Organisational agility:
How business can survive and thrive
in turbulent times
A report from the Economist Intelligence Unit
Sponsored by EMC
© Economist Intelligence Unit Limited 2009 Organisational agility
1
Preface
Organisational agility: how businesses can survive and thrive in turbulent times is an Economist Intelligence
Unit brie?ng paper, sponsored by EMC. In December 2008 and January 2009, the Economist Intelligence
Unit conducted a survey of 349 executives around the world on the bene?ts, challenges and risks
associated with creating a more agile organisation. The Economist Intelligence Unit wrote and executed
the survey, conducted the analysis and produced the report. To supplement the ?ndings of the survey,
the Economist Intelligence Unit also conducted in-depth interviews with a number of business executives
from leading companies. The ?ndings and views expressed in the report do not necessarily re?ect the
views of the sponsor. Marie Glenn was the author of the report, and Gilda Stahl was the editor.
Our thanks are due to all survey respondents and interviewees for their time and insight.
March 2009
© Economist Intelligence Unit Limited 2009 Organisational agility
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Executive summary
The market turbulence of the past year may have foreshadowed a new phase of globalisation, one in which
volatility is likely to remain a constant. Even after the current recession lifts, underlying ?uctuations in
energy, commodity and currency rates, the emergence of new and non-traditional competitors, and rising
customer demands will continue to roil traditional business and operating models for some time to come.
To be competitive, companies may ?nd themselves in a Houdini-like twist. How can they respond
quickly and nimbly to the changing environment without getting caught in knots? In today’s knowledge
age, the ability to transform information into insight in response to market movements is core to
sustainability. Companies must think of ways to make their processes more ?exible. This report examines
the challenges and rewards of organisational agility, particularly in tough economic times. The major
?ndings are as follows:
n Organisational agility is a core differentiator in today’s rapidly changing business environment.
Nearly 90% of executives surveyed by the Economist Intelligence Unit believe that organisational
agility is critical for business success. One-half of all chief executive of?cers (CEOs) and chief
Who took the survey?
This survey, conducted by the Economist Intelligence
Unit in December 2008 and January 2009, included
responses from 349 business executives around the
world. Sixty came from the UK, 59 from France, 53
each from Germany and Singapore, 49 from the US,
46 from Australia, 18 from Canada and 11 from New
Zealand. Executives from 19 different industries
took part in the survey, 44% of whom had revenue of
US$500m or less and 31% with revenue of US$5bn
or more. Board members and C-level respondents
comprised 43% of respondents, while senior directors
and department heads made up an additional 31%.
The survey included responses from a range of
business functions and industries.
© Economist Intelligence Unit Limited 2009 Organisational agility
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information of?cers (CIOs) polled agree that rapid decision-making and execution are not only
important, but essential to a company’s competitive standing. Agility may also be linked to pro?table
growth: research conducted at the Massachusetts Institute of Technology (MIT) suggests that agile
?rms grow revenue 37% faster and generate 30% higher pro?ts than non-agile companies.
n Yet most companies admit they are not ?exible enough to compete successfully. While the
overwhelming majority of executives view organisational agility as a competitive necessity, actual
business readiness is more mixed. More than one-quarter (27%) of respondents say that their
organisation is at a competitive disadvantage because it is not agile enough to anticipate fundamental
marketplace shifts.
n Internal barriers stall agile change efforts. More than 80% of survey respondents have undertaken
one or more change initiatives to improve agility over the past three years, yet 34% say they have
failed to deliver the desired bene?ts. The main obstacles to improved business responsiveness are slow
decision-making, con?icting departmental goals and priorities, risk-averse cultures and silo-based
information.
n Technology can play an important supporting role in enabling organisations to become more agile.
Technology should function as a change agent in the use and adoption of best-in-class knowledge-
sharing processes, so companies can improve their use of critical data.
© Economist Intelligence Unit Limited 2009 Organisational agility
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If information is the currency of our digital age, then knowledge is the coin of the realm. Nowhere is this
more true than in today’s workplace. Everywhere we turn, we are inundated with data. Content, once
largely proprietary, now proliferates through an abundance of channels. As the plethora of information
swells, management and employees may ?nd themselves drowning in it.
The surfeit of information comes at a time when companies the world over are challenged to become
more nimble in the face of change. The market volatility of the past year has highlighted in sometimes
painful fashion the need for companies to anticipate and address pivotal events that affect their business.
Planning for the unpredictable may seem an impossible irony, but many ?rms appear to recognise that in
a period of turbulence, an organisation’s ability to ?ex and respond is critical for sustaining growth.
Why is agility so important? Peter Weill, the director of the Center for Information Systems Research
at the Massachusetts Institute of Technology (MIT), explains: “When I was a kid, the most successful
companies were monopolies or duopolies, but in today’s globalised, free-market environment, the
ability to satisfy customer expectations is core to pro?tability. If you’re not agile, you can’t do it, because
customer expectations are never static.”
The importance of being quick to leverage information resounds throughout the survey results. An
overwhelming majority of executives (88%) cite organisational agility as key to global success. This view is
Introduction: planning for the unpredictable
Extremely important — it is a core differentiator for us
Somewhat important — it contributes to our business success
Neutral — many factors shape our business success
Somewhat unimportant — other factors play a more significant role
Not at all important — agility is not a relevant criterion for our business
40
48
10
2
0
In your view, how important is agility to your organisation’s overall business success?
(% respondents)
Source: Economist Intelligence Unit survey, January 2009.
“In today’s
globalised,
free-market
environment,
the ability to
satisfy customer
expectations
is core to
pro?tability. If
you’re not agile,
you can’t do it,
because customer
expectations are
never static.”
Peter Weill, director of the
Center for Information
Systems Research, MIT.
© Economist Intelligence Unit Limited 2009 Organisational agility
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particularly strong in the C-suite: one-half of all CEOs and CIOs say that agility is not only important, but a
core differentiator. Other studies support this idea as well: research conducted at MIT suggests that agile
?rms grow revenue 37% faster and generate 30% higher pro?ts than non-agile companies.
Still, more than one-quarter (27%) of respondents admit that their organisation is at a competitive
disadvantage because it is not agile enough to anticipate fundamental marketplace shifts. Stefan Kohn,
head of innovation management at Fuji?lm Europe, believes that part of the problem is the fear of change
itself. “Companies sometimes choose to neglect change,” he says. “Those that are truly agile embrace it,
even when it risks cannibalising an existing product.”
© Economist Intelligence Unit Limited 2009 Organisational agility
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In an effort to free resources and become more responsive, business leaders across the industry
spectrum are reshaping their business priorities, stretching budgets and applying greater scrutiny to
capital expenditures. Some have found that when a precarious economic climate requires quick action,
a company can open new avenues for growth by strengthening and rede?ning what is truly core to its
business.
Take Fuji?lm, for instance. As its name suggests, Fuji?lm’s roots are in photographic ?lm, an industry
that declined with the advent of digital photography. Faced with a serious challenge to its core business,
the company learned early on that to stay viable, it had to innovate. Rather than abandon the ?lm
production business, however, the company re?ected on how it might apply its expertise to new markets.
“We are a photo-imaging company,” says Mr Kohn, “but we realised that human skin shares similar
properties to thin-?lm photo processes.” Just as free radicals can mar a smooth complexion, they can also
degrade photo-imaging quality. Fuji?lm recognised that the oxidation control mechanisms it invented
to prevent photos from deteriorating over time could be modi?ed to produce creams that preserve skin
quality. Indeed in September 2007 the company launched a line of skincare products, called Astalift,
based on technology it had developed for ?lm. “A few years ago, who would have imagined moisturising
with a photo-?nishing byproduct?” says Mr Kohn. “But the ability to ?nd new and non-traditional avenues
to apply our strengths is fundamental to our ability to remain competitive and responsive.”
Just as market changes nearly upended Fuji?lm’s business model, the worldwide economic downturn
places many companies in a similar predicament. Regardless of location, size or industry, most face
extreme operating pressures. “We are in an unprecedented time,” says Sheila Hooda, senior managing
director and head of M&A and corporate development for TIAA-CREF, one of the largest ?nancial services
companies in the US. “The business world has never seen anything like this complete market dislocation.”
Technological advances mean that cost and pricing pressures ripple faster through increasingly connected
supply chains, putting pressure on margins.
In response, many of today’s companies are adopting a “back to basics” mentality, with renewed focus
on core operating costs. One-half of all respondents rank “driving down operating costs” as their number-
Drivers for organisational agility
Key points
Ë Many companies are adopting a “back to basics” mentality, with renewed focus on core operating costs.
Ë While retrenchment is often one of the ?rst things companies do when a recession looms, today’s executives
are refraining from knee-jerk reactions.
Ë Companies are tailoring strategic investments to align with rising customer demand.
“The ability to
?nd new and
non-traditional
avenues to apply
our strengths is
fundamental to our
ability to remain
competitive and
responsive.”
Stefan Kohn, head of
innovation management,
Fuji?lm Europe.
© Economist Intelligence Unit Limited 2009 Organisational agility
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one business challenge over the next three years. That emphasis grows larger with company size: more
than three-quarters (77%) of businesses with US$5bn-10bn in revenue cite cost management as their
greatest concern, compared with just one-third (35%) of those with less than US$500m in revenues.
Still, while retrenchment is often one of the ?rst things companies do when a recession looms, today’s
executives are refraining from knee-jerk reactions. Only 13% of respondents indicate that their ?rms plan
to reduce the number of initiatives under way. Instead, companies are tailoring strategic investments
to align with rising customer demands. Forty-seven percent of executives responding to the survey say
that retaining high-value customers will be their highest priority over the next three years, followed by
creating superior customer value (43%) and accelerating product innovation (41%). By minimising excess
spending and non-core programmes, companies can better direct limited resources to satisfying customer
expectations.
Pressure to drive down operating costs
Price competition
Rising customer demands
Commoditisation of products
Compliance and regulation
Difficulty accessing capital for growth
Managing supply chain and operational complexity
Pressure to be first to market/innovate
Difficulty in increasing productivity
Other
Don’t know
0
Over the next three years what do you see as your organisation’s leading business challenges?
Select up to three.
(% respondents)
Source: Economist Intelligence Unit survey, January 2009.
