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A model for agile businesses

PwC has come out with a new report tackling the topic of agility, and it's no big surprise that being adaptable is to key to a competitive advantage in today's business world.

PwC has come out with a new report tackling the topic of agility, and it's no big surprise that being adaptable is to key to a competitive advantage in today's business world.

Rising to the Agility challenge – continuous adaptation in a turbulent world is the result of a two-year study, a collaborative effort by PwC and the University of Melbourne. It involved 60 executives from 18 organisations (six organisations were from New Zealand), and spanned a wide range of sectors covering financial services, health, technology, retail and government sectors. 


pwc agility business modelNew Zealand PwC partner Alan Sinclair said: "There has been a lot of talk about the need for organisations to be more 'agile' but not much analysis on what agility means in practice and how it links to performance and results.

“There were some common threads from the study’s respondents. Agility is hard work to achieve and to maintain. And it is dependent upon an organisation’s  strategic awareness, the capacity to rapidly mobilise or re-direct resources and the ability to form and dissolve alliances and relationships to achieve specific goals.  How successfully this is achieved also depends on an organisation’s culture, strategy and leadership capabilities.”

From the report: "We define agility as a dynamic capability that allows organisations to adapt their substantive capabilities. What this means is that agility is critical for making sure an organisation’s objectives and actions are responsive and relevant to the dynamic conditions of an operating environment where constant change is the norm.We view agility as a multi-dimensional capability that is comprised of three underlying capacities ... that, when aligned, enable an organisation to anticipate the effects of environmental turbulence and adapt effectively."

As a result of the study, PwC and the University of Melbourne have developed an 'agility model'  based on three core capacities: horizon, velocity and plasticity – and is now planning to create a complementary 'agility index' that identifies strengths and weaknesses in accordance with the model and tracks improvement over time with a view to linking agility to business outcomes.

Defining agility

An agile organisation is likely to be a more resilient one. But while the two go hand in hand, they are two different capabilities, according to the study. Resilience is the ability to ‘bounce back’ from unexpected circumstances, whereas agility is the ability to adapt and respond to environmental changes. 

Even large organisations need to be agile, and agility can't be bought – it must be nurtured through effective leadership and good management.

Further, agility isn't inherited, permanent, or bought – it must be worked for, and many factors have to be aligned for an organisation to be agile.

So what are the three key components all about?

Horizon

The report defines this as the capacity of an organisation to continuously scan the environment for emergent threats and opportunities, or in other words, how far and how effectively the organisation can ‘see’ in space and in time.

Organisations are dealing with different investment cycles, performance cycles and even political cycles, and thus, there is no single best horizon. Individual organisations must determine the combination of time horizons that's best for their needs.

Velocity

How quickly can an organisation mobilise or redeploy funds, people and information to achieve new goals? Velocity refers to the capacity of an organisation to quickly move resources across its network. Executives spoke of particular difficulty with dropping projects to free-up and redirect resources into promising new initiatives.

According to the study, the biggest challenge for organisations is workforce mobility, specifically moving human resources to ensure they are being used most effectively by the organisation. Another significant challenge was how to move knowledge and information around the organisation quickly and effectively.

Plasticity

This is the the capacity of an organisation to rapidly form and dissolve internal and external relationships and make changes to the nature of relationships. In other words, well formed, organisational boundaries/silos are outdated.

The report found that boundaries between business departments/units and the frequently accompanying silos remain an impediment to horizontal collaboration. At the same time, the notion of the ‘annual restructure’ places a disproportionate emphasis on structure.

The biggest challenge to plasticity is to provide the right conditions – a supportive culture of trust and empowerment – so that people feel that they are able to forge new collaborative relationships. Agile organisations can use social networking and intranet tools to encourage cross-silo communication and to recognise innovative workarounds.

The report concludes that the most crucial element to the agility model is tying it all together. A strong capacity for horizon is undermined if an organisation doesn’t have the ability to mobilise resources (velocity) or form/ dissolve relationships (plasticity) in response. In other words, a weakness in one capacity can undermine strength in another – all three are essential.

Within an organisation, this requires coherence of culture, strategy and leadership to foster agile behaviour, supported by policies and practice.


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