When Muhammed Ali first burst onto the boxing scene as Cassius Clay in the 1960s, what especially marked him out from his peers was his astonishing speed on his feet.
‘Float like a butterfly, sting like a bee’ he would boast, and the generally one-sided results of his bouts tended to support his claim.
Ali became world-famous (and World Champion) not only because he usually won his fights, but also because his boxing style seemed as provocative and fast-moving as the 1960s themselves.
Today, the provocative and fast-moving business world of the early twenty-first century features the greatest intensity of domestic and cross-border competition it’s ever seen.
This new pressure of domestic and cross-border competition is made even more demanding by the challenges (and, for the successful implementers, opportunities) presented by the third generation of technology.
This third generation builds on the first (simple installation of IT as a labour-saving measure) and the second (replacement of whole processes by technology for efficiency gain) to provide entirely new capability and business potential generated by the technology itself.
Besides the new pressures on business stemming from new levels of competitiveness and new types of technology, there is a fundamental and pressing need for organisations to maximise their fundamental flexibility in order to be truly responsive to significant changes that can affect trading conditions.
What kind of changes? The most significant types of changes, which apply equally to business-to-business and business-to-consumer organisations, are likely to be as follows:
Changes in the channels available between an organisation and its customers
These changes are especially important if the new channel is likely to be a) particularly cost-effective for organisations; b) particularly attractive to customers. For example, the advent of the internet has proven of massive commercial significance because the internet channel can be a highly cost-effective one and is also extremely attractive to customers.
Fundamental changes in the nature of demand caused by incoming new technology
These kind of changes are extremely visible and hugely important. They mean that there are very few markets nowadays that can afford in any sense to be complacent about their market share. Consider the following examples:
· the way camera film - and for that matter film for home movies or even Hollywood features - has been almost completely superseded by digital media. A home movie camera just launched on the market offers more than forty hours of filming on a 60GB disc: a volume of memory that would literally have been science fiction even twenty years ago. As for major camera companies like Kodak, they have had to change in a few years from making film cameras and camera film to making digital cameras. That is a very serious example of business agility.
· the way mobile phones have become portable personal multi-media entertainment facilities in which the telephone function is only one of the fun factors on offer
· the demise of petrol-guzzling 4x4s - ‘Chelsea tractors’ - as they get taxed into social unacceptability. General Motors, which continues to make big pick-up trucks, has had a tough time financially recently but Toyota, manufacturer among other things of the fuel-friendly Prius, the must-have for Hollywood stars, has had a great year in the US
· the rise and impending fall of the CD as iTunes and iPods change the music market for ever
· thirty years ago, typewriter manufacturing were still big business, but today typewriters are hardly sold at all in the developed world, though they still find a market in the developing world. In the developed world the market for typewriters has been superseded by word processors. This kind of paradigm shift in demand is rarely foreseeable and is all the more potentially dangerous for precisely that reason. Of course, the core demand (i.e. for a powerful, time-saving tool to help with the preparation of written documents) has not in fact changed: what has changed is the nature of the tool.
Changes in customer preference that can, surprisingly, even override technological change
The importance of technological developments in unquestionable, but it is important to remember that technological change is only significant when customers are prepared to go along with the changes in the commercial infrastructure it inspires.
Sometimes they aren’t. Indeed, the truth is that nobody really knows what changes are going to be acceptable to customers and which aren’t.
Who would have imagined, for example, that High Street banks, so eager to switch to virtual operation a decade ago, would now be trumpeting their re-opening of physical branches where customers can actually go and interact with (or buy from) a real person? Who would have thought (though with some knowledge of human nature one might have anticipated it) that customers would get so fed up with foreign call centres that organisations offering UK call centre facilities would be able to win a competitive edge?
Significant changes in the prices of elements of the supply chain that are important to your organisation
These changes are of major importance because they affect an organisation’s financial position and the prices it can afford to charge for its products and services. Some of these, such as changes in the prices of raw materials, for example - are fairly obvious, but others - such as changes in the cost of travel, and in the salaries an organisation may need to pay people who possess certain types of expertise, may not be.
A major unknown in this respect is the likely price of energy in the future. It is a testament to the almost unimaginable scale of the world’s oil and natural gas endowment, and to the energy and ingenuity with which new sources are found and exploited, that even with today’s levels of global consumption of oil and gas (about eighty million barrels a day) the time when fuel prices will start to rise radically and herald a global fossil fuel shortage seems to be continually put back a few years. But gradually rising fuel prices appear to be a fact of life for businesses around the world.
Changes in financial conditions
The effect that changes in interest rates can have on a business is well known. Other financial variables such as exchange rates and inflation will also have a significant impact on a business.
