This article originally appeared

in the 2012, No. 3, issue of

The journal of high-performance business

Special Report

Corporate agility

Six ways to make

volatility your friend
By Walt Shill, John F. Engel, David Mann and Olaf Schatteman

In todays chronically uncertain markets, agility is an

exceptionally powerful competitive weaponand it
can be wielded with considerable effect by enterprises
of all types and sizes.
a ccenture.com/outlook

You know your market is changing

when customers are buying things they
shouldnt be. That was the case in 2009,
when managers at a leading US retailer
began to notice a steady rise in sales of
travel-size shampoos, soaps and similar
consumables.
Their prompt analysis pointed to
something much bigger than a rush on
tiny tubes of toothpaste. It revealed a
nationwide trend that was barely visible
to other retailers at the time: Consumers, hit hard by the global downturn
and often living paycheck to paycheck,
were buying the cheapest unit sizes they
could find. The trend had first surfaced
in the companys urban locations and
quickly moved to the suburbs
as the economic crisis spread.
The companys response was just as
nimble as its early detection of the
trend. It piloted big changes to its
assortments, expanding shelf space
for intermediate sizes, running sales
on two- and four-packs of goods (not
just 12- and 24-packs) and tailoring
its mix and merchandising approaches
to the wallets of cash-strapped shoppers.
Positive results told executives all
they needed to know to rapidly roll
out the program nationwide.
The move was a resounding success.
The retailer gained market share in
key demographic segments, boosting
its attach rate (the value of complementary goods sold for each primary
product sold) and establishing a
reputation for offering good deals.
It saw double-digit sales increases
levels unheard of in retailin the
non-discretionary categories it had
targeted. Whats more, the company
has continued to benefit from many of
the analytical techniques it pioneered
at that time.

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Here was a dramatic demonstration

of agility in action: a large, longestablished corporation that was quick
to sense and then analyze important
market changes, and then just as
quick to act. But the companys actions

are the exception rather than the rule.

For many businesses in many industries,
the concept of agility has proved
elusive indeed, particularly in the
implementation.

Restraining Gulliver
It has never been easy for large,
complex organizations to be nimble.
Nearly half of the 674 executives
surveyed globally in a 2010 Accenture
study have little confidence in their
companies ability to mobilize quickly
to capitalize on market shifts or to
serve new customers. Half do not
believe that their culture is adaptive
enough to respond positively to change.
And 44 percent arent certain that
their workforces are prepared to
adapt to and manage change through
periods of economic uncertainty.
Results from a survey by the Economist
Intelligence Unit echo these findings.
More than a quarter of the EIUs poll
respondents said their organizations
were at a disadvantage because they
werent agile enough to anticipate
fundamental marketplace shifts.
Even at very senior levels, decisions
can take foreverand are often secondguessed. We thought the big decision
had been made months before,
recalls one executive we interviewed.
But apparently, when we had to
act on it, it was still being debated.
We were furious.
Its time for those organizations
and many like themto try again.
From the swiftest startups to the
slowest-moving government agencies,
every organization needs to move
the agility needle to the right.
Its no secret why organizations
struggle mightily to do so: Gulliver-like,
they are bound by a thousand tiny
threads of hierarchycompartmentalization, interdepartmental conflict,
risk aversion and miscommunication,
to name just a few constraints. They
also tend to view volatility as a
limitation rather than an opportunity.

Business agility defined

Few business topics are softer than agility. Its one of
those concepts that everyone thinks they grasp. But its a
different story when it comes to deconstructing the concept
and coming up with practical ways to put it into action.
To anchor our understanding of agility, we should start with the
dictionary. According to Websters Collegiate Dictionary, the
definitions are: 1. The ability of being quick and well-coordinated
in movement; nimble. Active, lively. 2. Marked by an ability to
think quickly; mentally acute or aware.
Here are the components of agility that matter most in a
business context.
Anticipating. This means developing a view of possible or likely changesnot trying to predict actual changes. Anticipating
includes a rigorous review of customer needs and industry
forces, and an evaluation of likely scenarios of industry consolidation, product development, pricing and customer needs.

Sensing. This involves continual reviews of market conditions,

looking for trends and especially anomalies in customer
behavior, competitor moves, supply chain shifts, supply/demand
changes, and macro- and microeconomic developments.
It requires strong analytics capabilities.
Responding. The key is to respond to market shifts faster
than competitors do. This includes rapid decision making,
testing responses on a pilot basis and then scaling for
a broader response. It frequently includes preset plays,
where management teams have agreed ahead of time how
they will respond to certain situationsfor instance, to a price
drop by a competitor or the merger of two rivals.
Adapting. Once initial market changes have been identified,
organizations often find that they need to rework some of
their business processes. Some may tailor their organizational
structures to better handle ongoing changes in their markets.

At best, they gauge agility by how

fast they follow moves made by
their competitors.

Whats new?
Plenty has been written about the
virtues of agility. In 2007, Wharton
published Fast Strategy: How Strategic
Agility Will Keep You Ahead Of The
Game. In the 1980s, Harvard Business
Review explored the topic, notably
with its landmark article on time-based
competition. And decades ago, then
General Electric chief Jack Welch was
famously preaching about speed and
responsiveness.
However, much has changedand
continues to changeto force companies
to institutionalize their approaches to
agility. And much has happened to
enable them to do so: witness the rapid
advances in analytical software. Yet
when it comes to exactly how to become
agile, pragmatic advice is harder to find.
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The good news is that many more

executives are now ready to accept
change. Goneor at least going

is the reflexive urge to stick to triedand-true ways of doing things or

the sense of helplessness that market
turbulence has so often engendered.
Heres how the chief financial officer
of a global hospitality provider
describes the new mood: We had
to decide whether we were going to
avoid the market uncertainty with a
hunker-down mindset or seize it as
an opportunity. I think muddling in
between is the most risky. With the
right mindset, this is a fantastic time
to be in business.
What previously were viewed as oncein-a-lifetime events have become
permanent features of the business
landscape. As one utilities executive
recently told us, This industry
is not supposed to be rocked by
changes in technologyand then
shale gas emerged.
Most business leaders can reel off
myriad examples of volatility from
their own recent experiences. But
what is less obvious is the rate of
increase of uncertainty.

