Why Agility Matters and How to Achieve It
Never be so faithful to your plan that you are unwilling to consider the unexpected. Never be so faithful to your plan that you are unwilling to entertain the improbable opportunity that comes looking for you.
—Elizabeth Warren
Let’s backtrack for a second. What exactly does growth look like for an organization? What happens when you find a strategy that works?
A lot can happen. Different facets of your organization can expand, shrink, demand attention, or lose value. Your customer base can shift from one demographic to another. Your business model may need revising. Maybe your competitors steal your ideas. Will you anticipate all of this before it happens? No, of course not. The common denominator across all growing organizations is the unexpected.
What if you’re not growing? It’s the same story! In fact, if your organization’s growth has plateaued, you’re even more susceptible to the effects of unexpected change. Outside innovation becomes an even more dangerous threat. The risk of becoming less relevant looms larger and larger as more groundbreaking ideas and practices surface in your market. (A stagnant business is a business in decline. If you remain where you are, you’re sliding backward within your market. Just something to consider!)
So how do you plan for the unplanned? The answer is you can’t, at least not in the way you would think. You need a different skill set. You need to be agile.
I define agility based on The Agile Manifesto, which I introduced in the last chapter. If your organization is agile, you have the flexibility to react to unanticipated circumstances, whether challenges or opportunities.
A great analogy here is bumper cars. Imagine your organization is seated in one car, seat belt buckled, and helmeted. You whiz around the arena bumping into walls and other cars. The question is are you bouncing in every which way, haphazardly arriving wherever physics takes you, or do you premeditate your trajectory and use the laws of motion to determine your course?
If you find your organization ricocheting or always rushing to react to circumstances as they arise, you may benefit from a more formal approach.
I bring up physics for a reason here. The reality is that the motion of bumper cars can be analyzed as a science—the mass of the automobiles, their momentum, the arena’s friction, each car’s velocity, the list goes on. If you can identify every variable in the equation, you suddenly can take a guess at what might happen if you hit objects in your path. This is the essence of an agile organization. Not only will you have foresight, but you will react quickly to unforeseen outcomes. Challenges will pose less of a threat, and your ability to take advantage of opportunities will increase.
Take the example of Blockbuster. What an unnecessary catastrophe.
In its prime, the video rental provider had worldwide operations: it spread everywhere from the United States to Israel to Brazil. By 2000, the company was taking in almost $800 million in late fees alone. And then one particular customer—who happened to be a Silicon Valley software engineer and entrepreneur—got particularly frustrated when an overdue rental of Apollo 13 landed him a $40 fine.1
The model changed, along with customer expectations. Why drive down to the local Blockbuster to thumb through a shelf of DVDs in person when you could hop on the computer and have them delivered to your house? Netflix, Redbox, and other on-demand video services had sprung to the top of the market. Despite their attempts to catch up, Blockbuster filed for bankruptcy by 2010.2
Blockbuster illustrates how an organization that’s unresponsive to changing circumstances can crumble. The company had grown massively since its founding in 1985, but its demise pointed to a tremendous frailty within the organization. Over several years, a competitor emerged selling the same product with a sleeker business model. The innovation was a step in the right direction, and yet Blockbuster paid too little attention, too late. The video rental company could have had a happy ending. With an agile infrastructure capable of effectively responding, it could have easily participated in the market’s shift to on-demand models.
There’s no doubt Blockbuster had the resources for it. The business’ issue wasn’t feasibility; it was agility. The company lacked the flexibility and leadership to follow the shift.
It’s also worthwhile to note that Blockbuster demonstrated poor resiliency (a competency all agile organizations wield with strength). As Netflix and Redbox zoomed to the top of the market, Blockbuster realized it was behind the curve, still employing yesterday’s business model. But its attempt to adopt the DVD-by-mail and rental kiosk services posed little threat. The company’s shift over to the new model was tremendously overdue and lacked vision. Blockbuster’s attempt at a comeback mustered nowhere near the momentum it needed to get back on its feet.3
Now consider the polar opposite. The New York Times stands out as a shining example of agility. The newspaper is over 150 years old, yet it is not only afloat, but still a prestigious name in its industry. When the Internet hit, everyone was predicting the newspaper business would die. There was and still is never-ending talk of how digitalization and public access to information pose a continual threat to print publications. But as early as 1996, the Times began adopting digital publication methods, and by 2005 offering online subscriptions. Seven years later, you were able to get The New York Times on your iPhone or iPad.4
The difference here between Blockbuster and the Times is glaring. An organization reliant on print publications noticed a radical shift to online media. The Times saw a world where information was flooding in on laptops and smartphones, rather than on paper. Its bumper car had hit a major obstacle and was flying in a dramatically different direction that anyone could have predicted. The Internet was becoming more and more ubiquitous, trashing business models right and left. The Times’s response was to embrace—and lead—the change.
