Agile Enterprise Strategy: A Next Generation Manufacturing Concept
AGILE ENTERPRISE STRATEGY: A NEXT GENERATION MANUFACTURING CONCEPT Paul T. Kidd Cheshire Henbury Introduction The Iacocca Institute (1991) report "21st Century Manufacturing Enterprise Strategy" introduced the term agility in an effort to define a new paradigm which the authors called agile manufacturing. This report attempted to look beyond current best (lean production) practices towards the enterprise of the future - examining likely business practices and enterprise structures in the year 2006. Unfortunately it became apparent very quickly that the report had failed to make a clear distinction between "1991 best practices" and issues relevant to a longer term focus on developing a new and radically different manufacturing business model. The net result was great confusion, which still continues to this day, with agility being used as a catch-all-phrase to describe all the various changes and ideas being promoted such as lean production, business process re-engineering, time compression, extended (or virtual) enterprises, and so on. This problem with mixing up current and future best practices is also evident in other publications such as the Next Generation Manufacturing Project reports (US Agility Forum 1997) and UK's Technology Foresight report Manufacturing, Production and Business Processes (Office of Science and Technology 1995). The Iacocca Institute report and these other two publications all claim to look ahead fifteen to twenty years and to examine drivers and future needs and likely developments. However, all these reports in actual fact tend to focus on near term issues within the five year time frame, often describing developments and ideas that many companies have already implemented. In other words they tend to be based on current practices and understandings and shorter term matters, not on long term strategic drivers and future issues. Clearly, looking out over a longer time frame of fifteen to twenty years is a challenging task. It is however one that is becoming increasingly important. Agility in the Context of Next Generation Manufacturing As the second millennium draws to a close an interest is developing in looking towards the enterprise of the future. Of special note is the concept known as agile manufacturing, not as a synonym for lean production, but as a new concept which challenges lean production and leads to the modification or even abandonment of lean concepts. Such a view of agility is firmly set in the context of the longer term time scale, looking ahead 15 to 20 years at next generation manufacturing. This view involves defining agility as a focused concept and not some vague catch-all idea that conveniently embraces everything. Such a focused understanding does however, build on the past, for it has been evident since the 1970s that mass production economies have been in crisis. Since 1970 observers and thinkers have been describing the emergence of a post-mass production economy and the associated characteristics of a post-mass production enterprise (e.g. see Davis 1987; Dertouzos et al. 1989; Toffler 1970, 1980, 1985; Poire & Sable 1984). With the collapse of mass/lean production oriented competitive conditions a need has arisen to develop new types of enterprises capable of dealing with and thriving in a complex and ever changing business environment ? enterprises that can continually reinvent themselves. The strategic vision is therefore the development of enterprises totally committed to embracing the emerging business environment. This involves creating a strategy that moves enterprises forward in three interrelated areas: 1. The niche enterprise: develop and exploit capabilities to thrive and prosper in the face of increasing diversity arising from individual customers, markets and to deal with wider issues of a fragmenting and diverse world; 2. The knowledge-based enterprise: develop and exploit capabilities to use knowledge and information for sustainable competitive advantage (in effect acknowledging information and knowledge as a source of wealth); 3. The agile (or adaptive) enterprise: develop and exploit capabilities to thrive and prosper in a changing, nonlinear, uncertain and unpredictable business environment. Agile manufacturing takes its name from the last of these three interrelated areas. However, agility is just one component of a 21st century manufacturing enterprise strategy ? the issues of knowledge-based and niche enterprise need also to be considered and most importantly, the interrelationships between the three elements addressed. The key points to understand are: 1. Agile manufacturing is a strategy aimed at developing capabilities (the enterprise platform) to prosper in the 21st century. In this respect it is similar to a manufacturing strategy in that it should support business and marketing strategies. However, these strategies also need to be modified to take advantage of agile manufacturing capabilities. 2. As a strategy, agile manufacturing is concerned with objectives, structures, processes and resources and not with individual point solutions, particular technologies, methods, etc. considered in isolation. 3. The emphasis is on designing the enterprise as a whole so that certain characteristics are achieved and not on the piecemeal adoption of quick fixes, prescriptions and panaceas. 4. Agile manufacturing may require some current best practices, lean production concepts, technologies and taken-for-granted assumptions to be re-evaluated, modified or even abandoned. 5. In the same way that mass-production marginalised many craft-based firms, agile manufacturing is likely to marginalise many mass production firms, even those with lean production enhancements. 6. One of the biggest problems to overcome is the misunderstandings that lean and agile are synonymous. They are not, although most of what is portrayed as agile is in fact lean. Agility viewed as change competency Underlying agility is a capability to adapt (Kidd 1995), which implies change proficiency (Dove 1996, Dove et al. 1996) or change competency (Kidd 1997b). Change competency is an ability to thrive in a continuously changing business environment. It is achieved by developing processes and structures that enable change to be handled more like routine events that are welcomed, rather than as upheavals to be feared. At the heart of this concept of change competency is the notion of developing capabilities to deal with change, uncertainty and unpredictability ? characteristics that are becoming major features of the business environment. However, developing change competency is not easy. The difficulty is illustrated by the following five questions: 1. How quickly could business strategies and products be modified and the required changes to technologies, organisation, people, etc. be implemented? 2. What would be the cost of such changes? 3. How well would the reconfigured enterprise work in the immediate post-implementation period? 4. What is the scope of the changes that could be realistically accommodated? 