Facing Management Dogmas: Organizational Agility is a Must, Part I

Agility in companies refers to an organization’s ability to adapt effectively and quickly to significant changes in the market, technology, customer demands, or other external and internal pressures. To achieve this, companies must exhibit speed in decision-making and execution, flexibility to adapt to changes in a holistic fashion, and an on-going strong focus on delivering value.

Hence, the phrase “We need to become agile” is frequently heard in executive meetings and has become a new management dogma.

What seems to be an issue with the term “agile”?

Even though organizational agility has become a strategic imperative as businesses increasingly face unpredictable challenges, the term “agility” has become so widespread that there is a concern it may have lost its original meaning, is misinterpreted very often, and even used as an excuse for a lack of coordination and standardization of day-to-day processes.

We will start this discussion by first and foremost addressing the question if organizational agility is a binary phenomenon. In other words, can we declare that some companies are agile, and some are rigid? Or is there a spectrum in terms of the degree of agility on which every company is located?

The level of agility

To explore this question, let’s examine three companies frequently cited as exemplars of agility: Amazon, Netflix, and Spotify. If agility is a binary trait, these companies would exhibit similar approaches to adapting to changes in their environments. However, this is not the case.

Amazon is renowned for its rapid innovation and experimentation, disrupting every industry it enters. Netflix is celebrated for its successful transitions—from DVD rentals to streaming and later to original content production. Spotify is recognized for its rapid feature delivery and adaptability in the music streaming industry.

Are these companies equally agile? Let’s take a closer look and compare them.

Amazon

The beginnings of Amazon reach as far as 1994 when Jeff Bezos founded an online bookstore in Seattle, Washington, originally named Cadabra. In 1995, the website Amazon.com was officially launched, offering customers access to an extensive online bookstore. In 1998, Amazon starts expansion beyond books to offer music CDs and DVDs. From there, its expansion has been outstanding as Amazon positioned itself in various industries such as: E-commerce, Cloud Computing (Amazon Web Services), Entertainment and Media (Amazon Prime and Amazon Studios), Logistics and Supply Chain, Smart Home Devices (products like Alexa and Ring), Retail (Amazon Go and Amazon Fresh), Healthcare (Amazon Pharmacy and Amazon Care), Artificial Intelligence (AWS AI services), Consumer Electronics (Kindle and Fire tablets & TV), and the list goes on.

In every industry Amazon competes in, it is perceived as a disruptor and trend setter. The innovativeness of this company seems unlimited as it is flexing the norms and challenging business models in industry after industry.

These days, Amazon continues to simultaneously expand its footprint in industries it entered in recent years, while maintaining its dominance in industries where it began, like e-commerce and cloud computing.

Netflix

Netflix was established in 1997 in California with the launch of their first website that allowed users to browse DVD titles and rent them online via physical mail. In 2007, the company started its transition towards a streaming platform, allowing subscribers to watch movies and TV shows instantly over the internet. As a result, Netflix has successfully disrupted the television network and media distribution industries.

Today, Netflix is one of the dominant players in the video streaming industry that produces a significant amount of original content. However, it is facing severe competition by Amazon Prime Video, Disney+, Hulu, HBO Max, and Apple TV+, all of them having a striking level of similarity to Netflix business model. In response, Netflix is currently focusing on expanding its international content library, gaming, and interactive features to be able to differentiate itself from competition.

Spotify

Founded in 2006 in Sweden, Spotify is one of the dominant players in the music retail industry. It is widely recognized as a disruptor as its streaming business model resulted in a reduction of the demand for physical music formats like CDs and vinyl, and even digital downloads (e.g., iTunes).

Similar to Netflix, Spotify is facing a plethora of direct competitors such as Apple Music, Amazon Music, YouTube Music, Tidal, Deezer, and Pandora. They all compete with Spotify in the streaming music industry but have different strategies and unique features that differentiate them.

Today, Spotify continues to innovate, focusing on integrating AI for music curation, expanding podcasting, and experimenting with new audio formats like audiobooks and live audio events.

Comparison of three agile companies

To evaluate these companies, let’s analyze them through the lenses of speed, flexibility, and value delivery:

• Speed: Netflix has demonstrated unparalleled agility, transitioning rapidly from DVD rentals to streaming and introducing ad-supported tiers to adapt to market demands. However, Amazon’s unmatched pace in launching new products and features across industries is also impressive.
• Flexibility: Amazon has consistently innovated across industries, disrupting business models in diverse sectors for over 25 years. In contrast, Netflix and Spotify, while initially successful, have remained focused on their original industries, facing intense competition and showing limited diversification.
• Value Delivery: Spotify excels in music personalization features like Discover Weekly and Wrapped, but Amazon’s ability to pivot across industries and deliver value to customers on multiple fronts arguably places it at the top in this category.

Based on these factors, Amazon appears to be the most advanced in terms of overall agility. Its sustained success in entering and dominating new industries highlights a level of adaptability and innovation that sets it apart from Netflix and Spotify.

Drawing a conclusion on agility as a binary phenomenon

Having compared three agile companies and discussed their differences in terms of agility, we can conclude that agility is not a fixed set of traits but rather a continuum on which companies can be positioned.

While some organizations may exhibit higher levels of agility due to their ability to innovate across industries and adapt rapidly to change, others may demonstrate agility within narrower scopes or specific contexts.

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