Questions and answers about agility

Q: How is agility related to volatility?
Agility refers to a companys capacity to anticipate, sense and
respond to volatility in its markets to its advantage. Market
volatility is a tremendous source of opportunity for companies
that have developed the capabilities to not only manage risk but
also respond to it more effectively than their competitors.
Q: I hear lots of terms being used interchangeably. What
are the differences between agility, adaptability, versatility,
flexibility and resilience?
Each term touches on a companys ability to respond successfully
to change. Agility encompasses the broadest range of abilities.
Adaptability applies to organizations that are agile over long
periods and can switch to radically new market paradigms, as
Fujifilm Corp. has done repeatedly. Versatility typically describes
companies such as Amazon.com that embrace a wide range
of business models. Flexibility is used for companies that can
easily change their supply chains and use multiple customer
channels. Resilience refers to a companys ability to absorb and
bounce back after strategic, financial or operational shocks, as
Cisco did after the 20002001 tech downturn.
Q: Is agile really just another term for innovative?
Innovation is certainly one element of agility. Agile companies
are better at sensing new market needs and quickly developing
products or services to meet those needs. To innovate to their
fullest potential, they draw on broad and deep strategic, financial,
organizational and operational capabilities.

Q: How do we avoid losing control as we strive to become

more agile?
Increasing agility does not mean having less control; in
fact, many companies find that standardizing processes and
defining exceptions increases agility and control at the same
time. Agile companies tend to run more experiments and
tests, many of which are not market successes. Such tests
and experiments should not be ad hoc; they need to take
place in a controlled environment.
Q: What is ITs impact on agility?
IT systems are essential to helping organizations turn volatility
to their advantage. They must be able to quickly gather
market and operational data internally and externally and
analyze the information in real time. Internal reporting
systems need to be flexible and provide historical, real-time
and predictive performance indicators. IT systems must
support greater collaboration and visibility across functions,
business units and geographies.
Q: Does risk management inhibit agility?
Corporations need a robust risk management capability
to fulfill their obligations to shareholders, customers and
employees. Leveraged appropriately, risk management not
only identifies vulnerable areas where an organization must
protect itself but also identifies areas where a company can
create opportunity and take appropriate amounts of risk.

In the past decade, the US stock market

has been much more volatile than in
previous periods. Global commodity
price swings have been vertiginous. And
the list of Fortune 1,000 companies
is turning over faster. In their 2006
book, Built to Change, organizational
effectiveness experts Edward Lawler and
Christopher Worley found that between
1973 and 1983, an average of 35 percent
of the top 20 companies on the Fortune
1,000 were new to the list. The number
rose to 45 percent in the next decade,
then soared to 60 percent the decade
after that. And its likely to top 70 percent in the decade that ends in 2013.
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Yet few companies are agile enough to

successfully cope with the economic
turmoil around them.

Some, perhaps, lack consensus

among top managers about exactly
what agility means (see sidebar,
above). But we believe that the real
problem is less one of comprehension
than of the far more serious lack of
readiness and capacity to act. In fact, in
many cases, companies have actually
become less agile during the recession.
The headlines are filled with names
of traditional companies that have
failed to adapt to market volatility
companies where the opinions of
change-ready managers were quashed.
In such situations, its often about
turfthe fears of some executives
that they will lose power or influence
or both if they dont resist disruptive
innovation.

In other cases, organizations, in

their bids to become hyper-efficient,
have actually become sclerotic.
Consider the legions that reflexively
cut headcount when their current
quarters fortunes sagspreading the
pain over each department without
properly weighing the value of the
skills lost. Or look at the many
companies that have trimmed their
supply chains to the bone, reducing
their agility, sometimes to the point
of embarrassment.

A nonstop opportunity
In his latest letter to shareholders,
GE chairman and CEO Jeffrey Immelt
nicely summed up his teams perspective
on the need for agility: When the
environment is continuously unstable,
it is no longer volatile. Rather, we have
entered a new economic era. . . . Nothing
is certain except for the need to have
strong risk management, a lot of cash,
the willingness to invest even when
the future is unclear, and great people.
To be sure, the rise of volatility and
market turbulence makes it far more
important to get risk management
right. But there isor should be
more to it than that. Accenture has
found that several high performers
view ongoing uncertainty as nonstop
opportunity.
That doesnt mean that all highperformance businesses view
uncertainty in the same rosy light.
The levels of urgency and the potential
for opportunity felt by a maker of
hard disk drives or mobile-phone
handsets are very different from those
experienced by a producer of forestry
products. But there are consistent
themes that come up time and again
in conversations with business
leaders worldwide.

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Our experience reveals six lenses

through which these exemplars view
volatility in glass-half-full terms.
This list of lenses is not comprehensive.
Nor are the lenses themselves mutually
exclusive; there are many ways they

overlap with and reinforce one

another. Taken together, though,
they point to actions that business
leaders can take sooner rather than
later. Here are glimpses through
those lenses; each lens is explored in
more detail in the following pages.

Strategy
Its time to welcome back scenario
planningthis time as an agility
lever. Once seen as a rather academic
tool used by the C-suite to set a course
in industries that run on long economic
cycles, its now becoming a regular
whiteboarding approach used by
managers at many levels to pinpoint
the handful of best options for
responding to new situations.
High performers are reviving the
discipline not only to mitigate risks but
to quickly sound out opportunities
that may not be opportunities for
long. These companies are investing
more so they can deeply understand
their industries drivers, the new
technologies available to them, and
the economic and market factors that
could disrupt their industry networks.

