The dictionary defines 'agile' as 'nimble or active: quick-moving and supple'. For decades, the big business has been compared to a supertanker, which can only be turned at lugubrious speed. Top managers fret about the lack of creativity and innovation beneath them, below the supertanker's decks, but their own decision-making processes and command structures stultify efforts - even ones which they themselves have promoted - to develop the new and rejuvenate the old.
The new changeability is demanded in every major area of corporate strategy and tactics. Like it or not, every corporation belongs in a web (or webs), an eco-system of alliances, partnerships, sub-systems, processes, lines of business, collaborators, etc., none of which is guaranteed any permanence. Hierarchy, dominant market share, vertical integration and economies of scale were the traditional means of mastering the complexities of large organizations - for ever. Today, all four pillars have been undermined.
Hierarchy has very little place in an organization which depends on free-thinking, self-managing innovators at all levels. Formerly impregnable market shares have been undermined by aggressive newcomers in many markets. Vertical integration makes no sense when specialist, horizontal component suppliers can achieve economies of technology and scale far greater than those of vertical generalists.
TELESCOPE TO KALEIDOSCOPE
The management metaphor has moved from telescope to kaleidoscope. Where once top managers could focus on their own concerns, with little need for peripheral vision, they now view a constantly changing pattern of shapes, sizes and colours, from which they must try to make sense. It sounds like an awesome task. It would have been impossible save for the advances in IT, which animates and accelerates the agile corporation, setting it free to move from control to coordination of collaborative effort, from the status quo to the future.
The management metaphor has moved from telescope to kaleidoscope. Where once top managers could focus on their own concerns, with little need for peripheral vision, they now view a constantly changing pattern of shapes, sizes and colours, from which they must try to make sense. It sounds like an awesome task. It would have been impossible save for the advances in IT, which animates and accelerates the agile corporation, setting it free to move from control to coordination of collaborative effort, from the status quo to the future.
All truly agile corporations share this positive attitude to change and the future. What makes such agility possible? The first and paradoxical answer is that agility rests on stability: just as Olympic divers need a solid diving platform to launch their acrobatics, so a corporation must be solidly based in order to perform strategic twists and turns at speed. A key foundation is a large and well-nurtured base of customers who respect the supplier. That respect can only be earned by consistent attributes: top quality, excellent service, and great innovation.
The second answer is decentralization; diffuse authority to where it is most needed and can be most effectively applied. Let people take the initiatives that are best for their customers - in the famous microprocessor case, a Japanese calculator firm which wanted a set of Intel chips for its latest machine. An engineer named Ted Hoff earned immortality by wondering why all the circuits couldn't be placed on a single piece of silicon. They could: other engineers took over and their prototype gave birth to great fortunes. The discipline was that of the technology, not of top management.
CENTRAL MANAGEMENT
Central management's role in the agile corporation is partly to lay down exacting standards and to see that they are met. Management is also responsible for ensuring that decentralization is genuine. It uses its powers where they are helpful to ensure that its powers are not used where they hinder. This is another paradox, but the agile corporation thrives on paradox. It knows that there is no one right answer, only the best answer at the time, which will be replaced as soon as a better one arrives: and there's always a better answer.
Central management's role in the agile corporation is partly to lay down exacting standards and to see that they are met. Management is also responsible for ensuring that decentralization is genuine. It uses its powers where they are helpful to ensure that its powers are not used where they hinder. This is another paradox, but the agile corporation thrives on paradox. It knows that there is no one right answer, only the best answer at the time, which will be replaced as soon as a better one arrives: and there's always a better answer.
That is a basic principle of kaizen, the continuous improvement mentioned above, and the essence of Total Quality Management. For a long time, to many conventional managers, TQM seemed foreign in both senses - an unwelcome and uncomfortable import from Japanese control freaks. In fact, TQM sprang from the work of an American, the remarkable W. Edwards Deming, who believed passionately in setting workpeople free from authoritarian controls so that they could do their jobs better - much better. Whether or not companies use TQM or its close relative, Six Sigma, the agile principle is the same: give individuals control over their own work and its improvement, individually and in the group. So, are you agile? Can you:
• deliberately fuse old and new?
• blend group working with real individual fulfilment?
• combine short-term, medium-term and long-term, without sacrificing any of the three?
• achieve both discipline and freedom?
• pursue commercialism with humanity?
