COVER STORY OF THE MONTH
AGILITY IS THE NEW ROI
Charles Duell said in 1899 – “Everything that can be invented has been invented”. This may not be necessarily true of all in all innovations but so far as large incumbents go, finding ways to adapt and become increasingly agile in process turnaround time is highly business critical.
The world of agile is not new. It has been in existence in the software field for over several decades. However, even today just over 20% of enterprises consider themselves mature adoptors of agile across processes. Enterprises are increasingly making agile a central theme across business processes, to navigate through these challenging times and find improvements in their process turnaround time. Again, efficiency alone is not enough – processes need to be more responsive and adaptable to changes in business strategy. With agile processes, enterprises not only bring down costs significantly, but are able to serve their ecosystem in a much better way leading to increased stakeholder satisfaction and in turn driving long term competitive differentiation. Enterprises who have scored better on their agility metrics have gone up on their innovation scale by over 85%.
Agile has two components – rethinking the foundational process (operating model) and structuring the enterprise to adopt the new process. Both these components work hand in hand. There cannot be a process without a structure. On the other hand, the new process itself is dependent on the way the stakeholders are aligned. Again, there is no single magic mantra that works for all enterprises. For some, a shared service model works well to centralize global operations, while for some others, this means not being able to serve based on local and cultural needs that are unique. Some others have still not been able to bring down their SG&A despite centralizing all their core operations. There are also elements of process consistency to be factored in, as consistent processes means predictability and consequently better visibility for a business. Internal silos that makes processes disjointed must be identified and reduced. And finally, the enterprise must be structured to ensure better accountability and reduce redundancy.
These changes can either be executed as a large-scale transformation across the enterprise or a “lab based” approach taking baby steps. The challenge with taking a lab based approach is that it carries a risk of being separated from the rest of the enterprise and not taken too seriously by other departments. Where there is a larger management support and greater propensity to invest, one must consider transformations in a quick phased wise approach, which has the potential to showcase business benefits that has a material impact on the EBIDTA and financial performance of an enterprise. Identifying quick win processes to adopt in phase 1 will be based on its ability to provide immediate impact not only on performance but also on stakeholder satisfaction.
Dimensions that define success in process agility
Agile business processes can only work under transformational leaders who not only take the lead to drive change from the front but also constantly look to balance between agile and traditional management approaches. Here are some dimensions that are worth working on:
Building capability – Enterprises need to build internal capability to manage, monitor and govern process agility. Process owners must have the credibility and experience to drive this change and continuously look to eliminate waste in processes. Amongst other things, their KPI’s must include elements of long term improvements in process cycle time, ability to deal with changing stakeholder preferences and a shifting competitive landscape.
Redefine roles and responsibilities – Enterprises must restructure themselves to suit the new process with a clear assignment of roles and responsibilities. The traditional hierarchical structure must give way to a new structure where the teams collaborate and work seamlessly to accelerate the process.
Change Management – The importance of change management cannot be over emphasized. Agile is more than just incremental tweaks – it involves all employees impacted by the process. Hence it is imperative to get their buy-in and work on managing cultural and behavioral changes. This requires not only setting the right expectations, but importantly, receiving stakeholder buy-in via reasoning, in addition to consistently measuring and communicating progress.
Establishing transparency – Team members should be empowered such that they are made accountable, however, there should also be clear boundaries established to keep a check on risks. Clear guidelines must be provided to the process owners and business users around which decisions should be made within the team and which ones require external input for decision making.
Technology adoption – Business processes should be made consistent. Manual interventions in the process should be eliminated to ensure a seamless process. There should be minimal room for errors especially for repetitive or labor intensive tasks.
Measuring progress : There should be a way for process owners and leaders to get consistent feedback of not only time, cost and quality of the process but also its impact on outcomes in the form of stakeholder experiences or increase in the engagement level.
Making this change happen requires investment. And there several chances of encountering failures along the way. But it is still worth the time and investment, for there is probably no choice whether or not it needs to be done. Digital transformation requires business agility as its foundation. Unless processes are automated, governed and agile, no amount of investment in complex tools and technologies is going to make a difference.
To keep pace with the increasingly changing market dynamics, where entrants with new business models are always threatening incumbents, process agility is certainly a key tool to maintain competitive differentiation and survive. This however must be embedded into the fabric of the organization and must receive necessary leadership support to see significant pay offs in the long run.