Though an overwhelming majority (88%) of global executives believe that organizational agility is important to business success, 27% say their company is at a competitive disadvantage because it is not agile enough to cope with market shifts, according to a study conducted by the Economist Intelligence Unit (EIU) and sponsored by EMC.
The study, “Organisational agility: How business can survive and thrive in turbulent times,” (pdf) polled executives in numerous countries about the importance of anticipating and quickly addressing pivotal market changes, as well as their experiences and aspirations with regard to making their own companies more responsive.
Internal Obstacles Impede Agility
Despite the importance that the respondents place on agility, the study reveals that today’s executives are facing several major obstacles to improved business responsiveness. These include slow decision-making, conflicting departmental priorities, risk-averse cultures and silo-based information.
As a result, though more than 80% of respondents say they have undertaken one or more major steps to improve agility since 2006, more than a third (34%) say they have failed to deliver the desired benefits, EIU found.
Marketing, Sales among Most Nimble Functions
When asked about the agility of various functions within organizations, survey respondents say that sales, marketing and customer service are the most agile overall. In contrast, finance, information technology (IT) and human resources (HR) are among the least agile departments of global organizations. This is significant, EIU said, given the fact that finance, IT and HR play important roles in heightening efficiency, knowledge transfer and innovation.
Mid-Size Companies More Agile
The study revealed that mid-size companies generally seem to be more nimble than small or large ones. Some 44% of respondents believe that mid-size companies are more agile than large and small firms. EIU suggests that the flatter hierarchies of many mid-size companies (compared with large firms) most likely improve the flow of information and the speed of decision-maki More than two-thirds of mid-size companies responding to the survey say they are moderately agile and have the business information to support their primary job responsibilities.
Techology Key to Improving Agility
Most executives need to make more progress in transforming their knowledge processes to fit the demands of today’s information age, EIU said. While 64% of executives say they are largely satisfied with the business information available to support their primary job responsibilities, only 30% indicate that they have the needed information to conduct their duties effectively.
The study also found that CEOs and CFOs are more apt to seek easier real-time access to information, while CIOs desire more systems integration. As companies grow in size, the desire for more comprehensive integration of IT systems across the enterprise also increases: More than 60% of respondents with annual revenues more than $5 billion cite integration as the number-one priority for their company’s IT departments, compared with 42% of companies with revenues of less than $500 million.
In acknowledging the interplay between organizational agility and superior innovation, the survey found that knowledge management and collaboration systems – including the use of social networks, crowdsourcing apps and custom web applications – are high on the list of tools that will play a key role in the interplay between organisational agility and superior innovation:
- More than eight in 10 (81%) of executives say knowledge management and collaboration systems will go farthest in spurring innovation.
- 74% cite processes that capture employee feedback and advice.
- Two-thirds of desire technologies that pull data from multiple applications to help research and development (R&D) and product/service innovation.
- 54% say that social networks will play a central role in spurring innovation.
Despite the important role that executives expect technology to play, however, nearly 80% of survey respondents expect that IT spending on technologies related to organizational agility will remain fl at or increase only slightly over the next three years. Only 9% of those polled say that they will increase their IT investment significantly.
About the survey: The survey was conducted by the EIU in December 2008 and January 2009, and included responses from 349 business executives around the world. Sixty came from the UK, 59 from France, 53 each from Germany and Singapore, 49 from the US, 46 from Australia, 18 from Canada and 11 from New Zealand. Executives from 19 different industries took part in the survey, 44% of whom had annual revenue of $5M or less and 31% had revenue of $5B or more. Board members and C-level respondents comprised 43%, while senior directors and department heads made up an additional 31%.