Five ways to make your business more agile (and help it grow through uncertainty)

Volatility is the ‘new normal’. Think back to the heady, pre-pandemic days of 2019. The job market was burning hot, and it was a struggle to hire talent. Then COVID struck with full force, and there was a wave of redundancies. The market was flooded. Fast forward a year or so, and things have bounced back. Suddenly it’s tricky to find good people again. We’ve had wage inflation, quiet quitting, warnings of recessions, and global supply shortages – it’s been challenging, to say the least.

In our conversations with clients, one thing is true. People can’t say with any certainty where they think the economic indicators will be in the next 6 to 12 months. So it’s impossible to make any concrete plan or prediction. Our advice? To plan to be agile. Put in an org structure with the flexibility to cope with the shocks and bounce back. 

Agility is a mindset. There are things you can do to futureproof your business and make it more resilient. Let me take you through them.

1. Consider outsourcing rather than DIY.

As it’s difficult to predict how the future will unfold, it can be hard to plan the allocation of resources. So, wherever possible, think about outsourcing to give you future flexibility. Last week, a client visited us to plan a new initiative of 24/7 coverage. Their first thought was, ‘We could do this ourselves’. We suggested they think again. Yes, they could hire some people and do it in-house, but the team was unlikely to be big enough. And we couldn’t tell whether they’d have consistent demand in the future. If the main client churned, they’d be left with an underutilised and expensive resource. 

Always look at outsourcing in the first instance, at least until you’ve established a solid base. Once you know you have predictable revenue, you can bring it in-house later. It’s like Apple making their chips. They only did this when it made strategic sense. They didn’t say, ‘We haven’t launched the iPhone yet, but let’s go and build a chip plant.’

Don’t fall into the growth trap many companies find themselves in. ‘Here’s a thing – let’s do it!’ ‘Here’s another thing. Let’s do that too.’ You’ll end up with a disparate, unfocused business. Look at your existing org structure too. Is there anything here that can be outsourced? This will make your business more nimble. 

2. Prioritise fast learning

The highly influential CEO of General Electric, Jack Welsh, once said, ‘“If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

So with everything that’s happening around you, you’re going to need to move fast. And this will require fast learning. So often, human beings will avoid doing something that they don’t understand. This is the reason why so many projects fail. So when we’re guiding our clients through their OKRs, we recognise this. We go straight to the bit we don’t know, force ourselves to test our hypothesis, and learn to progress with certainty.

If you’re making a new investment, launching a new product or creating a new revenue line, work out the most uncertain element and do that first. When it comes to innovation, Jim Collins calls this ‘bullets versus cannonballs.’ First, you fire bullets (low-cost, low-risk, low-distraction experiments) to learn what’s likely to work – adjusting your line of sight by taking small shots. Then, once you have this knowledge, you fire a cannonball (concentrating resources into a big bet) on the calibrated line of sight. Calibrated cannonballs lead to massive results. Uncalibrated cannonballs lead to disaster.

I discussed this on my Melting Pot podcast with business innovation thought leader Ben Bensaou. He suggested you need to prioritise quantity over quality. Look at Venture Capitalists. They will invest in 20 businesses, knowing that only one will be a tearaway winner. 

3. Work towards a decentralised structure

According to Prof Robin Dunbar of Oxford University, the human mind is only capable of handling around 150 relationships simultaneously. As companies get bigger than 100 staff, one person can’t know everyone individually and understand where they sit in relationship with each other. This is when passengers appear – no one knows what these people do or can hold them to account. So Dunbar’s hypothesis is you should build business units of no more than 100 staff to add value to particular customer cohorts. And this will give you the agility to react to economic turbulence.

I’m pathologically against shared services where huge, amorphous functions like ‘global HR’ spring up. This is what bogs companies down and makes them less agile. Far better to have small, autonomous teams aligned with specific customer cohorts. Our client, Pax 8, has three distinct regions, Europe, Asia and the US, that operate with high degrees of autonomy and have their HR function. And New Signature (before Cognizant acquired them) looked at the success of their UK region and then broke the US down into multiple territories, all with their own General Managers.   

4. Ensure diversification and sufficient slack for innovation

One of our clients was forced to furlough their entire workforce, apart from the CEO, during COVID. When they re-emerged, they said to each other, ‘We need to make sure that never happens again. How do we diversify to make ourselves more resilient?’ They looked at their customers and identified a managed service they could sell even if circumstances meant they could no longer get into data centres. Their managed service division was established, and they had another revenue stream. 

That is agile at work. But there needs to be some slack in the system so that people can spend time researching new options. If you’ve tightened down all of your resources, there will be no time and effort to invest. 

As well as entirely new products and revenue streams, diversification is about taking what you already have and reusing it in a way that doesn’t reinvent the wheel. You’re exploring ways to get more customers onto an existing platform or selling into adjacent markets. The stories of Fujifilm and Kodak spring to mind here and are told in an excellent book, ‘Undisruptable’ by Aiden McCullen which charts the two companies side by side. 

With the death of film, Kodak disappeared, but Fuji diversified. They realised their core technical capability could be used to create cosmetics. This internal innovation led to them creating a series of new businesses spun out of every one of their core technology components.

5. Bring flexibility into planning

‘Plans are worthless, but planning is everything.’ So spoke Dwight Eisenhower in 1957. With change all around you, don’t get fixated on a plan. The world is so uncertain that it’s unlikely to turn out as you’d hoped. This is agile in action.

Instead of fixing on an annual horizon, plan for the next quarter. And have a longer-term goal of three years out. We guide our clients to divide the next three years into 12 quarters, working out and prioritising OKRs. And each time we reach the end of the current quarter, we add another.  

Likewise, don’t get locked into a twelve-month budget. Look at what triggers your ability to hire more people (usually EBITDA) and work out the projection for the next quarter and the point at which you can hire. I once ran a company, and my personal compensation was linked to top-line revenue being + or – 5% of where we’d thought it would be eighteen months before. Where’s the incentive in that? No excitement and no challenge. It told me all they wanted was predictability. 

Be ambitious. Work out the timeframe within which you’re likely to double the business. And work back from there.

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Written by business growth coach Dominic Monkhouse. Find out more about his work here. Read his book, ‘F**k Plan B’ here.