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Business Agility - Book Review

1 March 2010
Dr. Moria Levy
book cover

The book "Business Agility: Sustainable Prosperity in a Relentlessly Competitive World," by Michael Hugosת 2009, was released as part of a series of leadership books sponsored by Microsoft. At its core, the book explores how organizations can transform into entities that listen, respond, and adapt swiftly to foster continual growth in an ever-changing competitive landscape. The imperative for business agility arises from the realization that relying on the temporary strategy of lowering prices to attract customers is not sustainable. Global evidence demonstrates that another company eventually emerges, capable of further price reductions.


To achieve tremendous success, the focus should be on offering more rather than resorting to price reductions. The book emphasizes that significant profits, often denoted as "alpha," stem from additional services rather than fundamental offerings. The ability to provide added value to the customer is a critical factor.


Hugos proposes a model based on several key elements:

  • Awareness: Positioned as a strategic tool and an initiation of activity.

  • Balancing and Innovation Capabilities: Complementary tactical responses.

  • Visibility and Motivation: Enabling tools that transform capabilities into reality.

  • Computing: A facilitating tool for practical implementation.


The book delves into the following topics:
  • Awareness

  • Balancing Capabilities

  • Renewal Capabilities

  • Look (Visibility)

  • Motivation

  • Computing Infrastructure

  • Tips


Featuring an engaging writing style, the book provides numerous tips that extend beyond the scope of a summary. It is highly recommended for those seeking valuable insights into achieving business agility.

Awareness

To succeed in responsiveness and action, an organization must formulate a strategy. This strategy's core lies in awareness—a keen understanding of market changes, new technological capabilities, competitors, and customer needs. Without such awareness, the organization will lack the impetus for change and a clear understanding of the required changes. Awareness plays a pivotal role in directing and propelling the entire process, progressing through four stages:

  1. Observation: This stage involves keen observation of customers and their evolving needs. Recognizing sustained growth necessitates constant contact with customers and adapting to their changes.

  2. Decision: Acknowledging that while 90% of the business is suitable for computerization, the remaining 10% is better handled by human decision-making. This approach considers the simplicity of systems, cost-effectiveness, and the quality of human decisions. Sharpening employees' abilities to handle non-routine situations is crucial, necessitating training to identify and optimally address these exceptions.


Outline of Principles:

  • Reducing Control: Empowering employees involves reducing control and providing flexibility in on-the-ground decision-making. Managers are responsible for transparently setting goals and serving as coordinators to ensure employee progress and collaboration. This allows the organization to become more reactive, accelerating its progress.

  • Quiet Leadership: Effective leadership is characterized by quiet, non-charismatic traits that foster individual agreement. Rather than dictatorial, quiet leadership promotes decentralization and collaboration for sustained progress and agility.

  • Business Intelligence: Possessing significant business intelligence, encompassing a deep understanding of internal capabilities, market dynamics, and competitor landscapes, is crucial.


Furthermore, balancing and innovating are two essential tactics for realizing business agility. The book provides valuable insights into these principles, offering a comprehensive guide for organizations striving to navigate a dynamic and competitive environment. Highly recommended for those seeking to enhance their strategic approach.


Balancing Capabilities

Balancing ability is a tactical approach that enables organizations to make minor adjustments, adapt to fluctuations, and facilitate rapid progress without requiring substantial innovation and upheaval. Contrary to the common misconception that business agility relies solely on innovation, Hugos introduces an alternative method: organizational balancing ability. This method involves shifting activity centers, work volumes, and more based on the required need and volatility, ultimately favoring agility. Essential to this approach is a heightened awareness of the need for change.


Organizational balancing, similar to the movement of a sunflower throughout the day, involves constant, subtle adjustments rather than drastic changes. To foster effective balance, organizations must:

  • Embrace Simplicity: Focus on simplicity, agility, and boldness rather than seeking complexity.

  • Avoid Maximum Efficiency: Steer clear of maximal efficiency to allow for surpluses, enabling the organization to balance and allocate resources as needed.

  • Minimize Hierarchy: Reduce organizational hierarchy to create a flat structure, fostering greater flexibility and faster information flow.

  • Win Small Wars: Achieve victories through more minor battles, bypassing unnecessary conflicts and eliminating the need for fundamental change.

  • Collaborate and Operate on Multiple Channels: Work collaboratively across various channels simultaneously to enhance adaptability.

  • Sustain Momentum: Gain momentum and maintain small changes over time, ensuring continuous improvement.

  • Empower Employees: Grant employees autonomy in choosing courses of action, focusing on guiding the "what" while allowing them to determine the "how."


Organizational balance also confounds competitors, making it challenging for business intelligence to detect preparations for change and renewal. The balancing process involves five stages according to the Six Sigma concept proposed as a balancing tool:

  1. Definition: Define the project scope, derivative mission and objectives, partner map, and processes.

  2. Measurement: Implement a data collection plan to ensure observable change.

  3. Analysis: Analyze the required balance using TQM tools such as RCA root cause analysis.

  4. Improvement: Implement the necessary changes.

  5. Control: Monitor performance and make readjustments.


The Six Sigma method emerges as a highly effective approach to organizational balance.


Renewal Capabilities

As the second tactical tool alongside balance, innovation plays a pivotal role in enabling business agility. This approach resembles a panther—swift, immediate, and fast. Like the panther's agile movements, innovation occurs intermittently, resulting in short, immediate, sharp, and rapid changes.


The innovation process unfolds across three stages:

  1. Definition:

    a. Define the business goal and conceptual design, and initiate planning and budgeting.

    b. Duration: 2-6 weeks.

