Business Agility: What It Is and Why It Matters

Business agility refers to the ability to survive and thrive in changing times by responding quickly to changes and taking advantage of emerging opportunities.

The COVID-19 pandemic is a prime example of the importance of business agility and adaptability. As the pandemic swept the world, it caused widespread disruption to businesses across various industries.

Many companies that couldn’t adapt quickly to the new reality of lockdowns, travel restrictions, and social distancing measures were forced to shut down or scale back operations.

However, companies that pivoted their business models to shift to remote work or develop new products or services to meet the changing needs of consumers quickly recovered and even thrived during this time of uncertainty. The pandemic has shown that businesses need to be agile and able to adapt to changes in their environment to survive.

Building resilience and agility into business models and operations should be a priority for all organizations to navigate uncertain times and emerge stronger on the other side. Read more about business agility, its goals, benefits, and actionable examples.

What is business agility?

Business agility refers to how quickly a company responds to changing conditions in internal and external business environments, finds solutions to new problems, deals with threats and opportunities, and delivers high-value products or services in the marketplace.

The key components of business agility include:

• Culture. Business agility is founded on a strong organizational culture with practices, values, and attitudes that facilitate flexibility and adaptability. Such a culture allows an organization to respond quickly to changing conditions during uncertain times.
• Governance. Business agility requires good governance of the internal processes and structures to facilitate better decision-making, transparency, and accountability.
• Leadership. Agile leadership involves collaborative approaches to help organizations survive in transformative times. Rather than making all decisions alone, agile leaders empower junior staff members by delegating different tasks, making it easy to achieve shared goals.
• Strategy. Organizations understand the key objectives and dependencies of their strategies and make appropriate modifications to respond to unexpected events in the business environment.
• People. Employees are crucial stakeholders in any organization. To achieve business agility, good managers improve their employees’ skills to collaborate and respond well to changing market conditions.

An agile business has the following characteristics:

• Responsive. Agile organizations respond quickly to changes in market conditions, allowing them to survive and thrive.
• Innovative. As agile organizations adapt to uncertainties, they find new ways of doing things. They also create new products and services, which help grow their market and market share.
• Adaptable. Agile organizations use flexible strategies to modify and apply to new conditions.
• Flat structure. Agile organizations have a flat organizational structure, communicating decisions to other team members. A flat structure enables companies to adjust their operations quickly during uncertainty.  
• Employee empowerment. Agile organizations empower employees through clear expectations, task delegation, training and development, good compensation, and rewards. As a result, employees have high morale and the right skills to help the business survive during trying times.
• Strong culture. Institutions have an agile culture that favors teamwork and collaboration, fairness, flexibility, trust, and good communication, enabling them to adapt easily to market changes.

What is the goal of business agility?

The primary goal of business agility is to enable a company to quickly and efficiently respond to changing market conditions, customer needs, and opportunities while maintaining resilience and stability.

The ultimate objective of business agility is to increase competitiveness, improve operational efficiency, create self-organizing teams, and satisfy various business needs, delivering favorable bottom-line performance.

Why business agility matters

The modern world is evolving rapidly, exposing organizations to different threats and opportunities.

We’re witnessing changes in customer desires, technologies, workforce demands, economic conditions, and shareholder expectations. It’s essential for business leaders to adopt new strategies for changing workforce patterns. Business agility can help organizations adapt to these conditions and experience the following benefits.

Increased competitiveness

We live in a highly competitive world. Organizations compete not only for resources but also for market share. Businesses that fail to keep up are pushed out of the market—emphasizing the need for agility.

Agile development allows companies to identify changes in the operating environment, adapt quickly to new conditions, exploit opportunities, and achieve a competitive edge.

To illustrate, agile organizations can identify market gaps and release new products and services to consumers faster than other businesses, giving them a competitive advantage.

Improved customer satisfaction

Customer satisfaction refers to how happy your customers are when interacting with your products, services, or brand. It also indicates your ability as a company to meet or exceed their expectations. A high satisfaction rate may improve customer retention, loyalty, and brand reputation.

However, customers’ tastes and preferences change from time to time, making it challenging for companies to keep up.

