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The Corporate Agility Revolution: Get Loose or Lose

Flexibility. What’s it worth to your firm?

Try US$5 billion. That’s what General Motors’ (GM) originally wanted from Volkswagen (VW), alleging that Jose Ignacio Lopez stole file cabinets full of flexible designs before joining VW.

The GM-VW brouhaha marks the most manifest sign of flexibility’s very high market value.

“There is no alternative for becoming agile -- except competitive marginality,” explained high-profile business guru Stephen Goldman, founder and CEO of The Agility Forum.

In short, either you’re loose or you’re losing. That was certainly the urgent message coursing through the recent New Orleans gathering of The International Development Research Council (IDRC), long ranked as corporate real estate’s creme de la creme.

Making ‘Fixed’ Flexible

But what does real estate, a traditionally “fixed” corporate asset, have to do with being flexible?

Plenty. Real estate’s one-fourth of most firms’ total assets. And if one-fourth of your corporate being is immobile, your odds of being flexible are akin to Al Gore’s shot at winning a slam-dunk contest.

As noted futurist David Pearce Snyder told IDRC’s New Orleans gathering, “We are in a revolution in real estate.”

Already, the agility tsunami is battering manufacturing facilities, those erstwhile beacons of constancy long ruled by mass production methods dating from the late 19th century. That’s been blown to bits by niche-market needs, Goldman said.

“People don’t want standardized products anymore,” explained the author of Agile Competitors and Virtual Organizations.

“It’s the ‘sneakerization’ of products. It’s hard for kids to realize that sneakers were once cheap, general-purpose products. When you bought a sneaker, the clerk didn’t ask you, ‘Which game?’. . . Nike is marketing ‘ Street Hockey Shoes." ”

A Wealth of Agility Alternatives

Many companies are increasing flexibility by using team space, which also aligns the corporate workplace with today’s demands. “Teams are the new management system we’ll all use, including top management,” Snyder said.

Team space, though, was only the tip of New Orleans’ iceberg of agility alternatives. Myriad other workplace options profiled included “zones of flexibility” coupled with fixed corporate space (at Aetna, Corning Glass and Herman Miller); “universal” space plans (NDL, Roche, Shell and Sun Microsystems); modular standards (IBM); non-territorial work space (Arthur Andersen, Ernst & Young and IBM); home-based telework/“virtual office” schemes (American Express, Chiat Day, Travelers and VeriFone); multiple-use facilities (Ernst & Young) and even “movable caves” (Dupont).

But many key steps in seizing flexibility occur long before employees enter the space, explained William Sims, co-director of Cornell University’s International Workplace Studies Program: “A building’s characteristics -- shell, services, fit-out and furnishings -- greatly affect its ability to accommodate [and] even facilitate change.”

Plugged-In Partnering

Fixed-asset flexibility leans heavily on information technology. Bytes, not real estate’s bricks, must fuse corporate cohesiveness among increasingly dispersed full-timers and outsourced functions. Many U.S. firms, for example, are outsourcing key accounting and legal work to India’s huge pool of skilled, English-speaking professionals.

Suppliers, customers and other allied firms must also be electronically linked, making operational standardization critical. Even more critical is cooperation, “now the business strategy of first choice,” Goldman said. That cooperation is fueling the rapid proliferation of powerfully supple “virtual companies,” often cost- and risk-cutting alliances that speed product development and expand customer bases, markets, distribution channels and technological capacities.

“You can now access complimentary competencies without owning them,” Goldman said, citing inexpensive direct satellite TV systems, the most successful new consumer product in U.S. history, an RCA-Sony-Thomson Microelectronics joint venture.

More Metamorphosis in Services, Sites

Flexibility is also transforming the burgeoning service sector that constitutes at least two-thirds of all mature economies’ GDPs. In response, service industries are binding services with products.

“Today’s flexible factory will be tomorrow’s service factory,” Snyder explained. “The manufacturing company will be the office and the direct consumer contact,” a trend apparent in “one-hour” eyeglass manufacturer LensCrafters.

Radical change is also altering business location strategies. However, contrary to conventional wisdom, information technology hasn’t made locating anywhere advisable, explained La Jolla Institute President Steve PonTell: “Place does matter because quality and connectivity vary from place to place.”

“Smart cities” like Blacksburg, Va., California’s Silicon Valley, Kansas City, and San Diego will increasingly be locations of choice, PonTell contended. “But many local economic developers are not even engaged in the discussion. Their faces glaze over when you talk to them about it.” Their communities may “become ghost towns,” he cautioned.

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