The Pitfalls of Balancing Agility with Control

by Matthew Murphy

According to Applegate, (Applegate, 2008) there are two common mistakes that are often made by executives when attempting to balance agility with control:

(1) failure to redesign or reengineer end-to-end processes; and
(2) failure to maintain alignment between ramped-up operations and the other aspects of the organization such as organizational structure, control, authority systems, incentives, and culture.

We see an example of these mistakes playing out in the Frito-Lay case described in the text. When Frito-Lay tried to accelerate the rate of new product development (in an attempt to increase the firm's agility in the market), suppliers were unable to meet the sudden increased demand, manufacturing defects increased, and inventory piled up (loss of operational control).  This was a result of management not considering the effects of the new agility measures on processes such as supply chain, manufacturing, and order fulfillment.  All of these elements would be required to accomodate to a faster cycled operation and increasing logistical complexity.  Frito-Lay's initial attempts were a failure because they viewed the organization in a hierarchical or siloed way and not as a set of integrated, horizontal operating processes.  They neglected to consider the process as an end-to-end process consisting of many integrated subprocesses; product development, manufactiuuring, supply chain and order fulfilmenmt all working in concert.

When they attempted to correct this mistake, they took the time to integrate their new product development process with their supply chain, manufacturing, and order fulfillment processes. In so doing, they were able to identify and eliminate bottlenecks in production and reduce waste throughout the process in the form of excess time or costs.  However, they failed again by making the second common mistake.  This time they neglected to redesign the organization and management systems needed to control these accelerated processes.  This created a misalignment between the new streamlined and integrated processes and existing structures such as control, authority systems, and incentives. As a result of this oversight, the business intelligence and decision support structures were insufficient for the new operational tempo and created a new set of problems, oversights, and delays.

In this case, we have seen how Frito-Lay executives made both of the common mistakes associated with attempts to balance agility with control.