The word is out. Agile. Sometimes overused, sometimes criticized, it is a ubiquitous term in business and is supposed to be a guarantee of innovation, attractiveness, and performance. In 2019, PwC stated that the two main reasons for a company to adopt organizational agility were the need for innovation and the economic environment.
Furthermore, according to a 2021 McKinsey study, an agile organization delivers around 30% gain in customer satisfaction, employee engagement, and operational performance. These are three key success factors. While the word is rich in promise, it is important not to forget that the path to achieve agility is still winding. In 2022, the GBS Maturity Assessment conducted by EY, stated that around 46% of companies claimed they were operating in an agile environment. This is encouraging considering the trend and momentum, but it is not yet the majority. The executive committee has undoubtedly a crucial role to play in enabling agility. To demonstrate its commitment, it can adopt an appropriate mode of operation in driving the company's strategy and organization.
“Fixed on the destination, flexible on the journey”
The executive committee defines and drives the strategy, typically broken down into priorities for the next 12 to 24 months, presented in a strategic plan spanning three to five years. Presented to stakeholders, these priorities involve resource allocation and organizational alignment.
In the current geopolitical context (according to a survey conducted by Natixis, 49% of institutional investors see geopolitical conflicts as the biggest economic threat for 2024), Firstly the executive committee seeks to preserve value through short-term arbitrage, at the expense of long-term objectives, which are nonetheless creators of greater value. It is then difficult to explain changes to stakeholders who have endorsed priorities for three or five years. Secondly, leaders’ mandates tend to shorten to the extent that the person who decides on the strategy is no longer the one who sees the results. The embodiment of the strategy can therefore vary over time.
Thus, it would be important to have a vision of the destination while leaving the opportunity to arbitrate more quickly. What are then the best practices to enable an executive committee to have this agility in implementing strategy?
The first one is to meet physically and frequently. It may sound obvious, but it guarantees sharing and a sense of community of interests. The second one is to have proactive and real-time communication with the organization through town hall meetings or media statements. The main pitfall is the loss of information as it progresses all the way down through the organization, which may perceive sideways moves as a lack of direction or even a strategic shift. The same applies to stakeholders who need to be heard and kept informed of developments. Managerial relays must then be perfectly aligned. Lastly, the contribution of economic intelligence lies in mastering the information cycle to understand the changing factors affecting strategy.
Thinking in real-time, rather than in terms of fixed priorities, becomes a key success factor that nevertheless requires a certain agility. Some leaders are better equipped than others. Some need to have all the information before making a decision, while others are satisfied with only parts of the information.
Managing ambiguity, curiosity, and taking measured risks are behavioral preferences unique to each individual, but if mastered, they are positively correlated with agility in navigating such a context.
Two enlightening examples. In the B2B services sector, one company disrupted its strategy and organization during the Covid-19 pandemic to implement a marketplace, despite initial skepticism. It greatly benefited to customers and prospects as it provided them with quicker access to services. Another company, anticipating increasing savings from its customers while competitors focused on marketing and e-commerce, reallocated budgets and resources to its production to increase its stock, which was quickly reduced due to the rebound in demand.
Project governance takes the lead over organizational structures
The second core subject of an executive committee is the overall organization of the company. When we talk about organization, we also refer to hierarchical lines that determine, in turn, the competencies and performance criteria of individuals linked to a higher level.
In a context where the environment is constantly changing, and traditional organizational structures continue to evolve, there is a search for closeness in work relationships as well as commitment from organizations for a greater humanization of connections between individuals.
If one of the purposes of the executive committee is to have an organization that unleashes potentials and possibilities, then it should adopt a mode of work and task distribution that allows everyone to apply their skills, express their potential on increasingly multidimensional subjects. Adopting a project-based work mode is therefore a good indicator of an organization's agility.
English Translation : Article written by Michel Tobelem, June 2024, HBR France (link)