who the customers are. What are they like, and what problems do they have? It’s helpful to brainstorm several types of customers, giving them details such as an age, gender, likes, dislikes and a background. All these details help identify their problems and needs. The creation of these personas doesn’t come from the imagination, but rather from extensive research of the market and talking to existing customers.

With specific ideas about the customer, it’s possible to brainstorm around creating a product or service that solves their needs in the moment.

A next step is brainstorming where the customer will be two or three years from now. How will they be solving these same problems? What sorts of competition comes into the mix?

Using this knowledge, it’s then possible to work on the operations of the company, closely looking at the crossover between user experience and the cost and process for creating the product.

When strategic agility isn’t hyper-focused on the customer, then solutions are created that don’t serve the company’s ultimate goal. Maybe you do have the latest and greatest technology, but even with all that expense, the bottom line isn’t affected.

It’s a bit like a chameleon changing his colors at the wrong times: sure it may look pretty, but as far as survival goes, the effort is completely useless.

Strategic Agility Implemented

In addition to brainstorming and ideation, strategic agility entails continual upheaval in an organization’s processes and systems.

Careful research is critical before making big changes, in order to determine that the changes really solve problems. This includes talking to the people who do the work, and listening to their insight.

Lisa Levy is an organizational change management specialist and the founder of Lcubed Consulting. Through her experience creating adaptive frameworks for organizations, she has identified the key stages organizations go through as they grow and scale.

1. Hire More People

In order to scale and grow, the first step is adding additional labor.

Let’s say a grocery store is remodeling and doubling in size in order to serve an expanding population. Initially, it must hire as much as twice the labor, in order to manage the new checkstands and keep the shelves stocked.

This step is very expensive, so the organization must budget and plan for it.

2. Refine Processes

When the scaling is achieved and the new labor is working away, it’s time to refine the processes.

Efficiency experts look at systems to understand how much labor is really needed in various areas, and at what times. With this information, it’s possible to strategically allocate labor only when it’s utilized

In a grocery store, for example, maybe the coffee bar only needs one barista for the afternoon shift, rather than two.

3. Automate With Technology

A final step is automation. As stated earlier, technology doesn’t automatically equal good. It’s necessary to look at the problem technology solves in order to determine if it improves the customer’s experience.

Consider automated check stands in a grocery store. Before installing this sort of expensive, sophisticated equipment, leadership considers if there’s a customer demand for it, and if so, how many should be installed.

In order to scale successfully, organizations go through these same steps over and over again. When setting out to make changes, it’s good to leverage the resources already on hand, and then add and expand from there.

Four Reasons Why Processes Fail

Have you ever heard that anecdote about the woman who always cut off the ends of her roasts before she cooked them? When asked why, she said “Oh, this is the way my mother did it.”

When her mother was asked why she did it, she said, “Oh, that was the way my mother did it, so I guess you’re just supposed to.”

Finally, the grandma is asked why she cut off the ends of her roasts, and she says: “Oh, I cut them off because the pan I use is too small to fit the entire roast.”

Just like everyday people, organizations oftentimes get caught up in systems and work processes without giving them much reflection or examination. The organization gets in the way of its ability to make progress.

If you’re looking to scale or adapt your organization, here are four things to look out for.

1. Institutional Inertia

Just like the woman cooking the roast, oftentimes organizations go about doing things simply out of habit or tradition. There are deep grooves and patterns around processes and ways of thinking, and no one questions why things happen at all. It’s kind of a “well this is how we always did it, so it must be right,” mindset.

Maybe the accounting department spends hours at the end of the month creating report after report that simply gets sent to another department and filed away, without any examination or strategizing around them. Or maybe the team meets weekly, but doesn’t have an agenda or desired outcome for the meeting.

When organizations haven’t identified how certain actions serve the bottom line, it may well be wasting time and resources. Doing things simply out of habit often means money is left on the table.

Examining your own processes and systems for inefficiencies entails looking at them from two points of view. First, ask a lot of “why” questions. Why do we have this weekly meeting? Why do we create these reports each month? Secondly, look at the overall goal of increasing the bottom line, and ask what action steps must be taken in order to achieve it.

