March 17, 2010
Winning in the "March Madness" of Business
Our picks for the 2010 NCAA March Madness tournament are in; we see parallels between the ever-changing dynamics of the business of basketball on the court and the ever-changing dynamics of an increasingly competitive environment for our companies. In essence, all organizations are engaged in a March Madness tournament of sorts. Just as basketball players must decide on the fly whether to pass the ball or take it to the hoop, businesses must be able to nimbly shift between conservative and aggressive tactics in response to rapid changes in their competitive environment.
One model for accomplishing this higher-level competitive responsiveness is the “Agile Enterprise,” as outlined by Michael Hugos of Center for Systems Innovation in a recent blog post on CIO.com. In contrast to the traditional, slow-moving, bottleneck-prone hierarchical structure of a corporation, Hugos relates that the business unit network organization structure and decentralized decision-making of an agile enterprise are key to managing our fast-paced business climate. A critical underlying element for successful operation of this model is thorough training that sets up trust in business units to choose appropriate actions. Hugos emphasizes that this training must include companywide “financial fluency” in areas such as balance sheets, income statements, and breakeven analysis in order to orient all staff decision-making around achieving higher profitability.
In order to stay alive in the March Madness tournament, NCAA coaches and players will need to make proactive game-by-game, play-by-play shifts in competitive strategies and on-court actions. In a similar manner, a winning agile enterprise is comprised of departments that coordinate with each other, yet independently make effective decisions in the vein of positioning for an optimal three-point play or driving through a brief opening in heavy traffic on the way to a hard-fought lay-up.
Consulting firm Challenger, Gray & Christmas Inc. computed that employers had the potential to lose as much as $1.8 billion in the first week of the NCAA tournament as employees focus on pool results during work hours. The successful transfer of the ways of basketball onto the court of business could turn a $1.8 billion loss into an exceptional return on investment for our organizations.