Enterprise Agility: Being Agile in a Changing World

Disruptive innovation is a term in the field of business administration which refers to an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products, and alliances [v]. The disruptions that have taken place, due to technological innovations, have been unprecedented and have had a huge impact on almost every enterprise.

Digital cameras have led to the demise of film-based cameras and related businesses. Smartphones have impacted all B2C businesses (including traditional businesses like banking), and self-driving and electric cars are starting to completely change the nature of automobile businesses. We have seen how platforms that facilitate exchange between consumers and producers/providers have led to the emergence of companies such as Uber and Airbnb, which have caused turmoil in their respective domains. Online stores are providing a holistic buying experience and are posing a serious threat to retail enterprises that are still relying primarily on physical stores.

By definition, these disruptions and their impacts are unpredictable and hence it is impossible to have a plan to deal with them. The key lies in the ability to spot newer technology trends and predict the resulting disruptions. As seen from the aforementioned examples, a disruption can appear suddenly and can be powerful enough to threaten the survival of an industry itself.

The key implication of this for enterprises is that they need to be integrated more closely with the environment and customers, have short feedback loops, and encourage experimentation and innovation. In short, enterprises need to have greater agility. The concept of agility is examined in detail in the next chapter.

Until not too long ago, most businesses were "brick and mortar" businesses. By definition of being "brick and mortar," these businesses had significant entry barriers, especially related to capital, for example, investment in fiber optic networks in the telecommunications industry. However, innovations in technology are changing this rapidly. Entry barriers are collapsing in many industries. Here are a few examples of new age enterprises that broke entry barriers in their respective industries:

The implication of the breakdown of entry barriers is that enterprises cannot take their survival for granted and need to have a strong sensing mechanism to spot opportunities, and threats, as early as possible. A start-up can come up with a product that can pose a sudden and unexpected threat to supposedly well-established enterprises (for example, Paytm [vi], a digital payments platform (acronym of payment through mobile) is fast gaining widespread acceptance across India, to the extent that it has posed a serious threat to debit and credit cards products).

According to the CEO of NITI Aayog, the premier policy think tank of the Government of India, credit and debit cards, and ATMs, will become redundant in three to four years due to the usage of mobile phones for conducting financial transactions. [vii]

Technology is enabling enterprises to break the shackles and extend their business into seemingly unrelated domains, for example, retailers are offering credit on purchases, telecom companies are offering basic payment services through mobile e-wallets and, travel portals are offering insurance.

Consumers have now begun to appreciate the availability of a wide range of connected products and services under a single roof, which is a huge tailwind for such convergences. These convergences can become a "win-win" opportunity for enterprises, depending on how well the bundled offering is received by customers.

For example, Netflix provides an option to buy broadband services along with a subscription to its service. Assuming that this offering is well received by Netflix's customers, Netflix and the broadband service provider will both benefit. Another example of a partnership across domains, and one that is enabled by technology, is between Nike and Apple. They created an offering that tracks fitness activity, while connecting people to their tunes.

The implication for enterprises is that they need to relentlessly and continuously pursue better-value propositions, through innovative ideas and create a better experience for their customers. They also need to be open to outside-of-the-box partnerships. An example of an unconventional partnership, which is based on an innovative idea, is between Uber and Spotify, which have very different products but a common goal: to add more users. The offering allows users to become the "DJ of their trip." [viii]

Due to the widespread prevalence of social media and hashtag-driven searches, the news of any slip up, or mistake, made at any level of an enterprise, can become globally viral within no time at all. A passenger dragged off a United Airlines flight [ix] or something more serious like Samsung batteries catching fire and exploding [x], are examples of events which the entire world came to know about very fast.

The challenge for enterprises is that they need to have the ability to recognize the occurrence of such failures early enough, and, more importantly, be able to recover from a failure quickly through engaging directly and swiftly with aggrieved customers.

Today's customers are, among other things, tech savvy and demanding. They are ready to switch loyalties if they believe that there is an alternative product or service that offers better value, for example, a customer may choose to use Uber for travel, not necessarily because it is a cheaper option, but because it offers a superior end-to-end user experience that includes self-booking, vehicle tracking, automatic direct payment, and getting the receipt via email.

According to Senion, an indoor positioning systems and services company, the following factors are the ways in which 21^st century customers are different:

The impact of this for enterprises is far-reaching. Specifically, businesses must do the following:

Today's employees are very different from their predecessors in that they are knowledge workers, rather than machine workers. What drives and motivates knowledge workers is very different from what previously drove and motivated workers who believed they were, and who were treated as, "faceless bodies." Moreover, the proportion of millennials in the workforce is rising very fast and they are expected to form 75% of the workforce by 2030. This generation is visibly different from their ancestors, as they do not want to work for enterprises, but work with enterprises.

According to Jeff Fromm, the president of FutureCast, a millennial marketing consultancy:

What this means for enterprises is that they will need a culture that enables learning, fosters collaboration, builds meaningful engagement drivers, and empowers its people. In short, a culture that values and nurtures knowledge workers.

With the advent of the internet, the widespread adoption of smartphones and a drastic drop in the cost of data storage, there has been an "information explosion" across the globe. It is estimated that 90% of the data in the world has been created in the past two years, and that currently 2.5 quintillion (1 followed by 18 zeros) bytes of data is produced every day. A lot of that information is available freely or at very little cost.

Enterprises are grappling with the problem of "information overload." Due to the amount of information available, customers are getting distracted, becoming confused, and falling prey to the "analysis paralysis" syndrome, leading to delayed decisions. The problem is made worse as fake news and information is pervasive, thereby causing a need to validate the genuineness of information, especially if it is critical for decision-making.

This is in contrast to times when information was limited and leaders had to focus a lot of time and energy on acquiring information. Moreover, as the business environment was largely stable, information remained valid for longer periods and could be used as a source of power.

Taking all of this into account, decision-making needs to be decentralized, as the people who are closest to the customers are in the best position to filter out the clutter and focus on the most relevant information. Moreover, in a fast-changing environment, where information obsolescence is very high, enterprises no longer have the luxury of "pushing" ground level information up the layers of the hierarchy, losing valuable time and quality of information in the process.

Intuitive decision-making, based on "just enough" information, will become important, rather than waiting for "perfect information" [xiii] and a detailed analysis. Making decisions based on imperfect, but valid, information, and taking timely actions based on these decisions will provide early feedback.