We’ve been doing business the same way for so many decades; it’s hard to imagine other ways to achieve success. Work hard, make big profits, and always get better at what you do. These are the mantras we’ve all heard – and still share.
Conversations about reimagining business quickly point toward automation as the way to make things faster and more efficient. But, is it working? Only a few can say yes. Others have not survived.
*The quote, often attributed to Darwin, was actually spoken by an LSU business professor, Leon C. Megginson, to outline his interpretation of Darwin’s “On the Origin of Species”. http://quoteinvestigator.com/tag/leon-c-megginson/
In just two generations (60 years), over 90% of Fortune 500 companies have dropped off this distinguished list. In 2015, 26 companies (that’s 5%) disappeared from the list. In 2016, ten companies fell from 101 to 253 ranking places.
The reason so many have disappeared is that unexpected changes upset old business models and industries. Think of the impact of Uber on the long-standing, tried-and-true, market-proven taxi model! Music, retail, travel, and publishing have also been upended. The lesson is obvious. If you want to stay in business for the long haul, you have to be inherently capable of adjusting how you work as conditions, environments, and circumstances change. You must become adaptive. In this author’s opinion, becoming adaptive is the single most valuable new asset a leadership team can provide its shareholders, employees, and customers. It’s a matter of survival.
Imagining your organization as an adaptive enterprise is a valuable exercise. Just think about how your business could be better if some of its parts could adapt more readily.
What if you could build your product closer to the point of use? You could save (permanently) on shipping, manufacturing, and on customization. Build-a-Bear Workshop makes its products right inside the store and even lets its customers help.
What if instead of hiring three different companies to transcribe, edit, and post your next blog to your website, you could hire one company? You could manage fewer vendors, have a simpler process, and save on internal project management. Rev.com does that in 12-24 hours by breaking each job into parts and coordinating a global network of on-demand specialists to do in parallel what used to happen sequentially.
What if you could make it easier for your customers to order your products? You could sell more, enjoy more customer loyalty, better manage your supply chain, and pay less for advertising as your customers become habituated to working with you. Amazon.com started doing that with its website. Then it added apps for smartphones.
Each of these examples of adaptive enterprises is real, works, and is profitable. Two distinguishing features make them possible in this author’s opinion:
- Visionary leaders capable of shaping operations and culture around adaptive principles
- Information systems that are easy to change as needs change
Leaders of Adaptive Enterprises know how to blend these six essential principles into their business models, into their teams’ consciousness, and into practice:
- Dedicate the organization to providing customer benefit
- Organize the business as a set of capabilities based on system design principles
- Allow customers to specify the consequences of taking personal accountability – or not – at the point of use
- Scan the environment, continuously, for changes – and act on their meaning
- Supply up-to-date information to each vital role in the (business) system
- Strive to reduce ambiguity about accountabilities
So how do you reimagine your business as an Adaptive Enterprise? One important aspect I want to focus on here is the adaptive characteristics that information systems can support. The information systems that power Adaptive Enterprises share these essential characteristics:
- Self-awareness (think artificial intelligence) which allows employees, managers, analysts, and the system itself real-time access to requests, usage, and performance (think Amazon)
- Continuous adjustment which means changes don’t have to wait for scheduled releases – they code themselves (think Alexa and Siri)
- Build the external ecosystem with unlimited external feeds can become part of the core system – like IoT devices that adapt to users or other devices (think Nest)
- Speed up complicated scenario handling with in-memory queries that allow calculation of multiple what-if scenarios maximizing benefits for both company and clients (think SAP HANA)
- Use built-in rapid prototyping capabilities for improved scalability and integration
- Machine learning-friendly design which provides continuous improvement opportunities
From architecture and engineering, we learn that the X-bracing on buildings resists lateral forces of earthquakes and winds. During an earthquake, buildings with these reinforcements in place can sway sideways while retaining their vertical integrity. They don’t fall because the same design that makes them resilient makes them stronger. [Image Credit: https://en.wikipedia.org/wiki/Earthquake_engineering]
It’s the same in business. Your business design must give and adapt but maintain its integrity. Adaptive Enterprises do that.
The Inspiration Behind This Post
I had been hesitant to write about the power of Adaptive Enterprise (a concept I learned from Stephan Haeckel at IBM’s Advanced Business Institute) because once I explained it, business leaders often replied that it was just impossible to build something solid on top of something (IT) so flexible.
I’m no longer hesitant. In October, I attended the SAP Hybris Americas Summit 2016 in Fort Lauderdale, FL, where I got to experience the latest tech, commercial case studies, and omnichannel ideas first-hand. Interacting with the entire ecosystem (company leaders, product managers, developers, customers, and ancillary product/service providers) clued me in that it’s now (finally) possible to build out an adaptive IT infrastructure, one that can not only change its scale – but its very design. That means excuses for not building adaptive enterprises are quickly fading 😉
The SAP Hybris solution sets, I learned, are engineered from the ground up for flexibility and speed. Starter kits that provide basic functionality for dozens of industries are readily available. Rapid prototyping is built right into the design and updates that used to take weeks or months to schedule can now be online in hours or days – without compromising the integrity or security of live applications.
I was particularly impressed with two specific features that enable the Adaptive Enterprise concept:
- SAP Hybris comes with native abilities to connect third-party data sources. That means that you can connect just about any sensor to the network. Imagine knowing local weather conditions before attempting deliveries or understanding the condition of equipment before you roll a repair truck. What if you could use machine vision to see what items are running low in inventory to optimize stocking (and prevent stock-outs)? The more things the system can consider, the better the recommendations (and service, and value delivered, and profits).
- In-memory computing services and machine learning mean that the needs of all parties to a transaction get proper consideration and get more of what they want. The I-get-more-so-you-get-less mentality that has artificially held back growth for so long can finally fade. Enhanced algorithms can help customers, employees, partners, and other vendors at the same time to maximize their gains and run more efficiently.
Challenge For You
Reimagine your own business as an Adaptive Enterprise. First, consider the value of making your enterprise adaptive. Start by drafting your list of “What If?’s”. Next, customize the Principles to your unique situation. Then, think about which of the information systems characteristics might be most valuable to you. When you’ve organized your thinking, cast your strategy as a story – one based in the future when your adaptive transformation is well underway. Your future story should describe what it might feel like to deal with your business from the outside and what it feels like to get things done on the inside. Those perspectives will give you – and those whose influence you need – the opportunity to get on the same page, suspend disbelief, and make your business more resilient and more flexible. The possibilities are up to you.
Have a question about Adaptive Enterprise or Story as Strategy? Just ask. We’re here to help. Have a question about adaptive information systems with SAP Hybris, in-memory computing, or omnichannel? Just ask, we can get you connected to the right resources.