Leadership
Companies that can thoughtfully
respond to new opportunities and
make rapid decisions in uncertain
environments share one common
trait: Their top managers make decisions
quickly and those decisions stickno
second-guessing.
The companies achieve this by
investing over the long term to align
their top management teams with their
markets, their positions within those
markets, the strategic levers they can
pull and their readiness to pull them.
This ongoing exercise in organizational
alignmenttypically reviewed regularly
with the boardinvolves much more
than risk management or crisis
management. As with strategy, it

Twelve-point agility checklist

1. Does your organization have at least three scenarios for
how your industry is most likely to evolve over the next 36
months? Does it have good options for responding?
2. What three big opportunities would your company be
pursuing if it were more agile?
3. Imagine three possible sources of competition that you
havent thought would be likely until now. How will you
respond to them?
4. P ut yourself in your top competitors shoes. What could
they do to disrupt the market in the next year, and what are
your plans for outsmarting them?
5. How is your company augmenting its ability to quickly sense
new market anomalies? Are you taking full advantage of the
new capabilities of todays analytics tools?
6. What are the three biggest factors preventing your
organization from being more agile? How do you plan to
overcome them?

7. Did you make such big cuts during the recession (particularly
in terms of talent) that your agility and ability to grow have
been damaged? If so, how are you compensating now for
those cuts?
8. In what areas should you be collaborating with your
competitors to drive changes in the market?
9. Who among your organizations new leaders will be most
effective at taking advantage of volatility? What makes
them different from your longtime leaders?
10. W
 hich of your customers are the best leading indicators
of future market opportunities?
11. W
 here would faster decision making be of most benefit
to your company?
12. H
 ave you been able to cut your companys fixed costs in
the past few years to improve its agility?

means working through a wide array

of probable scenarios and gauging
how well the top team can deal with the
most likely of them.

Organization
The best performers have realized
that they can no longer count on
short-term sacrifices and superhuman
efforts from all-too-human workers.
So they hit transformation fatigue
head-on by increasing organizational
alignment, doing more to bolster
the caliber of their workforces and
emphasizing collaboration. Their
success is gauged by how easily they
can overcome organizational inertia
and how smoothly and quickly they
can make good decisions.

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High performers work hard to bolster

their entire talent rosternot just their
leadership ranks. They do far more than
average companies to map their current

and future talent lineups against their

business needs, seeking many of the
traits they look for in their leadership
teams. And they craft incentives and
compensation plans that recognize
and reward those traits.

Marketing
Top performers like the US retailer
discussed earlier have more finely
tuned antennae than their average
peers. They can predict, sense, respond
and adapt at speedin much shorter
cycles and in more dimensions than
ever before. They use real-time
market data and advanced analytics
to spot unexpected and incipient
shifts in customer behavior, sense
competitor moves and predict likely
trends. We look for anomalies in the
datawhat products are growing fast
that shouldnt, which campaigns are
not working that should, explains
an executive at a leading retailer.

For further reading

Examining the Euro: Why Does It
Matter? http://www.accenture.com/
us-en/Pages/insight-examining-eurowhy-does-it-matter.aspx
Managing the Unthinkable:
Scenario-Based EPM:
http://www.accenture.com/us-en/
Pages/insight-managing-unthinkablescenario-based-enterprise-performancemanagement.aspx
The New Realities of Dating in
the Digital Age: Are Your Customers
Really Cheating, Or Are You Just
Not Paying Enough Attention?
http://www.accenture.com/us-en/
Pages/insight-acn-global-consumerresearch-study.aspx
Preparing for the unpredictable,
Outlook 2012, No. 1:
http://www.accenture.com/us-en/
outlook/Pages/outlook-journal-2012preparing-for-unpredictable.aspx
For more related content,
please visit www.accenture.com.

Those nuances tell us something.

We just have to be smart enough to
listen very carefully.

Operations
Last years earthquake in Japan
highlighted the constraints and
vulnerability within many companies supply chains. In the quest for
lower costs, companies have stretched
supply chains globally and made
them more efficient. However, many
now question whether they have
gone too far, and ask how they could
restore flexibility, transparency
and redundancywithout loading up on
inventory.
Agile companies have developed
dynamic supply chains and operational
support systems. They build deeper,
more transparent supplier relationships
effectively extending the enterprise
beyond the traditional boundaries
and ensuring greater visibility and
tighter management of the supply
pipeline and the demand cycle.

Finance
Large cash balances clearly open
up options. But they are only one
agility lever. The most agile companies,
regardless of size, have also adapted
the role and activities of their finance
functions. In addition to improving
the risk management capabilities, the
finance executives at those organizations are changing their budgeting

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and planning processes to provide

greater insight and flexibility. Many
are accelerating their budget planning
cycles and deemphasizing annual
plans in favor of rolling year-on-year
or year-plus budgets. Finances proactive
efforts to manage inventory, credit
terms, payments and cash are vital
not only for mitigating risk but for
capturing upside opportunities.

These lenses do not constitute an

exhaustive list of all it takes to be truly
agile. For example, they dont include
information systemsparticularly the
analytics toolsthat will be necessary
to support agility efforts. Nor is this
brief overview meant to be anything
but that. In the pages that follow, we
explore each of these lenses in more
detail. Our intent here is to spark
fresh discussion about what it takes
to achieve institutional agility.
We also want to encourage leaders of
large, complex organizations to view
agility as well within their grasp.
As one bullish executive told us, Its
only volatility if you dont understand
it or dont know how to respond.

For more detail about the six lenses,

please see the following pages.
Strategy: page 8
Leadership: page 10
Organization: page 12
Marketing: page 14
Operations: page 16
Finance: page 18

Strategy

Anticipate, plan, execute

By Mark Spelman
UPS does not count seismology among
its core competencies. But when that
Icelandic volcano blew in the spring of
2010, the logistics and package delivery
companys European hub, which sorts
up to 110,000 packages an hour, was
able to navigate the disruption.
For years, UPS had fretted about how
its European operations would function
if a terrorist attack were to shut down
or cripple its hub in Germany; its
top teams had run detailed planning
exercises. So when Eyjafjallajkull
began spewing ash, UPS was able to
handle the problem.
UPS exemplifies the farsighted companies
that are emphasizing strategic agility.
These agile exemplars excel along
three strategic dimensions, acting on
them simultaneously.