Large organisations Mid-size organisations Small organisations
43
50
47
56
51
44
16
15
15
29
31
26
21
19
28
27
27
31
23
19
20
23
23
26
22
19
20
4
5
5
0
1
0
© Economist Intelligence Unit Limited 2009 Organisational agility
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Improving agility in tough times:
three lessons
Prior to taking up her current post as chief ?nancial
of?cer (CFO) for the world’s largest arts group, the
London-based Southbank Centre, Caroline Stockmann
directed global business planning for Novartis, a
pharmaceutical company, and served as CFO for
Unilever Thailand, a consumer-products company. In
both roles she faced tough business challenges, from a
division in need of a sharp turnaround to another whose
product base was being undercut by private labels. From
that experience, Ms Stockmann learned a few lessons
when it comes to managing in dif?cult times.
Lesson #1: There should be as much rigour devoted to
management before a crisis as during it. “People see
volatility as something beyond their control. It puts
them on edge, heightens emotions and compromises
good decision-making,” she says. When a crisis
happens, organisations tend to overcompensate.
“Companies often make the mistake of introducing
new measures and heaping mounds of data analysis
on employees,” says Ms Stockmann. Yet during such
times organisations need people at all levels to remain
calm and focused. “To preserve a business-as-usual
rigour in times of stress, a company must have the
right processes and controls in place as a general
management discipline,” she says.
Lesson #2: Do not let communication and teamwork
lapse. “People tend to withdraw when troubles
brew,” says Ms Stockman. As a result, teamwork can
suffer, often at times when companies need it most.
Management needs to make the ?rst move to reassure
anxious employees whose con?dence in the company’s
direction may have waned. It’s important for leaders to
be honest, forthright and direct with their employees
and communicate with greater frequency. “Employees
also need to know that it is okay for them to continue to
offer ideas and solve problems,” adds Ms Stockmann.
Lesson #3: Be wary of the status quo. The point
at which things start to go wrong is often when
everything seems okay on the surface. Managers
tend to miss the proverbial red ?ags until it’s too
late. Ms Stockmann speaks from experience: in
reconciling the balance sheet of a new employer, she
learned that the business had only recently become
pro?table. “The curious thing was that nothing in
the business model had changed to explain it,” she
says. Further examination revealed that a signi?cant
accounting error had distorted the balance sheet.
“If somebody simply paused to ask why there was
this sudden rise to pro?tability when our pricing
structure hadn’t changed, they would have very
quickly realised what was happening,” she says. “But
for three years, people were happy with this company
and few questions were asked.” People are more
inclined to probe poor results than they are good
ones, says Ms Stockmann. Putting that discipline in
place before ?scal pressures mount can pre-empt
bigger problems in the future.
© Economist Intelligence Unit Limited 2009 Organisational agility
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Despite a period in which consumers are ?ocking to discount retailers and private-label brands, only
3% of those polled say that being a low-cost leader is a top criterion for success in the global economy.
Instead, survey participants highlight the following traits as more critical to business success: leadership
in innovation; fostering a superior customer experience; the ability to turn knowledge into value; and
consistent, “no surprises” execution.
The notion of customer-centricity underlies each of these traits. “The better you know your customer,
the better you are able to gauge what matters most in de?ning a positive customer experience,” says
Michelle Cox, the head of contact centres at MBF (part of Bupa Australia, the leading health insurer).
“Such customer-centricity is core to competitiveness in today’s market, helping to direct innovation,
create value, and ensure ?exibility and nimbleness in decision-making,” says Ms Cox.
Key points
Ë The ?atter hierarchies and resource breadth that characterise many mid-size companies may facilitate better
information ?ow and, in turn, speed decision-making.
Ë For CFOs facing a tight credit market, agility means ?nding new or alternative funding sources.
Ë One-half of all CIOs believe that integrating and upgrading knowledge-sharing processes will go furthest in
improving agility.
What makes an organisation nimble?
Rapid decision-making and execution
A high-performance culture
The ability to access the right information at the right time
Accountability and credibility
Flexible management of teams and human resources
Decentralised or “flat” management reporting structure
Lean operations
Continual process improvements/Six Sigma
Unified/flexible application infrastructure
Other
61
44
34
34
31
29
22
17
9
2
What are the critical traits of an agile business? Select up to three.
(% respondents)
Source: Economist Intelligence Unit survey, January 2009.
61% of
respondents
say that rapid
decision-making
and execution are
de?ning attributes
of an agile
business.
© Economist Intelligence Unit Limited 2009 Organisational agility
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To nurture an environment in which innovation and customer-centricity can thrive, those polled
emphasise the importance of a high-performance culture (44%), the ability to access the right information
at the right time (34%) and accountability (34%) as key enablers. In addition, nearly two-thirds of
executives say that rapid decision-making and execution are de?ning attributes of an agile business.
Agility takes different forms for different functions. In an era in which open source and collaborative
networks are becoming a rich source of innovation, it may be no surprise that 37% of CEOs seek extended
partner relationships. For CFOs facing a tight credit market, however, agility means ?nding new or
alternative funding sources. Board members want improved scenario planning to carry out their oversight
role amid the vagaries of a ?uctuating market. For their part, one-half of all CIOs believe that integrating
and upgrading knowledge-sharing processes will go furthest in improving agility.
When it comes to competitiveness and changing market conditions, the “David vs Goliath” factor
doesn’t come into play, say executives. Instead, 44% of respondents believe that mid-size companies
have the agility edge over the size and reach of large companies and the entrepreneurial skill of small
?rms. The ?atter hierarchies and resource breadth that characterise many mid-size companies may
facilitate better information ?ow and, in turn, speed decision-making. Indeed, more than two-thirds of
mid-size companies responding to the survey believe that they are moderately agile and have the business
information available to support their primary job responsibilities.
44% of
respondents
believe that mid-
size companies
have the agility
edge over the size
and reach of large
companies and the
entrepreneurial
skill of small ?rms.
© Economist Intelligence Unit Limited 2009 Organisational agility
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Managing in a time of impermanence is no easy feat. To compete, businesses need to re?ne
organisational processes and leverage institutional and outside knowledge more effectively. Says Mr
Kohn of Fuji?lm Europe: “It’s impossible to keep up with the amount of information that churns through
the workplace. Making information easier to use is the ‘Holy Grail’.” Executives agree: 52% of survey
respondents acknowledge that they often have to spend valuable time hunting for key information. In
response, the onus, increasingly, will be on sense-making, arming decision-makers and employees with
Key points
Ë 52% of survey respondents acknowledge that they often have to spend valuable time hunting for key
information.
Ë Barriers to organisational agility include con?icting departmental goals and priorities, a culture of risk
aversion and silo-based information.
Ë Agile companies focus their time on standardising the processes that won’t change, freeing up resources to
develop value-added features that do respond to changing customer needs.
Becoming more ?exible: overcoming obstacles
38
1
33
30
28
25
24
23
18
14
13
13
2
Improving process efficiency (eg, change management, outsourcing, automation and standardisation)
Improving knowledge management and information sharing processes
Encouraging (and extending) collaboration across the business and beyond
Scenario planning and preparing for market changes
Increasing overall employee productivity
Creating cross-functional teams
Securing funding for business expansion
Improving workforce planning, ie, ramping up and down as needed based on human capital and expertise
Establishing policies that encourage and reward employee-generated process improvements and innovation
Reducing the number of initiatives under way
Allowing some budgets to be appropriated on a rolling versus annual basis to improve responsiveness to changing market needs
Other
Don’t know
In light of the economic downturn, what do you believe are your organisation’s priorities in terms of improving agility?
Select up to three.
(% respondents)
Source: Economist Intelligence Unit survey, January 2009.
“It’s impossible
to keep up with
the amount of
information that
churns through the
workplace. Making
information easier
to use is the ‘Holy
Grail’.”
Stefan Kohn, Fuji?lm Europe.
© Economist Intelligence Unit Limited 2009 Organisational agility
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the tools to ?nd, ?lter and focus the content they need.
Companies can’t change their infrastructure to meet the whims of the marketplace. What they can
do, however, is streamline, simplify and integrate the processes that support their true engine of
growth. Says Mr Weill of MIT: “We found that the ?rms with a higher degree of process and technological
standardisation are more agile.” Agile companies focus their time on standardising the processes
that won’t change, freeing up resources to develop value-added features that do respond to changing
customer needs.
To help solidify their core competencies, almost 40% of executives say that they will emphasise change
management, outsourcing, automation and other process ef?ciency improvements. Nearly one-third
of those polled will also seek to make better use of knowledge management and information-sharing
systems. To avoid the issues that have derailed many change programmes in the past, companies should
consider sharply focusing these improvements to make the improvements sustainable.
While the majority of executives view organisational agility as a competitive necessity, actual business
readiness is more mixed. Only one in ?ve participants believes that their company is able to react as
swiftly as needed. CIOs take a particularly dour view: 30% of respondents—more than any other functional
role—say that their business is not at all agile, and is too slow when it comes to decision-making.
Unsurprisingly, barriers to change include con?icting departmental goals and priorities, a culture of risk
aversion and silo-based information. It seems that even in challenging markets, turf wars persist.
Businesses have taken several steps to help improve responsiveness. More than 80% of those
BT Group:
germinating customer solutions in the hothouse
It is one thing to talk about what makes for an agile business, and
another thing to create one. Al-Noor Ramji is the chief information
of?cer (CIO) for BT Group PLC, the privatised UK state telecoms
operator. When Mr Ramji joined BT, his brief was to transform a
misaligned and largely decentralised IT organisation into a uni?ed
operation: “When I started, I was told we had 4,500 IT people. When
we ?nally stopped counting, it turned out we had 14,500.”
While part of the reorganisation was focused on cost savings, the
larger thrust was an effort to improve the customer experience. “We
needed our IT organisation to see that they had a front-of?ce role,”
says Mr Ramji. Over the two-year transformation, more than 3,000
formerly back-of?ce IT professionals found themselves at customer
sites delivering services. Not everyone liked it at ?rst. “This was a
huge cultural change,” says Mr Ramji. “People were plucked from
their comfort zones and had to break themselves of the view that they
were forbidden to speak to customers.”
Mr Ramji and his team tackled the issue by plunging employees
into BT’s customer co-development centre, or “hothouse”, as the
company calls it. “We use the hothouse to conduct intensive threeday
customer workshops with our IT, networks and process developers,”
he says. Once there, BT employees are given a current customer’s
challenge, divided into six competing teams, and asked to deliver
one solution per day. “The prototyping we do in competitive rounds
not only helps to build important client relationships”, says Mr
Ramji, “but also proves a powerful way to build employee pride and
motivation. It’s rare to have 36 hours in which employees can really
see how customers think and customers can see how our employees
work. And it doesn’t end there. The outcomes from the ‘hothouse’
set out what we will deliver for our customers over the next 90 days,
providing a level of transparency and accountability you can’t obtain
during a normal two-year cycle.”
