Enterprise Agility for Growth

As a paper from McKinsey explains[1] Enterprise Agility is the ethos of embracing uncertainty and exercising sound judgment to make better business decisions, drive innovation, and achieve high growth. While Enterprise Agility is usually mentioned in the context of the organisation's ability to adapt to market threats and opportunities rapidly, few make the logical step to suggest that this results in growth. Yet that is an obvious conclusion, and the natural outcome of Enterprise Agility is done well.

Not all organisations have built the capability for rapid change; some businesses implement agility-related change faster than others. Conventional Enterprise Agility wisdom suggests that organisations adapt rapidly to technological advances, new market dynamics, and shifting consumer preferences. However, this is nearly impossible because, in many markets, the environment evolves faster than many firms can respond. The consequences of trying to keep up with every change are stark: the erosion of competitive advantages, a myopic focus on the short term, and organisational chaos.

In their paper “How to Avoid the Agility Trap,”[2] Jianwen Liao and Feng Zhu found that companies in volatile environments tend to achieve sustainable growth by focusing their strategies on a few enduring elements rather than numerous fleeting ones. This approach, the term strategic constancy, involves recognising and committing to the essential aspects of the business model—such as core values, customer relationships, brand identity, and key competencies—despite external pressures. Unless there is a significant market shift, it prioritises depth over breadth, enhancing the company’s competitive advantage in its core areas rather than diluting efforts across many.

The disparity between industry leaders and laggards in the speed of agile adaptation will widen as businesses implement Artificial Intelligence applications as part of their transformation activities. Those at the forefront will become even faster, more responsive, and better equipped with data to anticipate and meet consumer demands. Meanwhile, those trailing behind may struggle to retain even small portions of their market share. We are used to the term technical debt, but here, there is a debt potentially of equal significance in agility.

McKinsey analysed over 1,000 high-growth agile companies in the United States.[3] They discovered that they often achieve a 50% higher Total Shareholder Return than their peers. This superior performance is attributed to one or more of the following five key factors:

1. Positioning: These companies typically position themselves to operate in or transition to high-growth markets or segments, naturally providing more opportunities for expansion and profitability in a dynamic environment.
2. Innovation and Product Development: These organisations consistently introduce new or improved products, staying ahead of market trends and meeting consumer demands.
3. Strategic Management: These businesses focus on effective management practices. They identify values, actions or methods that contribute significantly to growth, superior performance, and practical business management, with decision-making based on relevant metrics.
4. Leadership and Vision: These organisations employ dynamic, courageous leadership that embraces change, leverages technology, empowers teams, and eliminates inefficiencies, which can drive substantial growth and value creation.
5. Long-term Focus: These companies often maintain a long-term strategic focus, balancing growth with profitability, which helps sustain their higher shareholder returns over time.

Enterprise Agility identifies this combination of strategic positioning, innovation, effective management, visionary leadership, and long-term focus as the critical foundations for agility and natural sources of growth.

Positioning

Positioning concerns strategic decisions regarding the value the organisation will provide and the markets it wishes to operate in. Therefore, market expectations and the organisation’s brand promise are of primary concern. Agility is created by adapting positioning, brand or internal functions based on external market changes.

Adaptations to meet market changes are most likely to result in changes in customer experience. For example, expanding an operation into a new geography will require revisions to customer processing and internal processes to handle the new market. Introducing new products or services will also likely require alterations to customer experience—how customers are approached and handled.

Despite the clear evidence from agile frameworks and practices supporting the importance of customer-centricity, there appears to be a significant gap between intention and execution. Data from McKinsey shows that only 15% of respondents consistently incorporate customer input into their decision-making processes. Only 23% regularly engage with customers to ensure their products and services deliver real value. This disconnect highlights the Enterprise Agility challenge in prioritising the focus on the customer and effectively acting on that commitment.

This disconnection points to the need for agile marketing to provide regular and frequent external market analysis for internal decision-making. It is well understood that adapting and increasing customer focus unlocks substantial growth opportunities and creates a sustainable competitive advantage. Yet, as McKinsey illustrates, many businesses have room for improvement.

