Strategic Agility: What Exactly Does It Mean?

There have been a number of books and whitepapers published about strategic agility, but most of them are purely theoretical or too narrowly focused on things like software development methods. Rarely do people adequately address what strategic agility really means and how it can be made possible.

Today’s large enterprises are struggling with matters of compliance and maintaining tighter control over their company activities, while simultaneously wanting to create agility. There is no question that the market is moving at breakneck pace and companies simply cannot respond to the market—let alone think about business and organization design on a structural and systems level—but the desire to be agile still remains. Agility for many equates to rapid tactical execution, and even then the results are questionable. But everyone is talking about it and doing it nonetheless.

The easy answer is to throw away the structure, or maintain a dual operating system. But that’s a little over-simplistic. Before getting deep into talking about how to create strategic agility as a corporate capability, let’s first define what organizational agility means.

Strategic agility is an organization’s ability to think ahead of the market, quickly mobilize itself, adapt to market shifts, fill capability gaps, capture new revenue ahead of the competition, and even create new markets. Strategic agility requires going outside of systems, structures, and processes, and allowing fluid organization of teams to achieve loosely defined missions. It is an innovation playground.

Let’s break this down into the three things that strategic agility requires. First, is the ability to bring speed (sense and response) into the system, not only through turning ideas into prototypes, but also by employing speed in key decision points. I have seen cases where all ideas and prototypes were moving along quickly until they were stalled the moment they hit the executive office—because no one knew what to do with them.

The second requirement is clarity and stability. Clarity, in this case, is about identifying innovation hot spots and the key hypotheses that we are trying to validate. Stability refers to permanent and committed spaces and resources so that it’s not a one-time play. People need to understand what acceptable risks they are taking and the efforts required to manage those risks.

The third key to strategic agility focuses on deleting or suppressing organizational memories. These are legacies that, 99% of the time, actually prevent a company from moving forward and reinventing themselves. Companies must ensure they are approaching agility without attaching themselves to past failures, as often timing and technological maturity (or lack thereof) plays a key role in why something goes wrong.

One thing that I often hear in large company town halls is that “we have strong infrastructures, long-term relationships, lots of cash, and a solid management team, but now the market that we serve has changed and so we should act more like a startup” (except with cash).

This is a joke.

Most significant disruptions stem from ideas that do not have infrastructure constraints (such as out-dated technology or the management team’s desire to save the “old” business). And, as for cash, just look to the unicorns for inspiration of what can be done on a small budget.

Strategic agility means new organizational design, new capabilities, and new ways of managing. Simply saying that your company needs to maintain a dual operating mode is not going to cut it. The company needs to transform how its business is designed, and everything from its capabilities to its portfolio should be put on the table to be scrutinized.

One thing is for sure: When you have an executive team that has been used to the same managerial hierarchy for the past 20 years, they’ll depend on what’s worked historically when that system is slowly being dismantled. They will simply move the boxes around to create an almost-identical organizational chart. They will exert more control over risky projects, add governance, add processes, and add structure, all in the hopes of making the enterprise more agile. But to deeply embed agility into your organization, you need to rethink the hierarchy entirely.