Agility to Compete: The New Way of Growing a Business

Companies are now facing more disruption than ever before. COVID-19 has created both challenges and opportunities, with companies altering the ways they conduct business and many shifting to new digital models. This is coupled with traditional sources of disruption such as rapid digitization, higher access to data and information, new competition, and growing consumer expectations for simplicity in work and personal lives.

While the future is uncertain, companies have a clear opportunity to come out stronger than they are today. They just need to learn how to adapt to change and grow their business in ways they have never done before.

Agility to Compete

One effective strategy to help companies manage this disruption and emerge on the other side stronger than before is a concept we call “agility to compete.” Agility to compete is focused on taking out costs to invest back into growth priorities, and often is focused on a few major components. First, it aligns the operating model to the new business strategy. Second, it significantly simplifies and eliminates waste in processes to focus on business priorities. Third, it reinvests in developing leading capabilities to leverage scale. Finally, it transforms the talent, culture and organization to sustain business and reposition for growth. Taken together and with the right discipline and focus, companies can use this type of program to dramatically and rapidly pivot their companies to the future. 

With an agility to compete approach, it’s also important to get alignment among the executive team.  Misalignment inhibits growth and often times the perceptions and priorities differ among executive leaders. For example, our research shows that only 20% of CEOs versus 30% of CFOs indicate that reinvestment priorities are driven by the fastest ROI. Further, only 30% of CEOs versus 17% of CFOs strongly agree that their company’s operating model is aligned to fuel strategic growth initiatives. This type of misalignment is also common amongst VPs and the C-suite. Only 1 out of 3 C-suite executives and 1 out of 4 VPs believe that the reinvestment priorities are in line with the business strategy. Further, 31% of C-suite executives versus 16% of VPs are confident regarding the company’s ability to execute on activities that drive value.

An agility to compete approach can help an organization easily transition to an XaaS model. I have spoken in many of my recent blogs about the benefits of pivoting to an XaaS model. Often, many organizations recognize the benefits but are concerned that it will take many years to realize a return on investment. For example, Adobe, who began making the migration to an XaaS model in 2009, didn’t begin seeing revenue from XaaS offerings until 2011, and saw a revenue dip for five years before seeing their P/E grow by 2.7 from this shift. An agility to compete program can help give your organization the horsepower needed to make the shift.

A perfect example of a company that has successfully grown their business in a different way is Johnson Controls. The company made the bold move to combine its 135 years traditional  building experience with cutting edge technology, IoT, and machine learning capabilities to create a new suite of connected and intelligent solutions. The resulting platform – called OpenBlue – is a modern, scalable platform, that breaks down traditional industry silos to enable clients to achieve new outcomes with their real-estate holdings. With OpenBlue, customers are now able to create more dynamic buildings that not only decreased energy and water consumption, but also more comfortable and healthier living and working spaces. [1]

Time to Act!

Johnson Controls did what many companies in today’s disruptive environment are not doing. They recognized how buildings were evolving from inflexible assets to dynamic resources and developed a new digital platform that could deliver the capabilities their customers wanted, which was focused on the future of smart, connnected and sustainable buildings.  Johnson Controls OpenBlue technology now powers an innovative suite of new digital solutions with more than 20 uniquely tailored services across HVAC, fire protection and security.[2]

Remember – you don’t have to go full-on digital. Some companies jump in head first and others take a slower or more incremental approach. Either approach can work. The important thing is that you start looking at ways of growing your business differently than you ever have before.

If you are ready to act, here are some initial things you can start thinking about.

1.    Look at your business and try to determine where it is going so you can develop strategies to compete in that new environment.

2.    Look for ways to take out costs. This could be outsourcing, spending less money on indirect categories like travel, etc.

3.    Look at your current capabilities such as sales, IT and finance. Evaluate whether you are going to need some of these functions if you make the pivot. If not, scale them back as needed.

4.    Use available cash saved from the above ideas to invest in new ways of doing business that can transform the company.

5.    Start looking at how your company can leverage an agility to compete approach to migrate to an XaaS business model.  If you have already started this process, look for new ways to expand your digital journey.

In my next blog, I will provide the steps to embracing competitive agility.

Disclaimer: The views and opinions expressed in this document are meant to stimulate thought and discussion. As each business has unique requirements and objectives, these ideas should not be viewed as professional advice with respect to the business. This document may contain descriptive references to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks.

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[1] https://www.johnsoncontrols.com/media-center/news/press-releases/2020/07/31/johnson-controls-launches-openblue

[2] https://www.johnsoncontrols.com/media-center/news/press-releases/2020/09/23/new-flexible-service-offerings-powered-by-openblue-technology