Transforming the Business to Operate at Market Speed
A recent survey of 3,000 CEOs and senior executives reports that most CEOs (98 percent) recognize they need to change their companies’ business models within three years. Three in four CEOs indicate that their companies face significant disruption. Interestingly, 7 in 10 are concerned that their executive teams lack the agility to manage and keep pace with this disruption.
Another global survey reports resistance to change as a top-10 risk looking out both 12 months and 10 years. The bottom line is that leaders acknowledge the inevitability of disruption while also expressing concern regarding their organizations’ agility to pivot in response to change. This incongruence does not engender confidence. Leaders need only reflect on the reimagining of business since the turn of the century to gauge the implications of accelerated change over the next decade.
What should leaders do to enable their organizations to function at the speed of the market? The following eight points offer a holistic approach for directors to consider in boardroom discussions.
Focus on improving the customer experience continuously. In inculcating agility into an organization’s culture, this mind-set is ground zero. Companies are competing on customer experience now—for, in the marketplace, customer loyalty exists only until something better comes along. That’s why driving value for the customer is at the heart of all decision-making, creating new sources of value for existing customers while opening up new markets to grow the customer base. This never-ending, innovative pursuit is all about reimagining and improving business models and processes in an ever-changing business environment. Anything short of that is tantamount to playing to lose, as it breeds sluggishness, operational blind spots, and strategic error as markets progress.
Draw from data-driven customer insights. Leaders should view their organizations as living organisms. The faster the organization learns, the faster it evolves. Improvement initiatives are fueled by attention to speed in gathering and learning from continuous feedback. The data needed to uncover and connect deep customer insights vital to informed business decisions should be collected and operational improvements should be implemented at the speed necessary to compete and retain market relevance.
Speed up the decision-making process. Remember the “change or die” urgency requiring rapid decisions at the onset of the COVID-19 pandemic? That same philosophy is needed in an environment where customers’ preferences are constantly changing, leading them to always gravitate toward something that’s better, faster, and lower cost. To break down the silos that slow execution, the end-to-end customer experience should be at the heart of the decision-making process.
Leaders should encourage processes leading to high-velocity, quality decisions that support the dexterity in execution that’s so essential to a customer-centric organization. Decision-making should not be a one-size-fits-all process. Some decisions require a formal process, but many can be reached in an unstructured manner.
Connect technology to customer value. Technology should be viewed in terms of the customer experience rather than the customer process. This means combining a sales, service, and marketing perspective and customer behavioral insights to break through internal barriers and drive improvements to the customer experience. Customer-facing teams should focus on harmonizing automation and personalization to meet customers’ expectations of a tailored experience, which often requires an integration of competencies across the organization that can be challenging to orchestrate.
Weave innovation into the fabric of the operating model. In today’s marketplace, efforts to differentiate the business or customer strategy are harder to sustain and may result in advantages of shorter duration than in the past. Ways of working that infuse innovation into the business—with the intention of continuously differentiating the business in the market—are required to sustain competitive advantage. Accordingly, leaders should couple technology and operational expertise with insightful customer knowledge and an innovative culture that encourages experimentation to design new products, business models, and growth strategies, all facilitated by automation and digital agility.
Employ agility as a business mind-set versus just a methodology. Uncertainty is here to stay. Yet, with uncertainty also comes opportunity. Organizations need to create flexibility and infuse agility into operating principles and processes to navigate continued waves of change. They can do this by adjusting their priorities and focus to take advantage of new potential value streams, rapidly solve for jobs to be done, and facilitate pivots in response to changing customer needs, shifts in supply and demand, or advances in enabling technology. Employing agility as a mind-set will prove decisive in defining the leaders who emerge from periods of downturn or business disruption.
Set the tone for lean behaviors with a supportive organizational structure. With the board’s support, the CEO should encourage an open, flexible, and agile organizational structure with a flat hierarchy that drives efficiencies; speeds up innovation cycles; and facilitates collaboration, communication, and rapid decision-making and execution. Executive sponsors should empower focused, dedicated teams armed with purpose and clear objectives and expectations to tackle well-defined tasks, as assisted by appropriate alliance partners.
Select the talent that will lead to success and embrace learning at market speed. The war for talent is over. Talent won. Directors and executive leaders should understand technology and digital business models, take an active role in digital leadership, and encourage the investments needed to recruit, develop, and train employees and retain critical talent. Companies should also assess their digital capabilities as a core competency regularly.
Diverse talent enables and is enabled by a learning organizational culture that embraces open-mindedness, critical thinking, fresh ideas, and contrarian points of view fueled by data. Feedback loops from interactions with customers, suppliers, and other outside parties broaden employee participation, invigorate the innovative process, and help to root out unconscious bias.
In summary, speed matters. Speed is dictated by the market and influenced by external and internal factors. Markets evolve, and so must companies—at speed. The tailwind effect of embracing change at market speed breeds confidence in the C-suite and boardroom. To manage at speed in business, a company must be at least as fast to adapt as—with an emphasis on being faster than—agile followers in the industry. The reality of the digital age is that time and speed in business have evolved beyond the tactical to emphasize a more strategic and holistic view that challenges conventional thinking, transforms customer experiences, and disrupts long-established value chains.
Jim DeLoach is managing director of Protiviti. DeLoach is the author of several books and a frequent contributor to NACD BoardTalk.