Agility in business is the ability of an organisation to adapt to the ever-changing business environment and reinvent itself rapidly and steadily. However, the process of adapting and reinventing due to change requires significant investments in research and development, technology, and people. Beyond the ability to adapt to change, agility allows an organisation to lead the change ahead of the competition. Hence, agility can either refer to the ability to adapt to change, which is reactive agility, or leading the change, otherwise called proactive agility.
Agility: Necessary ability for the new and next norm.
During the industrial era, business operating environments were fairly stable with incremental changes, unlike today’s complex, volatile and uncertain business environment. During the Industrial Era, agility for organisations was not necessarily a prerequisite for success as most changes to the business operating environment were predictable, simple and certain to a large extent.
In today’s digital age, the business operating environment experiences regular disruptions as a result of globalisation, technology, innovation, international trade treaties and trade wars, fast-changing consumers taste, and even the coronavirus pandemic. Organisational agility has become a necessary precondition and requirement for survival and sustainability.
Regarding the ‘new norm’ occasioned by the impact of the pandemic, agile businesses are now asking themselves “what next?”. This leads to the contemporary discussion about ‘the Next Norm’. Organisations have many questions about the next norm. some of them include; “when will the COVID-19 vaccine/cure be ready?”, “How do we reinvent our current strategies to achieve our vision despite the disruptions to the operating environment?”, “Are we properly structured and positioned to withstand another shock?”, “Are we technologically positioned to tackle future challenges and take advantage of opportunities?” , “How do we help our staff remain engaged, and how do we measure productivity?” and “How do we infuse agility into our culture of working?”.
Agility: A means for survival and growth
The importance of agility for all organisations in this present turbulent, complex, unpredictable, and uncertain world cannot be overemphasised. As indicated above, agility can either be reactive or proactive. The ability to quickly respond to changing business environment is reactive agility. However, the ability to cause change that other competitors will have to quickly catch-up with is proactive agility. For survival and sustainable growth, organisations must be agile in both a proactive and reactive way.
Organisations that aren’t trying to become more agile will soon go into extinction. Many companies have become extinct due to rigidity and the inability to quickly respond to the changes in their business environment – case in point, ‘Nokia’. James Surowiecki, (the author of “The Wisdom of Crowds”) made the profound statements below in The New Yorker.
“It wasn’t just that Nokia failed to recognise the increasing importance of software, though. It also underestimated how important the transition to smartphones would be. And this was, in retrospect, a classic case of a company being enthralled (and, in a way, imprisoned) by its past success”.
Nokia, a company with a market value of $200 billion in 2007 declared the sales of its handset business to Microsoft in 2013 for $7.2 billion (€5.44 billion, £4.6 billion) and finalised the deal in 2014. James Surowiecki noted that Nokia made more than fifty percent (50%) of all profit in the mobile-phone industry in 2007, and most of those profits were not coming from smartphones. According to Statista, Nokia’s sales peaked in 2007 and started declining from 2008 till 2014 when the phone business segment was finally sold to Microsoft.
The rapid shift to smartphones in the mobile phone market started when Apple launched its iPhone in 2007, and Samsung followed suit in 2010 by completely dropping the Symbian platform for Android. During these periods, Nokia was still using the outdated Symbian operating system, and its market share started to decline. In the bid to regain the mobile phone market share in 2011, Nokia partnered with Microsoft and launched its first smartphones. This move was a little late, as Samsung and Apple had taken over the smartphone market. Nokia struggled to survive in the keenly competitive mobile phone market but was forced to divest its handset business to prevent further impact on profit and to focus on its networking equipment unit, navigation business and technology patents.
The story of Nokia depicts a company that was slow to respond to the changes in the market, and develop a product that will edge competitors. It’s the story of a company that lacks proactive and reactive agility. In 2013, James Surowiecki said:
“Not that long ago, it was the world’s dominant and pace-setting mobile phone maker. Today, it has just three per cent of the global smartphone market, and its market cap is a fifth of what it was in 2007.”
This is a call to all organisations to start re-thinking their business models and wake up to the fact that agility is no longer an option but a necessity for survival and growth in this difficult, complex and ever-changing world.