The triple combination of employee empowerment, an
unambiguous mission in which everyone is invested and clear
incentives is core to successful change efforts, he adds. “It took us
two years to bake these ingredients into our culture, but after that,
you just watch the transformation take off in your hands.”
© Economist Intelligence Unit Limited 2009 Organisational agility
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surveyed say they launched one or more initiatives to become more agile over the past three years.
Yet these programmes have had mixed results, with 34% of respondents saying that they failed to
deliver desired bene?ts. Executives from Singapore and the US are more pessimistic: 42% and 43%,
respectively, say their programmes under-delivered. By contrast, 78% of Australians are satis?ed with
their transformation initiatives.
Our survey responses suggest that transformation efforts are not as uniform and integrated across
functions as they need to be. Executives tend to give high marks to sales, marketing and customer service
operations, units that they say are among the most agile in the corporation. By contrast, ?nance, IT and
human resources (HR) are singled out as among the least agile departments of global organisations. This
may give management pause, since ?nance, IT and HR play particularly important roles in driving process
ef?ciency, knowledge transfer, innovation and execution.
One reason for the disconnect is that process improvements are often poorly aligned with strategic
imperatives. Righting this balance begins with reassessing the performance measures that underlie key
business unit and functional activities. As the former administrator for the Of?ce of E-Government and
Information Technology for the United States, Mark Forman was the de facto government CIO. Now, as a
partner with global professional services ?rm KPMG LLP, he has a hard-won perspective on what it takes
to help large bureaucracies successfully transform. “Most leaders understand that an organisation’s key
processes should be tied to policy or agency goals, yet process and business objectives too often part
ways,” says Mr Forman.
Marketing
Sales
Customer service
Research and development
IT
Finance
Procurement
Operations and production
Supply chain
Human resources
Senior management/Board
Legal, risk and compliance
Other
Don’t know
12 38
1 1
1 3
15 44
11 33
19 23
33 14
29 15
15 9
17 26
12 10
31 9
15 26
30 8
In your view, which areas of your company are most/least agile? Select up to three for each column.
(% respondents)
Most agile Least agile
Source: Economist Intelligence Unit survey, January 2009.
“We found that the
?rms with a higher
degree of process
and technological
standardisation are
more agile.”
Peter Weill, MIT.
© Economist Intelligence Unit Limited 2009 Organisational agility
14
If performance measures are pointed in the wrong direction, the change initiative itself can become
misdirected. Says Mr Forman: “Key performance indicators can unwittingly place undue emphasis on
one priority at the expense of another.” He cites an example of a government housing authority whose
policy directive emphasised increasing loan volumes. Supporting processes were updated to speed the
mortgage application and review process. But the drive for higher volumes ignored what became a huge
spike in default risk. The problem was addressed, but as Mr Forman explains, “by bringing the right parties
together at the outset and articulating both the strategic objectives and the business requirements,
leaders have a better chance of succeeding in their aims and avoiding costly missteps.”
Taking the long view at TIAA-CREF
TIAA-CREF is one of the few ?nancial services companies to be
weathering the current economic downturn. This not-for-pro?t
retirement fund manager continually earns among the highest
ratings in the industry. Sheila Hooda, senior managing director and
the ?rm’s head of M&A and corporate development, explains why the
company has thrived in an industry sector riddled with disruption:
“Many executives’ time horizons are very short and tailored to
meeting quarterly earnings targets,” says Ms Hooda. “This lack of
long-term orientation could cripple organisations by making them
more reactive than proactive. TIAA-CREF is a private company, so
we do not have to manage to short-term earnings expectations that
confront other publicly held ?nancial services companies.”
Because TIAA-CREF primarily manages retirement funds, the ?rm
is accustomed to taking the long view. But Ms Hooda acknowledges
that even with this approach, the temptation to succumb to hasty
decision-making can be great. “Without a strong internal rigour, it
can be dif?cult to walk away or easier to overpay for deals that may
appear to be a perfect ?t in the short term,” she says.
Such rigour may appear to run counter to improving operational
?exibility, but Ms Hooda believes it is fundamental to managing
in a time of change. She maintains that the due diligence applied
to outside deals needs to be brought to internal change efforts
as well. “To be agile, an organisation must embrace change, but
it has to be done in a disciplined and structured way,” says Ms
Hooda. “For example, we know that 70% of initiatives in the M&A
area fail. Therefore, we rely on very strong ?scal discipline and risk
management. This has served us well.”
When responding to opportunities, both internal and external,
many executives naturally seek to understand the ?nancial
implications. Yet, Ms Hooda stresses that “companies often place
undue emphasis on the numbers and often only involve ?nancial
people in the discussion. This creates risk, because other business
and operational factors can often have an equal or greater bearing.
Therefore, we take a broad-based integrated approach, involving
experts from across the organisation.” Hence TIAA-CREF assembles
cross-functional teams in an effort to keep both client needs and
organisational risk in mind.
“We have independent risk management,” says Ms Hooda. “It’s
an equal partnership: the investment and business side does not
have more leverage than the risk side. That system of constructive
and balanced tension serves as a perfect foil to the chaos of the
broader marketplace.”
© Economist Intelligence Unit Limited 2009 Organisational agility
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Most companies need to make more progress in transforming their knowledge processes to ?t the
demands of the knowledge age. While 64% of respondents say they are largely satis?ed with the business
information available to support their primary job responsibilities, only 30% indicate that they have
the needed information to conduct their duties effectively. Because technology underpins nearly every
business process today, it can help those in the workplace improve their use of critical data.
CEOs and CFOs seek easier real-time access to information. For CIOs, who are charged with simplifying
and standardising complex and (in some cases) competing layers of technology, the primary focus is on
improving systems integration. As companies grow in size, the desire for more comprehensive integration
of IT systems across the enterprise also increases: more than 60% of respondents with annual revenues in
excess of US$5bn cite this as the number-one priority for their company’s IT departments, compared with
42% of companies with revenues of less than US$500m.
Key points
Ë Because technology underpins nearly every business process today, it can help those in the workplace improve
their use of critical data.
Ë Knowledge management and collaboration systems top the list of tools that will play a key role in the interplay
between organisational agility and superior innovation.
Ë Nearly 80% of survey respondents expect that IT spending on technologies related to organisational agility
will remain ?at or increase only slightly over the next three years.
The role of technology
Social networks to identify and share business and social contacts
Knowledge management/collaboration system
Technologies to pull data from multiple applications and share personalised results
Tools to encourage customer engagement, ‘co-creation’ and dynamic generated content and interaction (eg, crowdsourcing, open source software and wikis)
Specialised custom web applications to facilitate design, engineering and component fabrication
Predictive simulation models
Process to capture employee feedback and advice
Incentive programmes that reward successful employee-generated initiatives
Other
To spur innovation, does your organisation currently use the following programs, or plan to use them within three years?
(% respondents)
47 19 35
19 30 51
35 37 28
49 33 19
53 22 25
51 21 28
24 24 51
40 20 40
75 11 14
Use now Plan to use within three years Don’t know/Not applicable
Source: Economist Intelligence Unit survey, January 2009.
© Economist Intelligence Unit Limited 2009 Organisational agility
16
In acknowledging the interplay between organisational agility and superior innovation, executives
expect several tools to take a central role. Topping the list are knowledge management and collaboration
systems, something that 81% of those polled indicate will go furthest in spurring innovation. Two-thirds
of respondents are eager to see technologies that pull data from multiple applications used in aid of
research and development (R&D) and product/service innovation.
In meeting these goals, the challenge for CIOs and IT leaders will be to target strategic investments in
a precise manner, as budgets are unlikely to grow signi?cantly in the near future. Nearly 80% of survey
respondents expect that IT spending on technologies related to organisational agility will remain ?at or
increase only slightly over the next three years. Only 9% of those polled say that they will increase their IT
investment signi?cantly.
© Economist Intelligence Unit Limited 2009 Organisational agility
17
When the ground rocks, structures must ?ex. The same is true for companies competing in today’s
turbulent environment. Organisations that are best able to anticipate market movements, re-emerge
from the worst system shocks and take advantage of gaps left by those unable to withstand the brunt will
win. Doing so requires organisational agility.
For most companies, the path to organisational agility involves transformation, the ability to whittle
away at inef?ciency and regroup around what is truly core to the business. While the task may appear
daunting, there are a number of steps that management can consider to lighten the burden of change:
n Optimise core processes. By minimising excess spending and non-core programmes, companies can
better direct limited resources to satisfying customer expectations, activities that position a company
well not only during times of recession but also for long periods of growth.
n Minimise information silos. Barriers to change include con?icting departmental goals and priorities,
a culture of risk aversion and silo-based information. By reducing silos, business leaders can improve
collaboration inside and outside their enterprise and better align departmental goals and performance
measures with overall strategy.
n Integrate and automate fundamental knowledge-sharing processes. Such integration will enable
IT to advance an organisation’s ability to problem-solve, improve decision-making and convert
information into insight.
The tangle of forces that created the current economic dif?culties looks set to leave an undercurrent of
volatility even after the global recession eases. Competitive advantage will go to those who align their
businesses well to embrace and respond to change.
Conclusion
18
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
Appendix: Survey results
Introducing new products
Entering new markets
Increasing revenue per customer
Improving services
Penetrating underserved segments
Growing through acquisition
Deploying new sales channels
Other
Don’t know
46
44
40
36
32
24
21
5
1
What drives most of your organisation’s new revenue growth
today? Select up to three.
(% respondents)
Creating superior customer value
Retaining high-value customers
Accelerating innovation in new products, services and/or sales channels
Streamlining, automating and standardising business processes
Recruiting and retaining high-quality talent
Accelerating productivity
Entering new overseas markets
Leveraging employee knowledge assets more effectively
47
43
41
36
33
25
24
20
What are your organisation’s leading business priorities over
the next three years? Select up to three.
(% respondents)
Pressure to drive down operating costs
Price competition
Rising customer demands
Commoditisation of products
Compliance and regulation
Difficulty accessing capital for growth
Managing supply chain and operational complexity
Pressure to be first to market/innovate
Difficulty in increasing productivity
Other
50
47
29
28
24
23
20
20
15
5
Over this same three-year period, what do you see as your
organisation’s leading business challenges?
