Potentials and Barriers of Agility in Small and Medi-um Sized Enterprises
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Transcript: English(auto-generated)
00:00
give the introduction and welcome everybody to our presentation on the potentials and barriers of agility. This research project is mainly conducted by my colleague, Professor Joachim Büchler and our PhD student Raphael Kein. Michael Presley is also attending
00:30
today. Now the presentation and me, we are strongly involved in the empirical process and in the interviews. So my agenda today is, my agenda comprises five sections.
00:57
Starting with introduction, I proceed with a theoretical framework, then I would like to give
01:05
our insights into the research design with the methodology and of course then the empirical findings and we finish with the conclusion and a discussion. When we talk about
01:29
barriers and opportunities of agility, we have to think about external disruptions. We are living in a world of external disruptions and there we have the new wording, WUCA world,
01:49
and the WUCA world stands for volatility, uncertainty, complexity and ambiguity.
02:02
There are in almost all industry sectors regarding capabilities, regarding resources and external financial access and to investigate these challenges, we try to build a model
02:28
on the potentials and barriers of agility, especially with focus on small and medium-sized enterprises. We started or our idea was to start with a qualitative research design
02:46
with an inductive theory building and there we investigated the role of digitization in the context of agile small and medium-sized enterprises. Our main research question is
03:04
about external drivers and internal drivers of agility. What is important for the potential of agility from the external side, from the internal? Coming to our theoretical framework,
03:27
the concept of agility and ambidexterity is in the center of our research. Agility is often described as a way to cope with dynamic challenges and they thereby not
03:43
losing one's competitive edge in the WUCA world. The concept of agility itself dates back into the 60s and centers primarily around the ability of the manufacturing industry
04:03
and its processes. Here we can state for agility that we are talking today about a generous landscape of research in general, then agility is a key prerequisite as well as a
04:26
consequence of digitization and agility is an expression of the independence and the interplay of sensing and responding abilities. The discussion about agility is quite often
04:47
combined with financial risk and loss of efficiency. The aim or the objective of our research is the examination of specific boundary conditions, challenges and benefits
05:05
of organizational agility as a result of digitization in small and medium-sized enterprises. What about small and medium-sized enterprises when we talk about small and medium-sized enterprises? There are just a few articles published about agility in the context
05:33
of SMEs. Of course there's a lot of
05:40
publication available on the term agility but just a few on SMEs. SMEs are in general lean and have some agility, an agile approach within our lean or smart organization.
06:03
Because they have informal structures. As mentioned before, especially with SMEs, we are talking about limitation of resources. Then we can find quite often hierarchical
06:21
style of leadership which is different from an agile mindset. And last but not least, very important, especially in Germany, but I think also it becomes more important also for other countries in Europe. SMEs comprise 99% of all companies in Germany and almost 60%
06:50
of the workforce. I have also a number for the European Union. In the European Union, even 66% of the workforce are in the sector small and medium-sized enterprises.
07:08
There are some common topics when we talk about SMEs. In German, the word or the wording Mittelstand is very popular. Another wording in a global perspective is hidden
07:23
champions. When we talk about SMEs and quite often we can read or we can see in publications that SMEs are the backbone of many economies. To examine our objective, our aim, we
07:42
decided to roll out our qualitative design, qualitative expert interviews in SMEs from the manufacturing sector. Because the manufacturing sector has a couple of issues on agility and furthermore in our area in southwest Germany, it's easier to
08:13
contact companies from the manufacturing sector than other sectors like service,
08:20
transportation, etc. We focused on individuals or experts from a broad spectrum working in different functions in different industries who are exposed to agility, ambidexterity or other topics relevant for our study. We did 22
08:46
semi-structured interviews conducted mainly at the beginning of 2020. We interviewed 20 different departments from 12 different organizations.
09:06
We collected data from people in various roles, so CEO but also people who are responsible for IT. Very important, we used narrative interview style. Here you can see the interview guide
09:28
with the different sections in our qualitative interviews. One section was of course about basic information, demographics, etc. The second section was the main section of our qualitative
09:45
interview. There we asked about the level of agility in the company of the expert and in three and four we asked about further opportunities to reflect further opportunities
10:01
and to talk about other aspects or issues of the choice of the expert. The
10:21
interviews in the original language, mainly in German, but I think there was also an expert who talked in English. Here you can see on this slide
10:45
the list of our interviewees. You see we addressed our interviews on the CEOs but also on heads of logistics, IT management, IT project management. Very important in this sector is
11:07
mechanical engineering and paper industry. The number of employees in our companies was in the range between 100 with one exception. I know that's the first data set and 800 but
11:30
mainly in the range of 100 to 800. For analyzing the data, we used grounded theory
11:45
approach. Therefore, we applied first open coding, then axial coding and lastly a selective coding for getting our conceptual model. We identified keywords in the interviews,
12:06
we searched for similarities in the interviews and the calls were grouped into categories to transition from a descriptive to a conceptual level. The interviews were
12:22
transcribed and we used the software tool MaxQDA. Furthermore, we constantly compared different paths within and across the interviews to ensure consistency.
