Nimbleness as a Business Strategy

Jeffrey J. Anderson

Friday, June 30, 2017

Amazon buys Whole Foods? Why every business needs to embrace messiness, uncertainty to get ahead.

The recent news that Amazon bought Whole Foods was a surprise to business people and consumers alike. Who would have imagined 10 years ago that Amazon would get into the grocery store business – let alone become a leader in same-day deliveries or outsourced IT services?

On a large scale, Amazon CEO Jeff Bezos has created a company that does what all successful businesses do – adopt nimbleness as a business strategy.

Many of the most successful companies look almost nothing like the businesses their owners originally set out to create. Innovative entrepreneurs do not cling tightly to a singular vision. Instead, they stay fluid. Amazon is no longer the online bookseller. They paid attention to the market to see what worked best and changed products, services and tactics to create a productive business.

Too often this isn’t the case. I see businesses go off into a laboratory to develop a new product or service. They’ve got market research and SWOT analyses. They create something to sell.

A lot of these businesses fail. They’re being methodical and they think strategically, but lack flexibility and the customer focus to look for the opportunity in the marketplace. The market changes so rapidly, by the time their product is ready to be released, it’s no longer relevant. The better strategy is to get quickly to market and be flexible and iterate while you learn.

Nimbleness as a business strategy

Organizations often view nimbleness and flexibility as individual or cultural attributes. But really, they need to be business strategies.

The book Messy by Tim Hartford reinforces the importance of an organization embracing messiness and disorganization to keep up with a fast-paced market. He uses Amazon as an example.

Veteran business advisers warned Bezos that competitors like Barnes & Noble would enter online book-selling and beat back Amazon. However, Bezos bet that his large corporate competitors would hesitate – and they did. Their aversion to risk and inability to be nimble left the old booksellers scrambling to keep up with trends and anticipate customer demands.

Bezos, on the other hand, is focused on being a “Day 1 company.” In his 2017 letter to shareholders, Bezos says “Staying in Day 1 requires you to experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight. A customer-obsessed culture best creates the conditions where all of that can happen.”

It’s what you learn from failure that matters

For Hartford (and Bezos) failure is an important part of success. Amazon lost money trying various tactics and launching new products, but it also outmaneuvered other companies and left competitors wondering what hit them.

What Amazon does differently is continue to be flexible and learn no matter what happens. Failures become opportunities to try new strategies and tactics. Internally, teams at Amazon are allowed to move forward quickly with projects without constantly getting approval or even having consensus support. They are also expected to swiftly correct bad decisions when new information comes to light. Successful initiatives move forward – less successful ones are reworked or scrapped.

Same rules for large corporations and small start-ups

Small start ups and large corporations (and everything in between) both operate in a hyper-speed market. Start ups may seem nimbler simply because of their size, but still need to consciously commit to flexibility and innovation.

Larger organizations can create smaller, independent entrepreneurial divisions. Teams can make small “batches” of product and try them out. They can learn, adapt, and make a better batch – and if it’s successful, move towards a larger roll out. The key is to keep learning.

Another nimbleness success story comes from the government – notorious for slow-moving bureaucracy. When General Stanley McChrystal took over U.S. efforts in Afghanistan in 2009, he saw that despite its military might, U.S. forces were losing. There were dense layers of structure preventing progress. When he insisted on giving local teams more flexibility to make decisions, he was able to reverse the downward trajectory of the mission.

Making your own organization more nimble

Leaders who want their organizations to succeed not only need to be comfortable with change and messiness themselves, they need to incorporate nimbleness into their organizations’ strategies.

They need to carve out pieces of the business where flexible, entrepreneurial teams can get ideas to market quickly and without fear of failure.

Resist the pressure to create boundaries and structure. Experiment. Know that your end product may not match your initial idea. The rate of change is accelerating at a pace where the average person cannot keep up. Being nimble is a core requirement.


Jeff Anderson, President & CEO, LFGSM

Jeffrey J. Anderson is the 5th President and CEO of Lake Forest Graduate School of Management (LFGSM). Prior to joining the School in October 2014, Mr. Anderson served as an Associate Dean for Leadership Development at the University of Chicago’s Booth School of Business. At Booth, Anderson harnessed his business experience to bring a practical, proven perspective to the leadership development curriculum.

Mr. Anderson is also a co-founder and partner at The Chatham Group, a consulting advisory firm that he launched in 2003. He has worked with senior executives in the distribution, consumer product, energy, investment banking, consulting, telecommunication and automotive industries. Connect with him on LinkedIn.

TwitterLinkedInPrintFriendlyShare
 

(Category: , , , , )