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Survival of the adaptable

Thursday 15 November 2012
News Release

It’s no longer survival of the fittest but survival of the adaptable

In a world first, leading New Zealand and Australian organisations have shared their insights in a study to understand the just how critical being adaptable is to achieving competitive advantage in a turbulent economic environment.

Titled ‘Rising to the Agility challenge – continuous adaptation in a turbulent world’ the study has taken two years and was a collaborative effort by PwC and the University of Melbourne Faculty of Business and Economics. It involved 60 executives from 18 organisations (six organisations were from New Zealand), and spanned a wide range of sectors covering financial services, health, technology, retail and Government sectors.

New Zealand PwC Partner Alan Sinclair says, "There has been a lot of talk about the need for organisations to be more “agile” but not much analysis on what agility means in practice and how it links to performance and results. This first phase of the research provides a definition of the factors that drive agility with the aim of helping organisations develop the capabilities needed to adapt to a world where constant change is the norm.

“There were some common threads from the study’s respondents. Agility is hard work to achieve and to maintain. And it is dependent upon an organisation’s strategic awareness, the capacity to rapidly mobilise or re-direct resources and the ability to form and dissolve alliances and relationships to achieve specific goals. How successfully this is achieved also depends on an organisation’s culture, strategy and leadership capabilities.”

Academically, change and transformation have been the topic of conversation for more than 65 years according to University of Melbourne Professor Graham Sewell.

"Kurt Lewin was the first to develop a model of organisational transformation in 1947. Since then we've seen several different models developed all grounded on the core assumptions that stability is achievable and desirable, employees need to be convinced of change and that organisational development must be anchored by a new, replacement vision of stability.

"But times have changed and our research has confirmed that existing models fail to provide an up-to-date roadmap for organisations to be agile in an environment where global and local market conditions are changing almost instantaneously. This is not purely ‘turbulence', it is permanent change occurring to the ecosystems in which organisations are operating.”

As a result of the study, PwC and University of Melbourne have developed a new "HVP Agility Model" recognising that agility has many dimensions, but is based on three core capacities: Horizon, Velocity and Plasticity."

Professor Graham Sewell says, “Earlier models have touched on the concept of agility periodically - not in a rigorous, holistic fashion- and have been based on reasonably stable operating environments where organisational change was reactive, episodic or incremental. Our model is one for the new millennium, one that will help us to understand explicitly what keeps an organisation agile in the increasingly complex and volatile trading environment."

Mr Sinclair adds, "Organisations spend significant amounts of money on transformation programmes and change management in an attempt to create new ways of working, yet studies tell us up to, 60 - 70% of change programmes aren’t delivering on their planned benefits. So it’s understandable that as the pace of the business world increases, organisations can feel like they are constantly playing transformation catch-up – that’s why thinking of this issue from a capability development rather than “one-off” change project perspective makes sense.”

PwC and University of Melbourne will use the HVP Agility Model and continuing collaborative research to produce an Agility Index as a tool to confirm that agility generates greater shareholder returns. It will allow organisations to review their strengths and weaknesses, track improvement over time and correlate this with overall performance and shareholder returns.

"Most encouragingly, many of the executives we worked with in this study agree there will be enormous benefit in establishing a sound diagnostic to help organisations measure their own agility,” concludes Professor Sewell.
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