How can Business Agility help your company get through the economic downturn, transform and thrive?

Home » How can Business Agility help your company get through the economic downturn, transform and thrive?

Authored by ADAPTOVATE Poland office.

Introduction: The economic slowdown has sparked interest in discovering new strategies for survival and growth

High inflation and interest rates, rising labour costs, less predictable demand for resources and volatile supply chain are the signs of global economic downturn and our current reality. Preparing for the slowdown 2023+ has become one of key topics discussed during World Economic Forum Annual Meeting in Davos. Executives are debating whether to stay on the course, cut costs, reduce the workforce, or pivot the strategy and find new ways to generate value. They are interested in accelerating a pace of digital transformations and removing organizational silos impeding growth and innovation.

Economic history proves that turbulence create space for those who are innovative. Companies that are famous for overcoming challenges like Lego in 2004 (shifting the product portfolio, reducing number of components and product-to-market time) and Pfizer in 2021 (by finding new ways to develop, produce and distribute vaccines in record time), decided not only to survive but thrive by adapting to emerging market conditions.

Leaders need to find new ways to generate revenue and remain profitable even consumer behaviour shifts, regulations change, and budgets are cut. They are starting to consider switching product portfolios or reinventing their Customer Value Proposition. All these factors cause a rise in the uncertainty, complexity and demand for innovation.

There are three competencies essential to navigate through turbulent times

“Leadership cannot reliably predict the future, but can develop an organization’s capability to face it," Alex Rebkowski, ADAPTOVATE’s Managing Director and Senior Partner

Looking at the challenges of a volatile market we can identify three skills that build advantage:

the ability to deal with unpredictable environment
skills and toolkit to reduce complexity
a potential to unlock the innovation

Leaders should invest in upskilling teams and managers. Even if it is not always possible to prepare for all eventualities, they can equip the organization with everything that is needed for disruptive waves including a downturn or recession. A lack of agility is evident in limiting the focus on innovation, fast shifting, and delivery in these new market conditions.

1. Business Agility brings competencies to manage unpredictability

“There is no better way to deal with ambiguity then moving ideas at pace into reality,” David Storrie, Partner and London Office Lead

To cope with uncertainty, we must face it. Agile teams test the solution and learn rapidly if it works in the real world. This is the signature of Business Agility: it is not about guessing the answer but testing ideas, collecting real feedback and data. Teams work in short, typically 2 weeks cadences, and check their hypothesis from the very beginning, a way before a product or service is finalised.

Predictability can be improved through breaking ideas into smaller ones and checking them against reality

Agile is based on responding to new circumstances by chopping big ideas into smaller pieces, experimenting, and iteratively developing solutions based on client feedback. This avoids mistaken assumptions and ambiguity; we know because we have tested it. Organizations typically are not good at stopping or discarding ideas which turned out not to be valued by clients. It is obvious that fast failures are better and more cost-effective than late failures, which happen after a team has spent a year of effort and resources. More and more companies embrace the practice of fast failures including Procter&Gamble, Google, and several tech start-ups within Silicon Valley.

Iterative approach improves predictability and risk management. In a dynamic environment, creating a long-term business case and then following a plan is no longer an option. Agile teams proved increased certainty of delivery roadmaps through planning for short intervals, aligning direction with stakeholders and continuously responding to what they had learnt.(1) Step by step they enhance confidence that customers will buy what they delivered.

2. Business Agility reduces complexity

“Strengthening focus and linking strategy directly with delivery are critical to manage a complex company in turbulent times,” Piotr Mocny, Partner and Warsaw Office Lead

In economic downturns focusing on key objectives becomes vitally important. New regulations, customer behaviour shifts, a need to keep the business going and transform at the same time increase complexity.

We will have experienced a situation when overload and complexity can damage a company’s performance. Imagine leadership, with the best intentions, is introducing multiple initiatives to the Product Development team. An excessive workload brings pressure, limits time for cooperation, undermines communication and opportunities to collect feedback from clients. In a turbulent environment, a company or team managed in such a way will not be able to respond to change effectively and soon becomes dysfunctional doing multiple projects without any specific progress or outcomes.