  2. Design:

    a. Develop new business processes, prototype, and establish the technological infrastructure for the solution, and finalize the plan and budget.

    b. Duration: 1-3 months.

  3. Construction:

    a. Build the working system, along with technical documentation and user manuals.

    b. Duration: 2-6 months.


To ensure success in organizational innovation, consider the following tips:

  • Assign a full-time employee to each replenishment activity.

  • Aim for 80% solutions rather than striving for perfection at 100%.

  • Break down projects into mini-subprojects, each designed and built separately.

  • Encourage and facilitate feedback at every step of the innovation process.


Look (Visibility)

Business agility hinges on the people driving it forward. To effectively mobilize individuals, visibility is essential, and they must be motivated to actively participate in fostering business agility and success. Hugos presents various tools and aspects for establishing visibility:

  1. Policy Visibility: Clearly defining the "rules of the game" with transparent guidelines for all employees. This includes outlining permissible and prohibited, and elucidating the organizational management approach.

  2. Visibility of Results: Emphasizing transparency by presenting all employees' status, encompassing successes and failures, at any given stage. This ensures an open and informative environment for everyone involved.


Motivation

Motivation stands as a prerequisite for success. Without motivation and visibility, the journey toward business agility won't commence, and indeed, it won't reach its full potential, given that the workforce constitutes the core engine. Motivation is the driving force that propels individuals to engage in full partnership to attain agility actively.


Hugos puts forth several tools to foster motivation:

  1. Employee Involvement in Goal Setting: Actively involving employees in setting goals, ensuring a sense of ownership and commitment.

  2. Rewarding Success: Recognizing and rewarding employees when the company succeeds collectively and individually. This extends motivation beyond the group level to individual contributions.

  3. Visibility as a Motivator: The mere presence of visibility is a motivator. Motivation is naturally enhanced when people can analyze data, contribute to the path to success, and witness the tangible outcomes of their efforts.


Computing Infrastructure

The computer infrastructure plays a pivotal role in assisting individuals within the company who collaborate in advancing activities. It is crucial to acknowledge that technology, in isolation and without the human element, holds no more value than a garlic peel, especially in creating a lasting and resilient competitive advantage.


According to Hugos, three computing infrastructures contribute to fostering responsiveness and agility:

  1. Business Process Management Tools; Business Activity Monitoring: These tools enhance awareness and facilitate measurement, providing valuable insights into organizational processes.

  2. Business Intelligence Tools: Offering support for analysis and decision-making, these tools aid in determining where to invest and how to proceed strategically.

  3. Simulation Modeling Tools: These tools assist in selecting the most appropriate changes for effective action, contributing to improved decision-making.


These three areas collectively form the subfields within contemporary business intelligence, encompassing monitoring, analysis, and forecasting.


It is imperative for supportive computing solutions, regardless of location, to be agile in their implementation, avoiding becoming a bottleneck in pursuing business agility. The book recommends establishing computerized solutions that address 80% of the challenges, leaving the less standard 20% for manual handling.


Recent technological advancements have further facilitated computing agility, including:

  • Virtual Servers

  • Cloud Computing

  • Computing Services (SaaS)

  • Services Architecture (SOA)

  • Mashup

  • Agile Development


Tips

Here are some tips for success:

  1. Streamlining for Improvement:

    a. Efficient in the short term but detrimental in the long term.

    b. Efficiency reduces excess, but an organization without some "fats" hinders growth and the ability to make balanced changes.

  2. Well-Defined Job Definitions:

    a. Avoid treating workers solely as resources.

    b. Overcome the outdated 20th-century industrial-age trap for better labor relations and product outcomes.

  3. Time and Budget Constraints:

    a. Work within defined constraints to limit the scope.

    b. Combat procrastination by delivering preliminary results within 30 days, motivating partners, and reducing objections.

  4. Promoting Cooperation:

    a. Foster collaboration between various teams involved in organizational tasks, particularly agility-related ones.

  5. Simplicity in Agility:

    a. Agility means accomplishing simple tasks effectively, not rushing through complex ones.

    b. Seek straightforward templates for promotion and implementation.

  6. Responsiveness as a Product of Training:

    a. Training in awareness, balance, innovation, visibility, and motivation leads to organizational responsiveness.

    b. Reactivity = X training (visibility + motivation), resulting in earning alpha profits.


Obstacles to Implementing Organizational Agility:

  1. Lack of Employee Trust:

    a. Employees need to believe their needs are considered and there is room for development.

    b. Lack of trust leads to fear and resistance to change.

  2. Managerial Commitment:

    a. Managers may talk about agility but hesitate to execute.

    b. Like other employees, some managers fear change and their role in the organization.


Emphases for Managers to Overcome Obstacles:

  1. Understanding the Organization: Grasp both formal and informal aspects of the organization.

  2. Understanding Change Managers: Understand those responsible for implementing change.

  3. Leading by Example: Senior management should provide a positive example.

  4. Clarity on Tasks: Clearly define tasks for teams, reducing uncertainty.

  5. Providing Independence: Allow project managers and execution teams independence for effective promotion.

  6. Accepting Resistance: Understand that resistance to change is natural and part of change management.

  7. Creating a Sense of Agility establishes agility and cultivates a sense of agility and an upbeat work pace.

  8. Remembering Implementation Challenges: Acknowledge that implementing agility, especially in the initial stages, can be challenging.


Summary:

The five characteristics of an agile organization include a transparent and flexible work model, co-senior managers, entrepreneurial employees, financial flow, and a network organizational structure.


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