A Case Study On How Investing In Agility Can Lead To Shareholder Value

A Case Study On How Investing In Agility Can Lead To Shareholder Value

By Flux7 Labs
June 25, 2020

According to an old saying, “luck is what happens when preparation meets opportunity.” And while no one likes to think of a pandemic as an opportunity, one company, Zoom, appears to have prepared for a moment like this where it has the opportunity to scale to meet the demand of a user base that grew 67% in Q1 2020, according to the New Statesman. In fact, Zoom’s preparation has positioned it to become the second-most downloaded app in the world, with more than 50 million downloads from the Google Store alone. What makes Zoom unique in this situation is the speed at which it reacted to changing market circumstances. I’ve written about the need for business agility in a VUCA (volatile, uncertain, complex, and ambiguous) world and how agility must permeate technology, culture and business processes. Zoom is a business case study in proactively embracing agility across business disciplines to position for opportunities when they arise.

Agility And The OODA Loop

The OODA loop (observe-orient-decide-act) was pioneered by John Boyd in the Korean War. As a military strategist and colonel in the Air Force, he applied the OODA loop to react as quickly as possible to fast-changing circumstances on the battlefield. Today’s marketplace is changing just as quickly, with uncertainty and ambiguity around every corner. As a result, the OODA loop provides a useful model that, when applied and followed, allows companies to react quickly — and smartly — to shifting market situations.

When others are still penciling out strategy, those who are able to marry the OODA loop with proactive preparation are able to hit the ground running. For its part, Zoom quickly observed how it could help people — whether students suddenly learning from home, employees now working remotely or conferences moving to a virtual format. Using its values (“We care for our company, customers, community, teammates, and ourselves”) to publicly orient itself, it quickly decided on an approach and acted.

Zoom acted by lifting the time limit for free users in China as well as schools and universities in the U.S. (upon request), giving them unlimited time to collaborate. It also provided informational sessions and on-demand resources so anyone could learn how to use the tool, helping people get up and running quickly.

Business Agility And Preparation

Stockholders tangibly benefited, with the company’s stock surging 117% last quarter. Zoom’s quick action drove this outcome, as evidenced across business disciplines. For example, the marketing team quickly announced the company’s new policies and created supporting blogs on topics like managing a remote workforce and how to prepare for changes to the way a company works during the outbreak.

While Zoom says it is proactively monitoring servers to ensure reliability and uptime, as a cloud-based business, it already laid the groundwork to maximize availability, noting that it has a very flexible architecture with auto-scaling servers. Business development, for its part, had forged integrations with tools like Dropbox and Slack that encourage seamless collaboration across best-of-breed services.

The company reported in its most recent earnings call that within days of the impact of the coronavirus becoming clear, it “added a lot of capacity and really focus[ed] on the products first.” This enabled the usage to accelerate, and it did — not just in China but across APAC and into Europe as well. Finance quickly judged the financial impact of significant customer growth, reporting to investors that it would make it more expensive for the company to do business.

Zoom has recently received several inquiries into its security practices. These inquiries are currently being worked through, yet I don’t think they take away from the lessons to be learned from the level of preparation the company has clearly put into action.

Fundamentally, Zoom’s story proves the case of the importance of business agility. While it’s not the only video conferencing outfit to experience an uptick in business at this time, not all market players were able to react as quickly.

Cloud technology and other advanced preparations combined with the OODA loop help organizations achieve a key goal: effectively and efficiently navigate a changing environment, orienting and reacting with customer and business objectives in mind. In today’s environment, that has translated into 88% revenue growth for Zoom and with it, significant shareholder value.

I believe the ability to run the OODA loop is what makes an organization successful.

O: Observe.

Whether you are watching market dynamics, competition, or something else, it is important in this phase to simply observe. Spend less time building conviction and more time building hypotheses by asking questions. Observation can help you avoid pursuing rat holes and stay focused on solutions that address what is happening in the market.

O: Orient.

Determine which observations are important and which are not. Start to make sense of your observations by deciding how they relate and what they mean to your business, its mission, goals, etc.

D: Decide.

Decide on a new course of action based on your observations and orientation. Experimentation helps move through the OODA loop by testing hypotheses that allow you to decide and act quickly.

A: Act.

Rapidly execute on your determined course of action — and get ready to begin the loop again, going back to observe the impact of your actions. The better you get at this self-repeating loop, the greater advantage you’ll gain.

The COVID-19 pandemic is just the latest example of how business is affected by continuous levels of volatility, uncertainty, complexity, and ambiguity. When properly prepared to observe, orient, decide and act, an organization will be able to maximize its business outcomes and value to its shareholders regardless of the nature of the challenge or opportunity.

This article originally appeared on Forbes.

Written by Flux7 Labs

Flux7, an NTT DATA Company, is the only Sherpa on the DevOps journey that assesses, designs, and teaches while implementing a holistic solution for its enterprise customers, thus giving its clients the skills needed to manage and expand on the technology moving forward. Not a reseller or an MSP, Flux7 recommendations are 100% focused on customer requirements and creating the most efficient infrastructure possible that automates operations, streamlines and enhances development, and supports specific business goals.