By Steve Dunne
What do you consider most important to your company’s future? Probably the most talked-about concept today is digital transformation. Yet digital transformation, including growth through new digital products and services, can’t happen without this one key ingredient: organizational agility. In other words, the ability to react quickly and effectively to what’s happening in the market, while continuing to drive innovation across the whole organization.
No one can predict the future and the seismic shifts that can rapidly arise in their industry. That’s why for the long-term survival of any company, the most important thing is its ability to manage the unexpected.
Because this issue is so important in today’s world, we conducted “Organizational Agility at Scale: The Key to Driving Digital Growth,” a global study of 998 business leaders across a number of industries. The purpose of our study was to identify how companies are (or aren’t) creating new digital products and services, building net new revenue streams from them, and developing business models that underpin them; and then, to understand how those who are seeing the most success leveraged organizational agility to drive their digital growth.
We identified five key behaviors that are crucial to organizational agility, and then grouped survey respondents based on their level of adoption of these behaviors. Leaders (15 percent of respondents) achieved high performance across all five of the behaviors, while Aspirers (30 percent of respondents) achieved high performance in four of them, and Laggards (55 percent) achieved three or fewer of the behaviors.
Here are the five behaviors that are necessary for organizational agility:
Businesses can’t wait 12 months to discover if a product or service is profitable or achieving market share. The parts of the business that rely on revenue through digital efforts, in particular, require rapid and continuous planning cycles. The research found that dynamic planning helps organizations react quickly to changing market conditions and potential threats to the business.
We found that the main obstacles to real-time planning are inflexible legacy technologies (which Leaders often cited as their biggest roadblock) and bureaucratic organizational culture (most often cited by the Laggards).
A change in business plans often forces changes to organization structures or business processes, or even the creation of completely new structures and processes. Businesses demonstrating organizational agility are able to quickly realign their two most important assets—people and money—to meet organizational requirements.
Our research found that Leaders build flexible structures and processes to adapt to changing business plans, including having the systems in place to understand skills gaps in their business, while Laggards do not. Once again, inflexible technology and a culture of bureaucracy also prevent businesses from building agile structures and processes.
Many organizations have discovered that vast proportions of their recent revenue is directly linked to skill areas that didn’t exist even five years ago. Skills are constantly changing, with new ones appearing while others become obsolete. Businesses have to help their workforces develop new skills to support and deliver new digital revenue streams.
In our study, Leaders were four times more likely than Laggards to have plans to upskill at least 75 percent of their workforce in order to meet talent requirements in the future world of work. More than three quarters of respondents agree that, to retain talent, their organization needs a more fluid approach to growing and deploying their people.
Ultimately it’s the workforce that will drive successful execution of business plans—including digital, the focus of this study. Workers need to be empowered with the right information at the right time to make the best possible decisions for the business.
Data is absolutely key in empowering decision-making closer to the customer: Laggards said that out-of-date information and siloed teams are major barriers to the democratization of decision making. Eighty percent of Leaders said all employees have access to timely and relevant data without gatekeepers blocking access to such information, compared to just 24 percent of Laggards.
Agility and speed are dependent on robust, accurate, and timely measurement and control. Businesses need to know quickly whether a new product or service is performing well—in which case it could rapidly need additional financial and talent investment—or performing badly, signaling that finance and talent may need to be reduced or reallocated, and the product or service changed or terminated. New metrics may also be required to supplement traditional financial metrics to truly understand the impact of digital strategies on the organization.
Our study shows that businesses recognize they don’t have the right measurement frameworks in place for the new digital world of work. In fact, just 25 percent of all respondents say their organization has made significant progress establishing performance metrics to measure digital revenue growth performance. This is crucial, because the research found that fast action on failing investments reaps higher returns. The majority of organizations with anticipated digital revenue growth above 50 percent in the coming three years (77 percent of respondents) agree that their organization is fast to act on failing investment in new technologies.