ExperiencePoint

The Business Case for Organizational Agility
August 5, 2021 | Organizational Agility
by ExperiencePoint

There’s nothing static about market trends and customer expectations. A fad can lose its luster overnight and companies gain little by trying to peddle a product or service that’s no longer in demand. With change defining our business era, brands need to be as agile and reactive as the people they serve.

The fickleness of the market, rapid advancements in technology and pandemic-related shifts in consumer trends all account for why organizational agility is so important these days. Small changes in buying behavior can amount to major industry shifts, making the future unpredictable. Companies who resist the turning tide, and cling to old ways of doing business, will be left out to sea. 

What’s the Point of Becoming Agile?

Changing the way your company operates may seem like a tall order. But organizational agility delivers measurable business outcomes that make the effort worthwhile. We’ve compiled a list of metrics that show the impact of going agile.

  • Agility Increases Customer Satisfaction and Loyalty

McKinsey studied several companies over the course of their agile transformations and found that customer satisfaction scores improved by 10 to 30 points. How? In our introductory post to organizational agility, we explored the strategic imperative’s connection to customer-centricity. Agility isn’t about being quick and responsive for the sake of these qualities alone it’s about being agile in response to the customer. So, in order for a company to become agile, it must first refocus its business model on the customer, making customer needs and wants the company’s guiding light.

In the context of organizational agility, there are two overarching benefits to building customer-centricity. First, during an agile transformation, customer-centricity provides employees with a clear and common goal. Having a shared objective means that, as the company flattens its hierarchy and finds ways to increase speed and flexibility, every new initiative can be measured against how it impacts customer needs. If the new project or initiative feels “agile” but doesn’t actually address a real customer pain point or desire, then it can be reassessed and reconfigured accordingly.

Secondly, customer-centricity increases customer loyalty and satisfaction. The value of both are indisputable. A number of recent studies show that acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one. And that 86 percent of customers are willing to pay more for a better customer experience. Nailing this aspect of your business is critical for growth.

  • Agility Increases Employee Engagement

The same McKinsey study noted that organizational agility increased employee engagement by 20 to 30 percent (measured by both employee surveys and an employee’s likelihood to recommend the company externally). This increase in employee happiness is likely due to the fact that agile organizations are non-hierarchical, with everyone feeling responsible for the company’s success. Agility demands that employees have a sense of autonomy, purpose and masterythe most frequently cited ingredients for employee engagement. When people feel valued, challenged and respected in their work, their professional satisfaction increases proportionately. This phenomenon is doubly important in today’s job climate, with the ongoing threat of a turnover tsunami.

  • Agility Improves Financial Performance

McKinsey also noted a 20-30 percent improvement in financial performance in the companies that underwent agile transformations. Manifesting as cost savings, increased revenue and/or new reinvestment, these financial improvements were the result of a combination of traits related to organizational agility. When systems are optimized to facilitate speed, collaboration, ongoing learning and customer-centricity, the company develops better products/services, and gets them to market at a faster rate.

Agility may sound a little abstract as a company quality but, as these metrics demonstrate, it delivers concrete benefits. In our next blog post, we’ll explore how design thinking and organizational agility can complement each other in a corporate setting.

Interested in learning more about organizational agility? Read our recent blog post: Organizational Agility: One of Today’s Key Strategic Imperatives