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Why agile companies are primed to succeed.

Why agile companies are primed to succeed

Psion's hand-held personal organizers were the iPad of their day. Light and small enough to fit in a pocket, they threatened to make diaries, address books and filofaxes obsolete. The ultimate yuppie device of the 1980s, they helped to take Psion into the FTSE 100 of top UK companies.

By 1998, when Psion signed an agreement with the world's three biggest mobile-phone companies to develop software for a new generation of 'smart' phones that would combine the virtues of personal computers and traditional phones, Microsoft was said to have identified Psion as its greatest competitive threat.

But the forces that would cause Psion to withdraw from the consumer market for personal digital assistants (PDAs) were already present. US-based Palm Computing had launched its extremely successful Palm Pilot personal organizer in 1996. The PDA, which had once been a niche-market product, was henceforth to be sold in a global horizontal marketplace where Psion would struggle to compete.

In September 2000, the company merged with Canada-based Teklogix, a global provider of mobile-computing and wireless data-collection devices. The move heralded a switch by Psion into heavy-duty hand-held computers used worldwide by couriers to record parcel delivery, and by supermarkets, warehouses and ports for stock and inventory control. The company's ethos is now about enabling firms to work faster and smarter by increasing the productivity of mobile workers.

In the April 2010 edition of Accountancy, Percy and Park reveal how the company has simplified operating structures, radically enhanced the supply chain, reorganized the business on a functional basis, widened channel relationships and added large distribution organizations like Ingram Micro.

Most importantly, the company uses modular product designs that enable it to create various products from standard modules, such as a keyboard module or display module. It has reduced the number of parts in its rugged mobile computers from 600 to 400, yet is able to generate 14,000 product variations, compared with 7,000 previously. In turbulent markets, Psion can therefore identify and capture opportunities more quickly than its rivals.

According to Sull, in the issue 1 of The McKinsey Quarterly for 2010, such 'organizational agility' can lead not only to improved operational efficiency and a faster time to market, but also to higher revenues and more satisfied customers and employees.

He reveals three distinct types of agility: strategic, which consists of spotting and seizing game-changing opportunities; portfolio, which is the capacity to shift resources quickly and efficiently out of less promising business areas and into more attractive ones; and operational, which involves exploiting opportunities with a focused business model. Sull warns organizations not to rely on a single type of agility. 'An operationally agile company, for example, is at risk if its core business becomes less attractive,' he says.

The author states that managers have traditionally been able to set a long-term vision for their companies and proceed steadily towards it, but no such clear view of the future is possible in today's fast-changing business world. Nevertheless, economic crises can help managers to renew a sense of urgency, justify unpopular decisions and overcome complacency or resistance to change. 'By building the organization's strategic, portfolio and operational agility, managers can position their companies to succeed, come what may,' he concludes.