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How Business Agility Increases Revenue

June 29, 2022

It’s no secret that agile businesses earn more. According to a 2020 McKinsey & Company report, organizations that go through an agile transformation see their financial performance improve by 20 to 30 percent.

Because agile companies are continually seeking ways to optimize their strategy, organizational structure, and operations, they’re more likely to have the effective processes, data-driven insights, and a culture necessary to power growth in any environment.

Ultimately, they’re better equipped to get a high-quality product, aligned with customer needs, to the market faster. This puts agile organizations at a huge advantage over their competition. With speed and quality, they’re the ones providing the right product at the right time to their customers.

But if you want to use business agility to help your company bring in more revenue, you’ll need to understand how it works and what it can do on a strategic, organizational, and operational level.

Let’s look at what it means to be an agile business and explore how agility can impact your bottom line.

What Does Business Agility Mean?

Business agility is what will take your company from a business that's chugging along, vulnerable to the way the wind blows, to a leading-edge organization that has the resiliency, flexibility, and innovative power necessary to excel, no matter what the future brings.

It’s not just a process you can implement to derive a specific result – it’s not a means to an end. Agility is an organization-wide shift that affects capabilities and resources, behaviours, and ways of working.

For business agility to help drive revenue, you should have three things:

  • The capabilities to pivot quickly – this includes technology that unifies data across teams and generates analytics to help drive smarter decision-making.
  • The mindset for change – everyone from the CEO and upper management to employees, welcomes the continual feedback loop necessary for fast failing, quick problem solving, and value-driven innovation.
  • Intentional work processes – wherever you can simplify or streamline processes through automation, eliminating unnecessary steps, and encouraging autonomy, you can increase speed and productivity.

Why Is Agility Important in Business?

Business agility is important because it lets your organization adapt to change quickly.

Here’s the thing – almost every business has the same core purpose. You exist to provide your customers with your products or services and to generate revenue through these efforts. So whether you’re selling aluminum or IT services, your goal is to offer your products in a way that drives value for your customers and for your business. When you do that, you’ll sustain your operations and grow.

Sounds simple enough.

But that’s not the whole picture. In business, you also have to account for change.

There will always be dynamic factors that impact your ability to sell your product and earn revenue.

Shifting customer expectations. New competitors. Technological advancements, or bumps in your supply chain. Even natural disasters and global pandemics are on the list of realistic triggers that you need to be ready for.

And in an increasingly complex environment, these dynamic factors compound. So you have more volatility, more uncertainty, and more ambiguity.

The problem is, if you are slow to adapt to what’s going on in your market, your industry, and in the world, you’ll miss out on opportunities that could boost revenue and risk falling behind your competition. But if your organization is ready to adapt – if you have business agility – you can continually find ways to increase revenue.

Business agility is what sets your business on the path toward constant improvement, which enables you to learn faster, change swiftly, and take advantage of the revenue opportunities that emerge before your competitors do.

With the rate of change that exists today, business agility is more important than ever. As Scrum Alliance Certified Enterprise Coach Teddy Carroll points out, it’s not just something that can help you increase revenue – agility for companies today is a must-have.

The Relationship Between Business Agility and Revenue

The reason business agility is so effective at increasing revenue is that it reframes your organization to focus on value for your customer.

Traditionally, businesses look at what the competition is doing or what they expect the market to do to drive strategy. But, as an agile organization, you’re diving deeper into the relationship between customer and company by figuring out how creating value for the customer impacts outcomes for your business.

This agile approach leads to three key benefits that help to drive stronger financial performance.

1. Better customer experience (CX)

As an agile business, you’re looking at relevant data on the wants, needs, and actions of customers, and then taking this information back to the drawing board to ideate, experiment, test, and learn. It’s a process of relentless improvement designed to deliver experiences customers want.

How this business agility benefit leads to more revenue: By focusing on the customer and boosting CX, you reduce churn and increase customer loyalty. Companies that excel at CX see a 10 to 20 percent increase in sales conversions and customer satisfaction.

2. Greater employee engagement

In today's customer-focused business environment, the old hierarchies no longer make practical sense. There's a pressing need to broaden and deepen information networks so information is available where and when a decision is being made.

To achieve this, agile companies design teams around creating value, and employees at all levels are invited to share in the decision-making.

Teams consist of the best people to achieve a specific objective, so collaboration between departments is typical. That helps information travel faster and helps to streamline organization-wide responses.

And with more autonomy, employees get work done more effectively because they better understand the context in which a decision is made. They also work more efficiently because they aren’t waiting for a manager’s approval.

All of this allows employees to be more productive, which helps them feel more satisfied and engaged at work. According to the 2021 Business Agility Report, employee satisfaction was the second most reported benefit of agile transformation. Also, research shows that employees at agile companies are 35 percent more engaged.

How this business agility benefit leads to more revenue: The happier your employees are, the higher your revenue is likely to be – a Gallup poll found that employee engagement increases sales by as much as 20 percent.

3. Built-in resilience

The third key benefit of business agility is ingrained flexibility and resilience. Once you have your agile infrastructure in place – software that unifies data across departments, data-driven decision-making, and fluid movement of information across teams – it’s easier to see what works, recognize what doesn’t, and continually adapt.