5. How soon after the reconfiguration could a similar major change exercise be mounted? Few companies today would score well on any one of these questions. Probably none would score well on all. Yet it is precisely this sort of capability that is implied by change competency. Example - Rapid Prototyping Technologies in the Context of Next Generation Manufacturing Increasing diversity in markets is forcing companies to address a greater number of market segments. Furthermore, in some industries, tailoring of products to individual customer needs, that is, customization, is increasingly what manufacturing companies need to deliver if they want to stay in business. A consequence of this increase in product variety and customization has been the development of techniques for controlling the costs traditionally associated with customization and a large number of different product options. These methods include: late configuration centres; assembly-based variety; and product configurators. These techniques are now well-known ways of accommodating increased variety without resulting cost penalties. However, they essentially all exploit the basic principle of achieving variety through assembly-based operations. Achieving fabrication-based variety is usually much more difficult and costly. Computer-aided design and computer-aided manufacturing systems can make a significant contribution towards achieving fabrication-based variety. However, rapid prototyping and tooling technologies, and especially the capability that they provide to generate cost-effective one-off tooling, offer an important means of moving forward the frontiers of product variety, enabling possibilities for increased product differentiation and more customization. The above is essentially an aspect of a niche production strategy. It is however, not enough just to consider this issue. Rapid prototyping technologies are in a state of flux, which means that new developments are continuously appearing. This in turn means that enterprises need to continually search for these new developments, assess them, and if appropriate apply them. Implied in this is an ability to continuously adjust and reconfigure strategies, technologies, organisation, etc. (Kidd 1997b). In affect therefore two additional requirements are placed on the enterprise. One is the need to develop agile or adaptive capabilities (change competency) so that new developments in these technologies can be applied quickly and at low cost. The other relates to knowledge management. In this case knowledge of customers, technology and processes need to be continually acquired and applied so that these new developments in technology are identified and used to produce customization that customers value. None of this however happens by accident. It takes a strategic plan which addresses niche production, agile enterprise and knowledge-based enterprise issues to create the processes and structure that will allow firms to move quickly and effectively to exploit and to create opportunities. These strategic issues are discussed in greater detail in Kidd (1997b). Concluding Remarks Agility as a subject is still a developing area. Companies are starting to move towards agile behaviour, often not in a planned way, more usually they "fall into it" and as a result it tends to be operational and lacks strategic direction. As a first step, companies need to understand the basic ideas and become intelligent respondents to the concepts. Agility is a long term issue for businesses ? achieving agility is a journey, not an objective to be attained before moving on to something else. Although embryonic examples of agility can now be found in industry (e.g. see Dove et al. 1996), the implementation of agility is still very much a frontier activity, involving radically new concepts concerning strategies, organisation, people and technologies. It takes businesses into a domain where fundamental and taken for granted assumptions are challenged. Agility is a paradigm shift and before one can move forwards one has to understand the existing paradigm and to face up to the often painful task of accepting that current practices and beliefs are no longer appropriate or relevant. This in itself, is a major change exercise, but one that is vital to the successful development of agile capabilities. Much has been written about agility. Most of the literature, however, is concerned with defining and discussing agility in terms of current best practices, which is not entirely correct. Most understandings of agility look at what companies have been doing, in some cases over the past 10 to 20 years and assume that this is a new paradigm which defines what companies will be doing in the future. This is the fundamental and fatal flaw in the bulk of the definitions of agility. The central point behind agility is to develop capabilities that today are not very well developed in firms and this is why it is important to challenge taken for granted assumptions (Kidd 1994). Change, uncertainty and unpredictability in the business environment is rendering invalid many of these assumptions as well as elements of current practices. A new and different sort of enterprise is needed for agility, but such enterprises will not begin to emerge until people really understand what agility is actually about. In 20 years time people will look back and see all this as obvious and will be puzzled why so many people today could not see the obvious. Agility is a paradigm shift which implies that old ideas, including some lean production concepts, need to be re-evaluated, modified and in some cases abandoned. References Davis, S., 1987, Future Perfect (Addison-Wesley, Reading, MA) Dertouzos, M.L., Lester, R.K., Solow R.M. and the MIT Commission on Industrial Productivity, 1989, Made in America: Regaining the Productive Edge (MIT Press Cambridge, MA) Dove, R.K., 1996, Tools for Analysing and Constructing Agile Capabilities (US Agility Forum, Bethlehem, PA) Dove, R.K., Hartman S. and Benson, S., 1996, An Agile Enterprise Reference Model (US Agility Forum, Bethlehem, PA) Iacocca Institute, 1991, 21st Century Manufacturing Enterprise Strategy. An Industry-Led View. Volumes 1 & 2. (Iacocca Institute, Bethlehem, PA) Kidd, P.T., 1994, Agile Manufacturing: Forging New Frontiers (Addison-Wesley, Wokingham) Kidd, P.T., 1995, Agile Corporations: Business Enterprises in the 21st Century - An Executive Guide (Cheshire Henbury, Macclesfield) Kidd, P.T., 1997a, Revolutionising New Product Development: A Blueprint for Success in the Global Automotive Industry (Financial Times Automotive Publishing, London) Kidd, P.T., 1997b, Rapid Prototyping for Competitive Advantage: Technologies, Applications and Implementation for Market Success (Cheshire Henbury, Macclesfield) Office of Science and Technology, 1995, Technology Foresight: Progress Through Partnership #9 - Manufacturing, Production and Business Processes (HMSO, London) Piore, M.J and Sabel, C.F., 1984, The Second Industrial Divide: Possibilities for Prosperity (Basic Books, New York) US Agility Forum, 1997, Next Generation Manufacturing Project Reports (US Agility Forum, Bethlehem, PA) Toffler, A., 1970, Future Shock (Random House, New York) Toffler, A., 1980, The Third Wave (William Morrow, New York) Toffler, A., 1985, The Adaptive Corporation (Gower Publishing, Aldershot)

