PA Consulting recommends Agile method for business success

09 April 2019 Consulting.us

Global innovation and transformation consultancy PA Consulting recently conducted a survey on organizational agility, and found the strategy to be a central component of business success.

Agile approaches sprung from a software development method that directs self-organizing and cross-functional teams towards collaborative development efforts. The approach includes adaptive planning and continual improvement, and centrally encourages rapid and flexible responses to change. Part of the strategy includes a short feedback loop in which team members report daily on tasks achieved and possible roadblocks, and the co-location of teams to enable face-to-face interaction and cycle time reduction.

Consulting firms and management types have now taken that software development approach and applied it to entire organizations, and it’s the hottest thing since scientific management. In a world where technology reforms industries in a span of years, companies have to be extremely adaptive to roll with the punches, evolve quickly, and deliver optimal products and services. Effectively implemented organizational agility is aimed at helping them do that.

According to a recent report from innovation advisory firm PA Consulting, organizational agility drives financial performance, and is the most important factor in helping firms react to technology, customer, and societal change. The survey of 500 senior business leaders found that the top 10% of businesses by financial performance are nearly 30% more likely to be “agile” firms.

Design across the agile dimensions

 

“As radical change transforms the world we live in, organizations must evolve at pace,” Ken Toombs, head of Americas at PA Consulting, said. “One in six of the companies we surveyed acknowledged that unless they evolve, they risk failure within five years. Yet we see organizational agility efforts transforming well-established financial institutions, household names, and industry stalwarts, establishing the conditions that have made them fit for the future.

“This research, and our experience, proves that embracing organizational agility is the most effective way to get ahead of the competition, and ensure your organization thrives, today and tomorrow," Toombs added.

Other key findings from the report were that two-thirds of leaders believe that their business model needs a fundamental rethink, and that 60% believe complex organizational structures are slowing them down. A further 72% cite organizational agility as a top strategic priority, while a majority are more concerned about disruption from digital natives than traditional competitors.

Ultimately, an effective agility shift seems to depend on either having or creating the right type of culture. Two-thirds of leaders said that organizational agility is more about shifting a culture than implementing a new process. As such, PA recommends putting about 80% of their agility effort on culture. “Without making sure you’ve got the right culture and processes, any agile initiative is likely to be temporarily effective at best,” the report notes. Since culture shifts can be a complex and difficult challenge, organizations often bring in experienced consulting firms for support.

Take five

The PA Consulting report identified five factors key to organizational agility, and common to high-performing firms.

  • Companies need to center on their customer, co-creating and prioritizing based on their feedback. Amazon is commonly cited as a successful customer-centric firm.
  • Firms also need to speed up time to value, which entails making quick decisions and acting swiftly to head off competition – moving from idea to launch at pace.
  • Agile firms design for simplicity, flattening hierarchies to let teams build, adapt, and deploy products in an effective way.
  • Critically, agile firms build to evolve, implementing modular digital systems that adapt easily to changing requirements, while having teams that can cope well with change.
  • Finally, firms need to liberate their people, encouraging collaborative work practices and employee empowerment at every level.

“As a business leader right now, we've never been afforded a better opportunity to adapt and transform – to truly understand our customers' motivations, to harness the power of technology to create ingenious products and services and to find creative and effective ways to engage and empower our people,” Sam Bunting, an organizational agility expert at PA Consulting, said. “We've seen first-hand how organizations can beat their numbers and deliver higher all-round performance as a result of taking these five perfectly achievable steps."

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Consumer and retail execs say 'agility' could boost revenues by $345 billion

09 August 2018 Consulting.us

A new survey of global C-suite executives from consumer and retail firms reveals that, on average, they expect the adoption of business agility to ramp up revenues by 23% - or $345 billion across the companies surveyed.

Firms today want to be agile, able to adapt and respond quickly changes in their environment. For consumer and retail businesses, that means being able to adapt their mix of goods and services to meet the shifting demands of consumers. An important aspect of this is offer personalization based on effectively used swaths of consumer data.

A recent A.T. Kearney survey of 270 global C-suite executives from large consumer and retail firms examined offer personalization and questions around the agility of firms in the sector. The consulting firm also gave some tips on how to evolve from an idle firm to an agile firm.

According A.T. Kearney, research asserts that Gen Z and millennials want to be served ‘on their own terms’ instead of as part of a demographic cohort defined by affluence or some other metric. The report also relates that younger, digitally connected consumers are more influenced by their fellow consumers than by brand communications.PersonalizationA result of the above trend is that retailers and consumer goods firms are shooting for a more personalized approach with its customers. According to the survey, executives are reporting that their companies are transitioning from products and surveys designed for the masses to more personalized offers. 38% of global CEOs expected their firms to move to a more personalized model by 2026, with the same percentage saying so in the US.

On opposite ends of the personalization continuum, the amount of firms with a 100% mass-produced approach to products/services is expected to drop from 11% today to 5% by 2026; the share of firms with 100% personalized products/services is expected to rise from 9% to 17% by 2026.

The survey also found that executives favor data gathering and ominchannel strategies for creating a competitive advantage. Data gathering (20%) and omnichannel focus (16%) ranked first and second in terms of strategies to create a more personalized shopping experience, while new technology ranked at the bottom with 5%. A.T. Kearney relates that many firms, however, struggle to separate themselves from the pack in the top-ranked areas.Incentivizing consumers for data accessThe most common approach for firms to collect data for personalization is through discounts and financially-driven loyalty programs. 79% of respondents said they incentivized data collection through discounts, loyalty programs, and gift cards. The report remarks, “In essence, companies are paying their best consumers.”

The survey also found that though respondents most frequently identified firm culture as an obstacle to agility, they still planned to prioritize hiring based on ‘cultural fit’ rather than ‘disruptive thinking’. When asked how they would recruit top talent by 2026, 51% of executives responded that they would target those who seemed to be the best cultural fit, while only 11% said they would deliberately recruit disruptive thinkers.

The report revealed that executives think they can boost company revenues by as much as 23% by making their companies more agile. Applying this to the firms involved in the survey – which earn more than $1.5 trillion annually in revenues – agility could result in a revenue boost of $345 billion.Agility’s perceived impact on revenueFinally, the management consulting firm offers a few pointers to transition from an idle consumer/retail company to an agile one. Firstly, instead of struggling against complexity and slow top-down decision-making, companies should try to build smaller teams more tuned into consumers and better able to follow their instincts rather than strict directives from up top.

Secondly, firms should listen to consumers and translate their input into meeting their needs rather than trying to broadcast to consumers. Thirdly, rather than analyzing data to see what consumers will buy, firms should try to engage with consumers to understand and serve them personally. Finally, instead of following trends, firms should try to trailblaze and shape trends with offers that create new customer demand.