Sensing change
The first key to strategic agility is
anticipation. Although leading
companies are becoming ever more
adept at market sensingand using
analytical tools and capabilities to
develop actionable insights from what
theyre sensingmany others still
have ample room for improvement.

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Thats especially true for parsing data

about demandand nowhere more so
than in emerging markets. Indeed,
many Western multinationals will
have to work harder to detect changes
in the behaviors and needs of middleclass consumer segments in nations
like Brazil and Indonesia. In addition,
those companies have to get smarter
at detecting the emergence of new
competitors; they also need to be better
at interpreting policy and regulatory
moves, and at distinguishing between

those that can create new opportunities

and those that pose new threats.
However, truly agile organizations
realize that information, data and
knowledge must be translated into
actions that can be understood and
implemented through the organization.
Take the life sciences industry: Nextgeneration option-planning efforts
are being used increasingly to transcend the sectors typical competitive
option-planning exercises, which dont
adequately account for the greater
uncertainty facing the industry.
Indeed, option planning is rapidly
becoming a regular whiteboarding
approach used by managers in many
industries to pinpoint the handful of
best options for responding to new
situations. Our industry continues to
shift, explains one telecom industry
leader. New competitors and business
models are emerging, and new acquisitions and alliances will happen. So
we have to be ready to respond. We
need to go through the likely options,
to identify the issues and have the
arguments ahead of timewe wont
have time for that when we have to act.
At root, strategic agility is a relative
concept. Its value is seen in an organizations ability to continually outrun
its rivals by executing consistently. It
goes to the heart of the way a company
decides how to use its critical resources
its money and its people.
This implementation piece is integral
to the holistic view of strategic agility
adopted by leading companies; they
are constantly refining their ability
to shift resources to where they will
have the most impact. They know

when to apply the brakes to projects

whose impact on overall performance
is diminishing and when to accelerate
on those that promise higher impact.
They are, in effect, institutionalizing
their learning from both success
and failure.

Fluid approach
Implicit in that constant refinement
and learning is the notion that strategic
agility is a characteristic at odds
with cultural norms in many large
organizations, where the temptation is
often to hoard resources to consolidate
power. The companies that can apply
more fluid approaches to resource
allocation are the ones that will be
best placed to handle uncertainty
and change.
Washington, D.C.-based Danaher
Corp. stays flexible by using a mix of
business models to run its constantly
changing mix of businesses. The
highly diversified groupits 2011
revenue was more than $16 billion
from operations in more than 125
countries, with products ranging from
blood gas analyzers to microscopesis
one of the worlds most acquisitive
companies, recently averaging more
than 14 acquisitions a year.
Its Danaher Business System, a model
that has evolved from a lean manufacturing initiative into a comprehensive
management approach, works on two
levels. At the daily management level,
process standardization and efficiency
companywide are supported by
eliminating waste; at the second level

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policy deploymentaggressive senior

management-level targets related to
product line innovation or geographic
expansion are set, ensuring that
Danaher is constantly pushing for
sustainable growth.
The dynamic aspect of strategic agility
extends far beyond conventional
corporate boundaries. Many top
performers are rethinking the relationship between their organizations
and those of, say, customers and
suppliers, thus giving themselves
additional options by redefining
traditional competitors as potential
partners and some of their suppliers
and customers as rivals. Frenemies
and co-opetitors are part of their
corporate ecosystems. For instance,
leaders in the automotive industry
know it is important to be able to
flex resources up and down the supply
chain. One reason why Germanys
automotive industry was able to exit
the recent recession in such a strong
position was that companies continually
adjusted payment terms for components
and fine-tuned short-term work
arrangements as demand for cars
ebbed and f lowed. That way, the
medium-sized and smaller companies
they depend on were not forced under
by the rapid contraction in demand
seen in 2009.
Strategic agility is at its most effective
when an organization turns strategic
insight into opportunities with clear
decision-making guidelines and the
willingness to allocate resources that
constantly drive premium results.

Leadership

Assertive, inclusive, flexible

By Robert J. Thomas and Yaarit Silverstone

Its highly unlikely that a company
can dodge and weave around the
markets punchesmuch less capitalize
on themif its executive team is less
than nimble. Today, top management
must be capable of active, inclusive,
engaged decision making that happens
quickly. Its not just an approach
to be applied in times of crisis; these
days, its a hallmark of top-performing
companies, those that can recognize
opportunity in times of great change.
Accentures research on the anatomy
of global leadership shows that true
agility at the top means having not
only a repertoire of standing teams
but also the readiness to quickly
assemble temporary teams to meet
specific challenges.
In short, business leadersand boards of
directorscan no longer assume that
management must be organized in the
typical rigid hierarchy of executive
bodies, such as an executive leadership
team, an operations team, a global
steering council and perhaps a crosssectional conference of high-potential
managers. Better to think in terms of
a flexible network of skilled, experienced,
collaboration-minded leaders who can
come together quickly to address the
challenge at hand.

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Thats the approach used by Kingfisher,

the UK-based home improvement
retailer. Beyond the five members
of the companys group executive
committee, other top leaders convene
in cross-functional teams to solve
problems. These networks allow
managers to make decisions in a style
that suits the problemcollaborating
to reduce complexity in product
assortment, for example.