Business Agility makes handling complex system easier

There is no magic in agile – it just brings skills, processes, and tools to focus leaders and teams on key sources of value. This is crucial in an economic slowdown when organizations often limit their pipeline to deliver key products quickly and effectively. Agile governance helps manage strategic objectives (OKRs), delivery cycles (QDCs), introduce clear roles and effective ways of working. You can read examples how they can be embedded in our dedicated articles. (2)

What is more, Business Agility creates alignment for leadership decision making and prioritisation. It moves executives from micromanaging to strategizing. Due to synchronised quarterly events, objectives are transparently communicated, reviewed, and translated into roadmaps. Cross-functional teams deliver results iteratively using clients and stakeholders’ feedback. Priorities, capacity, and dependencies are aligned regularly. Strong sponsorship from a leadership team helps to resolve impediments and accelerate delivery. Effectiveness is significantly improved and costs decrease (watch our videos with examples). (3) An embedded agile culture encourages people and teams to share feedback, doubts, and learn from failures.

Business Agility integrated approach to manage ambiguity and reduce complexity

In agile organizations less is more. They estimate impact versus effort, limit work in progress to focus on the key value and don’t “overload” the system with too many projects. These companies work with clear accountabilities and structure to reduce multitasking as a significant source of waste. Agile accelerates the time to market on average from 2 to 4 times in comparison to traditional working methods. (4)

3. Business Agility unlocks the innovation

“An Agile approach to innovation is built on collaboration and this needs to start at the top,” Nick Forde, Growth Partner at London Office

Agile teams are composed with experts from different business functions. Through cross-functional collaboration and diversity they can generate brand new ideas. Team members have regular access to customers to early and often test the solutions. It broadens the perspective and brings new opportunities. In each cadence teams run a retrospective session to look for a space for improvements.

We cannot ignore that organizational culture is essential to foster the innovation. It is built on psychological safety, cooperation and autonomy that play key role in unlocking creativity. Leaders learn how to switch from delegating tasks to enabling potential of employees and creating space for creativity.

Agile ways of working and design toolkit enhance innovation

Companies support themselves with the toolkit such as Design Thinking, Customer Journeys, and Design Sprints. It is worth to briefly explain the idea of Design Sprints as

a perfect way to solve business problems. This method engages a small team that collaborates to define the problem, brainstorm potential solutions, prototype, test and develop idea within a week. (5) It is particularly useful as provides an opportunity to seek solutions to specific challenges, which typically appear during the economic downturn.

Design Sprints help teams innovate, prototype and test solutions in 5 days...

Agile approach drives the pace of innovation at scale that is increasingly important in turbulent times, as companies seek smarter ways of doing things to remain competitive or look for new ideas to generate business value.

In conclusion, it is impossible to have ready answers to the disruptive waves, but organizations can prepare for them by enhancing three key competencies: managing unpredictability, complexity, and innovation. Business Agility support their development with culture, tools and ways of working.

Summary: Agile has been successfully applied to all parts of the business. Developing Business Agility and ways of working will help organizations to thrive in uncertain times.

Although agile was invented in IT software development, it has matured into mainstream management best practice and is used by world leading companies such as ING, Spotify, Pfizer, Roche, bp, Bosch, Google and LEGO. It benefits to entire company as a complex system and non-technical business functions including product portfolio management, research and development, supply chain management, marketing, HR, sales, and distribution.

Looking at industries affected by volatile market changes, Roche, top Pharma player, embraced agility at scale to accelerate decision-making process and reduce complexity. They invested in reinventing processes, shifting the culture and flatten the structure.(6)

We cannot ignore the fact that currently their R&D engine supported with agility is the most valuable on the market (1st place regarding recent approvals from 5 years).

The companies that have introduced true Business Agility do not need to design and execute a new, big, and costly transformation programme for times of uncertainty or recession. The three competencies they are equipped with, and ways of working they use, are sufficient to respond to change, pivot on strategy and ensure effective delivery for customers.

Business Agility equips companies with mindset and capabilities to get through the economic downturn, transform, and thrive