Business Agility

Updated on April 12, 2024
Article byRutan Bhattacharyya
Edited byRutan Bhattacharyya
Reviewed byDheeraj Vaidya, CFA, FRM

Business Agility Meaning

Business agility refers to an organization’s capacity to quickly make adjustments according to fluctuating production and consumer conditions, emerging opportunities, and markets with digitally-enabled and innovative business solutions. It leads to improved profitability, better customer satisfaction, and increased competitiveness. Moreover, it fosters team cohesion.

Business Agility

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It focuses on frequent value delivery to stakeholders by using visualization techniques, iterative workflows, and quicker planning cycles. Agile organizations often can get a competitive edge despite multiple fluctuations in their business environment as they can adjust to the customers and industry successfully. Some key metrics are used to measure this capacity, for example, velocity and cycle time.

Key Takeaways

  • Business agility refers to the ability that enables a business to quickly respond and make adjustments according to the fluctuations or changes occurring in the market or its business environment.
  • Some noteworthy business agility metrics that organizations can utilize are velocity, cycle time, process efficiency, and completion rate via throughput.
  • There are various benefits of business agility. For example, it provides companies with a competitive advantage. Moreover, it can minimize organizational expenses and enhance customer satisfaction.
  • While business agility focuses on immediate changes, enterprise agility focuses on adapting to changes with regard to the long term.

Business Agility Explained

Business ability refers to the ability of any organization or business to quickly respond to the fluctuations and changes taking place in the business environment. This ability enables organizations to be more responsive and flexible to customers’ expectations and requirements in addition to technological advances and trends. Moreover, it allows businesses to improve production, procedures, customer service, and security when required.

This ability is crucial for any business, considering how social, economic, and environmental problems are disrupting the world. Any agile business can do the following things:

  • Innovate on a consistent basis and deliver improved outcomes
  • Make new opportunities quickly
  • Lead with positive intent and purpose
  • Adapt quickly to challenges and market changes

Organizations must successfully execute and internalize the business agility framework (BAF) besides the agile values and principles to fully realize the benefits of this concept. At the heart of BAF lies these three crucial elements:

  • Leadership: Specifically, agile business owners or leaders need to have the capacity to employ agility in the true sense before needing it from a team. Note that this includes the employment of strategic agility when establishing organizational goals.
  • Governance: This element consists of various aspects related to good business practices. However, it also includes vital components, such as alignment, transparency, and trusted autonomy. These elements play a key role when building an agile organization.
  • Culture: All agile organizations must have a culture valuing agile practices, mindset, and methodologies to unlock organizational agility value. For this, a business’s overall culture needs to have different attributes, for example, true collaboration and teamwork, interpersonal and interdepartmental tasks, resiliency, etc.

Each of the above elements influences how the business carries out operations and evolves to adjust to the changing requirements of stakeholders and customers.

Domains

Primarily, there are 5 domains across 18 emerging business capabilities. Note that the combination of such capabilities and domains helps determine the continued and current effectiveness of an organization. The behaviors and capabilities within each domain are equally essential, necessary, and interrelated.

Let us look at the primary domains in detail.

  • Leadership: Having the capability to rapidly adjust to changes requires co-creative efforts and a one-team approach to fulfill the common goals spanning divisions, functions, and teams within the company. Moreover, it requires leaders who clearly communicate and set an adaptive business strategy.
  • Individuals: The concept requires individuals to be open to learning and accumulating knowledge through personal development and continuous learning. Moreover, it requires people to be comfortable in making decisions in an ambiguous environment without having any fear of failure.
  • Customers: Customers are the heart of this concept. They are the very reason an organization exists and carries out operations.
  • Relationships: This concept requires customer value-driven collaborations offering flexibility, allowing both partners and the business to make adjustments in a complementary and coordinated manner instead of a sequence of contractual organizations.
  • Operations: This type of ability in businesses requires an organization to alter the structure whenever necessary to embrace emerging opportunities easily without any issues. Simply put, businesses need to continuously evolve and adapt according to the changing business environment with the goal of creating value for their customers.

Individuals must remember that one cannot realize the success of an organization in a market associated with a lot of unpredictability until the development of business agility occurs across the above five areas in a business.

How To Measure?