The right hat

Its critical that team members
recognize and even declare which hat
theyre wearing in such cases. Hemant
Nerurkar, managing director of Tata
Steel, says that during particular
discussions, he asks each person to
be clear about whether he or she is
in this room because of my role as
head of Asia, or as head of outsourcing,
or as a functional leader of finance.
Am I anchored in one role, or am I sharing the burdens, the responsibilities,
the perspectives of the top leader and
looking at the whole of the organization?
Only when people recognize potential
biases caused by the variety of roles
they inhabit can a team arrive at a
fully informed decision.
Agility also manifests itself in the
ability of top leaders to change their
decision-making styles to accommodate
an array of variables, such as urgency,
risk level, time constraints, and
regional and cultural differences. No
decision-making style is universally
or constantly applicable.
According to Herv Borensztejn,
senior HR leader at GE Energy Power
Conversion, a French power conversion
company: We [sometimes] change our
decision-making structure when we
have to make decisions immediately
in order to keep up with the speed
and pace of our competitors . . . even
though not all of us are available at the
same time.
Agile organizations also tend to have
senior leaders with the right blend
of personal attributesindividuals
who demonstrate a range of skills, are
clearly comfortable with ambiguity
and are respectful of but not slaves to

process. They understand the difference

between influence and authority, and as
such, are entirely at home influencing
and participating in teams. Their
focus isnt on hierarchy; its on ideas,
information, creativity, flexibility,
candor and curiosity.

not arbitrarily but paced in ways

that avoid managerial rigor mortis,
welcome new talent from other
industries, broaden the experience
of the individuals and allow the
whole team to be refreshed by new
ideas and perspectives.

Range of options

Such moves are especially important

for far-flung global leadership teams.
There are many more companies
competing beyond their home bases
than there were as recently as the
1990s, and it is all too easy for
management teams to become siloed.
Leaders of many large multinationals
now complain that they have to
accept less-than-wonderful solutions
because the most thorough answers
require close working relationships
between senior managers who have
never met in person.

Collectively, these leaders constitute

highly experienced, assertive, receptive,
flexible teams that can hasten decision
making because the big issues have
already been debated. The range of
options, arguments, trade-offs and
implications has been largely worked
through. Theres widespread agreement
that such traits are key. Half of the
CEOs and CIOs polled recently by
the Economist Intelligence Unit
agreed that rapid decision making
and execution are essential to a
companys competitive standing.
Those levels of preparation are part of
the continual work at leading companies
to ensure that top managers are aligned
with their organizations markets, its
position within those markets, the
strategic levers that managers can pull
and their readiness to pull them.
Furthermore, the top team members
will rotate through various positions

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Says Mechthilde Maier, head of group

diversity management at Deutsche
Telekom, A major challenge in
this complex world is that we need
different perspectives, different
insights and different methods to
solve a problem . . . sometimes there
is not one answerthere are a few
or many answers to one and the
same question. What you need is
team thinking.

Organization
 orking at the speed of
W
opportunity

By Walter G. Gossage, David Gartside and Victoria B. Luby

Call it a case of slow organizational
reflexes. A company can see an
opportunity to innovate or capture
new customers and market share, but
by the time resources are allocated
and people with the right skills
are put in place, the opportunity
is gone. The organization simply
cannot get out of its own way.
How to make it better?

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Staffing and deployment also look

very different with agile organizations.
Rather than locking employees into
long-term roles and then waiting
for relevant work to arise, a more
leading-edge approach is to assemble
teams that are the right fit for a
particular needand then to disband
and reassemble a different team for
the next need.

Rapid re-skilling

Improving your organizational agility

involves coordinated action across
several fronts: how talent is sourced
and deployed; how people are given
the skills to meet a companys needs
both now and in the future; how HR
matches capabilities with business
goals; and how the ability to manage
change is adopted more broadly across
the organization.

The enterprise learning function

is vitally important to the agile
organization. It bears the primary
responsibility for creating engaging,
just-in-time learning experiences to
improve productivity and over-all
business performance. Equally
important, it must be able to rapidly
enable the development of new skills
to support new strategic needs.

The agile organization sources and

deploys talent in ways different
from its competitors. In hiring, these
companies look beyond the narrow
skills needed for particular jobs to
find people with a portfolio of broader,
related capabilities. They also screen
for people who are, by nature, more
adaptable and willing to embrace change.

The challenge here is that many

companies formal learning programs
are too slow and too outmoded to
improve the organizational reflex.
Whats needed is a dual approach:
providing formal learning that is
timely and based on best practices
so that broader sets of workforces
get consistent, high-quality training;
and at the same time, leveraging
social learning and collaboration
tools to connect all employees with
the information they need, right now,
to respond to a customer or develop
a potential breakthrough idea.

Companies Accenture has studied,

such as Entergy Corp. and Hilton
Worldwide, focus on hiring employees
who fit an agility profileoften
generalists who can then fill in
specific skills gaps with training.
These points underscore the fact that
the tone of organizational agility
is set very early in the process of
finding and developing talent.

The HR function of the agile

organization acts less like a process
administrator and more like an active
participant in flexibly matching talent

with need. If, as described earlier,

teams with the right mix of capabilities are to be assembled for specific
business needs, then some part of
the organization must be responsible
for knowing who has what capabilities.
Thats the job of the new HR:
understanding, at a detailed level,
the knowledge, skills and abilities
of the workforce, and then acting
as a broker to match the right talent
with the right business goals.

Adaptable, collaborative
For example, Campbell Soup Co.
uses a talent management system
that documents an employees full
range of skills and career aspirationsmaking it easier to identify
personnel able to take on new roles.
Employees can add new experiences
regularly, keeping their profiles up to
date. According to Jackie Scanlan, the
companys vice presidentHR international and strategy, The key is to
proactively mine this data to really
get to know employees beyond just
their current role.
The pace of change takes its toll on
an organization. We spoke to a COO for
a major telecommunications company
who expressed concern about how
much his people could take. In the
last five years, our company has been
through two CEOs, two mergers and
a new IT system launch, he says. Now
we are being acquired. The executive
feels he can no longer tell people to
work hard until it gets back to normal.
That pace of change is normal.

