Resources | Transformation

Kodak to Toyota: The Impact of Business Agility on Market Success

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Ron Laudadio
on February 14, 2023
Business Agility Maturity

You can stay ahead in today’s rapidly changing global marketplace by adapting your business strategy to embrace new paradigms like experiment-driven, networked, systems-based, employee-empowered, long-term results-driven, and pioneering organizations.

Companies like Kodak and Borders failed to adapt and lost their competitive edge, while others like Toyota and Patagonia thrived. As a leader, it’s crucial to introduce these paradigms in your organization for Business Agility and successful Agile and DevOps transformations. Aim for high Business Agility maturity to improve your organization’s adaptability and ability to thrive.

Accelerating Change

The pace of change in the world is accelerating rapidly.

The global marketplace evolves rapidly, and businesses must find ways to become increasingly adaptive and responsive to stay competitive. Over the last decade, evidence of this acceleration has been abundant such as:

  1. Technological advancements: The rapid pace of technological development and innovation is leading to new products and services and new ways of conducting business.
  2. Competition: Companies face increased competition from startups, emerging markets, and disruptive technologies.
  3. Consumer behaviour: The changing demands and expectations of consumers drive businesses to adapt and innovate.
  4. Globalization: The interconnectedness of the global economy is leading to increased competition and the need for businesses to be agile and responsive.
  5. Demographic shifts: Aging populations, migration patterns, and shifts in the workforce are having a significant impact on the marketplace.
  6. Political and economic instability: The increasing instability of governments, economies, and financial systems leads to an unpredictable global marketplace.

 

Past Success

Organizations struggle with outdated paradigms in changing markets.

Established organizations often need help with a critical challenge: their founding paradigms, successful in the past, now hinder their ability to adapt and thrive in an ever-evolving marketplace. These founding paradigms include:

  1. Stability and Efficiency: With the intent to maintain assurances, organizations prioritize stability and efficiency, which can encourage maintaining the status quo and discourages change.
  2. Hierarchical Structure: A deep hierarchical structure confines communication and collaboration, preventing creative problem-solving and decreasing efficiency. 
  3. Bureaucratic Processes: Reliance on process over people creates bureaucratic structures that increase response time and decrease operational efficiency. 
  4. Lack of Employee Empowerment: Organizations that restrict employee empowerment limit their potential for initiative and ownership and undermine their ability to achieve their full capability.
  5. Short-Term Financial Incentives: Financial incentives that reward short-term results discourage investment in creativity, innovation, and design long-term costs that outweigh the short-term benefits.
  6. Risk Aversion: A risk-averse culture discourages new thinking, experimentation, and innovation, making it hard to do little more than the status quo. 

 

Many famous organizations that embraced those paradigms have not succeeded in adapting to changes in the marketplace:

Despite being its inventor, Kodak missed the digital photography revolution due to a lack of employee empowerment and contribution to decision-making and bureaucratic structures that hindered change and investment in digital technology and marketing. This resulted in a delayed response to changes in consumer behaviour, ultimately falling behind competitors.

Borders started in 1971, and in the 2000s, their reluctance to take risks, prioritize long-term investments, and preference to reward executives for short-term achievements led to the company’s failure to keep up with the changing market trend toward online bookstores. The company’s top-down management style didn’t foster much communication and feedback from consumers failing to recognize the shift in expectations from its market. As a result, the company experienced a decline in sales and eventually filed for bankruptcy.

Embrace New Paradigms

Organizations must adopt new paradigms to thrive in changing markets.

Organizations must embrace new paradigms to succeed in today’s rapidly changing marketplace. These new foundation paradigms enable leaders to redesign their organizations and how people work together to swiftly and effectively adapt and respond to their markets. Business Agility is built on these paradigms, and organizations that excel in Business Agility embody the following organizational attributes:

  1. Experiment-Driven Organizations: Organizations that prioritize experimentation foster continuous improvement and flexibility in responding to change, tapping into new opportunities and discoveries through proactive learning and insight.
  2. Networked Organizations: Organizations that choose flat, networked structures foster open communication, collaboration, and shared decision-making, allowing them to respond to market changes with speed, flexibility and mastery.
  3. Systems-Based Organizations: Organizations that adopt flexible systems – flexible and adaptive processes – enable prompt and effective sensing, and decision-making, allowing them to respond nimbly to changes in the market with efficiency.
  4. Employee-Empowered Organizations: Organizations that empower employees to take the initiative, promote creativity and innovation, and encourage a powerful and responsive workforce to achieve exceptional results.
  5. Long-Term Results-Driven Organizations: Organizations that reward long-term results, encourage investment in strategic initiatives, and promote stability and growth to respond to changes in the market.
  6. Pioneering Organizations: Organizations that welcome calculated risks, foster a culture of innovation and encourage new ideas and approaches to forge their growth.

 

 

Many famous organizations that thrived embraced those paradigms and have succeeded in adapting to changes in their marketplace:

Toyota is a premier automobile manufacturer renowned for delivering exceptional quality, dependability, and innovation. The company invests in innovation, implements procedural systems such as the lean production methodology, and encourages continuous improvement at every level. Empowering employees and promoting a culture of innovation drives Toyota to create innovative products and technologies, leading to the company’s growth. With a focus on long-term results and a willingness to take calculated risks, Toyota stays ahead of the market’s constant changes.

Patagonia is known as an experiment-driven organization that prioritizes continuous improvement and adaptability in the face of change. With a flat and networked structure, the company fosters open communication and collaboration, allowing quick and effective decision-making on its organizational structure and product development. Patagonia also empowers its employees to drive innovation and initiative, promoting a responsive and creative workforce that has grown to be highly loyal and committed to the organization’s success. The company values long-term results and stability, encouraging investment in long-term strategic initiatives while embracing calculated risks and consistently leading the industry with new product innovations.

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    The Role of Leaders in Business Agility

    Leaders must embrace Business Agility for successful Agile and DevOps.

    Leaders must embrace new paradigms to implement Agile and DevOps effectively in their organizations. With the best of intentions, executives embark on Agile and DevOps transformations to be adaptive, efficient and deliver quickly in today’s rapidly changing environment. However, most transformations fail because leaders don’t understand that Agile and DevOps are more than processes, methods, and technologies. They are adaptive systems founded on Business Agility paradigms.

    For Agile and DevOps transformations to succeed, leaders must first introduce these new design paradigms to their organizations, allowing the systems to function and operate as designed. With these new paradigms in place, Agile and DevOps will be successful.

    Leaders who adopt Business Agility paradigms enjoy the power and benefits of Agile. Agile is highly adaptive, empowers employees, requires collaboration and open communication, encourages calculated risks, and drives long-term success through short-term investments. However, installing Agile in a rigid organizational structure that values stability, predictability, control, approvals, hierarchy, and bureaucracy undermines its success and sets the stage for an Agile transformation’s failure.

    You, as a leader, can play a key role in ensuring your organization’s success in today’s market by striving for high Business Agility maturity. Take action now by doing two simple things: reach out to organizations like EPiC Agile for expert advice, insight and guidance to improve your organization’s Business Agility. Also, get experienced help to empower your employees with new ways of working and use those opportunities to leverage your leadership skills and position to introduce positive change and support the paradigm shifts within the organization to allow those new ways of working to thrive.

    Use this self-diagnosis tool to get a sense of where your organization is at with these paradigm shifts. 

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