The concept of strategic agility describes a business’s ability to remain fluid, changing and updating operations as innovations become available. In this lesson, we look at how strategic agility applies to the development of new products and services.
What Is Strategic Agility?
If an organization has strategic agility, it’s able to adapt its business model quickly.
Let’s say a company makes chocolate bars. Let’s call it RollBars. A report comes out that indicates chocolate and cranberries together reduce the chance of getting heart disease. RollBars immediately starts to develop a chocolate bar with cranberries in it so the company can capitalize on the new research.The marketing team starts working on a plan, and the packaging department starts implementing changes to send out the new product to customers. Six months later, a new manufacturing process comes out that allows RollBars to switch from chocolate bars to nuggets in a matter of minutes. RollBars then promptly develops cranberry nuggets to speedily capitalize on the technology advancement.
Once again, the marketing team and packaging department get busy on the new plan.RollBars has strategic agility, which is the ability to remain fluid by changing and updating how it does business as innovations and new ideas become available. It’s able to make changes quickly so the company can stay ahead of the competition. By the time another company attempts to catch up, RollBars is accumulating new profits from leveraging the advancements.
Strategic Agility Drivers
Many large companies like RollBars are in a global economy and have to make decisions swiftly and efficiently. The company that accesses resources the fastest is the one that capitalizes the most.
Otherwise, the strategic advantages fade quickly.But the ability to adjust at a moment’s notice doesn’t just come from nowhere. It’s the result of specific factors in businesses. These include process adaptability, management commitment, and diversified labor.
Let’s look at each.Process adaptability means a company has a flexible infrastructure. Production of the good or service can easily be changed to meet increased demand or create a variation on an existing product.
When RollBars easily switched from bars to nuggets, this demonstrated a high level of process adaptability.Management commitment is necessary for a company to remain fluid and is when resources are distributed quickly and efficiently. Managers have to be flexible in how they disperse resources and reassign labor. Any delay results in lost profit.
As RollBars moved to integrate cranberries in their recipe, staff had to be reassigned from other departments to focus on the preparation of the cranberries being used. It was up to management to make sure existing processes were still covered while additional, more qualified staff were moved to the cranberry division.Diversified labor is needed when a company wants to increase its strategic agility and is when the labor force has to be able to switch jobs instantaneously. Those who can retrain promptly are often of high value to a company like RollBars.
Switching from being involved in quality control to cranberry preparation, for example, takes a diversified skill set.These key factors highlight the importance of being able to respond and adapt rapidly. Global competition is fierce for most companies. With advancements in shipping and transportation, companies are no longer protected by having a geographical advantage. For example, if a company’s based right outside of New York City, you might think that it has a strategic advantage in gaining the market there. But with globalization, companies on the other side of the world can compete with their own products and services. One way to gain profit, even in a market that might not be seeing much growth, is to have strategic agility.
Let’s review what we’ve learned. Strategic agility is about gaining a competitive advantage by capitalizing on new innovations. If a new technological advancement is made, a company with strategic agility is able to quickly take advantage of this change. Strategic agility means a company is fluid. It can change if new research is posted or a new machine becomes available.
For a company to gain a competitive advantage due to strategic agility, it would need to have three things: process adaptability, which is when a company has a flexible infrastructure; management commitment, which allows resources to be distributed quickly and efficiently; and diversified labor, which is when the labor force is able to switch jobs instantaneously.