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Creating a more adaptable and collaborative culture is certainly part of the

answer. But even more important is
moving beyond traditional approaches
to change managementwhich see
change as a separate and discrete
program with a beginning, a middle
and an endand instead creating
a broader enterprise capability to
be adaptable and agile all the time.
The agile organization embraces the
strategies and structures for constantly
upgrading the change capabilities of
leaders and the entire workforce.
One way to think about organizational
agility is much like the way the head
of a supply chain organization thinks
about quality. Quality isnt a matter
of appointing someone to check your
products, because by then its too late;
rather, its a matter of embedding
scrutiny and commitment into every
step of the process.
Similarly, an agile organization looks
across the multiple dimensions of talent,
culture, organization structure and
leadership, and embeds flexibility in
each. It adds up to a workforce that
can move closer to the speed of ideas
and opportunities. The exemplars also
put a premium on rich collaboration
which shouldnt be confused with slow
consensus-building. Truly effective
collaboration involves the wide
distribution and free flow of information,
quick sharing of perspectives from
across the organization, and rapid
decision making that can, when needed,
jump hierarchies in a single bound.

Marketing

Extraordinary relevance
By Glen A. Hartman, Baiju Shah and Robert E. Wollan
Nowhere is the need for greater
agility more pronounced than in
business-to-consumer marketing. In
the new world of consumer decision
making, the customer calls far more
of the shots, often with a simple click
of a mouse or tap on a touchscreen.
Buyers no longer enter a marketing
or sales channel but are continuously
in the channel. In this world, the
consequences for the provider of an
irrelevant customer experience can
be dire.
Accentures latest Global Consumer
Research Study shows how fickle
consumers really are these days
how rapidly their expectations are
rising and how diverse the factors
that influence them can be.
The study finds that only one in four
consumers feels very loyal to his
or her providers across industries;
just as many claim no loyalty at all.
Two-thirds switched providers in at
least one industry in the preceding
year due to poor customer service.
Whats more, the performance bar
keeps rising: Forty-four percent of
consumers said their expectations are
higher than they were only a year
earlier. Such contradictions are even
more marked in emerging markets.

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These days, the new grail is extraordinary relevance. Just as friends and
family provide relevant inputs online
and in social media, so consumers
want services and products that match
their expectations perfectly anytime
they want them. And its never a
one-time thing: Customers intentions
are constantly changing, and the
choices they make are increasingly
dynamic, open and continuous, so

providers must be able to offer a constantly evolving library of experiences.

As a result, marketers must now be
able to roll out programs in parallel
rather than serially. They must be
able to continually refine campaigns
based on breaking trends, right up to
the last minute. And they need to be
agile enough to analyze, on the go, a
wide variety of sources of information
from the very beginning of a marketing
campaign, and be ready to change
its focus or its content or its targets
on the fly.
Thats not the end of the agility
challenge. When it comes to providing
relevance, the real differentiator will be
the ability to get the right customized
messages out on an unprecedented
scaleto thousands, perhaps hundreds
of thousands, of potential shoppers
at the right times through the right
channels, in real time. Today, the
winning play is not to be relevant to
some of the people some of the time;
its to be relevant to all of the people
most of the time.
And the agility challenges are not
limited to the B2C arena. Increasingly,
consumer-centric behavior is influencing
business-to-business activity for the
simple reason that people buy for
companies in many of the same ways
that they buy for themselves.
Agility on the demand side no longer
stops at the door of the marketing
department. It touches sales and
customer service, too, upending every
segment of the traditional demand
funnel, from the earliest awareness
building and consideration to conversion and retention, across all customer

touchpoints. Customers dont see the

distinctions: If they cannot return
something purchased online to the
physical store, that provider has just
gotten a black mark.
Today, agility also means being able
to flex to meet unexpected surges
in demand generated by customer
advocacy, where fans of a particular
product or service actively propel
sales, often through social networks.
To better understand the desires
and intentions of so many individual
customers, agile companies have
developed a heightened ability to read
the market; top performers have more
finely tuned antennae than their peers.
They can predict, sense, respond and
adapt in much shorter cycles and in more
dimensions than ever before.
They must also be ready to respond
to rapid assaults on their reputations.
When consumers can use social media
to rise up, en masse and literally
overnight, corporations do not have
the luxury of ignoring the clamor or
taking their own sweet time to see
if the complaints are serious. Netflix
learned that lesson well after it split
its services between online streaming
and DVD rental, which raised fees
sharply for those customers who kept
both services. Users turned to Facebook
and Twitter to sound their displeasure
and quit the movie-rental service
in droves. In response, Netflix
scrapped its Qwikster rebranding
plan for its DVD rental servicea
stunning step-back in the face of
consumer protests.
Top performers use real-time market
data and advanced analytical tools and
capabilities to pinpoint unexpected
and incipient shifts in customer behavior,

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Number 3

sense competitor moves and predict

likely trends. We look for anomalies
in the datawhat products are growing
fast that shouldnt, which campaigns
are not working that should, explains
a leading retailer. Those nuances tell
us something. We just have to be smart
enough to listen very carefully.

More signal, less noise

The latest analytical tools and
capabilities help to increase the
signal to noise ratio. Much the way
that night-vision goggles amplify
available light, analytical tools
amplifiers make it easier to filter
and make good use of data that was
previously considered useless or,
at best, discretionary. For instance,
when a large chemicals company
noticed demand dropping, it dug
deeply into the data to find out
whether the drop resulted from its
customers seasonal destocking or
a real slowdown in an important
market sector.
Top performers also make good use of
new social technologies. South Korean
carmaker Kia Motors Corp. can attest to
the value of using social media to listen
to its customers. The seats of its 2012
Kia Optima were designed in response
to criticisms heard in social media
channels about the seat comfort of
previous models.
Two points are noteworthy: Companies
like Kia pay very close attention
to customer sentiment in a host of
online forums, and they act very,
very quickly on what they see and
hear there, even in time for the next
product launch cycle. The carmakers
insight: It can improve and innovate
continuously by using technology
to pay close attention to what its
customers have to say.