Agile businesses can respond to these varying needs and demands by delivering highly tailored products. They can quickly improve their products using customers’ feedback, leading to a high satisfaction rate. They can even anticipate opportunities to expand customer needs and expectations and be first to market new products and services.

Increased efficiency

Efficiency, in this context, refers to an organization’s ability to perform activities without wasting resources, time, money, and energy. The best way to do this is by embracing business agility.

Agile companies can streamline their processes, reduce waste, and boost productivity. They record higher efficiency, cost-savings, and profit in the long run.

Enhanced innovation

As market conditions change, innovation has emerged as a major source of competitive advantage. It allows organizations to design new products that satisfy customers better, develop processes that save on costs and boost growth, and find other effective ways of doing things.

Business agility enhances innovation by fostering a culture of experimentation and continuous improvement. Such a culture leads to the development of new products and services and more efficient business models.

Better risk management

Risk management is important because it helps companies identify and mitigate various threats and challenges. However, organizations are caught off guard in some cases, and the existing policies aren’t enough to deal with unplanned events.

In such cases, agile practices help companies modify their existing policies and respond quickly and more effectively to threats and risks, minimizing their impact and damage to key processes.

Managers can also collaborate with other stakeholders to deal with risks rather than work in silos, building synergistic solutions.

Improved employee satisfaction

Employee engagement and satisfaction levels can impact organizational success. Highly motivated and satisfied employees are more self-driven and capable of helping their organizations achieve objectives.

Such workers can form agile teams and perform different tasks more effectively. They’re also ready to sacrifice and go the extra mile for the well-being of the entire organization.

A high employee satisfaction rate leads to low turnover, high productivity, increased loyalty, and more positive interactions—results most managers seek.

Business agility improves employee satisfaction by creating a more flexible and adaptive work environment, which can lead to higher levels of employee satisfaction and engagement. It also helps managers create a safe and pleasant working environment where employees can interact with minimal distractions.

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Examples of agility in business

Whether managing human resources or dealing with sales and finance, embracing business agility can help you achieve value and meet expectations in whatever area you’re working in.

Some examples of where you can implement business agility in your organization include:

• Product management. Incorporating business agility in DevOps practices can help your organization create or improve products based on market developments and customer feedback. Managers can also use agile tools to do market research and ensure the products lead to higher customer satisfaction.
• Real-time data analysis. As times change, keep tabs on different events in and around your organization. Big data analysis allows businesses to identify various trends in the marketplace. Agile companies can use this information to streamline their processes, respond to volatile situations, and take advantage of opportunities.
• Agile project management. True business agility helps you realize various benefits at each project stage—rather than only at the end. It also enables you to implement an incremental or continuous improvement approach, which adds more value and flexibility to your projects. Agile project management methodologies require a strong vision and the ability to learn and adapt over time. Discover top tools for Agile software development. Many of the principles of Agile development can be applied to other non-software programs in a company.
• Flexible supply chain management. Agile supply chain processes enable companies to react faster and more efficiently to volatile situations. They can detect changes, make quick decisions, take advantage of opportunities, and improve their time to market. Organizational agility boosts your competitive edge by incorporating positive agile values, such as awareness, accessibility, swiftness, flexibility, and decisiveness, in your supply chain.
• Customer-centric approach. Satisfying customers is a crucial objective. Agile companies monitor changes in customers’ tastes and preferences and their satisfaction rates—and then use this information and their feedback to improve products and services.
• Scalability. Business agility facilitates a high level of awareness and adaptability. You can use these attributes to scale up or scale down based on market demands.
• Continuous improvement. Rather than making major changes at once, which could be overwhelming for an organization, business agility assists businesses in improving processes continuously and incrementally, helping them realize more benefits over time.
• Ability to embrace disruption for positive change. Agile organizations can quickly adapt to situations by identifying new opportunities or better ways of doing things rather than wasting time fighting change.

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Today, we face a lot of uncertainties and volatile situations. As a result, businesses can no longer rely strictly on long-term strategic planning to achieve success.

To boost their chance of survival, organizations must be ready to abandon or modify existing initiatives and pivot when things aren’t going as planned, which calls for business agility.

Embracing agile principles allows organizations to be alert, aware, decisive, adaptive, and innovative—characteristics needed to thrive in an ever-changing world.

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