Introduction: The agile enterprise: Reinventing your organization for success in an on demand world

Abstract

In the Spring of 2004, IBM conducted a massive global survey of CEOs. Over 450 CEOs from large, medium, and small enterprises across many industries responded to the survey and many spent time one-on-one with IBM consultants to provide qualitative comments. When asked what would have the greatest impact on their organization over the next three years, an overwhelming majority of the CEO's identified continuous changes in market forces to have the greatest impact. They talked about the intense and ever increasing competition, continuous changes in market dynamics, and rapid changes in customer needs and wants as the major market forces. Very few of them said they considered their organizations to be ready to respond to these changes, and most talked about Responsiveness, Agility, and Flexibility as the new key competencies to survive and sustain. Amongst many things the CEOs talked about wanting to urgently implement, the following two stand out as the summary of their combined wisdom: 1. "We have to implement a competitive intelligence capability so that the organization can react quickly." 2. "We have to be quicker and must anticipate and respond almost intuitively to changing customers needs." These results are reinforced by the results of the 2004 Conference Board CEO Challenge survey. This survey asks CEOs to identify the top ten challenges that they face. Second only to "Sustained and steady top line growth", "Speed, flexibility, and adaptability to change" was identified by 42% of the 539 CEOs responding to the survey. In her keynote talk at the Gartner Symposium, Carly Fiorina, Chairman and CEO of HP, citing Darwin's theory of evolution, said, "The company that thinks it's done is done. Darwin said it's not the most intelligent or strongest that survives, but those that adapt the most readily to change. It's not about fixing a company and stopping it, but it's about a company being able to adapt." In his book, Adapt or Die, Claus Heinrich, a member of the SAP Executive Board, describes how adaptive business networks can help businesses meet the extraordinary challenges of the 21st century and what they will need to change in order to survive. "Falling margins, accelerating innovation, and production cycles, as well as globalization are forcing companies to become more flexible in order to meet these challenges." He explains why this new business model is necessary for survival-and not merely an option. "Responding to intense pressures, organizations are trying to become more agile and responsive to customer demands," says a Xerox report. Bill Gates talked about the velocity of change. He said the 1980s were all about computing, the 1990s were all about bandwidth, and this decade will be all about change and the increased velocity with which everything will be changing. The common thread that runs across all of the above prophecies by visionaries is again that of change and speed! A couple of years ago, we had a massive strike of dock workers which idled all of the ports along the west coast of USA from Los Angeles to Seattle for 10 days. Dell's business process model operates with only a couple of hours of inventory in their Austin plant with supplies coming in just in time from their suppliers in Asia. When the strike hit, many industry watchers thought that Dell would soon run out of materials and product production would grind to a halt leading to plummeting sales. Indeed, many manufacturers and retailers suffered exactly that fate during that same period. But this dire prediction was not realized at Dell. Showing a remarkable ability to anticipate the strike in advance and responding with speed, Dell chartered Boeing 747s, as many as 18 in number, and much before others tried to do the same, to bring in supplies from Asia. They had already booked these chartered flights in advance with a very good price break, while others scrambled to find planes to charter and paid exorbitant prices. This is agility in action! It is no surprise that the advisory board of the eBusiness Research Center (eBRC), which is comprised of senior executives of leading American and global corporations, identified adaptive organization as the top focus area for research in 2003/2004. In May 2004, eBRC organized a workshop in New York City. Thought leaders from the industry and academia came together to deliberate with a group of selected participants on the issues, opportunities, and challenges of an adaptive organization. The deliberations at this workshop led to the conclusion that agility is a more appropriate term to use to describe these issues from a strategic perspective and adaptability from a tactical perspective. The following two key statements summarize the deliberations of this workshop: 1. From sense and respond to anticipate and lead: If you are planning to sense the changes and then respond, it is already too late; rather anticipate the coming changes and execute with speed to lead. 2. From alignment to synchronization: Aligning your infrastructure to changing needs and wants is not sufficient. Instead, seek to synchronize your infrastructure changes to the changes of the environment-a characteristic of a real-time enterprise. Sam Palmisano, IBM Chairman and CEO, recently said that today "people are trapped by their training, but 21st century workers won't be able to find answers in the past because things are rapidly shifting and new opportunities are arising so frequently." If answers cannot be found from the past, they must be found by postulating the future. It is with this thought in mind that thought leaders in academia and practice were brought together around this book and asked to share their personal insights and wisdom about agility issues. From their deliberations, recommendations were built about what organizations can do and should do to become an Agile Enterprise. The various chapters in this book cover the "why", the "what", and the "how" from the perspectives of the contributing experts. We, the editors of this book, did not attempt to rationalize the various chapters into one coherent thought. Instead, we maintained the originality and the integrity of the analysis and the insights so that you the reader will have a feast of ideas to think about and find the most that suit the initiatives within your organization. Also, the premise of this book is not to be prescriptive, as prescriptions will vary case by case. We attempted to be descriptive, using anecdotes to make a point, case studies to deliberate on key issues, and personal experiences and insights to identify emerging best practices.