Operations

 hy dynamic is as crucial
W
as efficient
By Gary R. Godfrey and Mark H. Pearson
Global operations are all well and
good in stable times, when just-in-time
makes all the sense in the world. But
unexpected changes like commodity
price gyrations or natural disasters are
rather good at highlighting the hidden
constraints and vulnerabilities within
many companies operations.
Suffice it to say that supply chains
and, to some extent, manufacturing
operationsare not as dynamic as they
need to be. And by its very nature,
supply chain integration means that
a supply chain can be only as good as
its weakest link.
Now, in this period of permanent
volatility, many executives are
questioning whether things have
gone too far. Fully 70 percent of
executives who responded to a recent
Accenture survey said they were
dissatisfied with their organizations
ability to predict future performance
amid todays market volatility. And
more than 80 percent expressed deep
concern about the resilience of their
supply chain.

Profiting from uncertainty

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But todays more dynamic and agile

practitioners are learning to profit
from permanent volatility by adapting
their supply chains to flex with the
markets. Not only are they insulating
themselves from the downside, they
are also positioning themselves to
take advantage of the upside. These
companies are reimagining their
supply chains as adaptable ecosystems
of processes, people, capital equipment,
technology and data.

Truly agile companies also have more

nuanced views of resource allocation
moving away from a peanut butter
spread approach and toward making
quicker decisions to pursue the
most promising opportunities. The
best performers excel at incremental
investment coupled with rapid and
well-documented test-and-learn cycles.
They will run numerous pilot programs
concurrently, but their spending will
soon shift toward the initiatives that
start to show better or faster returns.
The payoff is considerable. Research
by Accenture and the Massachusetts
Institute of Technology shows that
companies whose systems and processes
can anticipate certain risks are as
much as 75 percent more profitable
than their competitors.
Accenture pinpoints four core
capabilities that enable the dynamic
operating capabilities that high
performers are seeking.
First: There is great value in being
able to move from insight to action
transforming data into a decisive
response, and doing so quickly. The
key, of course, is whether the companys
data does in fact create insight, and
whether it is actionable. If the organization lacks access to real-time dataand
cannot identify the right data in the first
placeit is already lagging.
The organization must be in continuous
monitoring mode so it can sense when
a change has begun to happen. And it
has to have the tools and capabilities
to analyze and simulatealong with the

talent and skills to use those tools.

Companies such as Amazon have become
masters at sensing and responding,
helping to shape demand in close to
real time.
Second: Its important to have an
adaptable structureto design and
implement an operating model that can
easily capitalize on new opportunities
and respond to disruption. Management
teams need to ask themselves how
long it has been since their operating
models have changedand how much
the business environment has shifted
since then. And then the more pressing
questions: How long would it take to
alter our operating model? Can we
do it quickly enough to hold onto our
market lead today and in the future?

Toward flexible innovation

Third: Flexible innovation is
essential so the organization can
continually innovate for growth and
operational efficiency.
Procter & Gamble excels at ensuring
that innovation continuously enables
the company to be agile enough to
cope with shrinking product lifecycles
and launch new products quickly. The
consumer products giant is particularly
good at using crowdsourcing to boost
its innovation capabilities and supply
chain responsiveness. Not only can P&G
more easily capitalize on immediate
market trends in ways that a more
traditional R&D arrangement might not
be able to, but executives responsible
for other corporate functions can better
anticipate what they need to do to
plan for sourcing, manufacturing,
distribution and servicing.

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Last but not least: Companies must

perform agile executionthe ability o
respond adroitly to major disruptions
such as natural disasters but also
adjust to everyday facets of volatility
such as shifts in commodity pricing,
greater demand swings, lead time
variability or inadequate supplier performance. That helps explain why some
leading European TV manufacturers
are shifting production from China,
and why companies that make TVs for
the US market are reemphasizing the
Mexican maquiladoras that fell from
favor years ago as Far East costs
became irresistible.
In addition, many more companies are
making extensive use of shared services
centersoperations centers, often
internal to the companies, that are built
around such core processes as procurement and that can be adapted faster than
conventional functional organizations
can change. The recession allowed us
to consolidate operations into shared
services across multiple business units,
says one senior corporate strategist.
We now have an operational backbone
that can support businesses that are
much more dynamic.
Although there are definite moves
worldwide to embrace the four
characteristics of truly dynamic
operations, few companies are yet
employing all of them. Its apparent
that many management teams are
waiting to see who gets it figured out
before they act. But the fast follower
tactics that worked before will not
work now. In todays tumultuous
environment, it is essential to be the
fast leader.

Finance

Annual budgets are dead

By Paul A. Boulanger and Scott Brennan
Ask chief financial officers how
theyre coping with economic
uncertainty and back comes one
near-universal answer: solid balance
sheets. The Wall Street Journal reported
last year that cash accounted for more
than 7 percent of all company assets,
the highest level since 1963. As of
April 2012, Apple topped the list of
cash kings, with nearly $100 billion
stashed away. Pfizer was sitting on
more than $35 billion; General Motors had nearly $32 billion.
However, available cash is just one of
four financial agility levers. Accenture
contends that the scenario planning
so valuable in both setting strategy
and preparing leadership, and the
analytics competencies to drive it,
as well as variable cost structures
are all the more critical in an era of
permanent uncertainty.
Corporate cash is piling up for several
reasons. For a start, CFOs no longer
feel that banks are there to help; in
fact, they cite example after example
of credit lines being cut summarily.
One CFO recently told us: Cash that
I control is what I need to be nimble in
this environment.
Besides being there as a bulwark against
lean times and market upsets, cash fuels
opportunity. Specifically, it enables
companies to act promptly on possible
acquisitions.

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Todays balance-sheet positions

raise the question of whether the
cash bar has been raised permanently. Business leaders may need
to stop thinking of fat cash reserves
as an aberration that will be adjusted
as soon as the economy returns to

normal. Those levels may be

necessary to be able to manage in a
permanently volatile economy. The
question yet to be answered: Is this
the new normal for cash levels?

