BUSINESS

AGILITY
COURSE WORK - REPORT
HAN22080300
Table of Contents

Part A
Introduction 3
What is Business Agility 3
Key elements 3

Part B
Efficient Service Operation Management 6
Managing the Customer Expectation 8

References
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PART A
Introduction
Taylor (2012) stated that “unnerving and messy” are, possibly, characteristics of change. While
some entities are eliminated by this alteration, others depend on adaptability and flexibility to
exist. There is no exception for businesses. In order to endure in a turbulent environment, an
agile business should take human resource management, customer relationship management,
technological governance, management innovation, agile strategic management, and
alignment of vision into consideration.

Business Agility: Definition and Its Importance in Business

Business agility, in general, refers to the ability of an organization to respond and adapt to the
changing environment. Practically, agility motivates growth and efficiency among businesses.
Taking the case of Zoom as a typical example. This video online conference platform has
evolved quickly since the outbreak of COVID-19 to increase the number of users by 2900% and
earned over $1 billion in profit in 2021 (Iqbal, 2022).

Key elements
Human Resource Management
The first element contributing to the solidity of an organization comes from managing its
human resource. Karma (2019, quoted in Muduli, 2013) claimed that “The agile workforce is
seen to… grow a business in a competitive market of continuous and unanticipated
change”.Organizations should consider human resources as business partners and empower
them by executing the operation of “autonomous cross-functional teams” instead of over-
supervising the overall working system (Denning, 2018). Not only does this implementation
equip the company with the initiative in responding to timely changes (Jansson and Persson,
2020), but also connects organizations with potential creative and dedicated employees (Lee,
Willis & Tian, 2018).

Customer Relationship Management

Another element shaping business agility is customer relationship management. Apart from
customer retention, businesses should practice flexibility in de-selecting customers. This means
that the most catered group of customers is one whose potential can be optimized (Anderson &
Kerr, 2002). Otherwise, businesses are required to, eruditely, eliminate the group of customers
who can not offer value in the long run (ibid). In addition, the measurement of customer
lifetime value (CLV) is utilized in many organizations to minimize the costs of retaining
consumers and identify profitable customers (Johnston, Shulver, & Sack, 2020).

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Figure 5.4 Understanding the spread of CLV among a customer base can help focus on profitable customers
Source: Service Operations Management (Johnston, Shulver and Sack, 2020).

Management Innovation

The Innovation Stack

Source: Gary Hamel, The Future of Management, with Bill Breen (Boston: Havard Business School Press, 2007).

Most businesses emphasize barely fresh innovation of technology and product without
realizing how effectively the field of management could sharpen their competitiveness in a
such disruptive environment (Harbott, 2021). While it is completely easy for competitors of
Apple to produce similar touch-screen phones, not many organizations could follow the same
working practices of General Electric (the company is a pioneer in using disciplines to manage
its scientific discovery approach) and have the same results (ibid).

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Technological Governance
Technological governance is the critical factor orientating businesses towards agility.
Circumstances like “operations glitches, security and risk concerns or poor customer
experience” could accidentally happen if integration is activated at a fast pace. In contrast, in
the case of slow updates, companies could be immersed in oblivion (Culp, 2022). Donahue
(2020) reported that over half of companies on the Fortune 500 list underwent obsolescence
and numerous of those failed to keep the right pace with the digital evolution. To optimize
technological governance, businesses should focus on allocating resources and investment for
IT strategically, identifying what values technology delivers, and evaluating its performance
(Sá Couto, Lopes & Sousa, 2015, quoted in Read&Trites, 2004).

Agile Strategic Management

The methodology of Agile Strategic Management is more than just planning, its concept is the
constitution of “all level of management: strategic (top level), operational (tactical), and
project (action level)” (Lodato, 2014). Johnston, Shulver & Sack (2020) attached importance to
managing strategically and tactically because “undo button” is not available for business if their
main focus is shifted toward day-to-day operations. Strategic agility is described as an
“invaluable capability” which drives a business to respond quickly without risk of suffering from
“uncertain, volatile and rapidly changing environment” (Shams et al., 2021, quoted in Brueller
et al., 2014).

Alignment of Vision
Finally, using models of innovation in a continually changing business environment is attained,
or not, depending on the alignment of vision. Hoe (2007, quoted in Baker&Sikula, 1999) noted
that the motive of having a “shared vision” is to promote “a sense of purpose and direction”
among the organization’s members. The absence of a shared vision will result in a lack of
commitment, which means that employees are less likely to accompany the organization in
dealing with outcomes (ibid). Hence, it is crucial to clarify the overall objectives, directions,
and goals and nurture the culture of care in the workplace so that employees are reminded of
collaboration and hold initiatives in a fast-changing environment (Martin et al., 2014).

PART B
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1. Efficient Service Operation Management

From the DVD rental service to the top video streaming one with 223 million paid subscribers,
Netflix has proven its efficacy in managing the service operation regarding performance
objectives including cost, quality, speed, and flexibility.

Cost
Slow growth in the number of subscribers in the second quarter of 2022 has forced Netflix to
take prudent steps in managing its cost operation (Krouse & Toonkel, 2022). In the area of
cloud-computing science, the company takes initiatives in keeping stable costs spent on
“longtime cloud partner Amazon Web Service” until the number of global subscribers reaches
500 million (ibid).