While its agility required lots of reconfiguration, it also benefited from explicit goal setting. An organization like The New York Times would not have been able to succeed by simply encouraging its infrastructure to adopt new intentions. Being agile demands concrete strategy.
It also demands flexibility and a tolerance for ambiguity. You’ll remember from the last chapter that both of these are important competencies of start-up behavior. That isn’t a coincidence. Many pathways to growth come from organizations doubling back by innovating one or many aspects of their business. An agile organization that’s turning an unexpected outcome into an opportunity will often benefit from going backward. The reason many organizations struggle to do this is due to the strategy’s lack of control. Remember, grown-up mode is standardized. Every function of a mature organization has processes of all kinds to make sure everyone knows exactly what they’re doing and how to do it. Processes provide a lot of certainty—as a senior leader, you know what’s expected of you and your workers.
But if you double back to start-up mode, suddenly things become pretty uncertain. You’re operating in a space without many processes or rules. Your options expand exponentially, and your behavior is entirely up to you. Frankly, that can be scary for some people.
The flip side here is the freedom to push boundaries, take risks, and innovate. But how do you mitigate the uncertainty? How do you avoid floating in space, hoping and praying you aren’t inadvertently jeopardizing your organization?
It’s time to return to bumper cars. The answer is guardrails. An organization must be open to ambiguity to be at all agile. But you can ensure you feel safe taking risks by setting up boundaries for yourself. Guardrails create a contained space within which your organization can bounce back and forth. Here’s the step-by-step methodology I’ve developed.
1. Where do you place the guardrails?
You first need to define your goals. “Where am I and where do I want to go?” Obviously, your aim should be up and to the right in one way or another. You want to invest resources in strategies that offer high impact with a high likelihood of success (more on this later!) (Figure 5.1).
Next, use your guardrails to create a space in which to play. Establish the limits of your organization’s capabilities. Where are the constraints in your budget? What’s your cash flow? How about your turnover rate? Take a look at your overall business metrics to see what kind of flexibility you have. Create an upper guardrail for the fastest growth your organization could theoretically sustain. Then, do the same for the lower guardrail—what’s the least amount of growth your organization needs to ensure it stays healthy?
And remember, the environment within your organization can also have significant impacts. When deciding on where to place your guardrails, make sure you account for outside influences—the kind that organizations like Blockbuster failed to address.
2. Measure your strategy’s success and watch reality take hold.
Then you run with it. Begin implementing whatever strategies you’ve determined will push you toward your goals. Maybe your new one is rocket fuel, and your organization’s growth starts climbing much faster than you first estimated. It’s so fast you that hit your upper guardrail. One option here is to pull back because you don’t have the resources to sustain the growth (Figure 5.2).
Figure 5.1 Guardrails
Figure 5.2 Hitting the Top Guardrail
From here, you’ll most likely watch your trajectory bounce off the upper guardrail and begin heading toward the lower guardrail. I call this process upside flexibility. It’s all very normal. At this point, the opposite will happen. You’ll begin approaching the other extreme, whereby you’ve slowed down your growth enough to avoid overextending what resources you have, while also keeping your organization healthy and high performing. Once you hit that lower guardrail, you’ll want to bounce off to avoid continuing in that direction as well. In other words, to evade underperforming as a business, you’ll want to engage whatever strategy will direct your trajectory back up in the direction of the upper guardrail. I refer to this as downside flexibility (Figure 5.3).
I’ll tell you right now that no organization will exactly follow that middle line. Expect to stray from your estimates. In fact, it’s likely your metrics will begin bouncing between the upper and lower guardrails. Be prepared to exercise both upside and downside flexibility, increasing or decreasing growth to match what your organization is capable of sustaining.
Flexibility should be ringing a few bells. In essence, these guardrails represent the threshold at which point your internal and external strategies become misaligned. Hitting the upper guardrail means the results you’re getting are outpacing your ability to perform—imagine a business who’s sold more products than their capable of delivering on time. On the opposite side of the spectrum, hitting the lower guardrail means you are overperforming internally and are unable to garner the desired results that could happen to a business, which has manufactured more products than its workforce is capable of selling.
Figure 5.3 Using the Guardrails
Hopefully, you’re catching on to why I love this bumper car analogy so much. And you can understand why visualizing your growth can be tremendously helpful.
Staying agile like this requires you and your senior leadership team to exhibit an overarching awareness. It means continually measuring the success of your strategy and adjusting where you allocate your resources based on where you end up at each stage of the process.
