Nimbleness is Necessary

This is a common theme I hear all the time, and one that runs directly counter to the structure of most companies: it’s all about nimbleness.

tony-hsieh-is-zappos-ceoI’ve spent the past few days at the Silverpop Summit in Atlanta and two of the keynotes touched on this theme. Tony Hsieh from Zappos talked about how nimble their business model has been, literally redefining their core purpose 4 or 5 times in the past decade. Yes, through that time, they’ve always sold shoes, but that only really defined Zappos in the first few years of business. Since then, they’ve focused on customer service, then on HR, then on culture, and most recently, on happiness. Shoes are incidental. The evolution of the core philosophy of Zappos has been extraordinarily swift by the standards of most companies.

Then, today, Charlene Li gave us a peak at some of the central tenants of her new book, Open Leadership. Again, it’s all about creating a revolutionary managerial framework that takes advantage of more touch points with customers, faster communication lines, the ability to tap into social communities and a leadership approach that can quickly recognize and seize on opportunities, as well as identify and mitigate failures.

But it’s all about speed and the ability to change (or at least, adjust) directions quickly. It’s as if Darwin is teaching an MBA course.

This got me to wondering. It seems that when we look at the best examples of nimbleness, they’re all online companies. Amazon, Zappos, Saleforce – to name just a few. Why is this? Why can’t traditional companies compete with their online cousins when it comes to doing things quickly?

Well, I think there are a few reasons.

It’s all about the Environment

Darwinian change is driven by the environment. The more dynamic and hostile the environment, the faster the change. Nothing changes faster than online. We call it Internet Speed. Entire new business models are built from the ground up in months. And outmoded ones fade away just as quickly. If you’re slow to move in the traditional world, you’ve got plenty of company. But slow to move equals death online. It’s simply not an option.

Closer to the Customer

Online businesses live closer to the customer. They handle the customer service calls, sales, fulfillment and all aspects of the client relationship. There are no middle men clogging up the pipeline between management and the customer. Technology allows online companies to collapse distribution into a much flatter model than is found in the online world. And that means the distance between a customer and the CEO is much shorter, especially if you have a CEO that makes it a point to reach out consistently, like Hsieh at Zappos. This shorter feedback loop makes for much faster change cycles.

Flatter Organizations

Most online companies don’t have a very long corporate history. They are younger companies started by younger founders. And most of the online plays I know started with a determination to do things differently. They’re run in a much more open and transparent manner. Management tends to value culture and communication more than is typical (or possible) in the multi-layered multinational. Communications lines are shorter and more effective. And because they’re new and built on a more efficient model, they tend to be smaller as well.

Less Baggage to Carry

Finally, things that don’t work can be jettisoned much quicker online. If you launch a new site and it doesn’t work, it simply goes dark and everybody gets on with their online lives. There is no chain of empty locations across the country with for lease signs in the window. Online plays don’t have to keep resource sucking bricks and mortar locations afloat. It’s faster to invest in new opportunities online and faster to cut your losses if they don’t work.

If the corporate world now spins on the axis of nimbleness, I suspect it’s going to be hard for traditional companies to keep up with their online competition. Things are just moving too fast to keep pace, given all the odds stacked against them. In the next act of corporate evolution, I think I would have to cast the Multinationals as the dinosaurs and the online players as the mammals.

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