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To attain business agility organisations need to focus on core competencies - and let others deal with the rest
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Eat lunch or be lunch. It is a stark choice, but one that companies will have to face up to in the next few years, says Peter Korsten, executive director at the IBM Institute for Business Value.
Speaking at Information Age's Agile Business Conference in June, Korsten outlined his vision of a business world in which companies need to adapt quickly to perpetual change or face extinction. "It's scary," says Korsten. "The world has changed considerably in the past five years." In particular, he says four "unstoppable" drivers have emerged during this time that have changed the face of business and are not going to go away: 'competitive Darwinism', 'continuous discontinuities', unrelenting financial pressures and unpredictable threats.
As markets have become more transparent and new business models have emerged, companies have struggled to differentiate themselves from competitors, stay profitable, and respond to unexpected events. Korsten says organisations must learn to react quickly if they are to deal with these new threats and opportunities.
"In the new world, you will survive over your dinosaur [competitors] by being very focused on what sets you apart," he explains. "You have to concentrate fully on what we call 'differentiated competencies'."
In an era of continuous change, the biggest companies must be as nimble as the smallest. And they cannot achieve that by doing everything themselves. By focusing on
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"We expect companies to be able to partner with another company for 25% to 50% of their activities," says Korsten. But, he warns, organisations must look at their structures much more closely if they are to take advantage of these potential gains. The traditional business model organised around products or customer segments is too inflexible, too cautious, and uses too many resources, Korsten argues. "We live in a world of global connectivity. There are now architectures that make possible seamless connection between business components and external partners throughout the world."
Instead of the traditional model, companies should consider a "component" model in which business activities that deliver the related functions join across the enterprise to form a single unit, providing cross-enterprise services.
But this can be tough to achieve, he confesses. In addition to having to work out a new way of monitoring how different elements are performing, "you are dealing with very powerful Tyrannosauruses [departments wedded to the old ways of working] that say they want to change, but really want to stay the same. That may be much safer for them, but not for the rest of the world." Gradual steps may be all that are necessary, though. "Draw up a plan to see where you want to be in five years. Decide what can and can't be changed, then start the process."
By deciding what makes it different from - and better than - its competitors and using partners for everything else, a company can evolve its internal structures to a point where it can survive in the new world. If it does not, it may end up on the lunch menu.