Agile Enterprise Strategy: A Next Generation Manufacturing Concept

AGILE ENTERPRISE STRATEGY: A NEXT GENERATION MANUFACTURING CONCEPT

Paul T. Kidd
Cheshire Henbury

Introduction
The Iacocca Institute (1991) report "21st Century Manufacturing Enterprise Strategy" introduced the term agility in an effort to define a new paradigm which the authors called agile manufacturing. This report attempted to look beyond current best (lean production) practices towards the enterprise of the future - examining likely business practices and enterprise structures in the year 2006.

Unfortunately it became apparent very quickly that the report had failed to make a clear distinction between "1991 best practices" and issues relevant to a longer term focus on developing a new and radically different manufacturing business model. The net result was great confusion, which still continues to this day, with agility being used as a catch-all-phrase to describe all the various changes and ideas being promoted such as lean production, business process re-engineering, time compression, extended (or virtual) enterprises, and so on.

This problem with mixing up current and future best practices is also evident in other publications such as the Next Generation Manufacturing Project reports (US Agility Forum 1997) and UK's Technology Foresight report Manufacturing, Production and Business Processes (Office of Science and Technology 1995). The Iacocca Institute report and these other two publications all claim to look ahead fifteen to twenty years and to examine drivers and future needs and likely developments. However, all these reports in actual fact tend to focus on near term issues within the five year time frame, often describing developments and ideas that many companies have already implemented. In other words they tend to be based on current practices and understandings and shorter term matters, not on long term strategic drivers and future issues.

Clearly, looking out over a longer time frame of fifteen to twenty years is a challenging task. It is however one that is becoming increasingly important.

Agility in the Context of Next Generation Manufacturing
As the second millennium draws to a close an interest is developing in looking towards the enterprise of the future. Of special note is the concept known as agile manufacturing, not as a synonym for lean production, but as a new concept which challenges lean production and leads to the modification or even abandonment of lean concepts.

Such a view of agility is firmly set in the context of the longer term time scale, looking ahead 15 to 20 years at next generation manufacturing. This view involves defining agility as a focused concept and not some vague catch-all idea that conveniently embraces everything.

