July 8, 2015

Business Agility, Ok But, What Is That Agility?

Our topic is soccer, the 2013-2014 season’s Spanish Primary Division. Do you remember who finished the season first? Barcelona? Real Madrid?

As of 2014, Barcelona is the second most valuable soccer team with its 22 wins in the Spanish Primary Division, 4 championships in the UEFA Champions League, and with a worth of 3.2 billion American dollars [1]. As of 2014, Real Madrid is the most valuable soccer team with its 32 wins in the Spanish primary division, 10 championships in the UEFA Champions League, and a total worth of 3.44 billion American dollars [2]. However, it was neither of these two teams who finished the 2013-2014 Spanish Primary Division first. The champion was Atletico Madrid, with only 9 championships in the Spanish Primary Division and worth only 328 million American dollars as of 2014 [3], the world’s 17th most valuable soccer team.

Looking at only the numbers, what was it that allowed Atletico Madrid, which has around one tenth the worth of Real Madrid with its team of super stars, to reach the championship? The secret to Atletico Madrid’s success was, as all authorities are saying, the fact that they have a stronger team spirit compared to their competitors. Atletico Madrid, despite its comparative disadvantages, was able to overcome the championship challenge due to the team understanding that it had created.

Are we bored of soccer? All right. Let us look at a more colorful area, the clothing industry. According to Galin Zhelyazkov’s study “Agile Supply Chain: Zara’s Case Study Analysis” [4], in the clothing industry, an average international brand puts out new designs every four months. Looking at this situation, we can say that the average market entry speed in the fast clothing industry is around four months and more. On the other hand, the situation is very different for Zara, who is the world’s leading and number one fast clothing brand. According to the same study, for Zara, placing a new product (its fast fashion products, excluding the classic products) on the market in its stores around the world takes about a week. Yes, you did not read that wrong, Zara introduces its new design products to the market at a speed 16 times that of the sector average. For example, following the 9/11 in the US, clothing sales went through a serious decline. Zara, at this time, speedily created a black clothing line and transferred all of its production to this side and placed this new series in the showcases of the US in two weeks, increasing its sales considerably during a time when the entire sector was experiencing a sales decline [5].

If we are to continue with the Zara example, we will also speak of Zara as a brand that includes its customers in its processes, that listens to its customers very well and that takes shape accordingly. Zara is a brand that leads its clothing design team by examining daily sales numbers in its stores. For example, seeing that there is an increase in the sale of checkered models according to the sales numbers, Zara immediately designs and produces similar alternatives to these products and sends them to its stores worldwide in the same week.

Since we’re now on the topic of new products, meaning innovation, let us continue with an interesting example. Now, our subject is photography and the cosmetics market. What relationship could there be between these two sectors? Lets take a look.

In the 1980s and 1990s, Kodak was the leading photography film producer. The Japanese company Fujifilm followed Kodak, an American company. However, with the digital photography revolution in the beginning of the 2000s, the photography film industry took a serious hit and in a period of ten years almost completely disappeared. Well, with this serious change in the market, what do you think happened to Kodak and Fujifilm? While Kodak declared bankruptcy a few years back, Fujifilm’s brand continued to gain value. But, how? Both companies were aware in the 1980s that digital photography was the future. Steven Sasson, the inventor of digital photography technology, was actually an engineer working at Kodak. Kodak opted to invest in the digital camera area, but took an unexpectedly hard hit with the developments in the smart phone market. Alongside this, Fujifilm anticipated the risks in the market and focused its power and energy on the creation of new working areas. In this way, Fujifilm entered different sectors. One of these was the cosmetics market. Noticing that the human skin was similar to thin photography film, Fujifilm discovered that the oxidation control mechanisms it had developed in order to protect photography film could also be used as an aging preventative for human skin. In this way, by creating the cosmetic brand Astalift, it stepped into a completely new area in 2007. This cosmetic brand created by Fujifilm has now, with a majority in far eastern markets, reached a leading position in the market [6].

With the success stories above, we have actually tried to describe Agility. As can be seen from these examples, Agility, or to be Agile, comes from:


  • Being a good team like Atletico Madrid was in the 2013-2014 season,

  • Speedily and continually presenting new products to the market like Zara’s 16 times faster than the sector average speed,

  • Listening to customers, as Zara does through the mediation of its sales numbers, and to include customers in the process by listening to them, and

  • As Fujifilm did by creating an important brand in the cosmetic market, doing the unexpected and adapting to change, and even leading change.



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When speaking of listening to customers and including them in the processes, we mentioned Zara considering the sales numbers it receives from its stores all over the world and developing products accordingly. For many of us, the adages of ‘the customer is always right’, ‘we must listen to the customer’, etc., sound completely natural. However, are we really focused on the customer? Aside from the elements of agility that we have mentioned (being a team, continually introducing products to the market, and leading change), the meaning of being customer-focused must be emphasized again. For this, it will be good to speak about the “Wow Philosophy” of Zappos.com, which Amazon.com bought for 1.2 billion American dollars in 2009.

Zappos.com was an e-commerce company formed towards the end of the 1990s and whose majority turnover came from shoe sales. Zappos.com’s motto is based on differentiation through presenting a superior service experience to their customers. It expresses this viewpoint succinctly with the “Wow Philosophy”, meaning to surprise their customers through a superior and good quality understanding of service.

One of the strategies and cases applied by Zappos.com in order to increase customer satisfaction is its applications in customer service. The company encourages its customer service employees to move away from a classical understanding and from being sales-oriented and rather to focus on establishing a close and personal relationship with their customers. For this reason, Zappos.com does not use standard sentences in its customer service; it also does not have the aim and motivation of ending its phone conversations quickly. As is well-known, customer service creates serious costs for companies. For this reason, many studies have been done in order to shorten call time. Quite contrary to this situation, Zappos.com regards the phone conversations done with customers not as a cost to be reduced but as an opportunity to strengthen relationships with customers. In fact, there was a recorded conversation of 10 hours 29 minutes in Zappos.com, the longest phone call ever!

At this point, turn around and look at your company and consider, do you actually listen to your customers and communicate with them? Are your customers right, or are you simply continuing to do things as you know it while simply mouthing at them that they are right?

To be Agile, the first step is to really listen to your customers. This can start with a simple step such as calling your regular and loyal customers and thanking them for their business with you. It’s worth a try, don’t you think?

Note: This has been written as part of the book project “The DNA Of Agile Management”, which is being written through an Agile perspective. For detailed information on the book please see: https://www.linkedin.com/pulse/dna-agile-management-mehmet-yitmen?trk=prof-post

 

[[1]] http://www.forbes.com/pictures/mlm45fdmhj/2-barcelona/

[[2]] http://www.forbes.com/pictures/mlm45fdmhj/1-real-madrid-6/

[[3]] http://www.forbes.com/pictures/mlm45fdmhj/17-atletico-de-madrid/

[[4]] Galin Zhelyazkov (2011). Agile Supply Chain: Zara’s Case Study Analysis. Strathclyde University of Glasgow

[[5]] John T. Mentzer, Matthew B. Myers, Theodore P. Stank (2007). Handbook of Global Supply Chain Management.

[[6]] http://www.forbes.com/sites/amymorin/2014/04/07/unleashyourpotential