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D e v e l o p i n g the Agile Enterprise John Bessant, David Knowles, David Francis and Sandra Meredith Centre for Research in Innovation Management, University of Brighton, Falmer, Brighton, BN!9PH, United Kingdom

The problem facing enterprises in the late twentieth century can be seen as the latest version of two long-standing puzzles to do with responding to demanding internal and external environments. Searching for solutions to these puzzles leads to investment in innovation - via R&D, technology transfer, etc. But evidence suggests that the key requirement is not solving the puzzle for one set of circumstances but in continually solving the problems as the puzzles mutate. This places emphasis on organisational capability - it is not what you know or what you can buy but how well you learn and adapt which is the key. We term this ' agility' - and this chapter explores the definition in terms of the 'dynamic capability' view of strategic management. It draws on case study research being carded out as part of a major UK programme of work looking at the development of agility in small and medium-sized manufacturing enterprises. It presents a reference model which seeks to explain and guide the development of agility within organisations. 1. INTRODUCTION In the turbulent conditions characterising the new century it is clear that successful manufacturing firms will need to innovate. This is neither a new nor a surprising observation; the history of manufacturing is about creating new ways of producing and new things to produce. But much of the emphasis has been on seeing innovation as an occasional response -either deploying new technology in a way which confers competitive advantage as a 'firstmover' or by responding quickly and effectively to demand signals - for lower prices, higher quality, greater choice, etc. Arguably the challenge of the current environment is one in which the nature of innovation needs re-examining; firms need not just to innovate but to do so continuously. Dealing with turbulent and shifting environments requires a combination of strategic assessment of the nature and direction of change required and the ability to deploy innovative capacities to deal with it. Innovation in this sense does not have to be dramatic and radical in n a t u r e - although sometimes this is necessary. Most innovation is more concerned with incremental problem-solving- continuously improving things within an existing framework rather than rewriting the rules of the game. But the capacity for both is needed to survive; the key skill is one of constant re-configuration of internal knowledge resources to seize and defend competitive a quality which several writers call 'dynamic capability' .[ 1]