1. “Agility Redefined – Ways to be Agile”
Anil Bakshi
General Manager & Country Head – India
CollabNet Inc.
2. Summary
• Agility
•What is “Agile Absorption”
•Ways to be Agile
•Agile Absorption – Strike the right balance
•10 ways to build absorption
•Maintaining a culture of Agility
•Q & A
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4. Agility
A classic boxing match offers useful lessons for seizing
opportunities at the right time. True champions have the
capacity for both agility & absorption.
Muhammad Ali could spot a fleeting opportunity – the
hint of a sagging glove or an upward chin – and shoot
off a well placed blow before the moment passed.
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5. Agility
Agility – Float like a Butterfly, Sting like a Bee
Classic boxing match between M. Ali & George Foreman to illustrate 2
fundamental approaches:-
Agile companies (like Alis) quickly spot & exploit emerging business
opportunities whereas Absorptive firms (The Foremans) have the strength &
stamina to weather the market shifts.
Ali - Alert & nimble
Foreman – Lacked Ali’s agility, but because of his sheer bulk, physical strength
& toughness, could absorb all the punishment, all the while waiting for his own
opportunity.
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7. Agile Absorption
Firms actually need to apply both approaches, at just the right times during the
life cycle of the organization. The companies that display such “Agile
Absorption” don’t just thrive during unstable times, they emerge true market
leaders.
So what is “Agile absorption” ? - Ability to consistently identify & seize
opportunities while retaining the structural characteristics to weather changes.
“Organizational agility is a company’s ability to consistently
identify & capture business opportunities more quickly than its
rivals do”….
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8. Ways to be Agile
Organizations can achieve agility in three distinct ways.
1. Operational Agility
2. Portfolio Agility
3. Strategic Agility
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9. Ways to be Agile
Operational Agility
Within a focused business model, consistently identify & seize opportunities
more quickly than rivals do…
Examples are : Toyota, Tesco
Must Haves :
Shared real time market data that is reliable
Small number of corporate priorities to focus efforts
Clear performance goals (Teams & Individuals)
Mechanism to hold people accountable & to reward them.
Leaders need to : have sense of urgency, focus on critical objectives, flow of
information, recruit entrepreneurial staff….
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10. Ways to be Agile
Portfolio Agility
Quickly shift resources out of less performing businesses and into more
attractive opportunities…
Examples are : GE, Samsung, Proctor & Gamble
Must Haves :
A diversified portfolio of independent units
A cadre of General Managers who can be transferred across units
Central corporate control over key resources (talent, cash)
Structured processes for decreasing investments or selling off units.
Leaders need to : Base decisions on rational rather than emotional criteria,
Invest heavily in promising opportunities….
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11. Ways to be Agile
Strategic Agility
Identify and seize game-changing opportunities when they arise…
Examples are : Emirates Airlines, Oracle
Must Haves :
A strong balance sheet
A governance structure that permit to seize opportunities
Long term perspective from owners & executives
Leaders need to : Mitigate downside risk, Wait for the right
opportunities, maintain the owners’ confidence….
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12. Absorption
Absorption : Take a licking & keep on Ticking
Firms can build absorption in several ways. Levers include size,
diversification & war chest of cash, low fixed costs & powerful patron can
buffer a firm against environmental changes.
Emirates - structural strength others lacked, diversified its profitability
across regions & cargo, a large pool of cash & low fixed cost.
Golden opportunities are not evenly spaced over time, absorptive
capabilities can keep the company in the game until its big chance emerges.
Look at Apple … its iPod.
Absorption allows companies to outlast rivals in wars of attrition….
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13. Agile Absorption : Strike the Right Balance
Absorption & Agility are not stark alternatives…
Getting the mix right instead of relying heavily on one or the
other, increases the effectiveness.
Absorption is a store of energy for hard times – much like fat on
the human body. Low fixed costs for example is an outstanding
source of absorption.
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14. 10 Ways to build Absorption
1. Low Fixed Costs (To weather price war, declining demand)
2. War Chest of Cash (Against unexpected opportunities & threats)
3. Diversified Cash Flow (Diverse Units)
4. Size (Vast size can enable downsizing)
5. Tangible Resources (Real estate, Raw materials)
6. Intangible Resources (Brand, Expertise, Technologies)
7. Customer Lock-in (Switching cost can prevent customers)
8. Protected Core Market (To provide safe stream of cash)
9. Power Patron (Government, Investor, Regulator)
10. Staff (Extra staff can be shed at hard times)
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15. Is your business a Champ or a Chump?
Many Managers believe the corporate bulk is arch enemy of
agility. But it is not size per se that kills agility; it is “complexity”.
Alternative approach to combining scale & agility – breaking a
large company into “multiple” independent profit & loss units.
Firms that excel in this are : GE, Johnson & Johnson.
.
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16. Maintaining a culture of Agility
During the start-up phase, firms generally are agile but
short on absorption. As firms enter corporate
adolescence, they maintain some agility but also
accumulate absorption as they launch new products,
expand, bolster brand value. Over time absorption
stabilizes while agility deteriorates.
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17. Maintaining a culture of Agility
While Absorption is not the sole domain of established
enterprises defending their turf nor the later of nimble
start-ups looking at new ways to grow.
Managers should view agility & absorption as
complements with the balance shifting as
circumstances change….
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18. Maintaining a culture of Agility
Other Points :
Company’s absorptive strength can erode the culture of agility
Size often engenders bureaucracy & silos.
Managers who want to maintain culture of agility need to maintain focus on
handful of values they deem critical to agility.
Transparency.
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20. Conclusion
The rise & fall of Ali illustrates a universal dynamic.
As a champion Ali combined Agility & Absorption that made him the
“greatest of all times”. But overtime, agility seeped from his limbs & by his
final fights Ali could do little more than absorb punishment.
Many organizations follow a similar act.
Their early agility wins them the success – size, cash & a secure position.
Overtime bureaucracy, political infighting, complacency & arrogance takes
over….When the context shifts – the bloated organization just lumbers.
GM that once appeared invincible…
There fore “Understanding the sources of Agility & Absorption” & balancing
them overtime is the “Key to success”
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