Australian Business Agility Report: Business Agility Institute

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How did youi score? The Business Agility Institute‘s annual report provide valuable insights into how organizations are adopting agile practices. Comparing the 2023 and 2024 reports reveals a journey of challenges, recovery, and the critical importance of effective leadership.

Discussing and comparing ’23 to ’24

What is Business Agility?

According to the reports, business agility is “a set of organizational capabilities, behaviors, and ways of working that affords your business the freedom, flexibility, and resilience to achieve its purpose” It’s not a static state, but a continuous journey of adaptation and learning. It involves principles and ways of thinking that lead to new organizational behaviors, not just processes.

The Dip and the Rebound

The 2023 report showed a concerning trend, with the global Business Agility Index dropping for the first time in five years, from 5.0 in 2022 to 4.9 in 2023. This was attributed to a weakening global economy that caused organizations to cut costs and reduce innovation. Collaboration and the scope for organizational change both decreased.

However, the 2024 report brings good news, with the index surging to its highest level ever at 5.7. This rebound suggests that organizations are learning from past challenges and building resilience. This increase is driven by a collective shift towards more dynamic, customer-centric, and responsive operations.

Key Findings and Predictive Indicators

Both reports identify key areas that contribute to business agility. In 2023, the top three predictive indicators were:

  • Fund work dynamically: Agile organizations can easily shift funds to areas with the greatest potential value. This is an excellent process for business agility. Fund the value.
  • Adapt strategies seamlessly: Companies need to be able to adjust their strategies faster than the pace of the market.
  • Sense and respond proactively: Companies must actively scan for emerging patterns and trends.

In 2024, the indicators changed, though “Fund Work Dynamically” remained:

  • Fund Work Dynamically: The ability to move funds to areas of greater value is still essential. Great to see this remaining on the list.
  • Integrate Diverse Ideas: Organizations should seek and integrate ideas from various sources.
  • Empower with Accountability: Balancing empowerment and accountability is essential for high performance.

In 2024, “Balance Governance & Risk” is also a key predictive indicator when using all data from the last 7 years. In 2023, “Fund Work Dynamically” had been a key predictive indicator for six years. These indicate a shift in focus, underscoring the importance of a holistic approach, integrating diverse perspectives, and ensuring accountability alongside empowerment.

Domains of Business Agility: Where We Improved, Where We Lagged

Both reports use the five domains of business agility to assess progress:

  • Engaged Culture
  • Responsive Customer-Centricity
  • People-First Leadership
  • Flexible Operations
  • Value-Based Delivery

In 2023, organizations scored better in capabilities with a customer, people, or culture focus. However, their capabilities in flexible operations and delivery were rated weakly. A key observation was that while “Cultivating a Learning Organization” had increased, the ability to “Act as One” had substantially decreased.

In 2024, the picture is more positive across all domains. Cultural capabilities saw the most significant growth, particularly in “Act as One” (up 28%) and “Engage Transparently & Courageously” (up 23%). The ability to “Prioritize. Prioritize. Prioritize.” also saw a 35% improvement. However, the People-First Leadership domain showed the smallest growth compared to other domains. Organizations in Retail and Financial Services are performing poorly in many “Engaged Culture” capabilities.

The Critical Role of Leadership

Both reports emphasize that leadership is crucial for successful business agility transformations. The 2023 report highlighted that transformations are more successful when led by executives acting as role models for agility. It also noted that many leaders were not personally involved in organizational change.

The 2024 report reinforces this, stating that outdated leadership capabilities remain the most cited and impactful challenge. It highlights that leaders set the tone for the organization and their behaviors must align with the desired culture. Many leaders were reported to be unwilling to change their behaviors, which sent mixed signals to staff. This lack of direction and unclear transformation goals were also a major hindrance for organizations. Additionally, many respondents spoke of their transformations being limited by an overly narrow focus on a single business function instead of transforming the entire organization.

Key Differences and Takeaways

Here are some of the key takeaways from the two reports:

Recovery and Growth: 2023 saw a dip in business agility, while 2024 shows a strong recovery and the highest maturity levels recorded. The 2023 decline, with the Business Agility Index dropping from 5.0 to 4.9, was attributed to a weakening global economy, causing organizations to cut costs and reduce innovation. In contrast, the 2024 report shows a significant rebound, with the index reaching 5.7, the highest level recorded, suggesting organizations learned from past challenges and are building resilience. This recovery reflects a shift towards more dynamic and responsive operations.

Shift in Focus: 2024 reflects a move towards customer-centric operations and creating supportive environments where employees can thrive. The 2023 report indicated that organizations scored better in capabilities with a customer, people, or culture focus, but they still rated their flexible operations and delivery capabilities weakly. In 2024, there is a more positive picture across all domains, especially in cultural capabilities, with “Act as One” and “Engage Transparently & Courageously” seeing significant growth. This shift emphasizes creating human-centric environments and responding to customer needs.

Leadership Matters: Both reports emphasize the critical role of leaders, but 2024 highlights the continued challenge of outdated leadership capabilities. In 2023, transformations were noted to be more successful when led by executives acting as role models for agility, and many leaders were not personally involved in organizational change. The 2024 report shows that outdated leadership capabilities are still the most significant challenge, with leaders often unwilling to change their behaviors and thus sending mixed signals. This highlights a need for leaders to model agile behaviors and foster a culture of collaboration.

Scope of Transformation: 2024 emphasizes the need to transform the entire organization, rather than a single function. The 2023 report showed that organizations that included multiple business units in their agility journey scored significantly higher than those who limited their transformation to one area, usually technology. In 2024, there’s an emerging understanding that change needs to be organization-wide, not confined to a single function. This highlights the need for collaboration and consistent ways of working across all business areas to ensure a successful transformation.

Benefits

Both reports highlight the tangible benefits of business agility, including improved business outcomes, customer satisfaction, and employee engagement. The 2023 report linked business agility to better customer satisfaction, faster time to market, and increased revenues. The 2024 report further solidifies these benefits, showing a clear relationship between business agility and improvements in revenue, employee engagement and customer loyalty. This emphasizes that human-centric organizations are more likely to achieve financial success and higher employee engagement.

A Call for Better Leaders

Ultimately, both the 2023 and 2024 reports underscore that business agility requires a holistic, systemic approach that goes beyond simply implementing agile practices. It demands a fundamental shift in organizational culture, ways of working, and most importantly, leadership. The reports make it clear that organizations must invest in developing leaders who can model agile behaviors, foster a culture of collaboration and learning, and create a clear vision for transformation.

The journey toward business agility is not easy, and there will be challenges along the way. But with the right leadership and a commitment to continuous improvement, organizations can build the resilience and adaptability needed to succeed, no matter what the future brings. The data also indicates that focusing on the human element of business is critical, as human-centric organizations are more likely to achieve financial success and higher employee engagement. By focusing on the people, the processes will fall into place and your organization can be truly agile.

So where do you sit on business maturity index?

Steve

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