Emergence of the Agile Enterprise

When Wal-Mart noticed a signicant increase in the sales of US ags, lapel pins,and other patriotic items immediately after the September 11, 2001 tragedy, the world’s largest retailer immediately locked up all the supplies they could nd.On the evening of 9/11, the buyers at Wal-Mart had already ordered all of theavailable ags in the supply chain. Other retailers like Kmart and Target wereslow to respond and for a while, these items could only be found in Wal-Martstores. Zara, a Spanish clothing retailer, had black clothes on the shelves of theirstores immediately after the 9/11 event. How could they react so quickly? Wal-Mart was able respond because they had a “real-time” tracking and analysis systemhat helped them to see the surge in demand, and their supply chain was able toquickly respond to the situation. In Zara’s case, while the normal lead-time forclothing to be manufactured was 90 days, they anticipated the need for black clothes and responded quickly to get the black dresses made and delivered to theirstore shelves. So, if you are competing with the likes of Wal-Mart or Zara, youneed to have similar abilities to anticipate or sense marketplace changes and thenrespond to those changes with speed. Otherwise, you are history!

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EMERGENCE OFTHE AGILE ENTEPRISE

uilding Organizations for the Global, Digital Economy

1

THE AGILE ENTERPRISE2

Today,

more than ever

, corporate success depends on the ability to anticipate,adapt, and act on economic, technological, and social changes over time. It’s toughto sense as well as respond to the changes in the global, digital economy—and it’sgetting harder all of the time. Predictability, linearity, and “one best way” no longercharacterize the business environment. Schumpeter’s

gales of creative destruction

are sweeping ferociously across the economic ecosystem. This is evidenced in the

Global CEO Study 2004

, conducted by IBM Business Consulting Services, in which CEOs across all industries highlighted market forces as the most importantexternal factor that will affect their organizations in the next three years.

Figure 1. Market Forces in the Global, Digital Economy

It is the agglomerations of market forces that are fueling today’s volatility andvelocity. Faced with greater variety and choices in the marketplace, the power hasshifted toward consumers. They are demanding higher quality products, greaterpersonalization, better services, faster delivery, and greater discounts. It’s no wonder that one CEO in IBM’s

Global CEO Study 200

remarked: A productthat used to score nine out of ten with its customers, now merely gets a six”. At the present time (

n

the foreseeable future), the Internet remains one of the major disruptive forces in the marketplace. Cyberspace enables consumers toform online communities, which can adversely affect brand names and company reputations. More and more consumers are also using the World Wide Web toinuence their purchasing decisions. The global, digital superstructure has causedthe world market to become more integrated, but at the same time, consumer needsare becoming more diverse and segmented, causing organizations to respond with

EMERGENCE OF THE AGILE ENTERPRISE3

marketing, sales, and distribution programs that are more diverse and segmented.Procter and Gamble is a good case in point. The Fortune 500 household productscompany has been manufacturing their famous brand

Tide

detergent since 1949.Their 30-second commercials on national television channels are legendary andare often considered to be benchmarks in mass marketing. Today they havefourteen versions of Tide, specially designed for fourteen different target markets, which has caused their marketing campaigns to be more customized. They now spend less on broadcast media like network television and more on narrowcastmedia like the Internet, radio channels, and specialized magazines and cableelevision channels.Executives are also facing unrelenting nancial pressures. The median rate of return for US consumer product goods has fallen. Shareholders and analysts tooare becoming impatient with market valuation concerns. Accounting scandalsbred mistrust and caused the imposition of stricter regulations

e.g.

the Sarbanes-Oxley Act. In recent years, organizations have faced numerous new regulatory issues, namely cross-border e-commerce, online tax, privacy issues, and homelandsecurity. This is compounded by the unpredictable sources of external threats

e.g.

he 9/11 World Trade Center attack, SARS, the war in Iraq, Mad Cow diseases,he Bird Flu Epidemic, the power blackout in Northeastern United States in2003, and computer viruses.The disruptive effect of fast technological innovations and adoptionsredene the nature of today’s competitiveness. With the inux of new andinnovative competitors in the global marketplace, the dynamics of industriesare changing. The Internet and advances in communication technologies have

Figure 2. From Value Chains to Value Networks