value insights

Strategic Agility- Valutrics

Companies need to build IT infrastructure for strategic agility. Strategic agility is defined
by the set of business initiatives an enterprise can readily implement. Many elements
contribute to agility, including customer base, brand, core competence, infrastructure,
and employees’ ability to change. Organizing and coordinating those elements into an
integrated group of resources results in an enterprise capability, which, if superior to that
of competitors, becomes a distinctive competence. Research demonstrated a significant correlation between strategic agility and IT infrastructure capability. This suggests that if managers can describe their desired strategic agility,
they then can identify the IT infrastructure service clusters that need to be above the
industry average — and thus can create a distinctive competence.
Strategic agility is the ability of a firm to continually sense and explore customer and
marketplace enrichment opportunities and respond with the appropriate configurations
of capabilities and capacities to exploit these opportunities with speed, surprise, and
competitive success. Enriching customers,
leveraging capabilities and capacities, nurturing inter-organizational cooperation, and
mastering change and uncertainty are the four building blocks of strategic agility.
Enriching customers can include the following activities:
• Solution-centricity: Deliver total solutions for current and anticipated customer needs. Solutions are customizable bundles of products and services.
• Customer-centricity: Heighten customer convenience, including space, time, speed, and personalized convenience.
• Accelerate solution and product innovation to refresh continually customer
offerings: Portfolio of incremental, architectural, and radical innovation projects.
• Co-opt customers in the innovation process: Customers are sources of ideas for product and solution offerings. Customers are co-creators of innovative ideas.
Leveraging capabilities and capacities is the next building block. First, an ecosystem
of capabilities has to be built. The ecosystem might consist of customer relationship
management, selling chain management, supply-demand synchronization, manufacturing
management, financial engineering, brand management, human capital management,
and information technology management. Next, world-class excellence has to be
nurtured. This implies focus on a balanced set of metrics, such as adaptiveness, responsiveness,
speed, cost, effectiveness, and quality. This also implies applying continuous
improvement methods for capability enhancement and investing in and developing
enabling information infrastructures and services platforms.
Nurturing inter-organizational cooperation is concerned with value net concept, value
net posture, and value net integration. In the context of strategic agility, value nets are
configurations of sourcing and partnership structures for building the extended enterprise.

In the context of strategic agility, value nets are architected
to leverage other firms’ capabilities and assets that complement core capabilities and
assets within a firm. Value net posture is concerned with the governance of the value net,
which can be either prescriptive or collaborative. Value net integration requires focus on
the value net and expertise replication or expertise integration. In addition, the following
actions are important in nurturing inter-organizational cooperation:
• Identify and certify potential partners with regard to desired competencies (assets, capabilities) and their financial solvency
• Develop and continually assess working relationships with partners
• Develop abilities to work with partners through a variety of contractual mechanisms
• Develop competencies to quickly establish (and remove) the technology, process and managerial interfaces needed when initiating business arrangements with new partners
Mastering change and uncertainty is the fourth and final building block of strategic
agility. It requires strategic foresight, strategic insight, and organizational learning. The
following actions are important in mastering change and uncertainty:
• Sense, anticipate and exploit trends, opportunities, and threats
• Quickly and seamlessly marshal the combinations of capabilities necessary in shaping innovative moves
• Quickly reconfigure capabilities necessary in shaping innovative moves
• Execute and learn from strategic experiments and from strategic actions
The evidence from leading enterprises indicates that implementing different types of
electronic business initiatives based on atomic e-business models requires different
high-capability IT infrastructures. Strategic agility requires time, money, leadership and
focus — an understanding of which distinct patterns of high-capability infrastructures are needed where. Investing in IT infrastructure is like buying an option. If used
successfully, infrastructure enables faster time to market; if not, it will prove an
unnecessary cost. To ensure that investments in IT infrastructure support the
organization’s strategic goals and business initiatives, it is considered
critical for the enterprise’s most senior executives to understand which specific IT
infrastructure capabilities are needed for which kinds of initiatives. That way, they can
have some assurance that the investments they make today will serve the strategies of

According to Sambamurthy and Zmud, information technologies can enable
agility in several ways. First, the strategic role of IT can shift to fluid decision, authority,
and collaboration structures. Second, the IT architecture can shift to modular form. Next,
key technologies will be web services, objects, intelligent agents, and distributed
collaboration technologies. Fourth, key IT partnerships will include partners’ market
experts. Finally, IT investment focus will no longer be cost reduction, productivity
improvement, time-to-market, or product life cycle refreshment. Rather, IT investment will
focus on real options, market prototyping, time-to-solution, and relationship capital.
Of critical importance is IT investment in IT infrastructure. Strategic agility requires a
distinct pattern of high-capability infrastructures. Getting the right balance is difficult.
Under-investing reduces strategic agility and slows time to market. Also, infrastructure
investments must be made before investments in business applications because doing
both at the same time results in infrastructure fragmentation. But if the infrastructure is
not used or is the wrong kind, a company is over-investing and wasting resources.
Some managerial guidelines for strategic agility include:
• Adaptiveness enables competitive success in the digital economy
• Strategic agility enables competitive leadership
• Adaptiveness requires the co-integration of customer- and solution-centricity,
capabilities built around information, process, and information technology infra-
structures, and value net architectures
• Additionally, strategic agility requires the mastery of change and uncertainty
through entrepreneurial orientation and sensing capabilities
• Strategic agility is nurtured at multiple levels: competitive agility, innovation
agility, and functional agility
• The evolution toward strategic agility occurs through the learning gained by prior
investments in total quality management, lean management and value net integration
• Information technology management facilitates strategic agility as a digital options
generator by representing a platform for process innovation, for value net integra-
tion, and for innovation and strategic experimentation
• Attention must be focused on significant transformations of the IT function, such
as IT architecture, IT investment, IT partnerships, and organizing logic.

Strategic agility is an emerging concept that needs research concerning both organizational
and technology issues. Organizational issues include competency development
and organizational architecture as demonstrated by the need for organizational architects. Technology issues include distributed intelligence, interfacing intelligent agents
and humans, knowledge discovery technologies and processes, rapid start-up and
integration initiatives, meta data and process architectures, and end-to-end value chain
information visibility.

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