Although I am writing this on Labor Day, the end of the summer season, certain economists, pundits and other bigwigs are touting the signs of early spring in our economy. While there have been some hopeful signs, I remain an agnostic on where the economy is going next, and how quickly.
I am that way in part because I concur with my colleague Michael Hugos: the truly agile business is ready to respond quickly to whatever circumstances the economy throws at them. Hugos avers that if a business has the three basic systems of business agility: Awareness, Balance and Agility, that business will be able to focus and respond successfully to whatever the marketplace brings forth. Here’s how!
According to Hugos, there are three basic systems that form “loops” within a business that are the basis for agile operations. As mentioned above, those loops are Awareness, Balance and Agility. The important concept here is that the three loops are interconnected, each one providing feedback to the other loops, without which the system would not work.
The first loop, Awareness, places a strategic focus on the marketplace right now, gathering information about what is happening with customers, clients and the marketplace in general. The information in the Awareness loop may come from outward looking systems, such as market research. However, inputs can also be found in your own business systems such as ERP and CRM. Data mining or Business Intelligence software can be helpful.
Information gathered by the Awareness loop becomes input for the Balance loop that has two purposes. First, the balance loop reviews all processes to standardize as much as possible. In particular, business agility relies on standard processes that can be automated to as great a degree as possible, allowing energy to be focused on the non-standard.
The second purpose of the Balance loop is to identify inputs from the Awareness loop that are non-standard. Any input that does not fit into an existing process is considered non-standard. The non-standard is what represents opportunity for the agile business.
The third loop, Agility, receives input from the Balance loop and performs analysis to understand emerging opportunities and threats. In particular, the Balance loop plays a key role in the ongoing implementation of strategy. When an opportunity or threat is identified, strategy guides the Agility loop in which concerns to actively address, and what new processes to put in place to take advantage.
In addition, the Balance loop also plays a crucial role in the ongoing, incremental revision of strategy to meet the challenges that emerge. Strategy should not be a “once a year” activity. A vibrant, successful strategy must be transformed constantly if the business is to remain truly agile.
If you are interested in learning more about Business Agility, I highly recommend Michael Hugos’ latest volume: Business Agility: Sustainable Prosperity in a Relentlessly Competitive World (Microsoft Executive Leadership Series), published by John Wiley & sons.