Business Agility

Once a company has the processes in place to drive their strategy to the lowest level of the organization, they must also have a way to acknowledge and react to changes in the business environment that can change strategy. In addition to defining the Business Action Framework, Michael Hugos has done groundbreaking work on Business Agility. 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.

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 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, the Agility loop actively addresses what is different, and creates new processes to put in place to take advantage of change.

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.

This week’s post is basedon an excerpt from the second edition of my book, Project Management Accounting.

2 thoughts on “Business Agility

  1. When talking about Agililty it seems to me that you are connecting the two worlds of Lean manufacturing and Agile Software development? Or is there a Business “Agile”. I for one would be extremely interested in finding out.

    I will certainly be checking out Business Action Framework by Micahel Hugos, and your book Project Management Accounting.

    I do enjoy reading your posts.

    • Kevin R Callahan

      Gary,

      Thanks for the question, a very good one. The concept of business agility is related, in a way, to both agile software development and Lean. What Mike has done is to go back to the basics of agile, which are ultimately based on decision making training for air force pilots. Mike applies those concepts to business in a broader way, showing how an entire business can be agile. Mike has several excellent books out on the subject that I am sure you will find helpful.

      Kevin

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