A business model is a blueprint or plan of how a company will create and deliver customer value and generate revenue to achieve profitability. These days, there are dozens of business models to match varying business scenarios. Some of them are more popular and widespread, while others are less known.
With a great focus on agility for modern organizations, many entrepreneurs wonder what an agility business model is and how it works. Strange though it might seem, there is no agility business model per se.
At the same time, agility should be integrated into all tiers and components of business models since it’s a core feature that defines modern ventures’ successful development and growth. Hence, we are going to talk about how agility impacts business models today.
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Looking Into the Old Approach
To better understand what is happening now and explain contemporary business tendencies, it’s necessary to look back into the older business concepts. Though dynamics, flexibility, and adaptivity are the names of the business game today, many companies and ventures still function now, sticking to the old idea of an “organization as a machine.”
It is just what it sounds like. A machine is a well-organized and perfectly aligned mechanism in which all parts and elements have their specific functions yet work together like a charm. This mechanistic model was projected to an organizational structure. Its major features are:
- Centralized power;
- Hierarchical structure;
- Authoritarian leadership;
- Top-down authority with decisions made at the top of the hierarchy;
- Easy replaceability of low-ranking positions and low replaceability of decision-makers;
- Structured silos and strict procedures.
By and large, it’s a management-oriented business structure that has been dominating the markets for over a century. Due to its predictability and clear role distribution, it proved efficient and ensured stability. Yet, nothing is perfect in this world, and this machine-like structure has its drawbacks too:
- Lack of flexibility;
- Poor responsiveness to changes;
- A strictly vertical management structure that lacks adaptivity;
- Weak connections and poor communication between senior leaders and lower-rank executives.
Contemporary Trends Shattering the Old Concept
Any concept will last until it cannot embrace the new tendencies. The “organization as a machine” metaphor is outdated and no longer matches current realia. As a result, the companies struggle to leverage stability and dynamics, evidencing the shift toward a new concept.
What triggers that shift, you wonder? The digital revolution is booming and keeps transforming the world we live and work in. With that, there are a few distinct trends that force organizations to change and review the paradigm they rely on:
- Fast-evolving environment calls stakeholders in a business framework to change the ways they connect and interact, look for new communication patterns, and use a networking approach;
- Emerging disruptive technology breaks traditional business models and pushes organizations to transform by embracing technological advancements and automation;
- Information digitization and accessibility require companies to establish multi-faceted communication systems and engage in collaborations at all organizational levels;
- Talent-centered approach forces businesses to create appealing value propositions to engage and retain talent while taking into account their diversity.
Organizations as Organisms
It’s a new metaphor that comes to replace an “organization as a machine” concept. Unlike machines that are normally designed to complete a single task and easily get out of order in case of a single component malfunction, organisms are more autonomous. When something breaks, organisms strive to adapt and restore wholeness.
In a similar fashion, agile ventures are designed to respond to change by default. Their whole structure is built to be flexible and adaptive. Hierarchies are pushed out by simpler and horizontally aligned structures connected via feedback chains. In the meantime, team accountability is enhanced and the company can grow via learning.
The principles at the core of an organization structured and functioning as an organism include the following:
- Focus on achieving results above internal bureaucracy and rigidity;
- Establishing teams around internal responsibility;
- Leaders should be rather guides and motivators than controllers and supervisors. They should allow teams to find the best execution methods on their own;
- Organizations should be able to regulate their own behavior to respond to external stimuli and adjust their performance if needed.
While it’s not a complete list, these points showcase the major drivers of agile organizations. Now, let’s consider how you can implement them in your business model.
Using Agility in Your Business Model
As stated above, there is no uniform agile business model that works similarly for various businesses. Agility has a broad meaning and should be applied at all organizational levels to achieve the best effect.
To give you an idea of how to implement agile, let’s consider a few examples.
Simplify Structures
Agile organizations gravitate toward management decentralization. It means they prioritize simpler horizontally aligned structures over strict vertical management, with all decisions made at the top of the pyramid.
Besides, companies take away multiple layers of intermediary managers between leaders and executive teams. Instead, they create solid feedback chains that work both ways. This helps leaders efficiently outline goals and articulate instructions and enables teams to respond and give feedback on the process quickly.
As a result, this promotes a collaborative spirit and ensures smooth and effective communications across the organization.
Transform Hierarchies
Though strongly favoring simple structures, agile companies don’t negate hierarchies. They rather transform them to be more flexible and responsive.
The major aim is to introduce dynamics and resilience while using tried and tested company tools and culture. In other words, connections between senior leaders, mid-managers, and executives should be fine-tuned to ease information exchange and make sure top-level initiatives smoothly link to their execution.
Reform the Way Functions Interact
Free informational flow should be established and maintained not only in leader-team directions but also between different teams and structures within the organization. A siloed framework should be eliminated and replaced by easily communicating teams.
Efficient information transfer and exchange aside, this is how teams will switch to agile. Flexibility will occur naturally and further promote agility across other organizational levels.
Reconsider Planning
The way agile organizations plan should change too. Strict planning with detailed prescriptions for actions to be taken and decisions to be made on a monthly and yearly basis should be avoided.
Agile implies flexibility in everything, including planning. Hence, plans should be compiled around goals and directions to allow mid-managers and teams to choose an appropriate execution method.
However, plans should not be static. If conditions or external circumstances change, plans should be modified accordingly. In other words, planning should keep pace with changes that take place to deliver value in the best way possible.
What Is an Agile Business Model?
At this point, we understand that there is no agile business model as a separate prescriptive outline. Agile is rather a mindset and way of thinking when it comes to organizing, managing, and operating a business.
Agile principles embrace eliminating siloed structures, ensuring smooth feedback chains. This is needed to promote efficient leader-to-team communications and easy team-to-team collaborations, planning around goals, and giving teams more independence in execution.
Once you embrace agile thinking and grasp its major features, aspects, and approaches, you’ll be able to incorporate them into different business models to accomplish transformations forced by the modern business environment.