Enhancing Organizational Agility To Sustain Firm Competitiveness During Turbulent Times

Organizational agility

In today’s turbulent, uncertain and fast-paced business environment, organizational agility has become a key factor in sustaining firms’ competitive advantage. Organizational agility is the ability of the organization to effectively and quickly (re)organize its capabilities and internal processes and respond to changes in the firm’s external environment (exploit opportunities and/or mitigate risks).
This ability to adapt to new market conditions and evolving customer demands is essential for firms to stay ahead of the competitive curve.
The need to create and sustain shareholder and customer/stakeholder value through profit maximization and quality service delivery respectively are the primary goals of why companies engage in business operations. However, environmental turbulence both internal and external are increasingly affecting firms of all sizes and having negative effect on their competitiveness. The situation becomes worse when firms are exposed to risks, uncertainties and business complexities which they have never experienced before.

One the pioneering theoretical scholar of organizational agility is Teece who developed the dynamic capabilities theory in 1997. Based on this theory, dynamic capabilities is the capacity of an organization to create, reconfigure and assimilate towards a highly changing and competitive business environment. The dynamic capabilities theory was developed to help organizations improve their adaptability and flexibility towards managing competition effectively. As shown in Figure 2, Teece stresses that firm’s pass through three phases (sensing, seizing, and reconfiguration or transformation) to fully develop their dynamic capabilities.

Organizational agility can take many forms at different levels of the organization. Here, we focus on three key dimensions of leadership/strategic agility, business process/operational agility and work force agility. It is important to note that a bundle of these organizational agility dimensions can help organizations become more responsive, adaptable and competitive.

Leadership agility

Leadership agility means the ability of the organization’s top management and leadership to identify opportunities and threats and then quickly respond to those opportunities and threats. It also demonstrates the ability of the firm’s top management to foster strategic and operational agility, to create an enabling environment for agile culture and to personally adapt to changing conditions and needs. Leadership agility enhances the strategic focus and adaptability of the organization in pursuing opportunities, promotes responsiveness towards stakeholders’ needs, and strengthens firm creativity and leadership in pursuing firm goals.
Research found that leadership agility improved firm competitiveness by sustainably enhancing customer value and customer engagements. Another study showed that leadership agility had a positive and significant influence on firm competitiveness.

Business process agility

Business process agility also known as operational agility is the ability of organizational system to quickly change organizational structures, systems, processes and culture to ensure that it is aligned with the dynamic strategic priorities of the organization. In other words, it is the ability of an organization to react to the changing business environment by accelerating changes in the organization’s operations and processes in a flexible manner.
Research shows that process agility through flexible organizational structures was significantly associated with performance measurement systems and organizational performance, which also had a moderating effect on organizational competitiveness. A related study showed that business process agility had a positive and significant influence on firm competitiveness.

Workforce agility

Workforce agility is the ability of people to adapt their work experiences, competencies, skills and practices to match with the changing needs of their working environment as well as customer demands. It enables organizations to adapt to diverse and evolving requirements of the firm’s operating environment, thus helping the organization in achieving and maintaining business competitiveness. Workforce agility can be based on different factors including individual characteristics, job characteristics and organization’s workforce practices. An investigation showed that workforce agility improved firm performance outcomes. Similarly, flexible workforce practices positively influenced staff productivity and performance. Overall, workforce agility had a positive and significant influence on firm competitiveness in Rwandan firms.

Way forward

It is important to emphasize that combining leadership, business process and workforce agility can lead to significant advantages for an organization in terms of competitiveness. For example, a company with agile leaders can quickly respond to market changes, while an organization with agile operations can quickly adapt to new customer demands. A workforce that is agile can quickly learn new skills and technologies, which can help an organization stay ahead of the competition.
To achieve this level of organizational competitiveness, leaders should foster an environment that encourages agility, including:

In addition, leaders should also focus on implementing agile processes and technologies that can help drive operational efficiency and responsiveness. This might include implementing agile project management methodologies, automating key business processes, and investing in technologies such as artificial intelligence and machine learning.

References

[1] Teece, D. J., Pisano, G., and Shuen, A., (1997) ‘Dynamic capabilities and strategic management’, Strategic Management Journal, vol. 18, no. 7, pp. 509-533.
[2] Teece, D. J., (2018) ‘Business models and dynamic capabilities’, Long range planning, vol. 51, no, 1, pp. 40 49.
[3] Teece, D. J., (2014) ‘The foundations of enterprise performance: Dynamic and ordinary capabilities in an (economic) theory of firms’, Academy of management perspectives, vol. 28, no. 4, pp. 328 352.
[4] Teece, D.J., (2007) ‘Explicating dynamic capabilities: the nature and micro-foundations of (sustainable) enterprise performance’, Strategic Management Journal, vol. 28, no. 13, pp.1319-1350.
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