Select up to three.
(% respondents)
Large — because it has size, scale and financial muscle
Mid-size — because it has fewer organisational layers
Small — because it is entrepreneurial by nature and can move more swiftly
23
43
34
In your view, what size organisation is best suited to
changing market conditions?
(% respondents)
Extremely important — it is a core differentiator for us
Somewhat important — it contributes to our business success
Neutral — many factors shape our business success
Somewhat unimportant — other factors play a more significant role
Not at all important — agility is not a relevant criterion for our business
40
48
10
2
0
In your view, how important is agility to your organisation’s
overall business success?
(% respondents)
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
19
23
61
15
1
Extremely agile and can react to market changes as needed
Moderately agile; we are working to improve our ability to react to market changes
Not at all agile; we proceed with caution/work at a slower pace in our decision-making
Don’t know
How would you rate your organisation’s overall agility? My organisation is...
(% respondents)
25
22
19
18
13
3
1
Ability to be an ‘innovation-leader’, leveraging information, ideas and technology
Ability to be an ‘experience-maker’, engaging employees and customers in long-term productive relationships
Ability to offer ‘no surprises’ and a consistent experience in response to business process complexity and service execution
Ability to act as an ‘information leader’, turning knowledge into value
Ability to be a ‘first-responder’ in addressing market opportunities and challenges
Ability to be the ‘low-cost-leader’ in pricing goods and services
Other
Which of the following attributes will be most important to compete in the global economy?
(% respondents)
38
1
33
30
28
25
24
23
18
14
13
13
2
Improving process efficiency (eg, change management, outsourcing, automation and standardisation)
Improving knowledge management and information sharing processes
Encouraging (and extending) collaboration across the business and beyond
Scenario planning and preparing for market changes
Increasing overall employee productivity
Creating cross-functional teams
Securing funding for business expansion
Improving workforce planning, ie, ramping up and down as needed based on human capital and expertise
Establishing policies that encourage and reward employee-generated process improvements and innovation
Reducing the number of initiatives under way
Allowing some budgets to be appropriated on a rolling versus annual basis to improve responsiveness to changing market needs
Other
Don’t know
In light of the economic downturn, what do you believe are your organisation’s priorities in terms of improving agility?
Select up to three.
(% respondents)
20
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
My organisation is at a competitive disadvantage because it is not agile enough to anticipate changing market needs
My organisation has undertaken one or more initiatives to become more agile in the past three years
My organisation has a formal governance structure in place that clearly delegates decision-making rights down through the management function
My organisation is focused on cost-cutting and boosting productivity
At my organisation employees at all levels actively communicate with colleagues outside of their own functions or business units
My organisation has flattened its management structure over the past decade to respond more quickly to market opportunities and threats
My organisation’s efforts to become more agile over the past three years have helped prepare us for the current economic downturn
Do you agree or disagree with the following statements?
(% respondents)
73 27
15 85
38 62
28 72
39 61
50 50
34 66
Agree Disagree
Rapid decision-making and execution
A high-performance culture
The ability to access the right information at the right time
Accountability and credibility
Flexible management of teams and human resources
Decentralised or “flat” management reporting structure
Lean operations
Continual process improvements/Six Sigma
Unified/flexible application infrastructure
Other
61
44
34
34
31
29
22
17
9
2
In your view, what are the critical traits of an agile business?
Select up to three.
(% respondents)
Extremely satisfied
Somewhat satisfied
Neutral
Somewhat dissatisfied
Extremely dissatisfied
14
50
18
13
5
How satisfied are you with the business information
available to you and your team to support your primary job
responsibilities?
(% respondents)
Loss of focus on core organisational strengths and competencies
Potential for project scope creep leading to uncontrolled changes
The integration could take too long and derail other initiatives
Security of confidential data
Other
Don’t know/Not applicable
41
18
16
10
4
11
In changing business operations to become more agile, what
do you see as the greatest risks to your business?
(% respondents)
E-mail
File sharing/network servers
Mobile devices
Simple collaboration tools (eg, SharePoint, Jive)
Desktop/office applications
Instant messaging
Content management systems
Other
68
36
30
18
15
9
8
4
What technology tools contribute most to organisational
agility in your company today? Select up to two.
(% respondents)
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
21
22
18
15
11
10
4
4
3
3
10
Customer Relationship Management (CRM)
Content analytics and mining software to identify, manage and leverage knowledge assets
Content management systems
IP-based communication systems (eg, Voice over IP, unified communications)
Web 2.0 for easier communication and collaboration
Software as a Service (SaaS) applications that reduce the cost and complexity of content management
XML (extensible markup language) and related software that allow easier searching and tagging of data
Rich media content for more dynamic customer communications
Other
Don’t know
In your view, which of the following technologies are most helpful in making your organisation become more agile in three years?
(% respondents)
Social networks to identify and share business and social contacts
Knowledge management/collaboration system
Technologies to pull data from multiple applications and share personalised results
Tools to encourage customer engagement, ‘co-creation’ and dynamic generated content and interaction (eg, crowdsourcing, open source software and wikis)
Specialised custom web applications to facilitate design, engineering and component fabrication
Predictive simulation models
Process to capture employee feedback and advice
Incentive programmes that reward successful employee-generated initiatives
Other
To spur innovation, does your organisation currently use the following programs, or plan to use them within three years?
(% respondents)
47 19 35
19 30 51
35 37 28
49 33 19
53 22 25
51 21 28
24 24 51
40 20 40
75 11 14
Use now Plan to use within three years Don’t know/Not applicable
Increase investment significantly
Increase investment somewhat
About the same
Reduce investment
No investment at all
Don’t know
9
41
37
9
1
3
How do you expect your organisation’s spending on
technologies related to organisational agility to change over
the next three years?
(% respondents)
22
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
Performance
Security
Scalability
Consistency across borders
Vendor viability
Doesn’t meet compliance
Other
Do not share any of these concerns
70
49
33
32
17
13
7
4
When considering the adoption of new technologies or
applications, what, if any, are your greatest concerns?
Select up to three.
(% respondents)
Increased productivity
Increased revenue
Acquisition of new customers
Product/service innovation
Product development
Retention of talent
Other
We don’t measure this
44
31
23
17
7
5
3
21
How does your organisation measure the return on its
information management investment? Select up to two.
(% respondents)
52
48
30
28
25
21
2
I often have to spend valuable time hunting for key information
I find the best way to locate information is to ask “experts” at my organisation to give me the data
I have ready access to all of the information I need to perform my role
I can access portals and other easy-to-use knowledge capture tools to search and locate the information I need
I find it difficult to respond to e-mail and text messages as quickly as I’d like because of continually high message volumes
My effectiveness and productivity suffer when I’m out of the office on business
Other
Which of the following statements best describe your ability to access, analyse and use unstructured information (eg, ad hoc
but often valuable set of data loosely contained in e-mails, video files, web pages, PDFs, documents and other sources) in
your day-to-day responsibilities? Select up to three.
(% respondents)
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
23
Marketing
Sales
Customer service
Research and development
IT
Finance
Procurement
Operations and production
Supply chain
Human resources
Senior management/Board
Legal, risk and compliance
Other
Don’t know
12 38
1 1
1 3
15 44
11 33
19 23
33 14
29 15
15 9
17 26
12 10
31 9
15 26
30 8
In your view, which areas of your company are most/least agile?
Select up to three for each column.
(% respondents)
Most agile Least agile
Decision-making can take too long
Conflicting goals/priorities of different departments
Necessary information resides in silos
Culture is risk-averse and slow to adopt innovation
IT infrastructure is inflexible and inconsistent across the company
Lack of understanding of intellectual capital and knowledge assets
Business processes are not aligned with business objectives
Difficulty in measuring performance
Lack of budget flexibility
Difficulty complying with and staying up on changing regulations/standards
Business agility is not currently a strategic priority
Lack of senior management support
Other
Don’t know
29
28
3
2
28
26
24
20
20
17
15
11
11
11
In your view, what are the main obstacles to increasing
business agility at your organisation? Select up to three.
(% respondents)
45
38
38
35
33
24
18
10
3
3
Provide easier access and management of information in real time
Improve ability to search for relevant information across any repository
More comprehensive integration of IT systems across the enterprise
Provide content-mining and analytics tools
Implement a corporate-wide knowledge management/collaboration system
Provide more intuitive communication tools and leverage social media across the company and with customers (eg, VoIP, instant messaging, RSS, Twitter)
Create online communities around business processes to which members can post comments and modify documents
Support and expand current e-mail infrastructure
Other
Don’t know
In your view, how can corporate IT best support efforts to improve productivity, performance and responsiveness?
Select up to three.
(% respondents)
24
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
Financial services
Professional services
IT and technology
Energy and natural resources
Healthcare, pharmaceuticals and biotechnology
Government/Public sector
Manufacturing
Telecommunications
Education
Entertainment, media and publishing
Consumer goods
Automotive
Construction and real estate
Retailing
Transportation, travel and tourism
Chemicals
Aerospace/Defence
Agriculture and agribusiness
Logistics and distribution
18
15
10
7
7
7
6
3
3
2
2
1
1
1
5
5
3
3
3
What is your primary industry?
(% respondents)
United Kingdom
France
Germany
Singapore
United States
Australia
Canada
New Zealand
17
17
15
15
14
13
5
3
In which country are you personally located?
(% respondents)
Strategy and business development
General management
Marketing and sales
Finance
Operations and production
Customer service
Information and research
Risk
R&D
IT
Human resources
Supply-chain management
Legal
Procurement
Other
42
37
24
4
3
3
20
15
12
11
11
11
10
7
5
What are your main functional roles?
Please choose no more than three functions.
(% respondents)
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
25
44
10
15
8
23
$500m or less
$500m to $1bn
$1bn to $5bn
$5bn to $10bn
$10bn or more
What are your organisation's global annual revenues in US
dollars?
(% respondents)
Board member
CEO/President/Managing director
CFO/Treasurer/Comptroller
CIO/Technology director
Other C-level executive
SVP/VP/Director
Head of Business Unit
Head of Department
Manager
Other
8
21
4
3
7
17
7
7
18
7
Which of the following best describes your job title?
