In a 2017 letter to his shareholders, Amazon CEO Jeff Bezos cautioned, “Day 2 is stasis, followed by irrelevance, followed by excruciating, painful decline, followed by death. And that’s why it is always Day 1 (at Amazon). The outside world can push you into Day 2 if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them, and you have a tailwind.”
Your business environment is rapidly changing and more uncertain than ever. If you follow the lead of companies like Amazon that are committed to achieving high levels of organizational agility, you can leverage market changes to create a competitive advantage – and fuel growth. Put simply, a company’s organizational agility is its ability to renew itself, adapt quickly, and succeed in a rapidly changing, ambiguous, and turbulent environment.
In the first blog of this series, we discussed how the most challenging part of driving growth is not developing a business growth strategy or execution plan, but implementing it effectively. Now that you know how important it is to make changes to your foundational processes and revamp your data gathering and analysis approaches, you’re ready to avoid “Day 2” by evolving your business vision, goals, operating norms, processes, and mindset.
To become an agile learning organization that questions the status quo while striving for continuous improvement, your business must focus on four pillars of agility:
The first step to building organizational agility is developing and communicating a clear and succinct vision for change. Identify the desired outcomes. Articulate why it is important to operate differently. Outline the path forward. In developing this vision, it will be important to define what will change – and what will stay the same.
During this step, it’s important to balance both stability and change in an organization. Stable business practices are critical for efficiency, consistency, and creating synergies and scale. Dynamic practices are necessary for responsiveness, adaptation, and innovation. While stability will set the foundation for successful new approaches and processes, it is critical to set stretch goals to force the organization to think and do things differently.
The final part of constructing this first pillar calls for the leadership team to show true commitment to change. Leaders at all levels should model agile behaviors for the broader organization. Simultaneously, leadership must ensure the right tangible resources (people, tools, funding) are committed to the effort.
Next, focus on embracing new ideas and strategies while managing risk and change nimbly. Taking calculated risks and failing fast will minimize the downside of risk taking. Another Bezos quote illustrates this point: “If you’re good at course correction, being wrong may be less costly than you think, whereas being slow is going be expensive for sure.” Simultaneously, setting up processes and tools to better manage transformation will ensure new plans and programs are executed well and supported by employees.
View strategic planning as a journey, not a linear, annual process. As the Strategy and Corporate Finance experts at McKinsey note, “Messy, fast-changing strategic uncertainties abound in today’s business environment. The yearly planning cycle and the linear world of three- to five-year plans are a poor fit with these dynamic realities. Instead, you need a rolling plan that you can update as needed.” Similarly, annual budget planning must be agile. Set aside a portion of your budget for contingency and sudden plan shifts – at least 20 percent is a good benchmark.
Once plans are set, and execution begins, frequently review KPIs with a more active mindset. Monthly or quarterly key metric reviews are not frequent enough to capture the impacts of the fast-changing business environment. Weekly, and in some cases, daily reviews may be necessary. Similarly, metrics must be reviewed with an intent to course correct quickly: what’s working well should be amplified – and what’s not working well needs to be fixed.
Increase your organization’s leadership agility. Leaders must be more comfortable and graceful when facing the uncertainty and complexity of a rapidly changing business environment. When you embrace the fact that you may not immediately know the answer to your organizational challenges, you will be able to relax, think clearly, reframe problems, and generate new, breakthrough ideas.
Next, improve your decision-making speed by altering what it looks like within your organization. Enact clear decision-making rights, which includes pushing decision making downward. Embrace the Bezos concept of “disagree and commit.” Instead of spending an inordinate amount of time building a broad consensus for new plans, gain commitment from key decisions makers to try something new, knowing that decisions are not a one-way street and can be modified. If you maintain flexibility, your decision-making process will move faster.
A key part of building this pillar is creating self-managing teams. Delegate more and create flexible roles to allow leadership to flourish in unexpected places. Break down common collaboration barriers for the rapid flow of information within and across business functions. This practice will drive better decision making by creating information transparency and a single source of truth within the company. Establishing shared goals will also help kick-start collaboration.
Embrace the unknown, encourage discovery, and question certainty about your processes. Accelerate learning and continuous improvement by creating clear expectations for progress, forging incentives for achieving goals, and setting up systems and learning tools enabling the organization and its employees to increase their learning agility.
When managing projects, move away from linear management to a model of creative, iterative, and rapid testing – and test assumptions and procedures on a constant basis. As with the strategic planning process, approach projects as if they are a journey of discovery and learning. The linear path of classic project management hinders learning and can lead to suboptimal outcomes. It can also slow progress as unexpected outcomes may derail the project.
Embrace business challenges as learning opportunities. If a misstep or shortcoming occurs, explore it deeply. By delving into the challenge and understanding what went wrong, you won’t make the same mistake twice – and your team will get better at anticipating “potholes” along the way.
In the next article in this series, we’ll discuss how to go even deeper with your organizational agility and leverage market changes to create a competitive advantage and fuel growth. Specifically, we’ll discuss increasing the agility of your marketing team. Since marketing is a key driver of growth for most companies, it’s critical to ensure the elements of organizational agility are fully embraced by the marketing department. In the meantime, if you have questions or comments about this article or would like to discuss how to improve your company’s organizational agility, please give me a call or send me an email.