Adaptive Enterprise: Creating and Leading Sense-And-Respond Organizations

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Summary: The Future of Service Industries
Review: Adaptive Enterprise covers two separate but related topics - mass customisation (customisation at mass production costs) and agility (capability to deal with changes in the business environment and the associated high levels of uncertainty). The book is primarily focused on service industries, where services can often be customised through organisational (re)configuration (hence the agility dimension). Most importantly, the book covers the difficulties of moving from make and sell to sense and respond - difficulties often ignored in cookbook style business books. The book also addresses application of systems thinking to enterprise design - an important topic that is not covered enough in business books. Those interested in agility will also find Appendix B useful. Here one finds a decision process to use when one is faced with significant uncertainty. Overall the book is refreshing in its honesty. After reading this book you might also want to read some follow-ups: Mass Customisation (Joseph Pine); Agile Virtual Enterprise (Ted Goranson) and Agile Manufacturing (Paul T. Kidd).

Paul T. Kidd

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Summary: Looking for Guidance in eCommerce - its not here
Review: Adaptive Enterprises, the title holds the promise of long term sustainable advantage. Unfortunately the book reads like an extended IBM consulting sales pitch. The central case study (Westpac) is over 10 years old. Surly if this was a break through the book would talk about long term results and how they were able to take over their market by being adaptive. There is little evidence of this. Other examples are internally focused about how IBM's training and education have become more adaptive.

Not enough detail to warrant the read or to get a real idea of how you would implement the concepts.

If you are looking for guidance on eCommerce and competing in hyper competition. It is not here.

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Summary: Hard work. Great results.
Review: Consulting clients "get" Adaptive Enterprise. When the work gets hard (especially defining the reason for being, governing principles, and high-level business design), they stick with it (unlike other techniques I've worked with). The results are worth the effort.

The promise clients like (at least in my experience with the ideas in Adaptive Enterprise) is that rather than work within the enterprise's limitations, the focus is on identifying, then building support for what the enterprise can achieve.

It's quite simple (and brilliant) that one business design works so elegantly at different levels in the organiztation. One set of "blueprints" helps management, staff, and even programmers to converge on "one idea of what's going on" in the enterprise.

Thanks, Steve.

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Summary: A practical prescription for radical change.
Review: Haeckel has written one of the most thoughtful and useful books on the enterprise available today. By use of simple metaphor, Haeckel makes the distinction between the existing build-and-sell model and his proposed sense-and-respond model. Build-and-sell firms are like bus companies with fixed routes and schedules designed to meet predicted customer demand. Sense-and-respond firms are like taxi companies that dispatch cabs in response to customer demand. Although the concepts are well presented and readily understood, Haeckel offers the reader no easy answers!

Hackel avoids using the usual metaphors of complexity science but instead adopts and explains the term "adaptive enterprise". This choice enables him to focus upon three essential elements of business - governance, leadership, and commitment.

Beware! Adopting his customer focus concepts will produce radical organizational change. For instance, "Sense-and-Respond firms do not forecast demand for products and services. But they do place selective bets upon the stability of fundamental customer needs and on what capabilities should be in their modular response repertoire." The need to create modular organizations that support modular products - a point often misunderstood in practice by even progressive build-and-sell firms - is well made in Appendix A.

Haeckel frequently returns to the theme of a phased transition to a sense-and-respond model and demonstrates a profound understanding of the risk and reward of change in an existing organization.

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Summary: Command and control in complex adaptive systems
Review: If you are ready to accept the notion that complexity governs your external markets, but are not yet ready to accept that the same rules may apply inside your organisation, you may find comfort in this prescription. It purports to be about the distinction between a 'make-and-sell' organisation and a 'sense-and-respond' organisation. The first is production efficiency focused and second is focused on customer satisfaction. (What the author calls 'sense-and-respond' is in fact an unacknowledged version of the Kolb cycle or cycle of organisational learning cycle, so well examined by Nancy Dixon. It is essential to all forms of learning, whether that is applied to providing customer satisfaction or to playing a musical instrument)

Overtly he argues that the shift from a make-and-sell orientation to a sense-and-respond orientation is a major piece of unfinished business for organisations. The reason that he can argue this is that he 'bundles' the issue of customer responsiveness with the much wider issue of complexity and unpredictability in the environment - in other words, he argues that it is not possible to be truly customer responsive if you do not also recognise complexity in markets.

Beneath this surface argument that the new complexity requires new approaches and its characterisation as a move to 'sense-and-respond', lies the real issue, which is the defence of command-and-control from devolution of control, which the author characterises dismissively as 'communicate-and-hope'. The author develops a framework which is designed to retain the essential features of command-and -control, while building flexibility and responsiveness. He argues that forms of governance that challenge command-and-control have only been effective in smaller and simpler organisations than the giants with which he is primarily concerned. By extension, he argues that they can not work in such organisations.

The core of his prescription is the ability of central management to provide central direction to the organisation by the use of an analogy to 'fly by wire' technology. In other words, he advocates the use of modern technology to keep central management informed of unpredictable change so fast that they can respond appropriately within tight time deadlines. When a 'modular' approach to structuring organisations is added, he argues that they can respond effectively not only to the generality of customers but to particular customers. However, the question of relationships with internal stakeholders - employees - does not figure in his schematic, nor does the issue of external alliances and partnerships. Both (separately and together) challenge the capacity of command and control: it is not just customers and markets.

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Summary: An Important New Way of Thinking About Organizations
Review: Many business books focus on the best practices of 1995 or earlier, which dooms the reader to being constantly behind the curve in developing and implementing best practices. This book is one of the rare exceptions that attempts to push the organization beyond today's best practices. I applaud the effort and found that the metaphors were powerful, and the thinking about how to implement the new concepts to be solid. I was pleased to see the references to newer ways of understanding customers (such as behavioral observation). Most companies are using outmoded ways of tracking and responding to customers, and this book has many good things to say in that direction. A potential weakness of the book is that it does not say much about how to anticipate customer responses so that you can start preparing well in advance for significant adjustments. Not everything can be done instantaneously as the customer changes. I liked that the book focused more on customers than on competitors (the overemphasis on outdoing competitors is a flaw of many academic business books, especially from Harvard Business School Publishing). The greatest strength of the book is a thoughtful discussion of the organizational consequences of creating more flexible and successfully adaptive enterprises. I was not convinced that anticipating change is as impossible as the book suggests, but this ability to sense and respond is very helpful when you miss (which will certainly occur in many cases). If you want to usefully stretch your mind about the rapid changes in your market, this book is a valuable resource for you. It will help you overcome your stalled thinking about how organizations should focus and operate. Enjoy!

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Summary: A book full of really wonderful gems
Review: Stephan Haeckel and Adrian Slywotzky start to make sense of some very complex issues. The "set ups" lead you through logical construction to come to entirely different conclusions than one might expect. Now that he's put together the architecture, it will be a challenge to see if we can put the engineering behind it to instantiate these organizations.