Innovation and Product Development

A lack of customer focus can severely undermine strategic positioning, brand management, and innovation in products and services. Businesses that prioritise and collect customer data can leverage modern AI to predict demands and identify opportunities. This customer-centric approach allows organisations to develop products and services that meet market needs, reducing wasted investments and avoiding unsellable products.

Incorporating customer feedback and AI-driven insights allows businesses to refine and improve Agile product development. Traditional software agile practices increase development team productivity, ensuring that new products and services align with market demands and are delivered in the shortest possible timescales.

Strategic Management

Strategic management in the context of Enterprise Agility relates to a business model that combines customer experience with business operations. Unlike traditional operating models, which seek stability and are rigid, the agility operating model is adaptive and adjusts when needed based on customer experience, market conditions, or business opportunities.

Traditional business models are designed not to service the customer but to focus on management disciplines and functions. Enterprise Agility requires the organisation’s operating model to be revised to best suit customers and the business's markets. The business structure, operational technology and processes are designed to suit customer needs and the brand promised by the organisation. Again, waste is a concern. The consequence of the Enterprise Agility operating model is a flatter, lean organisation with fewer management levels. Adaptation thereafter reduces operational costs and increases transaction speed when needed.

Leadership and vision

Agile leadership emphasises flexibility, collaboration, and responsiveness to change, drawing from agile methodologies initially developed for software development. Key aspects include empowering teams to make independent decisions based on future visions. Agile leaders foster open communication and collaboration, embracing change and continuous improvement. They prioritise customer value and use iterative work methods to enable regular feedback and adjustments. This approach requires authenticity and courage from leaders but ensures teams remain aligned with a vision and measurable goals and can adapt quickly to changes.

I recently read an article in HBR about courageous leadership.[4]. The author discusses how traditional views of managerial courage often depict the "tough guy" image, a hero. Physically strong, aggressive, and infallible. However, a more contemporary perspective defines courageous leaders as prioritising principles, creating safer environments for others, and being concerned with coaching and developing their team. They are willing to take risks, experiment and make tough decisions, particularly in the face of uncertainty and adversity.

Agile leadership embodies resilience, perseverance, honesty, humility, integrity, compassion, and courage. It involves staying committed to a vision and goals despite facing obstacles and setbacks. These traits inspire trust and respect and create a strong foundation for long-term success. In conclusion, fearless leaders navigate challenges with unwavering dedication and a principled approach, fostering an environment where individuals and organisations can thrive.

Long term focus

Enterprise Agility is more likely to concern a maturing business than a recent start-up. Startups are generally more agile than mature businesses due to their flexibility and adaptability, innovative culture, lean operations, customer-centric focus, empowered teams, and lack of legacy infrastructure. These factors enable startups to pivot quickly in response to market changes, embrace new technologies, make efficient decisions, prioritise customer feedback, and adopt the latest tools, allowing them to navigate the dynamic business landscape more effectively than their more mature counterparts.

When rapid changes occur, and threats or multiple opportunities present themselves, businesses focussed on agility may attempt to pursue them all at once. Often, these organisations prioritise those that promise the fastest returns. The consequence is strategic confusion and a lack of coherence in their business portfolio as they continuously seek the next big opportunity. Consequently, they may fail to cultivate the vision and long-term capabilities necessary for sustained growth and success. Therefore, an agile business must navigate its strategic direction, evaluating every change to ensure fitness for purpose.

However, “Rome wasn’t built in a day!” Cultural, operational, and marketing change takes time, even when using Enterprise Agility approaches such as mobilising the entire workforce and focusing on desired outcomes through OKRs. In my article Navigating Enterprise Agility, I outline a case study on how one of my clients ensures their long-term focus on Enterprise Agility.

For further information regarding Enterprise Agility, please contact Beneficial Consulting.

[1] The Impact of Agility: How to Shape your Organization to Compete, McKinsey May 25, 2021

[2] How to Avoid the Agility Trap, Jianwen Liao and Feng Zhu, Harvard Business Review, November – December 2024.

[3] Achieving growth: Putting leadership mindsets and behaviors into action, McKinsey January 13, 2025

[4] What Courageous Leaders Do Differently, James R Detert, Harvard Business Review, January 2022