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Develop Agility That Outlasts the Pandemic

There’s nothing like a crisis to ignite innovation.

Today, many companies seem to be discovering agile on the fly. Executives tell us that the innovations their companies are creating weren’t part of a strategic plan. Typically, a small group of people spotted an urgent need, dropped lower-priority activities and broke typical bureaucratic procedures. Sounds a lot like agile to us. Another sign of today’s agility: a rapid increase in many companies’ metabolic rate.

Take note, though: This spur-of-the-moment agility is fragile. And when the emergency fades, people typically return to traditional command-and-control innovation until the next crisis arises, when they must reinvent agile approaches all over again. So how can companies maintain their agility once the crisis is over? Here are the keys:

— INCREASE THE SPEED OF INNOVATIONS: During crises, executives often marvel at how innovation in their organizations accelerates. Agile enterprises focus on speed during normal times as well. One common measure is how much time elapses between the identification of a problem or opportunity and the delivery of an innovative solution.

Tracking response times can lead to surprising insights. The time it takes an agile team to release an innovation is determined by two factors: the time required to work on the innovation and the time spent waiting on others. One way to reduce wait times is to break big, lengthy programs into smaller batches with rapid feedback loops. Breaking a long, monolithic planning and budgeting process into quarterly sprints minimizes wait times and increases flow efficiency.

— RESET THE BALANCE BETWEEN STANDARD OPERATIONS AND INNOVATION: To sustain success in dynamic environments, companies must balance two vital activities. They must run the business reliably and efficiently, and they must change the business rapidly and effectively. Too little focus on innovation leads to a static enterprise that will fail to adapt. Too little emphasis on operations leads to poor quality, high costs, and dangerous risks to customers and to the business.

The current pandemic is surely the worst calamity most business leaders have seen, but it is hardly unique. An agile business system can help companies create the innovations they will need to survive in these uncertain times.

(Darrell K. Rigby is a partner in the Boston office of Bain & Company. Sarah Elk is a partner in Bain & Company’s Chicago office and heads its global operating model practice. Steve Berez is a partner in Bain & Company’s Boston office and a founder of its enterprise technology practice.)

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The Key to Successful Succession Planning for Family Businesses

By Will Tabor and James Vardaman

The succession process is one of the biggest challenges facing family firms, as most fail to remain a family business past the second generation. Among those that do succeed, a key concern is how nonfamily personnel will receive a successor.

We reviewed more than 30 years’ research on nonfamily employees in family businesses, and the findings suggest that contrary to conventional wisdom, the solution is not to discard family succession altogether. Our research actually finds that nonfamily employees often prefer family successors to nonfamily outsiders. The studies we reviewed highlight clear communication, strong relational bonds and proven successor fitness as keys to an effective succession process.

We identified three primary ways family firms can secure nonfamily support:

— FOSTER FAMILIARITY: The best succession handoffs are often years in the making, giving employees time to prepare for this transition. In fact, upfront conversations about the family’s succession intentions should be had before firms hire nonfamily employees. Familiarity breeds trust and cooperation as employees need time to become comfortable with a successor. The relational capital created between the successor and employees from these interactions can be pivotal.

— RAISE THE BAR: Nonfamily employees often sense that family members have less accountability or responsibility than they do. To counter the adverse effects of such perceptions, aspiring successors should demonstrate competence and model accountability. Credentials such as education or outside experience can assuage nonfamily employee fears that the successor is simply the product of nepotism.

— BRING THEM IN: For many family firms, responsibilities for training the next generation fall squarely on the family leader. This practice misses a key opportunity to gain nonfamily employee buy-in. Future successors displaying humility and a willingness to learn from seasoned employees can deepen the commitment of nonfamily members, earning their trust and respect.

By clearly communicating family succession intentions, developing strong relational bonds and proving the fitness of next generation leaders, family firms can achieve buy-in from their nonfamily employees.

(Will Tabor is an assistant professor at Belhaven University. James Vardaman is an associate professor at Mississippi State University.)

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