Building the Agile Business through Digital Transformation

Neil Perkin, Peter Abraham

• Publisher: Kogan Page
• Year: 2021
• Print ISBN: 9781789666533
• eBook ISBN: 9781789666540
• Edition: 2
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

How can businesses transform to achieve competitive advantage in a digital-enabled world? How can managers and leaders create a culture that supports lasting change through these transformations? Building the Agile Business through Digital Transformation is an in-depth guide for all those needing to better understand, implement and lead digital transformation in the workplace. It sets aside traditional thinking and outdated strategies to explain what steps need to be taken for an organization to become truly agile, embed innovation and develop talent to succeed.This majorly revised second edition of Building the Agile Business through Digital Transformation contains new material on the culture and mindset challenges of shifting at scale from linear to agile working, and using data effectively in organizational decision-making. Full of practical advice, examples and real-life insights from organizations at the leading edge of digital transformation including AirBnb, Amazon and Google, this book is an essential guide to driving success by becoming an agile and digital native business.

Part One

The agile business

In this introductory part we set the context for digital transformation, define the key characteristics of an agile organization, make the case for why these characteristics are necessary and discuss some of the key barriers to change, particularly within large organizations.

Introduction

Fire is the origin of all things, permanence is an illusion, as all things are in perpetual flux.

HERACLITUS (CIRCA 500 BC)¹

Welcome to the new world of perpetual flux, unpredictability and rapid change. In the contemporary business environment, the ability to be a genuinely agile business, and one that is native to the digitally empowered world in which we all live and operate, has become not only a driver of competitive advantage and success, but critical for business survival.

How to use this book

The book is split into five parts:

1. The agile business: in this initial part we’ll set out the context for agility, disruption and what can stop businesses from changing.
2. Fast: this section focuses on applying agile principles to building momentum for innovation and transformation.
3. Focused: here we consider vision, purpose, the application of adaptive strategy and execution.
4. Flexible: in this section we look at structures and resourcing, scaling agility and building the culture to move fast.
5. Building an agile business: this brings it all together and provides a toolkit for truly starting small and scaling fast.

Depending on where you’re at with growing or changing your business, and where your business is at in terms of digital maturity, you can dive in and out of the sections in this book. It does not have to be read end to end, although you will have a much greater understanding of what an agile business really is by doing so. Above all, this book is designed to combine essential principles with practical examples and application, so remember – start small, and if it looks like it’s gaining traction, scale fast (Figure 0.1).

Figure 0.1 Start small, scale fast

So what is an agile business?

An agile business goes beyond simply aligning to agile methodology. It goes beyond understanding and following the principles of design thinking, lean, scrum and all the other buzzwords you’ll find in a Google search for agile business. Today’s and tomorrow’s agile businesses are those that are constantly scanning the horizon for changes in technology, data, privacy, compliance, customer behaviour, financial instability, exceptional growth, pricing, speed of delivery and ways to meet customer need in order to explore new possibilities, unlearn what needs to be unlearned, and reimagine models and ways of working.

Agility is the bedrock of digital transformation. What we discuss in this book goes way beyond simply adding digital technology to your business. True agility comes from how the organization generates value and progress. How teams work every day to not only generate value quickly but create useful value by changing what is to what could be. Recent history is littered with stories of how businesses have missed opportunities, stagnated, failed to change, believed their own hype, became complacent and neglected to challenge their own assumptions about the new possibilities that digital technologies create.

In the first edition of this book, published in 2017, we focused on making the case in an environment of rapid change for a scaled application of agile principles to support wider digital and business transformation. Since then, a number of organizations have embarked on their agile transformation journeys and we have also witnessed arguably the biggest test of corporate agility in a generation – the COVID-19 pandemic – which has driven an 18-wheeler through business norms, assumptions and plans. The pandemic served to accelerate and amplify many of the long-term technology-driven trends, but it also brought into sharp focus the need for businesses to be more responsive to rapidly shifting environments, more adept at dealing with uncertainty, and more adaptive in their strategies and operating models.