2. Rapid Processes

“Let me tell you, to stay competitive these days, we’ve got to do everything we can to be more efficient and reduce costs,” Eli tells Jonah in The Goal. Fast and cheap, Eli goes on to learn, however, doesn’t always mean better.

Sure, maybe a garment factory can figure out how to make a t-shirt in half the time and with a cheaper fabric, but what does that spell out in terms of quality, and ultimately in sales?

The project management “good cheap fast” triangle is helpful for guidance when considering the tradeoffs between time, cost and quality.

The principle of the triangle is that you must pick between something being high quality, inexpensive, or quickly made. And you can only have two of these choices.

For example, if you choose “fast” and speed up the production time, then either the quality suffers, or the price increases.

Although an organization may superficially think speeding up its processes is the solution, it may well make a different evaluation when it considers the tradeoffs. Can it stand to cut down on quality or increase prices?

3. Undocumented Processes

Have you ever worked at an organization where one person lived in a world of his or her own, completing all sorts of essential work independently from anyone else? When a foundational person like this departs, then it’s like a house of cards falling down. No one can pick up the ball, because all the work was unknown.

For an organization to have a strong foundation and scale with success, all processes must be documented and repeatable. This makes it possible to train more people in the same task, and for someone to assume responsibility for a position in the incident of a sudden departure.

One way to tell if your organization has effectively documented and cross-trained is to ask: What would happen if certain people were suddenly not to show up one day? Would anyone be able to pick up the slack?

4. Short-term Focus

Sometimes an organization has no mental space for looking ahead. Maybe they’re 100% focused on quarterly earnings, or completely spent just performing the day-to-day operations. Or else an organization is so cemented into its current way of being, that it can’t imagine a different version of itself.

Strategic agility entails looking into the crystal ball, and having the ability to morph a product or company identity in order to meet a changing market. If an organization is into print media, then maybe it needs to transition to digital. Or a brick and mortar store might set up an online store as well.

In sum, it’s easy for organizations to set themselves up against strategic thinking. Doing things out of habit or thinking short-term precludes any ability to adapt and change. Agility is about making space for innovation.

Strategies for Being Adaptive

Strategic agility is like being an athlete; it entails being limber and having the ability to flex backwards from time to time. Just like an athlete, this doesn’t come without training.

Here are three methods for organizations to adapt strategically and with ease.

1. Make Room for Agility

Strategic agility requires an entirely different mindset from focusing on the here and now. It’s about giving up control, acknowledging flaws in the current ways of doing things, and having an openness to change.

The research and development behind making strategic changes also requires a lot of resources, and so it behooves an organization to have a position or even a department dedicated to scaling and adaptability.

It also entails empowering employees to provide suggestions and listening to them for feedback, and setting up a system for hiring forward-thinking employees in the first place.

2. Set Learning Goals

Setting income and production goals are no-brainers for most companies.

However, scaling with strategic agility requires education about the market, new technology, and competitors. And so an adaptable organization also sets learning goals.

With the rate at which things change, without a continual dedication to education, the entire organization would be living under a rock in just a short time.

3. Brainstorm and Test Ideas

Creating innovative products is a process. After doing a lot of market research, a dedicated team brainstorms around an idea or new product. And then it tests prototypes with selected customers in order to receive feedback.

When something looks like it has potential, the next step is bringing the product to the market to see how it fares.

Implementing strategic agility entails being forward looking. It uses a completely different set of skills than maximizing the bottom line in the present moment.

The More Things Change

Whether you’re a tiny start-up of three employees, or a Fortune 500 company, every organization encounters the demand for constant innovation.

Unexpected change is always up around the corner, and strategic agility is part and parcel to keeping up to speed and staying relevant.

However, even amidst the constant change, the core goals for a business remain constant: it’s always dedicated to earning a profit by meeting customer’s needs. When focused on this goal, the organization is able to scale in such a way that it continues to flourish.

Strategic agility, then, is a delicate balance of staying true to core values, while also being limber enough to change. This agility demands an openness to learning and assuming risk.

When an organization becomes set in its ways, it’s unable to make significant changes. Overcoming this entails thinking long term, scrutinizing procedures, and documenting processes. An adaptive transformation may require receiving advice from an expert.

When an organization leads with agility, it stages the framework for growth from one cycle to the next.