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Business Agility: What Is It and Why Is It Important?

In today’s interconnected world, a company’s ability to adapt and course-correct quickly is incredibly important. Legislation, social trends, and technology can all change rapidly, and a company that can’t keep up is at a disadvantage. Business agility is the ability to sense and respond to changes quickly and effectively.

To stay competitive, companies need to be able to adapt their products and services to meet the needs of their customers. They also need to be able to quickly adapt to changes in the marketplace, new competitors, or even an unexpected departure of a key employee.

Business agility is also important for companies that are in distress. To turn around a failing company, it is important to be able to make quick decisions and get back on track.

You might be thinking “okay, but how do I become agile?” In this article, we will dig a little deeper and discuss:

Ready? Let’s jump in!

What is business agility?

It’s easy to hear the term business agility and think it means being able to jump on a trend or create a new product, but it is so much more than that. Several key factors determine how agile a business is:

Sensing changes in the marketplace

One of the biggest factors is the ability to quickly sniff out changes in the marketplace, and react accordingly. The world is constantly changing, and with it, the needs of consumers.

To stay ahead of the curve, businesses need to be agile enough to sense changes coming and move to counteract or take advantage of them.

a person using a laptop

This could mean releasing new products or services, but also could be adapting to new legislation or regulations, or simply changing marketing strategies to target a maturing demographic.

Being agile also means being able to respond to negative changes promptly. For example, if a competitor releases a new product that beats yours to market, you’ll need to be able to adjust quickly. Or if there’s a sudden economic downturn, you’ll need to be able to downsize your business without taking too much of a hit.

Quickly making decisions

Sensing those changes are on the horizon only matters if you can quickly act accordingly, and decision-making is something that many businesses struggle with.

In a study by McKinsey & Company, only 28 percent of executives said that the quality of their company’s strategic decisions was generally good, and 60 percent thought bad decisions were as frequent as good ones.

Why is this? One reason is that most businesses are still using a top-down decision-making model. This model relies on senior executives making decisions and then passing them down to the rest of the organization. But with so much information coming in from all directions, this type of decision-making often leads to delays.

Another reason is that many businesses are still using an outdated command-and-control management style. In this style, managers rely on rules and procedures to dictate how employees should behave. But with everything changing so quickly, rules and procedures can no longer keep up.

So what can businesses do to speed up their decision-making?

girl on a field with two paths to choose from

One option is to move to a more decentralized decision-making model. In this model, decisions are made by the people who are closest to the problem. This can help speed up decision-making because people don’t have to wait for approval from higher-ups.

Another option is to move away from a command-and-control management style and toward a more collaborative management style. In this style, managers work with their employees to come up with solutions instead of telling them what to do.

This can help speed up decision-making because employees will be more likely to follow procedures if they helped create them.

Building a flexible business model

At the beginning of a company’s lifespan, a succinct, focused business plan is imperative. But as the world spins, customers evolve, and the market prioritizes different things, you must be able to change with it. A flexible business model can:

  • Quickly pivot to meet the needs of customers and the market
  • Scale up or down as needed
  • Respond to changes in technology and consumer behavior

If you’re not able to change with the times, you’ll quickly fall behind. As a business, you need to be agile enough to stay ahead of the curve.

For example, if you’re a retailer and you see that customers are starting to shift their spending towards online purchases, you may have to quickly allocate resources to your e-commerce avenues to meet the demand.

Now that we know what it is, let’s dive into why you need it!

Why is business agility important?

In a 2021 Deloitte study, 67 percent of respondents agreed that improving business agility is a high priority but 47 percent also reported that there is no clear articulation of why they are changing to agile ways of working.

There are countless benefits from having an agile business, so let’s break down some of the most important:

  • To stay competitive: As we mentioned earlier, in a rapidly changing world, companies that can’t adapt quickly will be at a disadvantage.
  • To meet customer needs: To succeed, companies need to create products and services that meet the needs of their customers. Business agility allows them to do this quickly and effectively.
  • To respond to changes in the market: The market is constantly changing, and companies need to be able to respond quickly if they want to stay ahead of the competition.
  • To keep up with new technology: Technology is always evolving, and companies need to be able to keep up or they will quickly be left behind. The most agile businesses will be continually working with the best software to improve productivity.
  • To be more efficient: Being agile allows companies to be more efficient, which means they can get more done in a shorter amount of time.
  • To improve innovation: Agility encourages creativity and innovation, which leads to better products and services.
  • To reduce risk: When a company is agile, it’s able to create contingencies to respond quickly to external and internal threats, which reduces the chances of any negative consequences.
  • To improve communication: Agility encourages open communication, which allows for a better understanding of the company’s goals and objectives.

There are many others but these are some of the key benefits to consider when you are examining your business agility.

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How can you create an agile business model?

When faced with all of the reasons why business agility can help (or the lack of it can hurt) your company, it can seem extremely daunting.

Luckily, we’re here to help you with a step-by-step guide on making your business more agile.

1. Examine your current business model

Self-reflection and analysis are important because they can help you to identify areas where you may be able to make changes to become more agile.

For example, if you find that your model is not easily scalable, then you may need to make changes so that you can grow your business if the opportunity presents itself. Or, if you find that customer acquisition is difficult, then you may need to focus on marketing innovation.

