The importance of being agile in a economic downturn

A case for Agile Business Structure

Trickle-down economics, also called trickle-down theory, refers to the economic proposition that taxes on businesses and the wealthy in society should be reduced as a means to stimulate business investment in the short term and benefit society at large in the long term.
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Agile for survival during the inevitable economy downturn

Agile – When the economy is heading for a slowdown or a downturn, many firms don’t realize the opportunities available around them unless they are prepared and positioned to take advantage of those unseen opportunities.

“Downturns present opportunities, but to realize them, companies must do more than take a defensive stance. Agile enables an organization to reduce operating costs and drive better outcomes, while becoming nimbler and more focused on business value.”

Agile leads to optimized operating cost, better efficiency and value-driven

Agile software development can help companies become more responsive. Firms shouldn’t delay implementation and ideally should begin preparing by having one or more units adopt agile practices at scale simultaneously.

The units most suitable for agile would include those that are most vulnerable to crashes. 

“Agile as an organizational enabler can speed and facilitate the integration of two businesses, resulting in 20% efficiency gains and high levels of employee engagement.”

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Agile improves reactivity, optimized expenses and better engagement.

The market behaviour and both uncertain and fast-paced, thus being agile would better equip an organization to remain relevant and flexible. Resulting in improved ability to adapt to ever-changing consumer demands and competitor strategies.

Agile offers rapid feedback while encouraging cross-functional collaboration leading to better ability to iterate and scale up quickly. This makes a company much more effective at handling market developments than stolid and slow-to-react bureaucracies and hierarchies. So much so that businesses that use agile are up to four times more responsive than traditional companies model. 

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Common problems in going Agile

Agile “Traps” and Cutting jobs

Agile optimize costs by cutting all services that aren’t dedicated to customers, not by cutting down jobs. The savings don’t come from cutting jobs or costs but from a structural change that yields 15% to 25% cost reduction compared with the traditional 5% to 10%.  This comes from a much flexible organizational structure and adaptive to market changes.

“A key role of agile leaders is to set and maintain strong alignment around the overall company purpose, strategy, and priorities. Leaders need to communicate their intent, explaining both the what and the why.”

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Employees who aren’t anxious about losing their jobs will be much more focused and able to apply their skills. In addition, agile shifts traditional structures, allowing for increased employee engagement and maximization of their talents.

This is particularly useful since many employees value growth; that is, they don’t want to be stuck in limited positions that don’t help them acquire new skills. 

Every downturn produces winners and losers. Winners get stronger in the face of adversity; when they use the challenge to build organizational strength and capability.

I think it would be safe to assume that in the next downturn, one route to greater strength will be through increased agility.

Agile and Merger & Acquisition

Mergers and acquisitions are increasingly important drivers of growth and adaptability. Downturns in the market present opportunities in this realm. However, many companies fail to extract value from these opportunities. Several reasons explain this failure, the most significant of which is an inability to integrate two companies adequately. Agile streamlines the process, particularly as increased efficiency and employee engagement will boost cross-team communication and fill leadership roles. 

However, failure to do so might be disastrous.

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When going agile, there will be bumps.

As with any new program, there may be bumps in the road to implementing agile practices. Companies need actionable steps, not vague commitments to concepts. Actionable steps which are communicated clearly across the organization and the realistic steps to which the desired goals seems possible and measurable indexes by which progress can be tracked.

Simply reorganizing hierarchies without also reorganizing processes can lead to stagnation. Some companies move one unit to agile but fail to plan migration for other units. Others create incentives to boost adoption, like opening new promotional paths, but then fail to follow through, so employees feel no impetus to change. Lastly, management sometimes fails to buy into the changes. Knowing these common problems in advance can help you avoid them.

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Author: Muhamad Aarif

A notorious book addict by night and an oil and gas executive by day. As Mark Twain said, "The man who doesn't read good books has no advantage over the man who can't read them." So, read, read, and read some more.

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