Staying agile is essential for business survival

These are some of the most exciting and challenging times to run a business because the pace of change has never been quicker thanks to new technology and global communications.

Business leaders need to be more nimble to cope with this fast-moving world of constant evolution. The consulting firm Deloitte found that 83 per cent of businesses plan to adopt more agile methods.

They must think ahead, keep innovating and, if things go wrong, be willing to change direction or shut down an under-performing unit. That means running a flexible organisation that is open to collaboration with other companies and embraces technology.

“Try fast, fail fast” is the mantra in Silicon Valley. Or as Sir Martin Sorrell, chief executive of the advertising group WPP, warns: “You have to be prepared to cannibalise parts of your operation, so I believe in eating your own children.”

Few companies are comfortable with cannibalising themselves to survive, but spectacular failures, such as that of Kodak, the photographic film company that was too slow to embrace the rise of digital technology, have served as a salutary warning.

A masterclass in agile

By contrast, Steve Jobs’ final decade of leadership at Apple and his decision in 2005 to develop the iPhone is widely regarded as a masterclass in how an established business can be more agile.

First, he showed strategic nous and responded quickly when he correctly identified a threat to his business. At the time, the iPod portable music player was Apple’s best seller, responsible for 45 per cent of company turnover, yet he foresaw that “the device that can eat our lunch is the cell phone”, according to his biographer Walter Isaacson.

Second, Jobs was willing to work with a partner – in this case, the mobile phone manufacturer Motorola – because he knew Apple, a computer company, didn’t have all the necessary know-how inside the organisation. However, when that partnership failed to produce results by the end of 2005, he split from Motorola and pivoted by focusing on his in-house team.

Third, he fostered a dynamic working environment within Apple that encouraged the iPhone project management team to be radical by dispensing with a separate keyboard, which was used by Nokia and BlackBerry, the dominant mobile manufacturers at the time, in favour of a touchscreen.

The iPhone launched in 2007 and became the best-selling device in Apple’s history, smashing sales and profit records. By the third quarter of 2015, iPhone represented more than 63 per cent of Apple’s sales and iPod was barely 1 per cent.

Facebook’s Mark Zuckerberg is another business leader who has shown remarkable agility in terms of vision, strategic responsiveness and organisational flexibility.

In early-2012, his social media company was about to float on the Nasdaq stock exchange in a stunning $100-billion debut, yet Zuckerberg was smart enough to see beyond the Wall Street hype. He spotted threats on multiple fronts as Facebook was relying on desktop computers for advertising revenue and had no mobile business, just as rival app upstarts Instagram and WhatsApp were emerging.

Zuckerberg pivoted, ramping up Facebook’s mobile business so that it was worth 23 per cent of group revenues within 12 months, and buying first Instagram and then WhatsApp.

In a further sign of his shrewd judgment, he let Instagram and WhatsApp remain as separate businesses within the group, so that their founders could maintain a nimble, startup mentality.

Zuckerberg’s strategy has paid off handsomely as Instagram has overtaken Twitter to hit 400 million users and WhatsApp has passed 900 million. Both acquisitions are examples of how staying agile has maximised productivity and competitive advantage for their parent company.

Reinventing your business

Being agile is harder for a legacy business because, to return to the Sorrell analogy, it can mean “eating your own children”.

In the case of Auto Trader, a weekly print magazine full of second-hand car classified advertisements, reinventing itself for the digital age was a huge test. However, investing early in online and then pivoting to launch apps worked.

Auto Trader kept the print magazine going until 2013, almost as a marketing tool in the end, and then floated the wholly digital business for £2.5 billion.

Staying agile is essential as the tech revolution has much further to run while the mobile internet and powerful cloud-computing become ubiquitous

It is a rare example of a market-leading legacy business retaining its pre-eminent position online. In contrast, digital upstarts, such as Rightmove, the property website, or LinkedIn for jobs, have usurped legacy businesses in other sectors.

There must be no room for complacency as BlackBerry and Nokia’s fall from grace has shown.

An agile employer has to change its workplace culturally to attract employees too. Millennials, those born after 1983, expect flexible or remote working, and the ability to choose their own devices and software.

Staying agile is essential as the tech revolution has much further to run while the mobile internet and powerful cloud-computing become ubiquitous.