One can measure agility in business by following the steps below:

  1. Describe The Organization’s Mission: First and foremost, entrepreneurs need to describe the mission of the organization, which should reflect the future vision and the guiding principles of the business.
  2. Establish Goals: Keeping the mission in mind, business owners need to set objectives and goals that can help the business realize its vision.
  3. Formulate A Strategy: Building a strategy involves a number of steps directing a person or a group toward fulfilling a certain goal. When making a strategy, one must figure out the tasks that the team must undertake. Moreover, they must mention every task so the team can implement every strategy step.
  4. Implement The Strategy: This step involves executing the set strategy. Note that if strategies are successful, they can positively impact a workplace, the products and services offered by the business, and the workforce. This, in turn, can improve customer satisfaction. Business leaders who have the ability to support and mentor the staff when fluctuations occur need to execute the strategy.
  5. Utilize Key Metrics To Assess Goals: After executing the strategy, organizations need to measure the success based on certain key business agility metrics, like the following:
    • Velocity: It helps determine the value a team can generate in a sprint. Moreover, it helps obtain an estimate of the capacity during planning moments.
    • Cycle Time: It allows one to know how fast a team finishes a specific task by observing the cycle time or process speed for similar activities.
    • Process Efficiency: This metric allows one to know how much any agile business can optimize the existing resources without extra budget or additional individuals to the team.
    • Completion Rate Via Throughput: Throughput helps determine how many tasks are finished in a certain duration.

Examples

Let us look at a few business agility examples to understand the concept better.

Example #1

Suppose Company ABC is utilizing business intelligence (BI) services. With the help of BI tools, the organization can get actionable data showing high inefficiency on the part of a worker who manually invoices customers. Maybe it went unnoticed before. However, now the top-level managers know about the issues.

Hence, they can utilize robotic process automation (RPA) solutions to allow workers to focus more on meaningful work by automating the invoicing process. This would also enable the ABC to save money. As a result, the business’s efficiency increases. This culture of embracing new innovations that regularly result in improved productivity, lower costs, and streamlined processes is a feature that defines business agility.

Example #2

Temenos, a composable banking solutions leader from a global standpoint, announced the launch of Temenos Enterprise Services. The purpose of the new services is to enable banks to deploy software solutions in just 24 hours. This will reduce the usual complexities and costs related to the modernization of banking systems by a significant margin. The new product is a suite of elastically scalable, cloud-native services. Such services ensure that banks benefit from advanced security controls, resilience, high-performance service level agreements (SLAs), and continuous updates.

Benefits

The key advantages associated with this concept are as follows:

  • It minimizes the costs of a business. For example, it lowers employee expenses
  • The ability to improve customer satisfaction.
  • It motivates employees, allowing them to connect with the bigger organizational goals. This positively impacts the overall work culture.
  • The ability can enable businesses to become first movers and have a competitive advantage by capitalizing on short-term opportunities in a market.
  • Another key benefit of business agility is that it can promote creativity and foster innovative problem-solving through a supportive environment.

Business Agility vs Enterprise Agility

The concepts of business and enterprise agility can confuse people, especially if they are unfamiliar with them. To help them steer clear of confusion, let us look at their key differences.

Business AgilityEnterprise Agility
It is the ability of a business to quickly respond and adapt to changes taking place in its business environment.  Enterprise agility is a broader concept. It involves establishing an innovative, resilient, and adaptive business across every level.  
This concept is more tactical. Enterprise agility is comparatively more strategic. 
It focuses on enhancing agility in a linear growth market. This concept involves providing agility across an entire organization during times of uncertainty. 
It focuses on responding to immediate alterations in a market. This concept focuses on adaptability in the long term. 

Frequently Asked Questions (FAQs)

1. What are the seven core competencies of business agility?

The seven core competencies are as follows:
– Customer electricity
– Lean portfolio management
– Continuous learning culture
– Technical and team agility
– Customer centricity
– Organizational agility
– Agile product delivery

2. How does cloud computing bring in business agility?

Cloud computing helps achieve agility in business through flexibility and elasticity. On account of this flexibility, organizations can introduce or offer new products and services and adjust to the changing business environment or market scenario.

3. How to improve business agility?

The different ways to make a business more agile are as follows:
– Rapidly introduce new offerings
– Take into account shareholder value as one of the most important key performance indicators or KPI
– Provide excellent customer satisfaction and service
– Invest in new equipment and technology
– Strengthen employees
– Develop strong leadership in the company 
– Respond to the altering demands in the market
In addition, ensure that the business has a corporate commitment.

This article has been a guide to Business Agility & its meaning. We explain its examples, benefits, domains, comparison with enterprise agility, & how to measure it. You may also find some useful articles here –

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