Changes in public tastes and perceptions
Recent years have shown that public taste can change more rapidly than one might imagine. An important example here is the importance of the ‘green’ agenda today. In several countries around the world, ‘green’ political parties have made considerable headway. This has not been the case in the UK and the US, but the green agenda has become profoundly important in the UK and US all the same. The well-known ‘Plan A’ being pursued by Marks & Spencer, for example, is an ambitious 100-point plan to tackle what M&S describes as ‘some of the biggest challenges facing our business and our world.’ Of course initiatives like this have a marketing agenda too, but this doesn’t mean the initiatives aren’t genuine and sincere.
Changes in levels of physical safety
Not the least alarming point about the dreadful events of 9/11 was that until that day, the United States had been remarkably free of attacks by external terrorists. (The Oklahoma bombing having been committed by a domestic terrorist group). The 9/11 attack came closer to wiping out the New York brokerage house Cantor Fitzgerald, which was (and still is) regarded as one of the best and most dynamic firms on Wall Street.
The new attitude to physical safety that 9/11 and other terrorist attacks have conspired to bring into being has commercial repercussions (better security costs money) and also has major change implications in that we simply do not know the likely future nature of threats by terrorism to physical safety or our peace of mind.
Those, then, are some of the major types of change with which organisations have to confront today. For an organisation, the ideal situation is to be resilient to change, in the sense that no matter what the nature or extent of the changes, the organisation not only weathers them but actually benefits from them.
Organisations that are truly resilient need to be able to operate commercially just as Muhammed Ali boxed in the earlier years of his career. They need to be quick on their feet. They need to be able to float above the squalls and perils of the changing business scene, not because they are out of touch with reality but because they are so much in touch with reality that they are not hidebound by the changes that reality inevitably generates. And they need to sting the competition.
Such organisations are agile in the best sense of the word. At Charteris we define agility as the ability to drive timely change through adaptable processes and flexible IT systems and infrastructure.
An agile organisation is truly resilient, and fit for business in every sense. It is an organisation that is flexible enough to have in effect prepared its defence to otherwise potentially harmful threats before they actually take place.
The best way to be resilient and agile is to be fully prepared for change. Don’t set things in concrete. Don’t plan only for the most obvious scenario.
The traditional approach to resilience was to identify a scenario and then plan for it, to set the systems in place, write the processes, and train the people. But in the real world the scenario never quite happens in the way that it was planned, or even never at all happens in that way. As the military likes to put it, and probably very sensibly, ‘no plan survives the first contact with the enemy.’
Overall, organisations can achieve agility by putting the right people, processes and systems in place to prepare for change. This starts with taking a customer-centric view. Public sector organisations have customers too, of course: the citizens they are serving. This customer-centric view is based around understanding who your customers actually are. The need to be customer-centric is equally urgent and important whether your customers are external or internal in the sense that they are, in fact, people within another department.
Public sector bodies, overseen by elected politicians who see themselves as having a responsibility to implement changes they feel will be popular with the electorate, sometimes lead the way in the generation of agile strategies.
For example, a major new momentum in British public sector bodies is the notion of ‘shared services’. This is where the drive towards cost savings and improved efficiency, as outlined in the Gershon review and subsequently championed by the Cabinet Office, is achieved by economies of scale, bundling together services such as HR and finance and sharing them across multiple government departments (or multiple local government organisations).
Government departments are therefore in the process of making themselves agile in this crucial respect. It’s as if a commercial organisation were suddenly to decide that it was going on the acquisition trail and expected to quadruple in size in the next three years - tremendous agility is required to put the processes, people and systems in place to cope with this pace of change. In Government such change has to be resilient as well. Public sector bodies have to keep providing services to people on a day-by-day basis even as the change is taking place.
Once an organisation has made itself customer-centric, it needs to cultivate a profound understanding of its business processes so that it can engineer these processes to be resilient to change and to support them with the strategic use of information technology (IT). It is this particular challenge that organisations often find very difficult. The goal is to make IT serve the business and to use IT as an asset to support agility and provide resilience.
One of the most significant changes in IT business systems over the last few years has been the rise of ERP - Enterprise Resource Planning. ERP systems, originally created in the manufacturing industry, are end-to-end business IT systems, covering everything from customer relationship management through to accounting and billing, formulated around best practice as seen in many industries.
The potency and competitive advantages of ERP systems derives from the fact that the business functions can share data. For example, the customer help desk can call up payment records, check inventories, process applications and so on.
This has huge benefits in terms of customer experience, efficiencies and through-life costs. In terms of agility, these systems are built to be scaleable and to ‘plug-in’ to other existing systems.
So whether you’re creating a shared service in a government department, merging companies or growing the business, ERP can be an invaluable enabler. Right now, ERP providers are slugging it out for competitive supremacy by sparring with each other to offer the highest levels of agility and resilience to customers. Float like a butterfly, sting like a bee...
