The big picture: Over the last three game-changing years, organizations learned they had room to improve their agility and adaptability. Many found they could accelerate their digital transformation, particularly when faced with an unprecedented global pandemic and the potential demise of their business.
A new era: The business environment is still dealing with the longer-term effects of the pandemic. We’ve started to refer to this as the “era of uncertainty.” and it is having broad-based implications on how companies create and deliver their value proposition to customers.
Why it matters: Companies need to evaluate their readiness to compete. For most, this means taking the concept of agile beyond the technology department and have it permeate throughout the business. Accomplishing this requires looking at work differently and in a more integrated way.
There are mindset shifts and key capabilities that are critical to migrating toward business agility. We have identified seven key areas of focus that can help organizations along this journey and drive measurable results.
- Customer centricity
- Lean-agile leadership and management
- Employee culture and mindset
- Product management
- Value stream mapping
- Operating model
The bottom line: Business agility can help your organization navigate complex, unpredictable and ambiguous conditions by implementing an operating model that will enable your company to respond quickly to customer and market changes without compromising quality.
Go deeper: Read our insights below.
Over the last three game-changing years, most organizations learned they had room to improve their agility and adaptability. On the bright side, many companies also found they could accelerate their digital transformation dramatically, particularly when faced with an unprecedented global pandemic and the potential demise of their business.
The business environment is still dealing with the longer-term effects of the pandemic – ongoing supply chain disruptions, talent shortages, changing work models, accelerating exponential technologies like generative AI, and an uncertain macro economy. In fact, we’ve started to refer to this as the “era of uncertainty,” and it is having broad-based implications on how companies create and deliver their value proposition to customers.
In this new era and its accompanying headwinds, it is more important than ever for companies to evaluate their readiness to compete. For most, this means taking the concept of agile beyond the technology department and have it permeate throughout the business. However, compared with how most organizations are accustomed to functioning, accomplishing this requires looking at work differently and in a more integrated way.
As agile has become the go-to approach for digital transformation, we believe it is important for every company to look beyond the “pomp and circumstance” of agile ceremonies and focus on value delivered and achieving competitive advantage – not just in software development but also across the enterprise. We refer to the broadening of agile and the focus on the potential and real value delivered as business agility.
Based on our work with numerous organizations across different industries, there are mindset shifts and key capabilities that are critical to migrating successfully toward business agility. This transformation is a journey – it takes time and effort. We have identified seven key areas of focus that can help organizations along this journey and drive measurable results.
While this term is not new, its importance was magnified over the last three years as companies were forced to become more agile and adaptable in how they delivered products or services to customers. As uncertainty is here to stay, customer centricity is vital in enabling business agility. Customer-centric organizations are laser focused on how any given decision will impact their customers and deliver a positive experience along every stage of the customer journey. It’s not just front office – it’s mid- and back office, as well. Customer feedback is collected frequently and leads to decisions that will improve the customer experience. The entire organization’s ecosystem is flexible and driven to deliver customer value.
Lean-agile leadership and management
Business agility cannot reach its full potential without strong leadership and a commitment to adopt it across the business. Take, for example, supply chain operations, where customers may be pleased with the initial experience but, if they don’t receive their desired product at the end of the day, the overall experience is poor. Expanding business agility to other areas of the enterprise helps to resolve these unsatisfactory experiences. A lean-agile leader sets the company direction, embraces innovation, aligns teams to business outcomes, removes barriers and mentors teams. Leaders and managers are responsible for the adoption and success of a lean-agile organization. It is their commitment to continuous improvement in adopting a lean-agile mindset that creates an environment that encourages high-performing agile teams to succeed and deliver value across the organization. Delivering value to the customer is at the core of all decisions.
Employee culture and mindset
Being agile versus “doing” agile is about having an agile mindset and practicing agile values and principles. An agile mindset includes the organizational culture, how the team perceives itself and how a team interacts with other teams. Agile cultures promote a safe environment where teams can communicate and collaborate openly and welcome failure as a learning opportunity. A learning and growth mindset is part of the company’s DNA, where employees are empowered to innovate and learn continuously. There are constant feedback loops that enable continuous improvements. Visibility and transparency of information and decisions across the organization foster an environment of trust and cooperation, enabling teams to make timely decisions and take ownership and accountability for their outcomes.
The ability to define what a product is from an agile perspective, who owns it and understanding the discipline around it are paramount to transitioning from a project to a product orientation. Getting the organization to understand what’s required to move from looking at initiatives as projects that have a defined end, are point-in-time initiatives, and have highly variable teams to a product-based view where teams stay together for a long period of time, focus on continually improving a process and are focused on customer outcomes is a critical shift in how teams work and organize themselves. It means building new capabilities and skillsets and being strategic in how to design teams and allocate resources.
Value stream mapping
Companies should organize work into value streams. A value stream can be defined as all of the efforts and activities that contribute to creating a customer outcome. It includes a cross-functional team (e.g., solution architect, experience expert, UI/UX designer, developer and more). Teams should be formed around value streams rather than organizational charts and be tied directly to customer value. While an individual value stream can be supported by development value streams, which are typically more technical in nature, the overall value stream goes beyond technology and includes several roles critical to delivering a company’s value proposition to customers. In an age when customer experience can trump even brand or price in terms of purchasing decisions, it is not only the caliber of your products or services that matter, but also the experience a customer has in learning, purchasing and supporting that product or service long-term.
Organizations should use an approach that enables them to deliver products and services faster to meet the rapidly changing digital market demands and customer needs, while also improving business outcomes. That helps to support the company’s strategic objectives. The traditional approach of annual linear planning and budgeting cycles cannot keep pace with the fast-changing digital economy. Organizations should put into place a new target operating model that leverages best practices like lean portfolio management to go along with product management and value stream approaches.
A new set of metrics is needed to measure the effectiveness of business agility and ensure it is aligned fully to the business strategy. A combination of customer outcome-focused metrics (CLV, NPS, shopping basket size, engagement), employee engagement metrics (employee satisfaction surveys, turnover rates, employee NPS), throughput-oriented metrics (number of features deployed, accuracy of forecasted time of deployment), and revenue/profitability metrics are ideal.
Business agility in action
A global financial organization recently underwent a business agility transformation to enable them to keep up with their customers’ changing needs. They knew the traditional waterfall way of working was not sufficient to react quickly and deliver quality products to the market. With leadership support, they focused on transforming the entire organization to a lean-agile way of working. The journey took substantial time and effort, but with continual support from agile coaches and leadership along with employee dedication, their transformation was a success. They organized six customer-focused product value streams with roughly 36 cross-functional scrum teams delivering quality, customer-valued products to the market.
The benefits to achieving business agility are clear. An organization we worked with recently transformed to an agile operating model. They increased earnings per share by 35%, improved employee engagement scores by 60 points and improved operational efficiency by reducing an onboarding process from 12 months to six weeks.
Emerging a winner in the era of uncertainty
While a transformation to business agility can seem daunting, as with many transformation initiatives, it can start small. The good news is that value can be delivered incrementally if the overall program is designed correctly. Business agility can help your organization successfully navigate complex, unpredictable and ambiguous conditions by implementing an operating model that will enable your company to respond quickly to customer and market changes without compromising quality. You also will improve speed and adaptability and ensure you emerge a market leader in the era of uncertainty, with the ability to compete and win in the all-important battle for customers.
Learn more about Protiviti’s Digital Transformation solutions here.