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Strategic Agility: Definition & Examples

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  • 0:04 What Is Strategic Agility?
  • 1:19 Strategic Agility Drivers
  • 3:39 Lesson Summary
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Lesson Transcript
Instructor: Beth Loy

Dr. Loy has a Ph.D. in Resource Economics; master's degrees in economics, human resources, and safety; and has taught masters and doctorate level courses in statistics, research methods, economics, and management.

The concept of strategic agility describes a business's ability to remain fluid, changing and updating operations as innovations become available. In this lesson, we look at how strategic agility applies to the development of new products and services.

What Is Strategic Agility?

If an organization has strategic agility, it's able to adapt its business model quickly. Let's say a company makes chocolate bars. Let's call it RollBars. A report comes out that indicates chocolate and cranberries together reduce the chance of getting heart disease. RollBars immediately starts to develop a chocolate bar with cranberries in it so the company can capitalize on the new research.

The marketing team starts working on a plan, and the packaging department starts implementing changes to send out the new product to customers. Six months later, a new manufacturing process comes out that allows RollBars to switch from chocolate bars to nuggets in a matter of minutes. RollBars then promptly develops cranberry nuggets to speedily capitalize on the technology advancement. Once again, the marketing team and packaging department get busy on the new plan.

RollBars has strategic agility, which is the ability to remain fluid by changing and updating how it does business as innovations and new ideas become available. It's able to make changes quickly so the company can stay ahead of the competition. By the time another company attempts to catch up, RollBars is accumulating new profits from leveraging the advancements.

Strategic Agility Drivers

Many large companies like RollBars are in a global economy and have to make decisions swiftly and efficiently. The company that accesses resources the fastest is the one that capitalizes the most. Otherwise, the strategic advantages fade quickly.

But the ability to adjust at a moment's notice doesn't just come from nowhere. It's the result of specific factors in businesses. These include process adaptability, management commitment, and diversified labor. Let's look at each.

Process adaptability means a company has a flexible infrastructure. Production of the good or service can easily be changed to meet increased demand or create a variation on an existing product. When RollBars easily switched from bars to nuggets, this demonstrated a high level of process adaptability.

Management commitment is necessary for a company to remain fluid and is when resources are distributed quickly and efficiently. Managers have to be flexible in how they disperse resources and reassign labor. Any delay results in lost profit. As RollBars moved to integrate cranberries in their recipe, staff had to be reassigned from other departments to focus on the preparation of the cranberries being used. It was up to management to make sure existing processes were still covered while additional, more qualified staff were moved to the cranberry division.

Diversified labor is needed when a company wants to increase its strategic agility and is when the labor force has to be able to switch jobs instantaneously. Those who can retrain promptly are often of high value to a company like RollBars. Switching from being involved in quality control to cranberry preparation, for example, takes a diversified skill set.

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