12:42
All right. Here you can see an example of our coding procedure. Just to give you an example for the codes, digital technologies and data security,
13:06
they have been merged into a first order category called ongoing digitization. This one was also merged with increasing speed of change. Finally, we identified external
13:27
driving factors of agility. During the analyzing the data, theoretical memos were written which helped to cycle back and forth between literature and collected data to ensure validity.
13:51
Okay, coming to our conceptual model. Subsequently in the selective coding phase,
14:02
relationships and connections between the categories have been analyzed, summarized and visualized. That was the result of our analyzing process. I'm going to explain now the
14:21
factors and the determinants more detailed in the next slide. Starting with internal factors, we identified opportunities, we called identified agility
14:41
providers. We identified also barriers of agility in small and medium-sized enterprise. Here you can see examples from experts. We gave them idioms or specific names. One expert is called electro, the other one is called trait. We identified three types
15:07
of agility providers, leaders, employees and digital transformation. Leadership style is shifting from control to mentoring and coaching. Employees are empowered through agility
15:26
to achieve the coming goal in their own way and digital technologies are sustaining the opportunity to a flexible and agile working environment. When we talk about barriers,
15:44
we talk about managers need to understand leadership, not as a control rather than a mutual trusting relationship. And we talk about hierarchy is one of the biggest obstacles
16:00
in companies. And finally, we talk about ownership and resources endowment, which hinder agile transformation. OK, so here we can see external driving factors, moderating factors, and finally
16:26
the resulting potentials provided by agility. External factors are digitization, of course, itself. It's a key driver to increase efficiency.
16:47
Then another external driver is changing market conditions, which forces organizations to be agile and to respond faster. And norms and regulations
17:01
are also external driver, which inhibit quick and efficient execution. Here are moderating factors you can see. There we talk about department size, about the influence and size also, of course, of the IT department.
17:22
Departments with many routines have little potential for creativity and flexibility. The working relationship between agile, non-agile working teams need to be monitored very closely.
17:40
So when we balance the opportunities based on agility providers and the barriers of agility, especially in small and medium sized enterprises, when we include also external driving factors, we come to the potentials provided by agility. Agility offers potentials
18:06
in responsiveness, speed, flexibility, and competences. Customer feedback can be implemented
18:20
at a faster rate. And agility enables to reduce complexity, especially in our examples in modern manufacturing facilities. And in general, agility gives the potential to increase
18:41
inspiration and creativity. And finally, of course, we have a positive effect on the firm performance or if the effect of agility providers in combination with external driving
19:03
factors is bigger than the barriers of agility. Okay. Of course, we have to identify more variables on this model. And that brings me to the implications
19:22
and to the limitations. We identified further implications based on this conceptual model. We identified that German SMEs already demonstrate agile working practice in many cases.
19:42
Specific barriers in SMEs can be mainly attributed to resource constraints or hierarchical structures and traditional leadership styles. Often, agile working practices are used in an unstructured way and even unconscious
20:03
without explicit associations with agility. Empowerment of employees is a key factor which often requires a reassessment of leaders' own leadership style.
20:23
And service companies, that was a kind of side effect, are considerably further advanced in the usage of agile methods than those with a manufacturing background. We investigated mainly. Coming to future research, I think interesting might be to
20:48
identify new approaches for bridging the gap between agile and non-agile departments or business units in the manufacturing industry, but also in other industry sectors.
21:03
And I think it's a good question or a good research frame for further studies
21:21
with a quantitative approach. Yeah, quantitative approach means that we can use maybe the conceptual model from our qualitative empirical research and to go more into details and identify more factors. And of course, using a larger sample of experts and people from industry
21:51
who are responsible for agile management. Yeah, other designs might be also an option
22:02
for further research. For instance, a cross-sectional study or a study with a longer time frame which allows us to consider the dynamics of agility and which allows us also to
22:31
investigate different contexts. Okay, that's it for now. That was my conclusion. Thank you very much and I'm open for questions.