Out of touch with external trends: a reflection on Ansett

• Phase three in when an organisations is noted to be in a state of flux. At Ansett this meant that the threat of competition from Virgin and other low-cost carriers was still being ignored. The forced grounding of Ansett’s entire Boeing 767 fleet, combined with the distraction of finding ways to restructure and reduce costs, left the company seriously short of cash to the tune of $1.3m a day in lost revenue.

• Phase four sees organisations experiencing strategic drift make a dramatic move to restructure, or risk facing the inevitability of takeover or collapse. Ansett was now assessing drastic options for survival associated with a dramatic (revolutionary) transformational change. But as observers noted at the time its parent company, Air New Zealand, “simply didn’t have the resources to hold it up”. Just as major cost-reduction measures were being implemented, it became apparent that adequate levels of revenue could not be maintained. The entire fleet was grounded. The fight for survival at Ansett was lost.

Had Ansett executive’s adhered to a philosophy of strategic agility instead of the trap of a strategic drift, things might have been different for the airline.

What is strategic agility?

Strategic agility is representative of a management mindset that leads a business towards a state of transformation and reinvention as opposed to decline and extinction.

The identification of the construct of strategic agility can be attributed to academics Yves Doz and Mikko Kosonen, who studied nine successful high technology firms to assess how management teams succeeded in transforming organisations. The need to do so, they suggested, was because of their view that firms fail, not because they do something wrong, but because they keep doing what used to be the right thing for too long and fall victim to the rigidity of their prevailing business model.

The three vectors of strategic agility have nothing to do with strategy process, but are rather a state of leadership, and mind. They are:

• Strategic sensitivity – the ability to mount proactive and reactive responses to changes in the business environment.

• Leadership unity – the capacity for the executive team to make short, sharp, responsive decisions without being bogged down in bureaucracy.

• Resource fluidity – the internal capability to reconfigure and redeploy resources rapidly and effectively.

Organisations that participated in Doz and Kosonen’s research were high technology companies such as SAP, Intel, Kone and Cisco. Characteristics of strategic agility include: the operation of an ‘open’ (visible) strategy process; heightened strategic alertness (at executive level); high quality internal dialogue; mutual dependency (among the executive team); and an ‘adaptive’ (inclusive) leadership style.

But none of these can be conducted in isolation. In order to be successful the enactment of all three vectors of strategic agility is essential.

As Doz and Kosonen wrote in Strategy magazine in March 2008: “Being good at one, or even two, or working hard to rebuild selectively some capabilities and not others, will not help much. It may even lead you to a dead end.”