You can then:

  • Bring products to market faster.
  • Spot process inefficiencies and eliminate them right away.
  • Identify what products or features are a good fit with customers and invest more in them.
  • Draw upon the right capabilities to respond to situations with minimal waste.

How this business agility benefit leads to more revenue: Because you already have developed agile behaviours, capabilities, and processes, your employees don’t just have the tools they need to cope with change. They also have the experience and workplace relationships that will help them be more resilient. This resilience primes your company to survive in good times and in times of uncertainty. Research released by professional coaching company BetterUp found that companies with the most growth in resilience demonstrate three times the revenue growth rate as those with the least resilience.

Types of Agility Your Business Needs to Drive Revenue Growth

When your business is agile, you have everything in place to continue offering value to your customers, no matter what external factors are impacting the market. But to sustain your culture of continual improvement, you need three layers of agility:

  • Strategic – This type of agility allows you to recognize opportunities before your competitors.
  • Organizational – This one is necessary to ensure your organization can respond to emerging and existing market challenges.
  • Operational – You’ll use operational agility to ensure you’re able to quickly deliver results, measure them, and continually improve how work gets done.

Here’s an overview of what each layer of business agility is and how it impacts your bottom line.

Strategic Agility

We live in a world that prioritizes innovation and rapidly integrates each new worthwhile technological advancement. As such, every industry is always moving forward.

This fast-moving drum of progress leads to two key strategic challenges for businesses:

  1. New opportunities are always bubbling up to the surface – if you don’t notice them, you won’t gain a first-mover advantage.
  2. What was viewed as useful today might not be seen as valuable tomorrow – if you can’t recognize where trends are moving, you could be stuck with an outdated business model.

Being agile, however, you can protect your bottom line. You have a bird’s-eye view of your business and its place within your market. You rely on the right information, such as real-time data, relevant reporting, and market auditing, to see where you probe potential new markets, recognize what’s obsolete, and identify what services you should expand before the competition does.

An excellent example of the power of strategic agility is the story of Kodak and Fujifilm and how each company responded to the shift to digital photography:

When the market for photographic film began to shrink after its peak in 2001, Fujifilm was already pivoting. Kodak, on the other hand, waited too long and didn’t have the insights that would show them what changes were needed.

Fujifilm quickly moved away from what they knew was a dying market (film) and chose to diversify the brand’s product line. By 2004, the company was downscaling its film production lines and closing redundant facilities, all while moving research and development teams to new facilities to facilitate better communication between engineers. Company president Shigetaka Komori also launched an in-depth 18-month auditing initiative to better understand the international market and how the company’s existing technologies could adapt to align with future markets.

These were big, bold moves informed by an understanding of how market complexity and uncertainty require a change of strategy – it's about shifting from an exploit mindset to an explore mindset. 

But the willingness to make these changes and work with the uncertainty in the market led to a significant spike in revenue – despite the death of the analog photographic film market, which was the bulk of Fujifilm's revenue. From 2000 to 2010, Fujifilm sales rose by 57 percent. Kodak, which did invest in research and development but failed to recognize the critical need to diversify, saw a 48 percent decrease in revenue over the same period.

Organizational Agility

Strategic agility is what your business needs for big-picture decisions that impact revenue. But to have flexibility and fluidity within your company so you can adapt to market changes quickly, you need to have good organizational agility as well.

Here’s what you can do to create a more agile organizational structure:

  • Get rid of workplace silos that could be slowing down the flow of information.
  • Designate someone to coordinate between teams to ensure everyone in the organization is on the same page.
  • Let employees make more decisions and invite their input.
  • Make expectations visible and include goals or objectives and key results in a shared single source of truth.
  • Continuously gather customer feedback and have processes in place to adapt to that feedback and make improvements as needed.

This type of agility drives better communication across teams. This is essential for protecting your bottom line – informational silos cost companies billions every year. It also prevents your company from dealing with the inefficiencies that are commonplace when you have a rigid organizational structure, such as slow communication, redundant tasks, unclear boundaries between teams, and alack of standardized processes. An IDC report found that companies lose about 20 to 30 percent of their revenue each year because of inefficiencies.

Operational Agility

Focusing on agility at the operational level, you’re able to bring quality products to market faster. The focus here is on setting goals and delivering measurable results. So, you’re going to use automation to speed up tasks and protect quality, work transparency to keep teams on track, and frequent and early releases to uncover dependencies and bottlenecks. 

Then, as you ship each delivery increment, you can look at what works, what doesn’t, and continually make operational improvements.

According to research conducted by McKinsey & Company, companies that practice operational agility are able to cut their time to market by as much as 40 percent. They’re also better at hitting targets – where traditional companies rarely reach their targets, agile companies tend to surpass them.

Unlock Your Revenue Potential with Business Agility

When you’re an agile company, your customers are happier, employees are more engaged, and you have the capabilities, processes, and culture that enable you to adapt to whatever the future brings. But agile transformations aren't simple. There are a lot of layers to business agility that you need to tailor to your organization's unique needs. 

At IncrementOne, we help our clients foster highly adaptive, resilient organizations. Book an appointment today and empower your business with the processes, capabilities, and mindset that will allow you to navigate complexity in an increasingly dynamic environment. 

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