Those businesses that have integrated agile ways of working have already reaped the benefits, not least in how they have managed the impact of the pandemic. McKinsey research, which analysed 25 companies across seven sectors, showed that according to their own assessments, divisions and business units that had embedded agile practices deeply within their operating models had responded to the challenges brought by the pandemic better than their non-agile units across measures of operational performance, customer satisfaction and employee engagement.² Executives from the companies involved in the research noted how agile practices helped at the team and the enterprise level to support faster, cross-functional working, greater responsiveness to rapidly changing customer needs, the ability to prioritize and refocus quickly and to swiftly align resources to solve new problems or develop new propositions.

Yet for many organizations that are still right at the beginning of their agile transformation journey, and for those that have already embarked on the path, there remain many challenges to overcome. The reality is that while the pandemic served to amplify the need for greater organizational responsiveness, technological-driven change was already creating environments characterized by rapid change, heightened unpredictability and the need for far greater agility and adaptiveness.

In his book Antifragile,³ Nassim Nicholas Taleb defines the difference between how we understand the concepts of robustness and resilience. If being fragile means that you break without any significant alteration, then being robust is about the ability to resist against known changes and stresses. Resilience, however, is being able to absorb or react to disturbances by re-establishing as close as possible to the original state. But an antifragile system is one that improves as a result of stresses and failures. Businesses can become fragile by being resistant to change and not developing ways of operating that are fit for purpose for the new environments in which they find themselves. Many companies may believe themselves to be robust and resilient. Yet the real differentiator is when businesses can become an antifragile organization – one that can not only survive change but thrive in it.

John Hagel and John Seely Brown at Deloitte have described the necessary shift as one from ‘scalable efficiency’ to ‘scalable learning’.⁴ If we are to become fit for purpose for this new world, more than ever we need to realize that advantage is shifting towards those teams and businesses that value organizational learning and adaptability over simply leveraging scale and efficiency. Put simply, we need to learn fast at scale. Many organizations may pay lip service to the importance of agility, but the reality is that many have also not significantly challenged or changed outdated ideas of strict hierarchies, slow decision-making and top–down leadership, and as a result they have become fragile.

The agile business is one that learns fast at scale. It is efficient, ambitious and responsive. It is inherently antifragile. This book is about transforming business to be fit for purpose for a rapidly changing, digitally empowered world. Alongside our own insights, we’ve incorporated into the text some ‘stories from the front line’ – contributions from other experienced practitioners of digital transformation bringing to life their observations about how to do it well. Our book seeks to capture, distil and define the key lessons that might be learned in order to help companies on their journey of transformation towards becoming a truly agile business.

Notes

1 Toffler A (1990) Introduction, in Future Shock, Bantam Books, New York

2 McKinsey (2020) [accessed 30 December 2020] An operating model for the next normal: Lessons from agile organizations in the crisis, McKinsey, June [Online] https://www.mckinsey.com/business-functions/organization/our-insights/an-operating-model-for-the-next-normal-lessons-from-agile-organizations-in-the-crisis (archived at https://perma.cc/35CZ-LT4S)

3 Taleb, NN (2012) Antifragile: Things that gain from disorder, Penguin, New York

4 Brown, JS and Hagel III, J (2017) [accessed 30 December 2020] Great businesses scale their learning, not just their operations, Harvard Business Review, 7 June [Online] https://hbr.org/2017/06/great-businesses-scale-their-learning-not-just-their-operations (archived at https://perma.cc/DT63-5F3N)

Table of contents

• Acknowledgements
• Part One The agile business
• 01 The key forces for change
• 02 How digital disrupts
• 03 What’s stopping you?
• 04 Defining digital transformation and how an agile business is the foundation for it
• Part Two Fast
• 05 Operating in the ‘ambiguity zone’
• 06 Agile and adaptive methodology
• 07 The agile innovation process
• Part Three Focused
• 08 The role of vision and purpose
• 09 Agile strategy and planning
• 10 Linking strategy to execution
• Part Four Flexibility
• 11 Agile structures and resourcing
• 12 Scaling agility
• 13 Building the culture to move fast
• 14 A blueprint for flexibility: autonomy, mastery and purpose
• 15 Digital-native talent
• Part Five Start small, scale fast and the transformation journey – putting it all together
• Index