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Agile Enterprise Strategy


"When change is discontinuous, the success stories of yesterday have little relevance to the problems of tommorow; they might even be damaging. The world at every level, has to be reinvented to some extent"
Source: Charles Handy, Beyond Certainty, Arrow Business Books, 1996


Most of what of the things presented as agile practices, are in fact lean production practices. Agile enterprise is concerned with a post lean production paradigm. Lean production is one of yesterday's success stories, although because ideas diffuse very slowly, many companies are still in the process of implementing lean production. And because lean is so popular and easy to understand, a common mistake is to assume that lean and agile are the same. They are not.

With the emerging 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:

  • The niche enterprise - develop and exploit capabilities to thrive and prosper in the face of increasing diversity (arising from individual customers as well as different markets) and to deal with wider issues of a fragmenting and diverse world;
  • 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);
  • 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 to be considered and most importantly, the interrelationships between the three elements addressed.

Many companies have moved forward in the area of niche enterprise, using concepts and strateigies linked to what is called mass customization (individually customised products at mass production prices). However, many have not actively explored the issue of knowledge enterprising although more and more companies are starting to explore this area and to better define and further develop the concepts. Few companies have fully understand, let alone implemented, agile attributes (meaning that capability to deal with change, uncertainty and unpredictability). None have linked three elements together.
Therefore, while much is now known about how to mass customize, very little is known about what creates agile attributes. When companies involved in mass customization are analysed, the lack of agility is often very apparent, since most of the mass customization techniques assume only limited uncertainty and unpredictability in the business environment. Agility is therefore truely a frontier activity which challenges many of today's "best practices".

The key points to understand are:

  • Agile manufacturing is a strategy aimed at developing capabilities (the enterprise platform) to prosper in the next 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.
  • 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.
  • The emphasis is on designing the enterprise as a whole so that certain characteristics are achieved and not on piecemeal adoption of quick fixes, prescriptions and panaceas.
  • 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.
  • In the same way that mass-production resulted in the demise of many craft-based firms, agile manufacturing is likely to lead to the elimination of many mass production firms, even those with lean production enhancements.
  • One of the biggest problems to overcome is the misunderstanding that lean and agile are synonomous. They are not, although most (as much as 99%) of what is portrayed as agile is in fact lean.

Copyright © 2000, Cheshire Henbury, Created by Paul T. Kidd, Revised January 2000
http://www.CheshireHenbury.com

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