Quality
As a world-leading company in the online streaming industry, Netflix utilizes the innovation of
machine learning to maintain its quality performance. Simplification, optimization, and multi-
functions are what technological advance offers to the operation of Netflix. To specify, this
machine learning model provides the company assistance in shaping the catalog of content,
encoding video and audio, measuring advertising expenses, indicating appropriate channel mix,
and promoting advertising creativity (Netflix, 2020). In addition, this innovative application also
demonstrates Netflix’s attempt at enhancing its function of personalizing recommendations,
therefore, helping the service of the organization meet its users’ touchpoints (Toh, 2018).

To further maintain quality, Netflix introduced three Quality Control (QC) systems (QC
Operations, Branded Content QC, and Localization QC) with the aim to enhancing customer
experience (Netflix- Partner Help Center, 2020).
QC Operations: identifying disruptive factors that would affect the streaming experience (ibid).

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 Content going through QC Operations Process
Source : Netflix- Partner Help Center, 2020.

Brand Content QC: Operate evaluation for content and “flag” inconsistencies generated in
specific programs (ibid).
Localization QC: checking and qualifying the quality of translation for subtitles (ibid).

Speed
To reach consumers globally, the streaming giant is required to deliver content at high speed.
Because of this, Netflix established collaboration with different ISPs (Internet Service
Providers) to assist consumers in accessing to Netflix network without having to transit through
third-party providers (EduBirdie, 2019). Hence, consumers from all over the world are able to
stream a new-released show at the same time with “little additional traffic on the Internet”
(About Netflix, n.d.).

Flexibility
The company entered the market as a DVD rental one, constant changes in technology and the
inclination of consumers drove Netflix to embark on the online streaming service. This
innovative transformation created a reputation for Netflix as the dominant in the video
streaming market (Jacobsmeyer, 2017). Flexibility is also inserted in the streaming experience
of users since they can enjoy their favourite content on any device and anywhere (Morgan,
2019).

The potential non-availability of licensed content has induced Netflix to shift its focus to
producing its own content instead of over-relying on movie-supplying studios (EduBirdie,
2019). According to Forbes, although Netflix spent up to $100 on Friends in 2019, there is no

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 guarantee that this series could exist on the platform forever (Trainer, 2019). Hence, this
flexibility has eliminated the risk of losing content faced by the streaming service (ibid).

2. Managing the Customer Expectation

Ojasalo (2001) emphasized the pivotal role of the alignment of customer expectations and
service performance in determining service quality and customer satisfaction. Throughout the
years, Netflix has applied the model of customer-centric and localization in managing customer
expectations.

Establishing Service Concept

EXPECTATIONS
Diversity of content
Novel exclusive program
Fast rate of content refreshing
Ease of use
Limited number of ads
SERVICE
Providing online streaming
content: TV show, movies,
films, original series.
SATISFACTION
PERCEPTIONS Continue to subscribe to Netflix
Evaluating and rating Recommend to friends
the content critically Become loyal customers

Conformance
SERVICE CONCEPT to specification
A subscription-based
streaming service that gives
users access to various online
licensed and original content

SPECIFICATION
Producing original content

Figure 6.21- Operational service quality – conformance to specification (Johnston, Shulver and Sack, 2020).
Source: Service Operations Management (Johnston, Shulver and Sack, 2020).

The first step in orientating expectations of consumers is establishing a clear picture of the
service concept in the mind of customers. Netflix has built a branding image as a subscription-
based streaming service that gives users access to various online licensed and original content.
From this, customers’ first impression of the platform as a streaming service and expectation of
enjoying content on internet-connected devices is basically formed. This foundation could be
described as the process of “translation” that works to create reconcilIation between
inconsistent perspectives and opinions (Johnston, Shulver, and Slack, 2020).

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Apart from Netflix, Amazon Prime, Hulu and Disney+ are other big names of video streaming
service industry. For this reason, there is a need for companies to consider the “differentiating
factor” emerging from meeting or even exceeding customers’ expectations (PWC, 2021).
Diversity of content, novel exclusive program, fast rate of content refreshing, ease of use, and a
limited number of ads are several typical aspects that customers could expect while using a
streaming platform (ibid).
Expectations- Primary influences

Ideal
Prices
More than acceptable
Alternatives available
Marketing
Word-of-mouth
Previous experience
Acceptable Zone of tolerance
Customers’mood/attitude
Confidence

Unacceptable

Intolerance
EXPECTATIONS

Figure 6.7 Expectations-primary influences (Johnston, Shulver and Sack, 2020).

Source: Service Operations Management (Johnston, Shulver and Sack, 2020).

What Netflix does to manage Customer Expectation?

In order to cater well for expectations of the customer, Netflix has resorted to the customer-
centric model which takes into account every interaction that the platform has with the
customer (Spillane, 2019). This model uses algorithm to analyse captured information regarding
what users watch, when the action of pausing is performed, and even the volume, colors and
momentary scenery in the chosen content of consumers. Those analysed data are then utilized
in the process of choosing engaging thumbnails and adjusting predictions for future
recommendations (Yu, 2020). Stepping forward to the advance of technology allows the
company to personalize customers’ experience and gain a better understanding about their
streaming behaviour. This application, ultimately, tailors the service to the expectations of
consumers (ibid).

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Additionally, as a global organization which serves audiences living in more than 190 nations,
Netflix put into practice the strategy of localization in responding to the expectations of
regional customers. In the third phase of global expansion, the streaming service attached
importance to including more languages on the platform. For instance, in 2016, Polish and
Turkey were the two newly added languages on Netflix. This addition included the application
to “user interface, subtitles and dubbing” (Brennan, 2018). Furthermore, with the belief that
local content does not only reach out locally, but also globally, Netflix invests in 17 content-
producing markets (ibid). This evolution, therefore, satisfy the customer expectation regarding
the widely cultural selection of content.

Word count: 1521

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