What if?
Finance executives at the most agile
organizations are working hard to
improve their ability to manage risk.
They are building scenario planning
capabilities around the subset of
circumstances that they believe are
most likely to affect themeverything
from a sudden escalation of oil prices to
greater price sensitivity from consumers.
The planning part involves detailed
responses to each scenario, complete
with clear identification of resources,
roles and responsibilities.
Because it is all too easy to tie up
too many staff members in such
exercises, the most agile leaders
concentrate their efforts through
dedicated teams. At one leading US
energy provider, the number of those
involved with scenario planning has
dropped from 18 to 10, with a tighter
focus on the scenarios that matter
most. The result: clearer what if
scenarios and responses than those
originally crafted using a larger,
more loosely organized team.
In general, many more companies are
changing their planning and forecasting
processes to provide greater insight and
flexibility. A number are accelerating
their planning cycles and favoring
rolling quarterly and other short-term
forecasts over annual plans.
Annual budgets are dead, declared
one CFO we talked to. Ten years ago,
we had them, but we spent half the

year negotiating and planning. Then

we realized we needed to update
them after the second quarter. Then
during the recession we only made
commitments for two quarters. Then
we started monthly reviews, then
weekly updates. At one point, we were
monitoring accounts receivable every
day to watch trends. Weve backed
off that a bit, but essentially we have
a rolling 15-month forecast now.
As part of this accelerated pace of
review and reporting, the most agile
companies are investing more in
analysis of trends, anomalies and
external market informationand,
of course, in the technology tools to
handle the information gathering,
analysis and reporting.
For instance, by increasing market
intelligence and working inside the
business units, finance teams are more
actively managing working capital
for strategic advantage. One recent
example: An electronics company in
southern Europe has increased market
share by offering favorable credit terms
to selected distributors that it had
determined were financially sound
this at a time when its competitors
have been pulling back on credit terms
to mitigate their risks.
Finance is also becoming much more
sophisticated in assessing enterprise
performanceunderstanding the real
costs to serve customers and analyzing
pricing behavior to maximize the profit
contributions from specific assets or
products. These efforts require in-depth,
dynamic metrics to support insights
and decisions.

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Variable cost structures are another

characteristic of the agility exemplars.
Their finance teams work hard to reduce
their committed/fixed capital and
augment their discretionary expense and
capital budgets. That puts outsourcing
squarely in the spotlight. Noted one
CFO: Outsourcing was originally about
labor arbitrage, but now its about giving
us a flexible cost structure.

Top CFOs consider these four factors

to be the agility starter kit. They
work hard to continually improve
the necessary capabilities because
they know that agility is more easily
described than achieved.

About the authors

Paul A. Boulanger is the managing
director of Accenture Finance & Enterprise
Performance. He is based in Atlanta.
paul.a.boulanger@accenture.com
Scott Brennan leads the Enterprise
Performance Management group within
Accenture Finance & Enterprise Performance.
He is based in Charlotte, North Carolina.
scott.brennan@accenture.com
John F. Engel is a Chicago-based managing
director within Accenture Management
Consulting.
john.f.engel@accenture.com
David Gartside is the managing director
responsible for HR and talent management
offerings and capabilities within Accenture
Talent & Organization. He is based in
New York.
david.gartside@accenture.com
Gary R. Godfrey is a strategy planning
senior executive within Accenture
Operations. He is based in Atlanta.
gary.r.godfrey@accenture.com
Walter G. Gossage is the managing
director responsible for change
management offerings and capabilities
within Accenture Talent & Organization.
He is based in Dallas.
walter.g.gossage@accenture.com
Glen A. Hartman is the managing director
of digital consulting within Accenture
Interactive. He is based in Boston.
glen.a.hartman@accenture.com
Victoria B. Luby is a senior director
in Accenture Talent & Organization,
responsible for talent strategy offerings and
capabilities. She is based in San Francisco.
victoria.b.luby@accenture.com

David Mann is a managing director within

Accenture Management Consulting. He is
based in London.
david.mann@accenture.com
Mark H. Pearson is the managing director of
Accenture Operations. He is based in Munich.
mark.h.pearson@accenture.com
Olaf Schatteman is a Sydney-based
managing director within Accenture
Management Consulting.
olaf.schatteman@accenture.com
Baiju Shah is the managing director of
strategy and innovation within Accenture
Interactive. He is based in Chicago.
baiju.shah@accenture.com
Walt Shill is a senior managing director
within Accenture Management Consulting.
He is based in Washington, D.C.
walt.shill@accenture.com

Outlook is published by Accenture.

The views and opinions in this article
should not be viewed as professional
advice with respect to your business.

The use herein of trademarks that may

be owned by others is not an assertion
of ownership of such trademarks by
Accenture nor intended to imply an
association between Accenture and the
lawful owners of such trademarks.

For more information about Accenture,

please visit www.accenture.com

Copyright 2012 Accenture

All rights reserved.
Accenture, its logo and
High Performance Delivered
are trademarks of Accenture.

Yaarit Silverstone is the Atlanta-based

managing director responsible for
human capital and organization
effectiveness offerings within Accenture
Talent & Organization.
yaarit.silverstone@accenture.com

Mark Spelman, the managing director

of Accenture Strategy, leads the Accenture
Institute for High Performance. He is
based in London.
mark.spelman@accenture.com
Robert J. Thomas is the executive
director of the Accenture Institute for
High Performance. He is based in Boston.
robert.j.thomas@accenture.com
Robert E. Wollan is the managing
director of Accenture Sales & Customer
Services. He is based in Minneapolis.
robert.e.wollan@accenture.com
The authors would like to thank Meg
VanWinkle, who leads Accenture
Management Consulting Offering
Development Thought Leadership, and
Rakhee Sheth, a manager in Accenture
Strategy, for their contributions to
this article.