Such a focused understanding does however, build on the past, for it has been evident since the 1970s that mass production economies have been in crisis. Since 1970 observers and thinkers have been describing the emergence of a post-mass production economy and the associated characteristics of a post-mass production enterprise (e.g. see Davis 1987; Dertouzos et al. 1989; Toffler 1970, 1980, 1985; Poire & Sable 1984). With the collapse of mass/lean production oriented competitive conditions a need has arisen to develop new types of enterprises capable of dealing with and thriving in a complex and ever changing business environment ? enterprises that can continually reinvent themselves. The strategic vision is therefore the development of enterprises totally committed to embracing the emerging business environment. This involves creating a strategy that moves enterprises forward in three interrelated areas:

1. The niche enterprise: develop and exploit capabilities to thrive and prosper in the face of increasing diversity arising from individual customers, markets and to deal with wider issues of a fragmenting and diverse world;

2. The knowledge-based enterprise: develop and exploit capabilities to use knowledge and information for sustainable competitive advantage (in effect acknowledging information and knowledge as a source of wealth);

3. The agile (or adaptive) enterprise: develop and exploit capabilities to thrive and prosper in a changing, nonlinear, uncertain and unpredictable business environment.

Agile manufacturing takes its name from the last of these three interrelated areas. However, agility is just one component of a 21st century manufacturing enterprise strategy ? the issues of knowledge-based and niche enterprise need also to be considered and most importantly, the interrelationships between the three elements addressed.

The key points to understand are:

1. Agile manufacturing is a strategy aimed at developing capabilities (the enterprise platform) to prosper in the 21st century. In this respect it is similar to a manufacturing strategy in that it should support business and marketing strategies. However, these strategies also need to be modified to take advantage of agile manufacturing capabilities.

2. As a strategy, agile manufacturing is concerned with objectives, structures, processes and resources and not with individual point solutions, particular technologies, methods, etc. considered in isolation.

3. The emphasis is on designing the enterprise as a whole so that certain characteristics are achieved and not on the piecemeal adoption of quick fixes, prescriptions and panaceas.

4. Agile manufacturing may require some current best practices, lean production concepts, technologies and taken-for-granted assumptions to be re-evaluated, modified or even abandoned.

5. In the same way that mass-production marginalised many craft-based firms, agile manufacturing is likely to marginalise many mass production firms, even those with lean production enhancements.

6. One of the biggest problems to overcome is the misunderstandings that lean and agile are synonymous. They are not, although most of what is portrayed as agile is in fact lean.

Agility viewed as change competency
Underlying agility is a capability to adapt (Kidd 1995), which implies change proficiency (Dove 1996, Dove et al. 1996) or change competency (Kidd 1997b). Change competency is an ability to thrive in a continuously changing business environment. It is achieved by developing processes and structures that enable change to be handled more like routine events that are welcomed, rather than as upheavals to be feared. At the heart of this concept of change competency is the notion of developing capabilities to deal with change, uncertainty and unpredictability ? characteristics that are becoming major features of the business environment.

However, developing change competency is not easy. The difficulty is illustrated by the following five questions:

1. How quickly could business strategies and products be modified and the required changes to technologies, organisation, people, etc. be implemented?

2. What would be the cost of such changes?

3. How well would the reconfigured enterprise work in the immediate post-implementation period?

4. What is the scope of the changes that could be realistically accommodated?

5. How soon after the reconfiguration could a similar major change exercise be mounted?

Few companies today would score well on any one of these questions. Probably none would score well on all. Yet it is precisely this sort of capability that is implied by change competency.

Example - Rapid Prototyping Technologies in the Context of Next Generation Manufacturing
Increasing diversity in markets is forcing companies to address a greater number of market segments. Furthermore, in some industries, tailoring of products to individual customer needs, that is, customization, is increasingly what manufacturing companies need to deliver if they want to stay in business.

A consequence of this increase in product variety and customization has been the development of techniques for controlling the costs traditionally associated with customization and a large number of different product options. These methods include: late configuration centres; assembly-based variety; and product configurators.

These techniques are now well-known ways of accommodating increased variety without resulting cost penalties. However, they essentially all exploit the basic principle of achieving variety through assembly-based operations. Achieving fabrication-based variety is usually much more difficult and costly.

Computer-aided design and computer-aided manufacturing systems can make a significant contribution towards achieving fabrication-based variety. However, rapid prototyping and tooling technologies, and especially the capability that they provide to generate cost-effective one-off tooling, offer an important means of moving forward the frontiers of product variety, enabling possibilities for increased product differentiation and more customization.

The above is essentially an aspect of a niche production strategy. It is however, not enough just to consider this issue. Rapid prototyping technologies are in a state of flux, which means that new developments are continuously appearing. This in turn means that enterprises need to continually search for these new developments, assess them, and if appropriate apply them. Implied in this is an ability to continuously adjust and reconfigure strategies, technologies, organisation, etc. (Kidd 1997b).

