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Adaptive Enterprise

What Is An Adaptive Enterprise?

A number of definitions for "The Adaptive Enterprise" have been bandied about over the past few years, but the best may be from Stephan H. Haeckel's seminal book The Adaptive Enterprise where it is explained that an adaptive organization is one that does not try to predict the future and accurately anticipate demand for it's offerings, but instead senses and identifies changing conditions (customer needs, business challenges) as they happen, and responds to these new opportunities before they disappear or change.

An Adaptive Enterprise is one which acknowledges that - in today's unpredictable markets - customers themselves are no longer reliable predictors of their own needs; and then builds and employs the capabilities and processes needed to sense customer needs early and accurately and respond - in "near time" if not "real time" - to those customer needs. An Adaptive Enterprise should establish, unambiguously, what it's purpose is and any constraints on it's operations - but within that context employees are empowered to determine the best way to execute their roles and deliver on commitments they are accountable for. In this model, the business becomes a dynamically reconfigurable pool of capabilities which are recombined and reconfigured to respond to changing conditions, as opposed to today's enterprise which is static, rigid and slow to adapt.

Why Should I Care About Adaptive Enterprise?

There are a number of benefits to adopting an Adaptive Enterprise orientation. Among the foremost is the ability to escape the "Big Opportunity Trap." This "trap" is based on a flawed assumption that a firm can accurately anticipate the future revenue potential of a new business idea. As a result many small but profitable ideas may be killed off prematurely as "too small", when they could have served as ideal bridges to tremendous growth opportunities. In isolation, at the beginning, we are typically clue-less when trying to determine if a new idea is a stand-alone idea worth "only" $100MM, or a bridge to significant new, enduring, and profitable revenue stream.

Another benefit of the Adaptive Enterprise approach is it's ability to help firms avoid wasting their R&D investment. In most firms, ideas with substantial growth potential are developed by technologists and researchers in R&D, but - due to lack of nurturing and incubation by "the business" - are left to die on the vine and never result in any revenue growth. An Adaptive Enterprise will assign talented and influential executives to oversee the transition of new initiatives out of R&D and into a place in the business where they can grow in response to major opportunities. The result is a profitable connection between dynamically changing customer needs, and new capabilities developed by your firm.

But perhaps the ultimate benefit of the Adaptive Enterprise mindset is it's self-reinforcing nature. As your enterprise adopts the Sense & Respond techniques inherent in becoming an Adaptive Enterprise, it will naturally become more of a Learning Organization and experience a Kaizen like process of continual self improvement and learning. As you become progressively better at "Sense & Respond" you will begin to "anticipate and preempt" and will find yourself reacting in time with market conditions. You could think of this as being somewhat analogous to switching from Archery (shooting at a stationary target) to Skeet shooting (shooting at a moving target).

By learning to sense and interpret signals from customers, you can adapt to their changing needs before a formal request is even articulated, allowing your firm to "get there first" and establish a dominant leadership position. Traditionally, this level of rapid reaction has been the domain of startups and risk-taking entrepreneurs. By adopting an Adaptive Enterprise approach, you can preempt the likelihood of newcomers entering your market and stealing market share with new value offerings.

How Can Becoming An Adaptive Enterprise Benefit My Organization?

Complex Adaptive Systems, of which an enterprise are one example, survive in hostile and competitive environments by learning to translate apparent noise into meaningful signals faster than the competition. An Adaptive Enterprise, rather than attempting to define a strategy to deal with every conceivable scenario in advance, focuses on sensing signals from it's environment, extracting meaning, and adaptively reacting to those signals, in a continual learning & feedback loop. An Adaptive Enterprise can be thought of as analogous to a human being, who doesn't need a genetically hardwired "program" called "jump out of the way of oncoming car". A person detects the imminent danger and adapts to the environment by tapping into existing capabilities to dodge out of harm's way.

In this regard, an Adaptive Enterprise can be thought of as an organization which dispatches capabilities to respond to incoming requests, rather than one which schedules responses to known needs. When discontinuous change is a regular part of your operating environment, this adaptive ability becomes essential to survival.

When an organization adopts the Adaptive Enterprise principles, it can: react to customer needs more quickly, preempting competitors, detect and enter profitable new lines of business more rapidly, and introduce innovative new products and services more rapidly and with greater precision. The Adaptive Enterprise begins to find that collaborating with customers, suppliers, and even competitors, is more effective than focusing on competing against it's competitors. Adaptive Enterprises foster much stronger relationships with customers, and begin to exchange "value for value" with customers, gaining deeper insights into customer needs through information exchange. The firm then begins to provide quality responses to those needs as part of a mutually profitable relationship. The firms begin to compete not so much based on "moment in time" product superiority, but rather on superior knowledge of market conditions and customer requirements.

Ultimately, Adaptive Enterprises begin to cycle through a faster "adaptive loop", similar to the famous OODA loop articulated by Colonel John Boyd. The enterprise begins to first Sense, then Interpret, then Decide, and finally Act in a positive, learning feedback loop. Iterating through is loop, and learning faster than others is a key survival advantage in competitive and chaotic environments.

How Does My Organization Become An Adaptive Enterprise?

Becoming an Adaptive Enterprise is not as simple as purchasing and deploying a product, or as simple as bringing in a team of consultants for a few months. Becoming a learning organization requires commitment from the highest levels of the enterprise - the CEO and the Board. The move to becoming an Adaptive Enterprise is a fundamental shift in the nature of the enterprise, from a "make and sell" model to a "sense and respond" model. The transition is a process and requires time, outside expertise, commitment and the necessary technological capabilities.

Several Fogbeam Labs products, including our Fogcutter Enterprise Suite, which features our Open Source Enterprise Social Network - Quoddy Enterprise, our Information Discovery Platform - Neddick Enterprise and our Enterprise Search offering - Heceta Enterprise, provide an essential suite of capabilities that all Adaptive Enterprises will require. We can provide the necessary infrastructure to support real-time access to crucial business events, detailed context around those events - including content from every knowledge & content repository in your enterprise - and rapid correlation, filtering, routing and analysis of signals from both within and outside your organization. We provide the tools and expertise you need to begin translating apparent noise into meaningful signals, so you can survive and thrive in today's hostile and chaotic business environment. For more information contact us today.

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Information on The Adaptive Enterprise is largely sourced from "The Adaptive Enterprise" by Stephen H. Haeckel, Harvard Business School Press. 1999.