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Accenture Outlook: Corporate Agility - Six Ways to Make Volatility Your Friend

Accenture Outlook: Corporate Agility - Six Ways to Make Volatility Your Friend

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Published by Accenture
In today’s chronically uncertain markets, agility is an exceptionally powerful competitive weapon—and it can be wielded with considerable effect by enterprises of all types and sizes.
In today’s chronically uncertain markets, agility is an exceptionally powerful competitive weapon—and it can be wielded with considerable effect by enterprises of all types and sizes.

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categoriesBusiness/Law
Published by: Accenture on Jul 02, 2012
Copyright:Attribution Non-commercial

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12/04/2012

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The journal o high-perormance businessThis article originally appearedin the 2012, No. 3, issue o 
Strategy
Corporate agility
Six ways to make volatility your friend
 By Walt Shill, John F. Engel, David Mann and Ola Schatteman
In today’s chronically uncertain markets, agility is anexceptionally powerul competitive weapon—and it canbe wielded with considerable eect by enterprises o all types and sizes.
accenture.com/outlook
 
2
Outlook 2012
Number 3
 You know your market is changingwhen customers are buying thingsthey shouldn’t be. That was the casein 2009, when managers at a leadingUS retailer began to notice a steadyrise in sales o travel-size shampoos,soaps and similar consumables.Their prompt analysis pointed tosomething much bigger than a rush ontiny tubes o toothpaste. It revealed anationwide trend that was barely visibleto other retailers at the time: Consum-ers, hit hard by the global downturnand oten living paycheck to paycheck,were buying the cheapest unit sizesthey could nd. The trend had rstsuraced in the company’s urbanlocations and quickly moved to thesuburbs as the economic crisis spread.The company’s response was just asnimble as its early detection o thetrend. It piloted big changes to itsassortments, expanding shel space or intermediate sizes, running sales ontwo- and our-packs o goods (not justthe 12- and 24-packs) and tailoring itsmix and merchandising approaches tothe wallets o cash-strapped shoppers.Positive results told executives allthey needed to know to rapidly roll outthe program nationwide.The move was a resounding success.The retailer gained market share inkey demographic segments, boostingits attach rate (the value o comple-mentary goods sold or each primaryproduct sold) and establishing areputation or oering good deals.It saw double-digit sales increases—levels unheard o in retail—in thenon-discretionary categories it hadtargeted. What’s more, the companyhas continued to benet rom manyo the analytical techniques it pio-neered at that time.Here was a dramatic demonstrationo agility in action: a large, long-established corporation that wasquick to sense and then analyzeimportant market changes, and then just as quick to act. But the company’sactions are the exception rather thanthe rule. For many businesses in manyindustries, the concept o agility hasproved elusive indeed, particularly inthe implementation.
Restraining Gulliver
It has never been easy or large,complex organizations to be nimble.Nearly hal o the 674 executivessurveyed globally in a 2010 Accenturestudy have little condence in their companies’ ability to mobilize quicklyto capitalize on market shits or to servenew customers. Hal do not believethat their culture is adaptive enoughto respond positively to change. And44 percent aren’t certain that their workorces are prepared to adapt toand manage change through periods o economic uncertainty.Results rom a survey by the EconomistIntelligence Unit echo these ndings.More than a quarter o the EIU’s pollrespondents said their organizationswere at a disadvantage because theyweren’t agile enough to anticipateundamental marketplace shits.Even at very senior levels, decisionscan take orever—and are otensecond-guessed. “We thought thebig decision had been made monthsbeore,” recalls one executive weinterviewed. “But apparently, whenwe had to act on it, it was still beingdebated. We were urious.”It’s time or those organizations—andmany like them—to try again. Fromthe switest startups to the slowest-moving government agencies, everyorganization needs to move the “agilityneedle” to the right.It’s no secret why organizations strugglemightily to do so: Gulliver-like, theyare bound by a thousand tiny threadso hierarchy—compartmentalization,interdepartmental confict, risk aversionand miscommunication, to name just aew constraints. They also tend to view volatility as a limitation rather than anopportunity. At best, they gauge agility
 
3
Outlook 2012
Number 3
by how ast they ollow moves madeby their competitors.
What’s new?
Plenty has been written about the virtues o agility. In 2007, Whartonpublished
Fast Strategy: How Strategic  Agility Will Keep You Ahead Of The Game
. In the 1980s,
HarvardBusiness Review
explored the topic,notably with its landmark article ontime-based competition. And decadesago, then General Electric chie Jack Welch was amously preaching aboutspeed and responsiveness.However, much has changed—andcontinues to change—to orce companiesto institutionalize their approachesto agility. And much has happenedto enable them to do so: Witness therapid advances in analytical sotware. Yet when it comes to exactly
how
tobecome agile, pragmatic advice isharder to nd.The good news is that many moreexecutives are now ready to acceptchange. Gone—or at least going—isthe refexive urge to stick to tried-and-true ways o doing things or the sense o helplessness that marketturbulence has so oten engendered.Here’s how the chie nancial ocer o a global hospitality provider describes the new mood: “We hadto decide whether we were going toavoid the market uncertainty witha hunker-down mindset or seizeit as an opportunity. I think muddlingin between is the most risky. Withthe right mindset, this is a antastictime to be in business.” What previously were viewed asonce-in-a-lietime events havebecome permanent eatures o thebusiness landscape. As one utilitiesexecutive recently told us, “Thisindustry is not supposed to be rockedby changes in technology—and thenshale gas emerged.”Most business leaders can reelo myriad examples o volatilityrom their own recent experiences.But what is less obvious is the
rateof increase
o uncertainty.
Few business topics are soter than agility. It’s one o thoseconcepts that everyone thinks they grasp. But it’s a dierentstory when it comes to deconstructing the concept andcoming up with practical ways to put it into action.To anchor our understanding o agility, we should startwith the dictionary. According to Webster’s
Collegiate Dictionary 
,the denitions are: 1. The ability o being quick and well-coordinated in movement; nimble. Active, lively. 2. Marked byan ability to think quickly; mentally acute or aware.Here are the components o agility that matter most in abusiness context.
Anticipating.
This means developing a view o possible or likelychanges—not trying to predict actual changes. Anticipatingincludes a rigorous review o customer needs and industryorces, and an evaluation o likely scenarios o industryconsolidation, product development, pricing and customer needs.
Sensing.
This involves continual reviews o marketconditions, looking or trends and especially anomalies incustomer behavior, competitor moves, supply chain shits,supply/demand changes, and macro- and microeconomicdevelopments. It requires strong analytics capabilities.
Responding.
The key is to respond to market shits asterthan competitors do. This includes rapid decision making,testing responses on a pilot basis and then scaling or abroader response. It requently includes preset “plays,” wheremanagement teams have agreed ahead o time how they willrespond to certain situations—or instance, to a price dropby a competitor or the merger o two rivals.
Adapting.
Once initial market changes have been identied,organizations oten nd that they need to rework some o their business processes. Some may tailor their organizationalstructures to better handle ongoing changes in their markets.
Business agility dened

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