(% respondents)
Whilst every effort has been taken to verify the accuracy
of this information, neither The Economist Intelligence
Unit Ltd nor the sponsors of this report can accept any
responsibility or liability for reliance by any person on
this briefing paper or any of the information, opinions
or conclusions set out herein. D
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doc_291626505.pdf
How business can survive and thrive
in turbulent times
A report from the Economist Intelligence Unit
Sponsored by EMC
© Economist Intelligence Unit Limited 2009 Organisational agility
1
Preface
Organisational agility: how businesses can survive and thrive in turbulent times is an Economist Intelligence
Unit brie?ng paper, sponsored by EMC. In December 2008 and January 2009, the Economist Intelligence
Unit conducted a survey of 349 executives around the world on the bene?ts, challenges and risks
associated with creating a more agile organisation. The Economist Intelligence Unit wrote and executed
the survey, conducted the analysis and produced the report. To supplement the ?ndings of the survey,
the Economist Intelligence Unit also conducted in-depth interviews with a number of business executives
from leading companies. The ?ndings and views expressed in the report do not necessarily re?ect the
views of the sponsor. Marie Glenn was the author of the report, and Gilda Stahl was the editor.
Our thanks are due to all survey respondents and interviewees for their time and insight.
March 2009
© Economist Intelligence Unit Limited 2009 Organisational agility
2
Executive summary
The market turbulence of the past year may have foreshadowed a new phase of globalisation, one in which
volatility is likely to remain a constant. Even after the current recession lifts, underlying ?uctuations in
energy, commodity and currency rates, the emergence of new and non-traditional competitors, and rising
customer demands will continue to roil traditional business and operating models for some time to come.
To be competitive, companies may ?nd themselves in a Houdini-like twist. How can they respond
quickly and nimbly to the changing environment without getting caught in knots? In today’s knowledge
age, the ability to transform information into insight in response to market movements is core to
sustainability. Companies must think of ways to make their processes more ?exible. This report examines
the challenges and rewards of organisational agility, particularly in tough economic times. The major
?ndings are as follows:
n Organisational agility is a core differentiator in today’s rapidly changing business environment.
Nearly 90% of executives surveyed by the Economist Intelligence Unit believe that organisational
agility is critical for business success. One-half of all chief executive of?cers (CEOs) and chief
Who took the survey?
This survey, conducted by the Economist Intelligence
Unit in December 2008 and January 2009, included
responses from 349 business executives around the
world. Sixty came from the UK, 59 from France, 53
each from Germany and Singapore, 49 from the US,
46 from Australia, 18 from Canada and 11 from New
Zealand. Executives from 19 different industries
took part in the survey, 44% of whom had revenue of
US$500m or less and 31% with revenue of US$5bn
or more. Board members and C-level respondents
comprised 43% of respondents, while senior directors
and department heads made up an additional 31%.
The survey included responses from a range of
business functions and industries.
© Economist Intelligence Unit Limited 2009 Organisational agility
3
information of?cers (CIOs) polled agree that rapid decision-making and execution are not only
important, but essential to a company’s competitive standing. Agility may also be linked to pro?table
growth: research conducted at the Massachusetts Institute of Technology (MIT) suggests that agile
?rms grow revenue 37% faster and generate 30% higher pro?ts than non-agile companies.
n Yet most companies admit they are not ?exible enough to compete successfully. While the
overwhelming majority of executives view organisational agility as a competitive necessity, actual
business readiness is more mixed. More than one-quarter (27%) of respondents say that their
organisation is at a competitive disadvantage because it is not agile enough to anticipate fundamental
marketplace shifts.
n Internal barriers stall agile change efforts. More than 80% of survey respondents have undertaken
one or more change initiatives to improve agility over the past three years, yet 34% say they have
failed to deliver the desired bene?ts. The main obstacles to improved business responsiveness are slow
decision-making, con?icting departmental goals and priorities, risk-averse cultures and silo-based
information.
n Technology can play an important supporting role in enabling organisations to become more agile.
Technology should function as a change agent in the use and adoption of best-in-class knowledge-
sharing processes, so companies can improve their use of critical data.
© Economist Intelligence Unit Limited 2009 Organisational agility
4
If information is the currency of our digital age, then knowledge is the coin of the realm. Nowhere is this
more true than in today’s workplace. Everywhere we turn, we are inundated with data. Content, once
largely proprietary, now proliferates through an abundance of channels. As the plethora of information
swells, management and employees may ?nd themselves drowning in it.
The surfeit of information comes at a time when companies the world over are challenged to become
more nimble in the face of change. The market volatility of the past year has highlighted in sometimes
painful fashion the need for companies to anticipate and address pivotal events that affect their business.
Planning for the unpredictable may seem an impossible irony, but many ?rms appear to recognise that in
a period of turbulence, an organisation’s ability to ?ex and respond is critical for sustaining growth.
Why is agility so important? Peter Weill, the director of the Center for Information Systems Research
at the Massachusetts Institute of Technology (MIT), explains: “When I was a kid, the most successful
companies were monopolies or duopolies, but in today’s globalised, free-market environment, the
ability to satisfy customer expectations is core to pro?tability. If you’re not agile, you can’t do it, because
customer expectations are never static.”
The importance of being quick to leverage information resounds throughout the survey results. An
overwhelming majority of executives (88%) cite organisational agility as key to global success. This view is
Introduction: planning for the unpredictable
Extremely important — it is a core differentiator for us
Somewhat important — it contributes to our business success
Neutral — many factors shape our business success
Somewhat unimportant — other factors play a more significant role
Not at all important — agility is not a relevant criterion for our business
40
48
10
2
0
In your view, how important is agility to your organisation’s overall business success?
(% respondents)
Source: Economist Intelligence Unit survey, January 2009.
“In today’s
globalised,
free-market
environment,
the ability to
satisfy customer
expectations
is core to
pro?tability. If
you’re not agile,
you can’t do it,
because customer
expectations are
never static.”
Peter Weill, director of the
Center for Information
Systems Research, MIT.
© Economist Intelligence Unit Limited 2009 Organisational agility
5
particularly strong in the C-suite: one-half of all CEOs and CIOs say that agility is not only important, but a
core differentiator. Other studies support this idea as well: research conducted at MIT suggests that agile
?rms grow revenue 37% faster and generate 30% higher pro?ts than non-agile companies.
Still, more than one-quarter (27%) of respondents admit that their organisation is at a competitive
disadvantage because it is not agile enough to anticipate fundamental marketplace shifts. Stefan Kohn,
head of innovation management at Fuji?lm Europe, believes that part of the problem is the fear of change
itself. “Companies sometimes choose to neglect change,” he says. “Those that are truly agile embrace it,
even when it risks cannibalising an existing product.”
© Economist Intelligence Unit Limited 2009 Organisational agility
6
In an effort to free resources and become more responsive, business leaders across the industry
spectrum are reshaping their business priorities, stretching budgets and applying greater scrutiny to
capital expenditures. Some have found that when a precarious economic climate requires quick action,
a company can open new avenues for growth by strengthening and rede?ning what is truly core to its
business.
Take Fuji?lm, for instance. As its name suggests, Fuji?lm’s roots are in photographic ?lm, an industry
that declined with the advent of digital photography. Faced with a serious challenge to its core business,
the company learned early on that to stay viable, it had to innovate. Rather than abandon the ?lm
production business, however, the company re?ected on how it might apply its expertise to new markets.
“We are a photo-imaging company,” says Mr Kohn, “but we realised that human skin shares similar
properties to thin-?lm photo processes.” Just as free radicals can mar a smooth complexion, they can also
degrade photo-imaging quality. Fuji?lm recognised that the oxidation control mechanisms it invented
to prevent photos from deteriorating over time could be modi?ed to produce creams that preserve skin
quality. Indeed in September 2007 the company launched a line of skincare products, called Astalift,
based on technology it had developed for ?lm. “A few years ago, who would have imagined moisturising
with a photo-?nishing byproduct?” says Mr Kohn. “But the ability to ?nd new and non-traditional avenues
to apply our strengths is fundamental to our ability to remain competitive and responsive.”
Just as market changes nearly upended Fuji?lm’s business model, the worldwide economic downturn
places many companies in a similar predicament. Regardless of location, size or industry, most face
extreme operating pressures. “We are in an unprecedented time,” says Sheila Hooda, senior managing
director and head of M&A and corporate development for TIAA-CREF, one of the largest ?nancial services
companies in the US. “The business world has never seen anything like this complete market dislocation.”
Technological advances mean that cost and pricing pressures ripple faster through increasingly connected
supply chains, putting pressure on margins.
In response, many of today’s companies are adopting a “back to basics” mentality, with renewed focus
on core operating costs. One-half of all respondents rank “driving down operating costs” as their number-
Drivers for organisational agility
Key points
Ë Many companies are adopting a “back to basics” mentality, with renewed focus on core operating costs.
Ë While retrenchment is often one of the ?rst things companies do when a recession looms, today’s executives
are refraining from knee-jerk reactions.
Ë Companies are tailoring strategic investments to align with rising customer demand.
“The ability to
?nd new and
non-traditional
avenues to apply
our strengths is
fundamental to our
ability to remain
competitive and
responsive.”
Stefan Kohn, head of
innovation management,
Fuji?lm Europe.
© Economist Intelligence Unit Limited 2009 Organisational agility
7
one business challenge over the next three years. That emphasis grows larger with company size: more
than three-quarters (77%) of businesses with US$5bn-10bn in revenue cite cost management as their
greatest concern, compared with just one-third (35%) of those with less than US$500m in revenues.
Still, while retrenchment is often one of the ?rst things companies do when a recession looms, today’s
executives are refraining from knee-jerk reactions. Only 13% of respondents indicate that their ?rms plan
to reduce the number of initiatives under way. Instead, companies are tailoring strategic investments
to align with rising customer demands. Forty-seven percent of executives responding to the survey say
that retaining high-value customers will be their highest priority over the next three years, followed by
creating superior customer value (43%) and accelerating product innovation (41%). By minimising excess
spending and non-core programmes, companies can better direct limited resources to satisfying customer
expectations.
Pressure to drive down operating costs
Price competition
Rising customer demands
Commoditisation of products
Compliance and regulation
Difficulty accessing capital for growth
Managing supply chain and operational complexity
Pressure to be first to market/innovate
Difficulty in increasing productivity
Other
Don’t know
0
Over the next three years what do you see as your organisation’s leading business challenges?
Select up to three.
(% respondents)
Source: Economist Intelligence Unit survey, January 2009.
