Assess Your Enterprise Agility (Forrester).

November 12, 2007
Assess Your Enterprise Agilityby Henry Peyretfor CIOs
Making Leaders Successful Every DayFor CIOs
November 12, 2007
Assess Your Enterprise AgilityAgree On Agility Objectives With Your Internal Peersby Henry Peyretwith Alex Cullen and Caroline Hoekendijk
EXECUTIVE SUMMARYFirms and government organizations are constantly bu?eted by changes in their business environment - from changing customer tastes to economic changes a?ecting raw material prices to government regulations that make hitherto smart business strategies irrelevant. Firms must respond well to these changes to survive and thrive. While ?rms have used di?erent business strategies to insulate themselves from the e?ect of change, CEOs are beginning to recognize the need for their ?rms to become more agile in detecting and making the changes to strategy, operations, and products. Turning agility from a buzzword into a business capability requires ?rms to measure and manage their ability to change - and agree on what agility means speci?cally for their enterprise. CIOs should take a lead by helping the executive team understand its own ?rm's de?nition of agility and de?ning the key agility indicators (KAIs) that will highlight improvement.
TABLE OF CONTENTS NOTES & RESOURCES2The Rate Of Change Continues To Challenge Forrester interviewed ?ve vendor and user The Capacity For Change companies, including Capgemini, HP, IBM, There Is No Single Overriding Problem That LogicaCMG, and Veolia Environnement.Reduces The Capacity For ChangeThe CIO Struggles To Prepare For Change Related Research Documents"Debunking Alignment Nirvana"6Manage Enterprise Agility To Prepare For June 18, 2007Disruptive Changes "The Rise Of Globally Adaptive Organizations" Agility Management In Action December 13, 2006RECOMMENDATIONS10Transform The Agility Buzzword Into Strategy "The Foundation Of Sound Technology Investment: The Total Economic ImpactT WHAT IT MEANS Methodology"11Agility Management Is A Step Toward A Fully September 26, 2003Managed Business Strategy11Supplemental Material
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THE RATE OF CHANGE CONTINUES TO CHALLENGE THE CAPACITY FOR CHANGEChange is a constant for all ?rms. It provides opportunity in the shape of market openings or raw material supplies but also threats in the form of shifting customer preferences or macroeconomic forces that impact prices or costs. In an ideal world, ?rms would be able to instantly detect and respond to these changes at no cost; in reality, ?rms require time and funds to respond to changes or to prepare for a change like the ones occurring now. The speed and cost with which they respond to these market and economic environment changes determines how successful they will be in terms of growth and pro?tability. To improve their ability to respond to market and business environment change, ?rms have pursued a combination of three strategies:
· Increasing scale. Firms use mergers to increase their size more quickly than they could through organic growth; they want to be big enough to insulate themselves against changes that their competitors or supply networks cause.
· Increasing scope. Firms broaden their product lines through acquisition or product and service innovation; their goal is to be able to ride out the changes in any one market.
· Increasing reach. Firms expand geographically to tap new markets; their aim is to be less dependent on the fortunes of their previous markets.
However, these strategies for coping with business change bring along their own change costs - they may have made the organization more susceptible to the impact of changes, as the experience of large ?rms has shown.
· Mergers, acquisitions, and divestitures drive risk. The... [download for more]