In affect therefore two additional requirements are placed on the enterprise. One is the need to develop agile or adaptive capabilities (change competency) so that new developments in these technologies can be applied quickly and at low cost. The other relates to knowledge management. In this case knowledge of customers, technology and processes need to be continually acquired and applied so that these new developments in technology are identified and used to produce customization that customers value.

None of this however happens by accident. It takes a strategic plan which addresses niche production, agile enterprise and knowledge-based enterprise issues to create the processes and structure that will allow firms to move quickly and effectively to exploit and to create opportunities.

These strategic issues are discussed in greater detail in Kidd (1997b).

Concluding Remarks

Agility as a subject is still a developing area. Companies are starting to move towards agile behaviour, often not in a planned way, more usually they "fall into it" and as a result it tends to be operational and lacks strategic direction.

As a first step, companies need to understand the basic ideas and become intelligent respondents to the concepts. Agility is a long term issue for businesses ? achieving agility is a journey, not an objective to be attained before moving on to something else.

Although embryonic examples of agility can now be found in industry (e.g. see Dove et al. 1996), the implementation of agility is still very much a frontier activity, involving radically new concepts concerning strategies, organisation, people and technologies. It takes businesses into a domain where fundamental and taken for granted assumptions are challenged. Agility is a paradigm shift and before one can move forwards one has to understand the existing paradigm and to face up to the often painful task of accepting that current practices and beliefs are no longer appropriate or relevant. This in itself, is a major change exercise, but one that is vital to the successful development of agile capabilities.

Much has been written about agility. Most of the literature, however, is concerned with defining and discussing agility in terms of current best practices, which is not entirely correct. Most understandings of agility look at what companies have been doing, in some cases over the past 10 to 20 years and assume that this is a new paradigm which defines what companies will be doing in the future. This is the fundamental and fatal flaw in the bulk of the definitions of agility. The central point behind agility is to develop capabilities that today are not very well developed in firms and this is why it is important to challenge taken for granted assumptions (Kidd 1994).

Change, uncertainty and unpredictability in the business environment is rendering invalid many of these assumptions as well as elements of current practices. A new and different sort of enterprise is needed for agility, but such enterprises will not begin to emerge until people really understand what agility is actually about.

In 20 years time people will look back and see all this as obvious and will be puzzled why so many people today could not see the obvious. Agility is a paradigm shift which implies that old ideas, including some lean production concepts, need to be re-evaluated, modified and in some cases abandoned.

References

Davis, S., 1987, Future Perfect (Addison-Wesley, Reading, MA)
Dertouzos, M.L., Lester, R.K., Solow R.M. and the MIT Commission on Industrial Productivity, 1989, Made in America: Regaining the Productive Edge (MIT Press Cambridge, MA)
Dove, R.K., 1996, Tools for Analysing and Constructing Agile Capabilities (US Agility Forum, Bethlehem, PA)
Dove, R.K., Hartman S. and Benson, S., 1996, An Agile Enterprise Reference Model (US Agility Forum, Bethlehem, PA)
Iacocca Institute, 1991, 21st Century Manufacturing Enterprise Strategy. An Industry-Led View. Volumes 1 & 2. (Iacocca Institute, Bethlehem, PA)
Kidd, P.T., 1994, Agile Manufacturing: Forging New Frontiers (Addison-Wesley, Wokingham)
Kidd, P.T., 1995, Agile Corporations: Business Enterprises in the 21st Century - An Executive Guide (Cheshire Henbury, Macclesfield)
Kidd, P.T., 1997a, Revolutionising New Product Development: A Blueprint for Success in the Global Automotive Industry (Financial Times Automotive Publishing, London)
Kidd, P.T., 1997b, Rapid Prototyping for Competitive Advantage: Technologies, Applications and Implementation for Market Success (Cheshire Henbury, Macclesfield)
Office of Science and Technology, 1995, Technology Foresight: Progress Through Partnership #9 - Manufacturing, Production and Business Processes (HMSO, London)
Piore, M.J and Sabel, C.F., 1984, The Second Industrial Divide: Possibilities for Prosperity (Basic Books, New York)
US Agility Forum, 1997, Next Generation Manufacturing Project Reports (US Agility Forum, Bethlehem, PA)
Toffler, A., 1970, Future Shock (Random House, New York)
Toffler, A., 1980, The Third Wave (William Morrow, New York)
Toffler, A., 1985, The Adaptive Corporation (Gower Publishing, Aldershot)

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