Large organisations Mid-size organisations Small organisations
43
50
47
56
51
44
16
15
15
29
31
26
21
19
28
27
27
31
23
19
20
23
23
26
22
19
20
4
5
5
0
1
0
© Economist Intelligence Unit Limited 2009 Organisational agility
8
Improving agility in tough times:
three lessons
Prior to taking up her current post as chief ?nancial
of?cer (CFO) for the world’s largest arts group, the
London-based Southbank Centre, Caroline Stockmann
directed global business planning for Novartis, a
pharmaceutical company, and served as CFO for
Unilever Thailand, a consumer-products company. In
both roles she faced tough business challenges, from a
division in need of a sharp turnaround to another whose
product base was being undercut by private labels. From
that experience, Ms Stockmann learned a few lessons
when it comes to managing in dif?cult times.
Lesson #1: There should be as much rigour devoted to
management before a crisis as during it. “People see
volatility as something beyond their control. It puts
them on edge, heightens emotions and compromises
good decision-making,” she says. When a crisis
happens, organisations tend to overcompensate.
“Companies often make the mistake of introducing
new measures and heaping mounds of data analysis
on employees,” says Ms Stockmann. Yet during such
times organisations need people at all levels to remain
calm and focused. “To preserve a business-as-usual
rigour in times of stress, a company must have the
right processes and controls in place as a general
management discipline,” she says.
Lesson #2: Do not let communication and teamwork
lapse. “People tend to withdraw when troubles
brew,” says Ms Stockman. As a result, teamwork can
suffer, often at times when companies need it most.
Management needs to make the ?rst move to reassure
anxious employees whose con?dence in the company’s
direction may have waned. It’s important for leaders to
be honest, forthright and direct with their employees
and communicate with greater frequency. “Employees
also need to know that it is okay for them to continue to
offer ideas and solve problems,” adds Ms Stockmann.
Lesson #3: Be wary of the status quo. The point
at which things start to go wrong is often when
everything seems okay on the surface. Managers
tend to miss the proverbial red ?ags until it’s too
late. Ms Stockmann speaks from experience: in
reconciling the balance sheet of a new employer, she
learned that the business had only recently become
pro?table. “The curious thing was that nothing in
the business model had changed to explain it,” she
says. Further examination revealed that a signi?cant
accounting error had distorted the balance sheet.
“If somebody simply paused to ask why there was
this sudden rise to pro?tability when our pricing
structure hadn’t changed, they would have very
quickly realised what was happening,” she says. “But
for three years, people were happy with this company
and few questions were asked.” People are more
inclined to probe poor results than they are good
ones, says Ms Stockmann. Putting that discipline in
place before ?scal pressures mount can pre-empt
bigger problems in the future.
© Economist Intelligence Unit Limited 2009 Organisational agility
9
Despite a period in which consumers are ?ocking to discount retailers and private-label brands, only
3% of those polled say that being a low-cost leader is a top criterion for success in the global economy.
Instead, survey participants highlight the following traits as more critical to business success: leadership
in innovation; fostering a superior customer experience; the ability to turn knowledge into value; and
consistent, “no surprises” execution.
The notion of customer-centricity underlies each of these traits. “The better you know your customer,
the better you are able to gauge what matters most in de?ning a positive customer experience,” says
Michelle Cox, the head of contact centres at MBF (part of Bupa Australia, the leading health insurer).
“Such customer-centricity is core to competitiveness in today’s market, helping to direct innovation,
create value, and ensure ?exibility and nimbleness in decision-making,” says Ms Cox.
Key points
Ë The ?atter hierarchies and resource breadth that characterise many mid-size companies may facilitate better
information ?ow and, in turn, speed decision-making.
Ë For CFOs facing a tight credit market, agility means ?nding new or alternative funding sources.
Ë One-half of all CIOs believe that integrating and upgrading knowledge-sharing processes will go furthest in
improving agility.
What makes an organisation nimble?
Rapid decision-making and execution
A high-performance culture
The ability to access the right information at the right time
Accountability and credibility
Flexible management of teams and human resources
Decentralised or “flat” management reporting structure
Lean operations
Continual process improvements/Six Sigma
Unified/flexible application infrastructure
Other
61
44
34
34
31
29
22
17
9
2
What are the critical traits of an agile business? Select up to three.
(% respondents)
Source: Economist Intelligence Unit survey, January 2009.
61% of
respondents
say that rapid
decision-making
and execution are
de?ning attributes
of an agile
business.
© Economist Intelligence Unit Limited 2009 Organisational agility
10
To nurture an environment in which innovation and customer-centricity can thrive, those polled
emphasise the importance of a high-performance culture (44%), the ability to access the right information
at the right time (34%) and accountability (34%) as key enablers. In addition, nearly two-thirds of
executives say that rapid decision-making and execution are de?ning attributes of an agile business.
Agility takes different forms for different functions. In an era in which open source and collaborative
networks are becoming a rich source of innovation, it may be no surprise that 37% of CEOs seek extended
partner relationships. For CFOs facing a tight credit market, however, agility means ?nding new or
alternative funding sources. Board members want improved scenario planning to carry out their oversight
role amid the vagaries of a ?uctuating market. For their part, one-half of all CIOs believe that integrating
and upgrading knowledge-sharing processes will go furthest in improving agility.
When it comes to competitiveness and changing market conditions, the “David vs Goliath” factor
doesn’t come into play, say executives. Instead, 44% of respondents believe that mid-size companies
have the agility edge over the size and reach of large companies and the entrepreneurial skill of small
?rms. The ?atter hierarchies and resource breadth that characterise many mid-size companies may
facilitate better information ?ow and, in turn, speed decision-making. Indeed, more than two-thirds of
mid-size companies responding to the survey believe that they are moderately agile and have the business
information available to support their primary job responsibilities.
44% of
respondents
believe that mid-
size companies
have the agility
edge over the size
and reach of large
companies and the
entrepreneurial
skill of small ?rms.
© Economist Intelligence Unit Limited 2009 Organisational agility
11
Managing in a time of impermanence is no easy feat. To compete, businesses need to re?ne
organisational processes and leverage institutional and outside knowledge more effectively. Says Mr
Kohn of Fuji?lm Europe: “It’s impossible to keep up with the amount of information that churns through
the workplace. Making information easier to use is the ‘Holy Grail’.” Executives agree: 52% of survey
respondents acknowledge that they often have to spend valuable time hunting for key information. In
response, the onus, increasingly, will be on sense-making, arming decision-makers and employees with
Key points
Ë 52% of survey respondents acknowledge that they often have to spend valuable time hunting for key
information.
Ë Barriers to organisational agility include con?icting departmental goals and priorities, a culture of risk
aversion and silo-based information.
Ë Agile companies focus their time on standardising the processes that won’t change, freeing up resources to
develop value-added features that do respond to changing customer needs.
Becoming more ?exible: overcoming obstacles
38
1
33
30
28
25
24
23
18
14
13
13
2
Improving process efficiency (eg, change management, outsourcing, automation and standardisation)
Improving knowledge management and information sharing processes
Encouraging (and extending) collaboration across the business and beyond
Scenario planning and preparing for market changes
Increasing overall employee productivity
Creating cross-functional teams
Securing funding for business expansion
Improving workforce planning, ie, ramping up and down as needed based on human capital and expertise
Establishing policies that encourage and reward employee-generated process improvements and innovation
Reducing the number of initiatives under way
Allowing some budgets to be appropriated on a rolling versus annual basis to improve responsiveness to changing market needs
Other
Don’t know
In light of the economic downturn, what do you believe are your organisation’s priorities in terms of improving agility?
Select up to three.
(% respondents)
Source: Economist Intelligence Unit survey, January 2009.
“It’s impossible
to keep up with
the amount of
information that
churns through the
workplace. Making
information easier
to use is the ‘Holy
Grail’.”
Stefan Kohn, Fuji?lm Europe.
© Economist Intelligence Unit Limited 2009 Organisational agility
12
the tools to ?nd, ?lter and focus the content they need.
Companies can’t change their infrastructure to meet the whims of the marketplace. What they can
do, however, is streamline, simplify and integrate the processes that support their true engine of
growth. Says Mr Weill of MIT: “We found that the ?rms with a higher degree of process and technological
standardisation are more agile.” Agile companies focus their time on standardising the processes
that won’t change, freeing up resources to develop value-added features that do respond to changing
customer needs.
To help solidify their core competencies, almost 40% of executives say that they will emphasise change
management, outsourcing, automation and other process ef?ciency improvements. Nearly one-third
of those polled will also seek to make better use of knowledge management and information-sharing
systems. To avoid the issues that have derailed many change programmes in the past, companies should
consider sharply focusing these improvements to make the improvements sustainable.
While the majority of executives view organisational agility as a competitive necessity, actual business
readiness is more mixed. Only one in ?ve participants believes that their company is able to react as
swiftly as needed. CIOs take a particularly dour view: 30% of respondents—more than any other functional
role—say that their business is not at all agile, and is too slow when it comes to decision-making.
Unsurprisingly, barriers to change include con?icting departmental goals and priorities, a culture of risk
aversion and silo-based information. It seems that even in challenging markets, turf wars persist.
Businesses have taken several steps to help improve responsiveness. More than 80% of those
BT Group:
germinating customer solutions in the hothouse
It is one thing to talk about what makes for an agile business, and
another thing to create one. Al-Noor Ramji is the chief information
of?cer (CIO) for BT Group PLC, the privatised UK state telecoms
operator. When Mr Ramji joined BT, his brief was to transform a
misaligned and largely decentralised IT organisation into a uni?ed
operation: “When I started, I was told we had 4,500 IT people. When
we ?nally stopped counting, it turned out we had 14,500.”
While part of the reorganisation was focused on cost savings, the
larger thrust was an effort to improve the customer experience. “We
needed our IT organisation to see that they had a front-of?ce role,”
says Mr Ramji. Over the two-year transformation, more than 3,000
formerly back-of?ce IT professionals found themselves at customer
sites delivering services. Not everyone liked it at ?rst. “This was a
huge cultural change,” says Mr Ramji. “People were plucked from
their comfort zones and had to break themselves of the view that they
were forbidden to speak to customers.”
Mr Ramji and his team tackled the issue by plunging employees
into BT’s customer co-development centre, or “hothouse”, as the
company calls it. “We use the hothouse to conduct intensive threeday
customer workshops with our IT, networks and process developers,”
he says. Once there, BT employees are given a current customer’s
challenge, divided into six competing teams, and asked to deliver
one solution per day. “The prototyping we do in competitive rounds
not only helps to build important client relationships”, says Mr
Ramji, “but also proves a powerful way to build employee pride and
motivation. It’s rare to have 36 hours in which employees can really
see how customers think and customers can see how our employees
work. And it doesn’t end there. The outcomes from the ‘hothouse’
set out what we will deliver for our customers over the next 90 days,
providing a level of transparency and accountability you can’t obtain
during a normal two-year cycle.”