But say you’re hitting the upper guardrail, and you have the extra resources to accommodate the new growth. You may have the money to hire new staff, expand to a new location, release more products, or begin contracting with larger clients. Now you have the opportunity to reset your guardrails.
But let me remind you to account for external factors. Innovations of all kinds can completely skew your progress and catapult you to somewhere you would have never expected. While measuring internal metrics is a must, devote substantial time to monitoring where the rest of the market is. How are your competitors behaving? What’s the media saying? Have there been any new developments in technology, politics, or the economy that might affect your business? Something outside your organization like this may warrant redrawing your guardrails, either to prepare for complications or to capitalize on favorable circumstances (Figure 5.4).
Ideally, you’d like your organization to continually rise to new levels of growth, which would mean revising your guardrails to align with larger and larger amounts of expansion. You can imagine why measuring your success and reevaluating your strategy are critical to any of this working.
You are now beginning to understand how an agile organization can determine its growth, while also accounting for unexpected outcomes. Let’s circle back to deciding which strategies are worth your investment. You won’t get far without this piece of the puzzle.
Figure 5.4 Guardrails with new upper and lower rails
To choose the best strategy, you want to zoom out and consider all possible scenarios. Sounds daunting, right? There’s a quick shortcut for this.
The value of all potential strategies that may grow your business can be boiled down to two variables: impact and likelihood. I mentioned earlier that you’ll always want to funnel resources into plans that are likely to work and offer high impact. Pretty simple stuff, I know. But visualizing all of this in a handy-dandy 2 × 2 matrix can help differentiate between resources well spent and wasted investments (Figure 5.5).
Picture a car manufacturer that’s tracking the rise of electric motors. Over the last few months, they’ve observed Tesla cars gaining more and more popularity. After conducting some large-scale surveys, they’ve found that the primary complaint of Tesla owners is the cost of their vehicle. With this information in mind, the car manufacturer begins designing an electric car with all the same capabilities but at a substantially lower cost than any Tesla model.
Reducing costs is a useful example of a high impact and high likelihood strategy. The company has already found an emergent market for electric cars, so the likelihood of them gaining traction is high—especially given that Tesla already has very few competitors who offer the same intelligent design. If it is successful, it could cause a massive boost in sales and become Tesla’s most successful product launch. In other words, high impact.
Figure 5.5 High- and low-impact matrix
However, low-impact and high likelihood strategies should not consume much of your time, money, and labor. While small victories may be beneficial, you’ll want to direct most of your attention elsewhere.
Similarly, high-impact and low likelihood strategies should only eat up a small number of your resources. However, this is another great place to continually measure and monitor, just as you would evaluate the strategy in which you’re investing the most. Say there’s a new technology being developed that, when combined with your business model, could potentially double your sales. The issue is, there’s very little information on when this technology is going to be available for commercial use, and rumors suggest it may never happen. It’s still a solid idea to place a small number of resources here. In the off chance that it will release commercially in the future, you’ll want to be able to capitalize on its high impact.
Working at Compaq taught me much of what I’ve just described, but there was one particular philosophy I’ve found to be critical. Amidst all the chaos of working under tight deadlines and making sure we had the resources to support our rapid expansion, we always were able to continue our high performance in ambiguous circumstances. I think this offers unique insight into the power of being an agile organization.
It was Compaq’s leadership that created this kind of culture. All the leading executives understood that to survive and flourish, we would have to travel into uncharted waters. Venturing into the unknown meant, at its core, tolerating ambiguity. It was half skill, half character—we had to embody this competency to lead with it.
What I mean here is that there’s only one way for you to lead your organization into ambiguous territory. And that’s to be comfortable in that space yourself. If you can’t function in that kind of environment, your organization won’t be able to either.
Remember one of the basic tenets of leadership—you can only lead from where you are. If you personify where you want your organization to be, your staff can follow along.
Are you ready for more notes? Start by listing the primary goals of your organization. What would you like to achieve by next quarter or next year? What kind of resources would it take to get there? What kind of collaboration from your fellow senior leaders would this require? How could you and your team prepare one another and the rest of your organization for doubling back? What kind of leadership tactics would you use to ensure your staff continued to perform well in ambiguous circumstances?
1Netflix.
2M. Phillips and R. A. Ferdman. November 6, 2013. “A Brief, Illustrated History of Blockbuster, Which is Closing the Last of Its US Stores,” Quartz.
3G. Satell. September 21, 2014. “A Look Back At Why Blockbuster Really Failed And Why It Didn’t Have To,” Forbes Magazine.
4“Our History,” The New York Times Company, 2018.