When examining your business model, it’s also important to consider the different parts of your company and how they work together. For example, are all of your departments aligned with the company’s goals? Are there any areas where improvements could be made?

Overall, making a fair assessment of your business model can help you to identify ways that you can become more agile and adaptable. By making small changes, you may be able to improve your overall efficiency and ensure the company is moving in a strong direction.

2. Identify your strengths and weaknesses

No business is perfect, and it’s important to be aware of your company’s strengths and weaknesses. What are you good at? What can you improve on? Are there any areas where you’re struggling or falling behind the competition?

While it’s important to be confident in your strengths, it’s equally important to be honest about your weaknesses and take steps to address them before they become a bigger problem.

3. Understand your customer’s needs and wants

Like almost any part of a business, agility is driven by a true understanding of your customers. What are their needs? What are they afraid of? What delights them?

The answers to these questions will change over time and with new products, services, and customer segments. But it’s important to have a baseline understanding of what motivates your customers so you can quickly adapt as needed.

In the early days of Airbnb, for example, the team focused on creating a platform that was easy to use for both guests and hosts. They would test new features by asking friends and family to try them out — and then make changes based on feedback.

Today, Airbnb is constantly tweaking its product based on feedback from guests and hosts about what works well (and what doesn’t), staying as agile as possible.

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4. Monitor the marketplace and your competitors

Being agile also means being aware. Knowing what your competitors are doing, as well as what trends may be affecting the marketplace, is key to staying ahead. There are a few different ways to monitor the marketplace and your competitors, but the most important part is being consistent with it.

To start, set up Google Alerts for any keywords or phrases related to your industry. This will give you a daily digest of any new articles, blog posts, or even just product offerings from your competitors.

You can also use tools like Brandwatch or Hootsuite to track when your brand or specific keywords are mentioned on social media. This will help you stay on top of any new developments in the industry, as well as what customers are saying about you and your competition.

Being aware of what’s happening in the market can help you stay ahead of the curve and avoid any blindsides.

5. Respond quickly

If you see that the market is shifting, or that someone new has entered the scene, don’t wait to act. Figure out what needs to be done and do it fast.

One of the biggest benefits is that it allows you to stay in control. When the market shifts, it’s easy for things to start spiraling and quickly fall off the rails. But by responding quickly, you can keep things under control and make sure that your business stays on track.

Responding quickly also helps you stay nimble. In a rapidly changing market, flexibility is key. If you’re able to adapt to new circumstances and changes in the market instead of waiting around to act, you’ll already have a leg up on most of your competition.

6. Embrace change

Change is constant, and businesses that don’t embrace it will quickly fall behind. Be open to new ideas and new ways of doing things. When it comes to adapting to changes in the market, think outside the box and be willing to try new things.

For example, Netflix was originally a DVD rental service, but when they saw the shift to streaming, they embraced it and became a leading provider of streaming content. They were willing to make changes to their business model to stay ahead of the curve.

Likewise, Uber didn’t originally offer food delivery, but when they saw the growth of food delivery services like GrubHub, they decided to enter the market. They were willing to make changes to their business model to stay competitive.

Embracing change is essential for businesses that want to be agile and adaptable. By being open to new ideas and new ways of doing things, you can stay ahead of the curve and respond quickly to changes in the market.

a business meeting with employees

Common mistakes to avoid

It’s easy to get caught up in the minutia of business agility, worrying about whether or not you’ll be able to pivot quickly enough if the market shifts. Mostly, the important parts are the big-picture items: your strategy, your team, and your processes. But even if you get those right, there are a few common traps that can trip you up along the way.

  • Failing to establish clear goals: Without a goal, every decision is a gamble, and it’s impossible to make informed choices about where to invest your time and energy. So start by clearly setting attainable goals, then break down each one into specific objectives that you can track and measure.
  • Building in too much complexity: The more complex your business model, the slower you’ll be to adapt. So keep your processes and systems as simple as possible, and avoid over-complicating things with unnecessary rules and regulations.
  • Focusing on the wrong metrics: Agile businesses are constantly testing and experimenting to figure out what works best. But if you’re measuring the wrong things, you won’t be able to make informed decisions about what changes to make.
  • Underestimating the importance of culture: A strong culture is essential for any agile business. It’s what enables your team to move quickly and make decisions without involving management, and it helps ensure that everyone is working towards the same goals.
  • Not investing in training and development: Agile businesses are constantly evolving, which means that your team needs to be constantly learning and adapting as well. Make sure you’re investing in training and development so that everyone is up to speed on the latest changes and techniques.
  • Focusing on short-term gains over long-term success Agile businesses are always looking for ways to improve their efficiency and increase their profits. But if you’re too focused on short-term gains, you’ll sacrifice your ability to grow and scale in the long run.
  • Ignoring customer feedback: Customer feedback is the best way to figure out what’s working and what needs to be changed, and it helps you stay in touch with what your customers want and need. Make sure you’re actively soliciting feedback and incorporating it into your decision-making process.

That’s it — a few common mistakes that companies make can limit their business agility. Avoid those, while embracing an agile methodology and you’ll be ready to quickly make changes and capitalize on the next big opportunity.