• combine globalism with local, national and regional marketing?
• give the customers what they want while leading them to want it?
• strengthen the old while nourishing the new?
• throw caution to the wind, yet also avoid undue risk?
• grow fast while not overstretching the company by exceeding 'the limits to growth'?
• blend group working with real individual fulfilment?
• combine short-term, medium-term and long-term, without sacrificing any of the three?
• achieve both discipline and freedom?
• pursue commercialism with humanity?
• combine globalism with local, national and regional marketing?
• give the customers what they want while leading them to want it?
• strengthen the old while nourishing the new?
• throw caution to the wind, yet also avoid undue risk?
• grow fast while not overstretching the company by exceeding 'the limits to growth'?
Sometimes these limits are immediately obvious, like shortages of production capacity, or component supply, or unsaturated markets to exploit. More often, the limits are less specific, compounded of several elements, including competitive actions and reactions, market trends, organisational responsiveness, environmental factors, etc. Taking the long view, the limits seem almost arithmetical: a corporation aiming to grow its earnings per share by 15% compound will have to double in five years, quadruple in ten and octuple in fifteen. The bigger the base, the more highly improbable the growth.
DECENTRALISED FLEET
One remedy was well expressed by one CEO, who wanted to replace his supertanker by a fleet of decentralized motor-boats, speedy and powerful autonomous units that (unlike the unwieldy supertanker) could turn on a dime as they pursued their opportunities and repelled their threats. Few chief executives, however, have found it easy or quick to dictate and achieve this dynamic change in their fleets from stability to agility. Top-down initiatives have run into resistance from senior and middle management - resistance which is insidious and difficult to conquer.
One remedy was well expressed by one CEO, who wanted to replace his supertanker by a fleet of decentralized motor-boats, speedy and powerful autonomous units that (unlike the unwieldy supertanker) could turn on a dime as they pursued their opportunities and repelled their threats. Few chief executives, however, have found it easy or quick to dictate and achieve this dynamic change in their fleets from stability to agility. Top-down initiatives have run into resistance from senior and middle management - resistance which is insidious and difficult to conquer.
The agile answer is to remove the top-down element from the initiatives - a reform which is at last easier done than said, thanks to informal, internal changes that have increased the agility quotient in all businesses. None of these changes is more important than the spread of multi-disciplinary, cross-functional teams which are formed to tackle projects and which last only as long as the project. Nobody ordained this fundamental reform, but today managers can easily spend half their time in ad hoc teams, the building blocks of the agile corporation.
Team remits may well extend beyond the boundaries of the corporation, into the territory of customers, suppliers or even competitors. The team thus bypasses formal structures and can create its own modus operandi. Time and again, project management by teams has proven its ability to make impossible deadlines possible. 'Skunk works', project teams and other 'hot groups' have created new heroes as well as new products and services.
Leadership of teams can pass from hand to hand, depending on whose authority of expertise is most relevant. The kaleidoscopic corporation thus breaks away from the old ideas of rank, status and chains of command and communication. The agile corporation relies on people doing what comes naturally, intuitively and voluntarily. Many observers have puzzled about the fact that employees in the mass in general resist change more than they do as individuals - even when the proposal is manifestly beneficial to their individual interests.
GUARDING THE STATUS QUO
This obstructive mass mentality reinforces the corporation's role as guardian of the status quo. That automatically makes it the enemy of the new. There are obstinate, talented people like Ted Hoff inside every organization: the supreme test of agility is whether the organization frustrates that individual talent or thrives on its expression. The new agile approach optimizes the return on human capital employed by facilitating and grouping the use of human talents wherever, whenever or however they are needed.
This obstructive mass mentality reinforces the corporation's role as guardian of the status quo. That automatically makes it the enemy of the new. There are obstinate, talented people like Ted Hoff inside every organization: the supreme test of agility is whether the organization frustrates that individual talent or thrives on its expression. The new agile approach optimizes the return on human capital employed by facilitating and grouping the use of human talents wherever, whenever or however they are needed.
This inevitably hinges on using new technologies to the full - above all those of information and communication. Organizations have always been machines for controlling and distributing information. Corporate arthritis followed when the messaging machinery became more important than the message. The aim was laudable: to attain disciplined, orderly, regular efficiency. The result was lamentable: wholes worth much less than their parts. Agile firms treat their parts as more important than the whole - and end up with a total entity that much outweighs those parts.
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