Brief Guide: Operational Agility

Disruptive technologies, market volatility and changing customer expectations are rewriting the rules of engagement, creating business chaos that we must navigate. Against this backdrop operational agility has become a critical capability for us to not only survive but thrive.

Operational agility is the ability of an organisation to quickly adapt and respond to changes in its operating environment, whether that be market fluctuations, technological change or unexpected disruptions. It’s about moving fast, decisively and effectively to grab opportunities or mitigate risk and be resilient and grow long term. This article will look at what operational agility is, the benefits, challenges and how to achieve it.

What is Operational Agility?

At its core, operational agility means being able to adjust processes, structures and strategies to changing circumstances. Strategic agility is about big picture changes like entering new markets or launching new products. Operational agility is about the day to day and tactical level of operations. It means that an organisation’s workflows, supply chains and decision making mechanisms are agile and responsive.

Operational agility includes:

• Process Flexibility: The ability to change workflows quickly without losing efficiency.
• Resource Re-assignment: Redirecting resources – labour, capital or inventory – where they are needed most.
• Decision-Making Velocity: Giving teams the ability to make informed decisions quickly, often with limited information.
• Technology Enablement: Using technology to improve operations, visibility and workflows.

In short operational agility means an organization is not only prepared for change but can use it as a competitive advantage.

Benefits of Operational Agility

• Resilience: In an uncertain world, operational agility helps you “weather the storms”. Whether it’s a supply chain disruption or a sudden economic downturn, agile operations means continuity and business resilience so you can adapt and thrive in a changing market.
• Time-to-Market: Agile organizations can get to market faster by adapting their processes and removing weaknesses.
• Customer Satisfaction: By responding to customer feedback and changing preferences quickly, you can meet customer demands better, and deliver better customer experiences and loyalty.
• Cost Savings: While agility may require an upfront investment in technology and training, it reduces waste, optimises resource usage and lowers costs.
• Competitive Edge: Companies that can pivot quickly to opportunities or challenges will outpace their competition.

Challenges

Despite the benefits, being agile isn’t easy. Organisations face many obstacles:

• Cultural Resistance: Employees used to traditional ways of working will resist change, seeing it as a threat rather than an opportunity. You need an agile culture to overcome this resistance, as it enables flexibility, resilience and a collective commitment to adapt to market changes and customer needs.
• Legacy Systems: Old technology and inflexible infrastructure will hold you back from being agile.
• Siloed Operations: When departments operate in isolation, it’s hard to coordinate and apply agile across the organisation.
• Lack of Skilled Talent: Operational agility requires employees who are skilled in their role and can think critically and adapt to new scenarios.
• Decision-Making Bottlenecks: Without decentralised decision making, organisations will struggle to respond to emerging issues.

To overcome these challenges you need a holistic approach that touches every part of the organization.

How to be Operationally Agile Through Continuous Improvement

• Be Agile Adopted: Operational agility starts with a cultural shift. Leaders must create an environment where experimentation, adaptability and continuous improvement is encouraged. Employees must be empowered to take initiative and see change as the new normal.
• Invest in Technology: Modern technology like artificial intelligence (AI), cloud and automation tools are key to agile operations. These technologies give real time data insights, streamline processes and enable collaboration across teams. And investing in a digitally connected workforce means frontline workers can access information and contribute to process improvements.
• Simplify Decision Making: Operational agility happens when decision making is decentralized. Frontline employees and managers should have the tools and authority to make decisions without too much bureaucracy. This will enable operational agility by simplifying decision making.
• Cross-Functional Collaboration: Breaking down silos is key. Encourage collaboration across departments so all teams are working towards the same goal and have access to the same information. Review and improve existing processes will help cross functional collaboration and operational efficiency.
• Data Analytics: Data driven decision making is at the heart of operational agility. Organizations must be able to gather, analyze and act on data in real time to identify trends, predict challenges and capitalize on opportunities. Data analytics will help simplify processes and improve responsiveness.
• Employee Development: Train employees to think critically, adapt to change and operate with a customer first mindset. Upskilling and reskilling should be part of the organization’s strategy.
• Iterative Processes: Borrowing from agile project management, organizations can implement iterative processes to test, learn and improve. Having standard operating procedures (SOPs) within these iterative processes will ensure consistency and operational efficiency.
• Scenario Planning: Operational agility is also about being prepared. By doing scenario planning organizations can anticipate disruptions and develop contingency plans for them.

Operational Agility Examples

• Amazon: Amazon’s operational agility has been the secret to its success. Its dynamic inventory management, flexible supply chain and customer first approach allows it to respond quickly to changing demand. During the COVID-19 pandemic Amazon scaled up its operations to meet the surge in online shopping and implemented new safety measures for employees.
• Toyota: Toyota’s lean manufacturing principle is operational agility. By continuous improvement (Kaizen) and empowering employees at all levels Toyota can adapt its manufacturing operations to changing market demand. This ensures its production processes are efficient and responsive to disruptions.
• Netflix: Netflix’s transition from a DVD rental service to a global streaming giant is a proof of operational agility. The company is continuously adapting its content, technology and business model to customer preferences.

Measuring Operational Agility

To measure the effectiveness of operational agility and operational performance organizations can track:

• Time to market for new products/services
• Employee productivity and engagement
• Customer satisfaction and retention
• Response time to disruptions
• Resource allocation efficiency

Reviewing these metrics regularly will help organizations to identify areas to improve and sustain agility.

Conclusion

Operational agility is no longer a nice to have – it’s a must have. As the world changes around us, those who can amplify business agility will be agile and have the advantage. It takes effort, investment and cultural change but the rewards are worth it. From resilience to customer satisfaction operational agility allows us to thrive in uncertainty.