Big corporations, by nature, maneuver like battleships. Held back by their own inertia and current business strategies, turning quickly can be difficult when the competitive environment changes. Likewise, high performance as measured by shareholder returns is impossible to sustain over a long period of time. No company consistently beats the market.
A recent in-depth study of long-term performance, however, suggests an alternative point of view about business strategy. A few large companies outperform peers when the measure of performance is profitability. They maintain this performance edge even during a significant business change in their competitive environments. Agility is one factor that differentiates them from others.
Agile companies adapt business change more quickly and reliably than competitors. Even as battleships, they have learned to turn quickly as speedboats. Learning the routines of agility makes them be at the forefront of competition.
The Link Between Agility and Performance
A survey was conducted to determine the link between agility and performance. The survey was focused on determining the way organizations formulated strategy, designed their structures and processes, led their people, and made changes and innovation.
More than 4,700 Directors and Executives from 56 companies were surveyed, of which 34 companies were Fortune 500 firms.
The survey was able to find out that when markets and technologies changed rapidly and unpredictably, the outperformers had the capability to anticipate and respond to events, solve problems, and implement change. As such, this enables Agile companies to easily adapt. Agility is not just the ability to change – it is a cultivated capability that enables organizations to respond in a timely, effective, and sustainable way when changing circumstances require it.
Many an Agile organization involves 4 complementary sets of activities, what we will call Agile Activity Groups.
The 4 Agile Activity Groups to Managing an Agile Company
- Dynamic Strategy Development. This is having a clear, relevant, and shared strategy that is undertaken with 3 key activities integrated within the strategy.
- Market Environment Response. This ensures an effective response to the implications of outside signals. Market Environment Response provides an accurate sense of what is going on in the environment.
- Response Refinement. This encourages innovation and tolerates failures. These are insights refined from the perceiving routing with a relatively high number of low-cost experiments.
- Change Management. Change Management is the mastery of internal program management capabilities needed to convert successful test and innovations into widespread practice. It builds the company’s capability to adopt unambiguous commitment with speed, certainty, and precision.
With the 4 Agile Activity Groups, Competitive Advantage is gained through an ongoing series of advantages that exploit current business conditions.
Interested in gaining more understanding of 4 Agile Activity Groups? You can learn more and download an editable PowerPoint about Agile Activity Groups here on the Flevy documents marketplace.
Are you a management consultant?
In today’s business environment, learning and knowledge have become key success factors internationally and intangible resources are of vital importance. The struggle between competing firms has moved from tangible resources to intangible resources where knowledge and the ability to use knowledge have crucial roles.
Organizations are becoming more global, multilingual, and multicultural with people being required to work smarter and faster. People have become more connected with them being expected to be “on” all the time and the response time measured in minutes instead of weeks.
Indeed, today’s work environment has become more complex with businesses being threatened by the vulnerability, uncertainty, and crisis that could have been prevented if Knowledge was better managed. Better KM can help companies anticipate uncertainties and design strategies to lessen their impact.
While managers would like to take a strategic approach to avoid an impending crisis, often they find themselves fire-fighting. With a Knowledge Management Strategy, corporate executives can better manage the complex, chaotic, and non-predictable environment, in which companies must achieve performance.
Putting Strategy on Knowledge Management
Knowledge is important to efficiency and productivity. Hence it is critical that organizations manage their Knowledge effectively and strategically. Having a strategy for Knowledge Management will provide companies a plan to better manage information and knowledge for the benefit of the organization.
Effectively, a good KM Strategy can gain senior management commitment to KM initiatives and attract resources for implementation. In the end, it can provide the basis against which the organization can measure its progress.
Taking the 3 Knowledge Management Strategies to Fore
Companies are now feeling the pressure of the need to be more competitive. Taking on a Knowledge Management Strategy can lead competing firms to take the high road to success.
KM Strategy 1: Reckless Negligence
Reckless Negligence is doing little or nothing to improve capabilities in information, data, and KM. This is one strategy that has ceased to be viable in today’s business environment.
KM Strategy 2: Knowledge Competence
The goal of Knowledge Competence is to be an efficient and effective company with sufficient emphasis on responsible management of Knowledge. To date, at least 50% of the companies in the world are in this category.
KM Strategy 3: Knowledge as a Competitive Advantage
The goal of Knowledge as a Competitive Advantage is to up the ante in the spirit of continuous improvement. Undertaking the third strategy involves making KM a critical capability of the organization. At least 20% of the companies in this world are in this category. This is often adopted by Knowledge-Intensive Industries.
Essentially, our company must create a robust Knowledge environment. However, this can only be achieved when 8 KM critical success factors are put in place.
Interested in gaining more understanding of Knowledge Management Strategy? You can learn more and download an editable PowerPoint about Knowledge Management Strategy here on the Flevy documents marketplace.
Are you a management consultant?