What is Business Agility? - Definition & Process

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  • 0:04 What Is Business Agility?
  • 1:27 Business Agility Process
  • 4:28 Lesson Summary
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Lesson Transcript
Instructor: Mike Miller
How do businesses respond to changing conditions? This lesson will go over business agility, why it's important, and how to follow the six-step process to implement changes.

What Is Business Agility?

Have you heard of a company that just sticks to its products as is, and doesn't make changes or invest in advancement? Probably not. Those types of companies either go out of business or they have a monopoly niche that they don't have to change. As competition emerges, the latter will become the former. So how do businesses respond to changing conditions?

Business agility refers to a company's ability to respond to changing conditions. Just about anything can cause a need for change. Changing conditions can refer to both internal and external factors. Some internal factors are reorganization, being purchased, new policies and procedures, or a new chief executive officer. External conditions are supplier shortages, new technology, or regulatory requirements.

A company's business agility is critical to their long-term viability and sustainability. The faster a company can respond the better chances the company has for long-term survival. Innovation is key. The more and faster a company can innovate, in both its brand and products, the better the company's agility will be.

Business agility has its roots based in agile project management, where a project team sets their priorities, tracks progress, and makes changes as needed to help the project perform at its peak.

Business Agility Process

Okay, so a business has to keep its edge. But how? Just like everything else in business, there is a process.

In the first step, the business identifies a need for change. This need could come from an external factor such as a regulatory requirement or supplier issues. The business will identify a lead to take on the responsibility for managing the changes and who will determine what will be required to process the change. Say Larry's Laptops needs to change their laptop product line because a competitor has developed a new processor that is faster than theirs. The company identifies Jeb as the lead. Jeb does some research and determines how they can change their processor to increase speed while maintaining current costs.

During the recycle phase, the change lead will determine what, if anything, the company can recycle, using their current systems to help implement this new one. This could be modifying current organization process, such as procedures, IT systems, or supply chains. The lead will also determine which key performance indicators (KPI) will be used during the change implementation and manage the change down the road. Examples of key performance indicators are earned value, customer loyalty, and cost of poor quality. Jeb reviews the company's processes, policies, and KPIs. He plans on reusing the majority and modifying a small percentage. He does need to work with supply chain to identify new suppliers for the new processors.

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