Agility: Going Beyond Buzzwords

There’s a lot of discussion these days among the business media, academics and think tanks about the need for companies to be agile. Agility is fast becoming one of the most important trends in business — as well as one of the most overused words in the field. Why is this? And what does everyone mean by agility?

First, let’s look at the basic definition of business agility: “ability of a business system to rapidly respond to change by adapting its initial stable configuration”

Second, it’s important to understand what an agile company looks like. According to McKinsey, there are five main things that agile companies all do:

• They focus greatly on the customer
• They create internal networks of teams that are empowered to do new things
• They learn quickly and make fast decisions — basically, fail fast and learn faster
• They empower their employees to do what is right
• They use technology to enable the next generation

We can recognize many of these attributes in some of the most successful companies around the world. But why is it important? According to one recent study, the life cycles of large companies are compressing. In other words, it is harder and harder to remain a large company. One recent study showed that in 1965, the average life of a US company on the S&P500 index was 33 years. By 1990, that had fallen to 20 years, and by 2026, it is forecast to fall further to 14 years. The study also predicted that half of the companies that are on the S&P500 today will not be there in 10 years.

The rate of change that companies are facing has never been greater. Consumers increasingly expect digital, seamless and connected solutions, not just great products which require new strategies to navigating disruption. Therefore, if we want to compete — and win — we have to find ways to move fast, innovate and exceed the rapidly changing expectations of our customers. A recent KPMG survey indicates that 59 percent of CEOs say that acting with agility is the new currency of business, and that if they are too slow, they will vanish.

Let’s take the way we pay for our shopping as an example. We are now so used to paying by card, or even by phone, that it is hard to remember when we used to pay for purchases with a chequebook or with large bundles of cash. But the revolution in payments is now so embedded that some countries such as Norway and Sweden are forecast to go cashless in the near future.

At Arçelik, we are embracing this point of sale revolution. Beyond our capabilities in the home appliances industry, we also manufacture Point of Sale (POS) devices that process card payments at retail locations. This has proven successful in our main market, Turkey, where we have a market share of more than 50%. But we want to grow this further and expand internationally with sales automation, order systems and mobile payments, to be followed by payment processing and blockchain technology in the medium term. We have decided to set up a new, separate company to run this business. This will allow us to act as an agile and efficient start-up. We will unify the sales and marketing of this business under one roof and transform it into a global solutions partner with new services, business partnerships and investments, as well as — most importantly — an agile mindset.

We are undertaking a similar exercise with the business that manufactures our industrial and white goods motors. We recently established a new company called WAT Motor. This move will unlock the value of our motor business while also transforming the organization from a manufacturing one to an industrial systems solutions provider. This step will help us accelerate our decision-making and allow us to respond quickly to market dynamics. We aim to seize opportunities in the defense, electromobility and industrial servo sectors with this new structure.

Becoming more agile in these two areas will help us gain ground in these rapidly growing sectors. It will allow us to leverage our strong domestic presence into new global ventures with the agility to make new partnerships and alliances along the way.

We also recognize that we need internal and external change. For large organizations, this can be a difficult strategic goal. But we have several initiatives that seek to replicate the speed and agility of start-ups within our large organization. We have an in-house entrepreneurship program, which offers incubation support to our employees who wish to pursue their own ideas and develop their own products. This program is underway at Arçelik Garage, which is a dedicated makerspace that is open to innovators, both internal and external. Arçelik Garage is the largest space of its kind in Turkey, including 3D printers, laser cutting, CNC, arduino and raspberry Pi capabilities, as well as a home simulation lab. This allows makers to test their prototypes quickly and collect early customer feedback.

As a closing message, I want to share my personal belief that being agile alone will never be enough to stay ahead of the rate of change that companies are increasingly being subjected to. As I have noted previously, companies need to have a higher purpose that can unite all stakeholders. Over time, this purpose must prove itself in terms of benefits to society. Customers are loyal only when a company’s values and products are aligned.

Agility, digital transformation and disruption are some of the buzzwords of our time. They are, however, mostly overrated and overused by almost everyone to define almost every single theme. To keep it simple, they need to be transformed from business hypes to business models, because the name of the game is about focusing on a purpose, learning continuously, and gaining momentum. This will not just allow companies to survive in the age of disruption, it’ll help them thrive.