Enterprise Agility: Tweaking Won't Deliver Expected Results

From the Editor, Gabriele Piccoli

This issue of CBR focused on a very important and timely topic: enterprise agility. It is also the third issue of CBR to center on agility; these installments looked at agility from various angles: the technical, the strategic, and now the managerial. Enterprise agility calls for structuring the unstructured, for institutionalizing improvisation. It requires that the organization become adept at reacting with speed and precision to changes in the competitive environment, customer needs, and any other change of significant magnitude. The rate at which such changes occur has accelerated (and will likely continue to accelerate) in the increasingly turbulent environment.

In this issue of CBR, our academic perspective was provided by Alan MacCormack, associate professor in the Technology & Operations Management Unit at the Harvard Business School and member of Cutter's Innovation & Enterprise Agility team. Alan's work has traditionally focused on the management of technology and product development in rapidly changing environments, such as the Internet software industry and the computer workstation and server industry. Alan's previous work and current interests make him uniquely suited to bring a new perspective to the notion of enterprise agility. Our view from the field came courtesy of Lou Mazzucchelli and Tim Lister, both Fellows of the Cutter Business Technology Council.

The main insight in this issue for me comes from the notion, introduced by Alan, of interdependencies in the application portfolio. He produces an interesting analytical tool as well: "propagation cost." Perhaps the pendulum theory is at play here (see my comments in the March 2008 issue of CBR, Vol. 8, No. 3, for more on the pendulum theory). After heavily investing in enterprise systems and standardization, organizations are coming to realize some of the constraints that such systems create. It would be interesting to find out the degree of complexity inherent in such systems and the propagation costs they entail. If, as one would expect, both are high, this will prove to be unwelcome news from many organizations that will need to reconcile the increasing needs for enterprise agility with past investments in technology and business process redesign.

Another very interesting result that surfaced in our survey is the fact that agility is mostly sought by those organizations that face significant internal complexity rather than environmental uncertainty. At this point I am not willing to completely buy into the notion that environmental complexity and turbulence do not affect the need for enterprise agility. On the other hand, the survey suggests that we need to pay as much attention to internal complexity. Environmental complexity is of course related to internal complexity, and the makeup of the survey respondent population may have influenced its perspective. Nonetheless, I think that this result raises some novel insight that you should corroborate within your own organization. If supported, these findings have implications for how you seek funding and make the case for improving the agility of your infrastructure and practices.

The bad news in this issue of CBR is that if you are serious about pursuing enterprise agility, tweaks and spot improvements to your existing infrastructure will not do. Yet, not all news is bad. While refactoring systems simply to lower propagation cost and increase their flexibility is typically a tough sell given that no new functionalities are delivered, applying an option-value approach to this investment may be the solution. We don't have the opportunity here to thoroughly describe this approach (perhaps a good topic for a future installment of CBR). Suffice it to say, however, that the option-value perspective enables you to justify an investment based on the ability to launch future initiatives more cheaply, with superior speed, and with lower risk.