The triple combination of employee empowerment, an
unambiguous mission in which everyone is invested and clear
incentives is core to successful change efforts, he adds. “It took us
two years to bake these ingredients into our culture, but after that,
you just watch the transformation take off in your hands.”
© Economist Intelligence Unit Limited 2009 Organisational agility
13
surveyed say they launched one or more initiatives to become more agile over the past three years.
Yet these programmes have had mixed results, with 34% of respondents saying that they failed to
deliver desired bene?ts. Executives from Singapore and the US are more pessimistic: 42% and 43%,
respectively, say their programmes under-delivered. By contrast, 78% of Australians are satis?ed with
their transformation initiatives.
Our survey responses suggest that transformation efforts are not as uniform and integrated across
functions as they need to be. Executives tend to give high marks to sales, marketing and customer service
operations, units that they say are among the most agile in the corporation. By contrast, ?nance, IT and
human resources (HR) are singled out as among the least agile departments of global organisations. This
may give management pause, since ?nance, IT and HR play particularly important roles in driving process
ef?ciency, knowledge transfer, innovation and execution.
One reason for the disconnect is that process improvements are often poorly aligned with strategic
imperatives. Righting this balance begins with reassessing the performance measures that underlie key
business unit and functional activities. As the former administrator for the Of?ce of E-Government and
Information Technology for the United States, Mark Forman was the de facto government CIO. Now, as a
partner with global professional services ?rm KPMG LLP, he has a hard-won perspective on what it takes
to help large bureaucracies successfully transform. “Most leaders understand that an organisation’s key
processes should be tied to policy or agency goals, yet process and business objectives too often part
ways,” says Mr Forman.
Marketing
Sales
Customer service
Research and development
IT
Finance
Procurement
Operations and production
Supply chain
Human resources
Senior management/Board
Legal, risk and compliance
Other
Don’t know
12 38
1 1
1 3
15 44
11 33
19 23
33 14
29 15
15 9
17 26
12 10
31 9
15 26
30 8
In your view, which areas of your company are most/least agile? Select up to three for each column.
(% respondents)
Most agile Least agile
Source: Economist Intelligence Unit survey, January 2009.
“We found that the
?rms with a higher
degree of process
and technological
standardisation are
more agile.”
Peter Weill, MIT.
© Economist Intelligence Unit Limited 2009 Organisational agility
14
If performance measures are pointed in the wrong direction, the change initiative itself can become
misdirected. Says Mr Forman: “Key performance indicators can unwittingly place undue emphasis on
one priority at the expense of another.” He cites an example of a government housing authority whose
policy directive emphasised increasing loan volumes. Supporting processes were updated to speed the
mortgage application and review process. But the drive for higher volumes ignored what became a huge
spike in default risk. The problem was addressed, but as Mr Forman explains, “by bringing the right parties
together at the outset and articulating both the strategic objectives and the business requirements,
leaders have a better chance of succeeding in their aims and avoiding costly missteps.”
Taking the long view at TIAA-CREF
TIAA-CREF is one of the few ?nancial services companies to be
weathering the current economic downturn. This not-for-pro?t
retirement fund manager continually earns among the highest
ratings in the industry. Sheila Hooda, senior managing director and
the ?rm’s head of M&A and corporate development, explains why the
company has thrived in an industry sector riddled with disruption:
“Many executives’ time horizons are very short and tailored to
meeting quarterly earnings targets,” says Ms Hooda. “This lack of
long-term orientation could cripple organisations by making them
more reactive than proactive. TIAA-CREF is a private company, so
we do not have to manage to short-term earnings expectations that
confront other publicly held ?nancial services companies.”
Because TIAA-CREF primarily manages retirement funds, the ?rm
is accustomed to taking the long view. But Ms Hooda acknowledges
that even with this approach, the temptation to succumb to hasty
decision-making can be great. “Without a strong internal rigour, it
can be dif?cult to walk away or easier to overpay for deals that may
appear to be a perfect ?t in the short term,” she says.
Such rigour may appear to run counter to improving operational
?exibility, but Ms Hooda believes it is fundamental to managing
in a time of change. She maintains that the due diligence applied
to outside deals needs to be brought to internal change efforts
as well. “To be agile, an organisation must embrace change, but
it has to be done in a disciplined and structured way,” says Ms
Hooda. “For example, we know that 70% of initiatives in the M&A
area fail. Therefore, we rely on very strong ?scal discipline and risk
management. This has served us well.”
When responding to opportunities, both internal and external,
many executives naturally seek to understand the ?nancial
implications. Yet, Ms Hooda stresses that “companies often place
undue emphasis on the numbers and often only involve ?nancial
people in the discussion. This creates risk, because other business
and operational factors can often have an equal or greater bearing.
Therefore, we take a broad-based integrated approach, involving
experts from across the organisation.” Hence TIAA-CREF assembles
cross-functional teams in an effort to keep both client needs and
organisational risk in mind.
“We have independent risk management,” says Ms Hooda. “It’s
an equal partnership: the investment and business side does not
have more leverage than the risk side. That system of constructive
and balanced tension serves as a perfect foil to the chaos of the
broader marketplace.”
© Economist Intelligence Unit Limited 2009 Organisational agility
15
Most companies need to make more progress in transforming their knowledge processes to ?t the
demands of the knowledge age. While 64% of respondents say they are largely satis?ed with the business
information available to support their primary job responsibilities, only 30% indicate that they have
the needed information to conduct their duties effectively. Because technology underpins nearly every
business process today, it can help those in the workplace improve their use of critical data.
CEOs and CFOs seek easier real-time access to information. For CIOs, who are charged with simplifying
and standardising complex and (in some cases) competing layers of technology, the primary focus is on
improving systems integration. As companies grow in size, the desire for more comprehensive integration
of IT systems across the enterprise also increases: more than 60% of respondents with annual revenues in
excess of US$5bn cite this as the number-one priority for their company’s IT departments, compared with
42% of companies with revenues of less than US$500m.
Key points
Ë Because technology underpins nearly every business process today, it can help those in the workplace improve
their use of critical data.
Ë Knowledge management and collaboration systems top the list of tools that will play a key role in the interplay
between organisational agility and superior innovation.
Ë Nearly 80% of survey respondents expect that IT spending on technologies related to organisational agility
will remain ?at or increase only slightly over the next three years.
The role of technology
Social networks to identify and share business and social contacts
Knowledge management/collaboration system
Technologies to pull data from multiple applications and share personalised results
Tools to encourage customer engagement, ‘co-creation’ and dynamic generated content and interaction (eg, crowdsourcing, open source software and wikis)
Specialised custom web applications to facilitate design, engineering and component fabrication
Predictive simulation models
Process to capture employee feedback and advice
Incentive programmes that reward successful employee-generated initiatives
Other
To spur innovation, does your organisation currently use the following programs, or plan to use them within three years?
(% respondents)
47 19 35
19 30 51
35 37 28
49 33 19
53 22 25
51 21 28
24 24 51
40 20 40
75 11 14
Use now Plan to use within three years Don’t know/Not applicable
Source: Economist Intelligence Unit survey, January 2009.
© Economist Intelligence Unit Limited 2009 Organisational agility
16
In acknowledging the interplay between organisational agility and superior innovation, executives
expect several tools to take a central role. Topping the list are knowledge management and collaboration
systems, something that 81% of those polled indicate will go furthest in spurring innovation. Two-thirds
of respondents are eager to see technologies that pull data from multiple applications used in aid of
research and development (R&D) and product/service innovation.
In meeting these goals, the challenge for CIOs and IT leaders will be to target strategic investments in
a precise manner, as budgets are unlikely to grow signi?cantly in the near future. Nearly 80% of survey
respondents expect that IT spending on technologies related to organisational agility will remain ?at or
increase only slightly over the next three years. Only 9% of those polled say that they will increase their IT
investment signi?cantly.
© Economist Intelligence Unit Limited 2009 Organisational agility
17
When the ground rocks, structures must ?ex. The same is true for companies competing in today’s
turbulent environment. Organisations that are best able to anticipate market movements, re-emerge
from the worst system shocks and take advantage of gaps left by those unable to withstand the brunt will
win. Doing so requires organisational agility.
For most companies, the path to organisational agility involves transformation, the ability to whittle
away at inef?ciency and regroup around what is truly core to the business. While the task may appear
daunting, there are a number of steps that management can consider to lighten the burden of change:
n Optimise core processes. By minimising excess spending and non-core programmes, companies can
better direct limited resources to satisfying customer expectations, activities that position a company
well not only during times of recession but also for long periods of growth.
n Minimise information silos. Barriers to change include con?icting departmental goals and priorities,
a culture of risk aversion and silo-based information. By reducing silos, business leaders can improve
collaboration inside and outside their enterprise and better align departmental goals and performance
measures with overall strategy.
n Integrate and automate fundamental knowledge-sharing processes. Such integration will enable
IT to advance an organisation’s ability to problem-solve, improve decision-making and convert
information into insight.
The tangle of forces that created the current economic dif?culties looks set to leave an undercurrent of
volatility even after the global recession eases. Competitive advantage will go to those who align their
businesses well to embrace and respond to change.
Conclusion
18
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
Appendix: Survey results
Introducing new products
Entering new markets
Increasing revenue per customer
Improving services
Penetrating underserved segments
Growing through acquisition
Deploying new sales channels
Other
Don’t know
46
44
40
36
32
24
21
5
1
What drives most of your organisation’s new revenue growth
today? Select up to three.
(% respondents)
Creating superior customer value
Retaining high-value customers
Accelerating innovation in new products, services and/or sales channels
Streamlining, automating and standardising business processes
Recruiting and retaining high-quality talent
Accelerating productivity
Entering new overseas markets
Leveraging employee knowledge assets more effectively
47
43
41
36
33
25
24
20
What are your organisation’s leading business priorities over
the next three years? Select up to three.
(% respondents)
Pressure to drive down operating costs
Price competition
Rising customer demands
Commoditisation of products
Compliance and regulation
Difficulty accessing capital for growth
Managing supply chain and operational complexity
Pressure to be first to market/innovate
Difficulty in increasing productivity
Other
50
47
29
28
24
23
20
20
15
5
Over this same three-year period, what do you see as your
organisation’s leading business challenges?
