Resilience and Agility: The Two Ingredients of Competitive Supremacy

The provocative and fast-moving business world of the early 21st century features the greatest intensity of domestic and cross-border competition it has 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 (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.

CHANGES IN THE AVAILABLE CHANNELS

These changes are especially important if the new channel is likely to be particularly cost effective for organisations or attractive to customers. For example, the internet has proven to be of massive commercial significance.

FUNDAMENTAL CHANGES IN THE NATURE OF DEMAND

Changes in the nature of demand caused by incoming technology 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:

Camera film has been almost completely superseded by digital media. A home movie camera just launched on the market offers more than 40 hours of filming on a 60GB disc: a volume of memory that would literally have been science fiction even 20 years ago. Major camera companies have had to rapidly change from making film cameras and camera film to producing digital cameras – a very serious example of business agility.

Mobile phones have become portable personal multimedia entertainment facilities in which the telephone function is only one of the applications 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 of late, 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 forever.

30 years ago, typewriter manufacturing was still big business, but today typewriters really only 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 (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

The importance of technological developments is unquestionable, but it is important to remember that technological change is only significant when customers are prepared to accept the change in the commercial infrastructure it inspires.

Sometimes they aren't – 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 reopening 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 gain the competitive edge?

SIGNIFICANT CHANGES IN THE PRICES OF ELEMENTS OF THE SUPPLY CHAIN

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 are fairly obvious, but others, such as changes in the cost of travel, and 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 80 million barrels a day) price rises and shortages are not common. 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 today is the importance of the 'green' agenda. 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

The 9/11 attacks came close to wiping out the New York brokerage house Cantor Fitzgerald, which 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).

It 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.

RESILIENCE TO CHANGE

Those, then, are some of the major types of change that 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 must be able to operate commercially. They need to be quick on their feet to rise above the squalls and perils of the changing business scene.

Such organisations are agile in the best sense of the word. Agility can be defined as the ability to drive timely change through adaptable processes and flexible IT systems and infrastructure.

THE AGILE ORGANISATION

An agile organisation is truly resilient and fit for business in every sense. It is an organisation that is flexible enough to have prepared a defence to otherwise potentially harmful threats before they actually happen.

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.

CUSTOMER-CENTRIC THINKING

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. This customer-centric view is based around understanding who your customers actually are.

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 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.

ERP – ENTERPRISE RESOURCE PLANNING

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 vying for competitive supremacy in an attempt to offer the highest levels of agility and resilience to customers.