The critical importance of organisational agility

Marco Limena at Board International explains why business leaders need to prioritise agility in the face of disruption and continuous change

 

No business could have accurately predicted the series of unprecedented events over the last three years. Learning from their mistakes, the next generation of businesses needs a strategy to withstand challenges and leverage knowledge to move forward and grow.  

 

We’re living in an era labelled by continuous disruption. Brexit, the pandemic and a war in Europe have had indirect effects on every business, but labour shortages, high inflation, and increased regulation regarding ESG disclosure are only a few of the direct influences on the economic success of businesses.  

 

Companies globally have been unprepared for this perfect storm of events that has come slashing their business growth from all angles, and we’ve seen many companies across industries file for bankruptcy as a result.

 

Data from Board International’s Global Planning survey which asked businesses about their planning transformation and preparedness, shows that a third of businesses confessed that they lack the agility or resources to absorb ongoing supply chain disruption, high interest rates, or – perhaps most disruptive to businesses – another global pandemic. 

 

While businesses leaders can’t predict the future, they can optimise their preparedness for multiple outcomes. The survey shows that 98% of businesses still rely on traditional spreadsheets, like Excel, to do their financial planning and analytics, which requires time-consuming manual editing to plot potential scenarios.

 

These companies are not using predictive tools, rather hoping that they will have the capacity to react when a game-changing event has already played out. Businesses need to embed agility, flexibility and visibility into the original operations and decision-making recipes to stand a fighting chance against the unpredictable. 

 

Intentions versus reality 

The data tells us that of 2,450 decision makers asked, 90% of their business transformations have failed. The blame for these failures can be cast on numerous things – a lack of technical capability within the organisation has been cited as the top cause.

 

Furthermore, 26% of decision makers said that technical capability was dragged down their transformation, while a lack of investment in skills was cited by 23% and 22% cited a scarcity of team resources, both direct results of economic disruption. 

 

These failures shouldn’t scare businesses off, however, but show them just how important it is to be agile. Businesses attempting transformations aren’t unable to transform, but aren’t using the right tools to see through the changes. 

 

The economic disruption has caused 85% of businesses say planning is now taken more seriously across their organisation, including how they realise their financial planning, strategic approach toward investing, and teams and acquisitions requirements. The series of events over the last three years have brought upon a moment of reckoning that is forcing VCs and investors hands in pressuring businesses to step up and adjust their models. 

 

While planning is vital to a business’ future, many organisations still struggle with legacy challenges including outdated and inefficient tools such as spreadsheets. With so many businesses still using Excel to plan for unprecedented events, it takes planners an average of 27 hours a week to model different scenarios for their businesses.

 

And these business leaders still feel significantly underprepared to cope with disruption, a third believed they weren’t. If interest rates rise in the country of production and a manufacturer adjusts to this regulation change, it won’t matter if the shipping company that brings their exports to another country doesn’t have the right planning tools to execute their role.

 

They, too, should be able to see the possibility of rising interest rates and plan to still be able to financially carry out their job. Each member of the supply chain plays a key part in smoothing the flow of production. 

 

Therefore, both the lack of proper planning tools and the skills gaps that businesses suffer from play a part in the under-preparedness of companies when up against financial walls. While the unprecedented may not be avoided, it can be mitigated with the right systems in place. 

 

Digital transformation: an investment in customers 

Following the wave of troubling events within the last five years, businesses will be undoubtedly trying to execute planning transformations once again. Beyond investing in chatbots and over AI services, investors will want to see a rebuilding of trust.

 

Employees too will want assurance that the company they’re working for has taken on board the events of the previous years and become stronger and more agile as a result. 

 

85% of decision-makers say that their planning transformation is being taken more seriously since the beginning of the economically disruptive events. While many expected to bounce back after the pandemic, others have found the journey to regrowth humbling. Sales professionals are struggling to close deals and existing client relationships are teetering. 

 

The companies that choose to digitally transform in this next era of the economy will ultimately be the most successful. This is because the next “unprecedented event” will not happen in the next one hundred years, nor the next thirty, but it will happen in the next decade. And it will pay to be prepared. 

 

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Marco Limena is CEO of Board International 

 

Main image courtesy of iStockPhoto.com