Select up to three.
(% respondents)
Large — because it has size, scale and financial muscle
Mid-size — because it has fewer organisational layers
Small — because it is entrepreneurial by nature and can move more swiftly
23
43
34
In your view, what size organisation is best suited to
changing market conditions?
(% respondents)
Extremely important — it is a core differentiator for us
Somewhat important — it contributes to our business success
Neutral — many factors shape our business success
Somewhat unimportant — other factors play a more significant role
Not at all important — agility is not a relevant criterion for our business
40
48
10
2
0
In your view, how important is agility to your organisation’s
overall business success?
(% respondents)
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
19
23
61
15
1
Extremely agile and can react to market changes as needed
Moderately agile; we are working to improve our ability to react to market changes
Not at all agile; we proceed with caution/work at a slower pace in our decision-making
Don’t know
How would you rate your organisation’s overall agility? My organisation is...
(% respondents)
25
22
19
18
13
3
1
Ability to be an ‘innovation-leader’, leveraging information, ideas and technology
Ability to be an ‘experience-maker’, engaging employees and customers in long-term productive relationships
Ability to offer ‘no surprises’ and a consistent experience in response to business process complexity and service execution
Ability to act as an ‘information leader’, turning knowledge into value
Ability to be a ‘first-responder’ in addressing market opportunities and challenges
Ability to be the ‘low-cost-leader’ in pricing goods and services
Other
Which of the following attributes will be most important to compete in the global economy?
(% respondents)
38
1
33
30
28
25
24
23
18
14
13
13
2
Improving process efficiency (eg, change management, outsourcing, automation and standardisation)
Improving knowledge management and information sharing processes
Encouraging (and extending) collaboration across the business and beyond
Scenario planning and preparing for market changes
Increasing overall employee productivity
Creating cross-functional teams
Securing funding for business expansion
Improving workforce planning, ie, ramping up and down as needed based on human capital and expertise
Establishing policies that encourage and reward employee-generated process improvements and innovation
Reducing the number of initiatives under way
Allowing some budgets to be appropriated on a rolling versus annual basis to improve responsiveness to changing market needs
Other
Don’t know
In light of the economic downturn, what do you believe are your organisation’s priorities in terms of improving agility?
Select up to three.
(% respondents)
20
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
My organisation is at a competitive disadvantage because it is not agile enough to anticipate changing market needs
My organisation has undertaken one or more initiatives to become more agile in the past three years
My organisation has a formal governance structure in place that clearly delegates decision-making rights down through the management function
My organisation is focused on cost-cutting and boosting productivity
At my organisation employees at all levels actively communicate with colleagues outside of their own functions or business units
My organisation has flattened its management structure over the past decade to respond more quickly to market opportunities and threats
My organisation’s efforts to become more agile over the past three years have helped prepare us for the current economic downturn
Do you agree or disagree with the following statements?
(% respondents)
73 27
15 85
38 62
28 72
39 61
50 50
34 66
Agree Disagree
Rapid decision-making and execution
A high-performance culture
The ability to access the right information at the right time
Accountability and credibility
Flexible management of teams and human resources
Decentralised or “flat” management reporting structure
Lean operations
Continual process improvements/Six Sigma
Unified/flexible application infrastructure
Other
61
44
34
34
31
29
22
17
9
2
In your view, what are the critical traits of an agile business?
Select up to three.
(% respondents)
Extremely satisfied
Somewhat satisfied
Neutral
Somewhat dissatisfied
Extremely dissatisfied
14
50
18
13
5
How satisfied are you with the business information
available to you and your team to support your primary job
responsibilities?
(% respondents)
Loss of focus on core organisational strengths and competencies
Potential for project scope creep leading to uncontrolled changes
The integration could take too long and derail other initiatives
Security of confidential data
Other
Don’t know/Not applicable
41
18
16
10
4
11
In changing business operations to become more agile, what
do you see as the greatest risks to your business?
(% respondents)
File sharing/network servers
Mobile devices
Simple collaboration tools (eg, SharePoint, Jive)
Desktop/office applications
Instant messaging
Content management systems
Other
68
36
30
18
15
9
8
4
What technology tools contribute most to organisational
agility in your company today? Select up to two.
(% respondents)
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
21
22
18
15
11
10
4
4
3
3
10
Customer Relationship Management (CRM)
Content analytics and mining software to identify, manage and leverage knowledge assets
Content management systems
IP-based communication systems (eg, Voice over IP, unified communications)
Web 2.0 for easier communication and collaboration
Software as a Service (SaaS) applications that reduce the cost and complexity of content management
XML (extensible markup language) and related software that allow easier searching and tagging of data
Rich media content for more dynamic customer communications
Other
Don’t know
In your view, which of the following technologies are most helpful in making your organisation become more agile in three years?
(% respondents)
Social networks to identify and share business and social contacts
Knowledge management/collaboration system
Technologies to pull data from multiple applications and share personalised results
Tools to encourage customer engagement, ‘co-creation’ and dynamic generated content and interaction (eg, crowdsourcing, open source software and wikis)
Specialised custom web applications to facilitate design, engineering and component fabrication
Predictive simulation models
Process to capture employee feedback and advice
Incentive programmes that reward successful employee-generated initiatives
Other
To spur innovation, does your organisation currently use the following programs, or plan to use them within three years?
(% respondents)
47 19 35
19 30 51
35 37 28
49 33 19
53 22 25
51 21 28
24 24 51
40 20 40
75 11 14
Use now Plan to use within three years Don’t know/Not applicable
Increase investment significantly
Increase investment somewhat
About the same
Reduce investment
No investment at all
Don’t know
9
41
37
9
1
3
How do you expect your organisation’s spending on
technologies related to organisational agility to change over
the next three years?
(% respondents)
22
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
Performance
Security
Scalability
Consistency across borders
Vendor viability
Doesn’t meet compliance
Other
Do not share any of these concerns
70
49
33
32
17
13
7
4
When considering the adoption of new technologies or
applications, what, if any, are your greatest concerns?
Select up to three.
(% respondents)
Increased productivity
Increased revenue
Acquisition of new customers
Product/service innovation
Product development
Retention of talent
Other
We don’t measure this
44
31
23
17
7
5
3
21
How does your organisation measure the return on its
information management investment? Select up to two.
(% respondents)
52
48
30
28
25
21
2
I often have to spend valuable time hunting for key information
I find the best way to locate information is to ask “experts” at my organisation to give me the data
I have ready access to all of the information I need to perform my role
I can access portals and other easy-to-use knowledge capture tools to search and locate the information I need
I find it difficult to respond to e-mail and text messages as quickly as I’d like because of continually high message volumes
My effectiveness and productivity suffer when I’m out of the office on business
Other
Which of the following statements best describe your ability to access, analyse and use unstructured information (eg, ad hoc
but often valuable set of data loosely contained in e-mails, video files, web pages, PDFs, documents and other sources) in
your day-to-day responsibilities? Select up to three.
(% respondents)
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
23
Marketing
Sales
Customer service
Research and development
IT
Finance
Procurement
Operations and production
Supply chain
Human resources
Senior management/Board
Legal, risk and compliance
Other
Don’t know
12 38
1 1
1 3
15 44
11 33
19 23
33 14
29 15
15 9
17 26
12 10
31 9
15 26
30 8
In your view, which areas of your company are most/least agile?
Select up to three for each column.
(% respondents)
Most agile Least agile
Decision-making can take too long
Conflicting goals/priorities of different departments
Necessary information resides in silos
Culture is risk-averse and slow to adopt innovation
IT infrastructure is inflexible and inconsistent across the company
Lack of understanding of intellectual capital and knowledge assets
Business processes are not aligned with business objectives
Difficulty in measuring performance
Lack of budget flexibility
Difficulty complying with and staying up on changing regulations/standards
Business agility is not currently a strategic priority
Lack of senior management support
Other
Don’t know
29
28
3
2
28
26
24
20
20
17
15
11
11
11
In your view, what are the main obstacles to increasing
business agility at your organisation? Select up to three.
(% respondents)
45
38
38
35
33
24
18
10
3
3
Provide easier access and management of information in real time
Improve ability to search for relevant information across any repository
More comprehensive integration of IT systems across the enterprise
Provide content-mining and analytics tools
Implement a corporate-wide knowledge management/collaboration system
Provide more intuitive communication tools and leverage social media across the company and with customers (eg, VoIP, instant messaging, RSS, Twitter)
Create online communities around business processes to which members can post comments and modify documents
Support and expand current e-mail infrastructure
Other
Don’t know
In your view, how can corporate IT best support efforts to improve productivity, performance and responsiveness?
Select up to three.
(% respondents)
24
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
Financial services
Professional services
IT and technology
Energy and natural resources
Healthcare, pharmaceuticals and biotechnology
Government/Public sector
Manufacturing
Telecommunications
Education
Entertainment, media and publishing
Consumer goods
Automotive
Construction and real estate
Retailing
Transportation, travel and tourism
Chemicals
Aerospace/Defence
Agriculture and agribusiness
Logistics and distribution
18
15
10
7
7
7
6
3
3
2
2
1
1
1
5
5
3
3
3
What is your primary industry?
(% respondents)
United Kingdom
France
Germany
Singapore
United States
Australia
Canada
New Zealand
17
17
15
15
14
13
5
3
In which country are you personally located?
(% respondents)
Strategy and business development
General management
Marketing and sales
Finance
Operations and production
Customer service
Information and research
Risk
R&D
IT
Human resources
Supply-chain management
Legal
Procurement
Other
42
37
24
4
3
3
20
15
12
11
11
11
10
7
5
What are your main functional roles?
Please choose no more than three functions.
(% respondents)
Economist Intelligence Unit 2009 Appendix
Survey results
Organisational agility
25
44
10
15
8
23
$500m or less
$500m to $1bn
$1bn to $5bn
$5bn to $10bn
$10bn or more
What are your organisation's global annual revenues in US
dollars?
(% respondents)
Board member
CEO/President/Managing director
CFO/Treasurer/Comptroller
CIO/Technology director
Other C-level executive
SVP/VP/Director
Head of Business Unit
Head of Department
Manager
Other
8
21
4
3
7
17
7
7
18
7
Which of the following best describes your job title?
(% respondents)
Whilst every effort has been taken to verify the accuracy
of this information, neither The Economist Intelligence
Unit Ltd nor the sponsors of this report can accept any
responsibility or liability for reliance by any person on
this briefing paper or any of the information, opinions
or conclusions set out herein. D
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