How to Nurture Business Development Capabilities

How to Nurture Business Development Capabilities

How should professional services firms choose their "rainmakers"? This blog posts suggests that testing them and evaluating their performance is the only effective way.

Where are Tomorrow's IT Leaders? - Susan Cramm - Harvard Business Review

Where are Tomorrow's IT Leaders? - Susan Cramm - Harvard Business Review

Interesting article on future IT leaders and the competencies they need to have.

The Age of Cloud

 

I’ve recently came across an interesting definition of Cloud Computing by Irwing Wladawsky-Berger here.

The perspective there presented is based on the findings of a recent study from the Corporate Executive Board.

It’s particularly interesting to note that the emerging era of Cloud Computing seems to imply a shrinking role for Corporate IT.

What are then the implications for IT Service providers other than becoming the provider of “Utility Computing” over the Cloud?

What are the implications for all the IT Services Professionals that today provide their services in corporate IT?

Leading on demand businesses — Executives as architects

 

This post is an excerpt from the IBM SYSTEMS JOURNAL article "Leading on demand businesses—Executives as architects" by S. Haeckel, published in 2003.

The reason for writing this post is that even if it took almost 15 years to make "adaptive enterprise" (or its synonyms "on-demand enterprise", "sense-and-respond enterprise", "resilient enterprise") a buzzword, the foundation of any current enterprise architecture resides in many of the concepts introduced by Haeckel.

Father of the "adaptive enterprise" or OnDemand Enterprise Stephan Haeckel pioneered the sense-and-respond concept of adaptive business design. He coined the term "adaptive enterprise" and introduced it to a large audience in a Harvard Business Review article in 1993.

His book, "Adaptive Enterprise: Creating and Leading Sense-and-Respond Organizations" presented innovative principles for business strategy.

Let's look at the IBM System Journal Article in detail.

 

Leading on demand businesses — Executives as architects

To respond “on demand” to the unpredicted opportunities of the moment, a business must invest in knowing earlier the meaning of what is happening now rather than in attempting to forecast better the opportunities of the future. This means concentrating on know-why, which is system knowledge, rather than know-how, which is process knowledge.

 

Knowhow is procedural knowledge, which is action-centered and based on practice.

 

In an on demand business environment, where things change so unpredictably that few executives believe their strategic planning playbooks anymore, knowing earlier what is happening now provides a crucial competitive edge. And if executives cannot reliably
predict what their customers will prefer or what they and their competitors will be capable of in the future, it no longer makes sense for them to place bets on plans and processes. “Plan your work and work your plan” was a mantra of success in more stable
times. In the new economy, it all too often leads to a process orientation that makes a company better and better at doing irrelevant things. Processes and set plays are core competencies when the environment is sufficiently stable; and “six sigma” execution
(that is, nearly perfect execution) of best practices is a powerful strategic advantage when the target moves slowly or predictably. But when it does not, timely one sigma execution (that is, flawed execution) of next practices wins the day, and knowing why
trumps knowing how. Said another way, systems knowledge replaces process knowledge as the source of strategic advantage.

 

Moreover, agility—the ability to change directions rapidly—is not enough. The change must be appropriate to the situation, which is why an ability to size up the current situation earlier is fundamental to adaptiveness.

 

Applying systems design principles to business

Many principles of systems design deserve to be adopted as management principles by leaders of on demand businesses—businesses that must sense and respond in a profitable and timely way to what is actually happening now, rather than make and sell efficiently what they planned to produce.

The five principles discussed below have particular salience to issues that managers of on demand businesses must address:

 

Four of the recommended design principles are inherent in the properties of any system:
1. Design top-down.
2. Design for synergy.
3. Design relationships.
4. Identify the higher-level systems of which our system is a part.

The fifth is a sense-and-respond principle for adaptiveness:
5. Dispatch capabilities from the external “event back.”

 

Designing a business as a system: Synergy and alignment

“System” is a word that everyone uses but defines differently.

 

A system is a collection of elements that interact to produce an effect that cannot be produced by any subset of the elements.

 

Two important insights emerge directly from this definition.
First, if a business is designed as a system, it will automatically create synergy. Second, the key design choices specify how the pieces interact, not how they act.

Synergy

Because synergy is a system-level result, it differs qualitatively from the outcomes contributed by any of the parts.

Relationships

If a business wants to produce synergy with its employees, products, and places, it must understand and design the interactions among them, rather than the actions of them.

Alignement

In a system, every element (capability) exists only because the outcomes it delivers to other elements are essential to the system’s ability to produce its function.
Alignment of the parts to the whole is an intrinsic feature of systems.

 

A major and directly related benefit of this feature is the prospect of significantly reducing the enormous internal transaction costs associated with matrix management.

 

The negative attributes of matrix management include suboptimization, fragmentation, redundant accountability for the same outcomes, and ambiguity about authority and accountability. The cost of these negative attributes can be significant. A 1998 study
of multidivisional teams in a large multiproduct company quantified the opportunity cost of matrix conflict in terms of deals lost, not pursued, or not closed because of noncompetitive bids at more than $10 million, and the company had dozens of these teams in operation at any given time. The root cause was identified as “lack of clarity about roles, accountabilities, and authorities.”

Matrix management recognizes the existence of interdependencies between organizational functions, but does not address them systematically.

 

In the sense-and-respond model of adaptive business designs (see sidebar for overview), clarity about accountability is achieved by defining the work of persons exclusively in terms of the roles they play. Roles, in turn, are defined exclusively by the outcomes that relate them to other roles.5 Nothing need be prespecified about how the outcomes are produced, that
is, about processes or activities.

 

Top-down design

Designing an organization as a system provides a perspective that casts serious doubt on other commonly accepted business practices and models.

No system of any complexity is designed from the parts up.

 

An executive familiar with the principle that systems are designed from the purpose down, not from the components up, would not think that “business process integration” is a good way to improve performance.

 

Designing businesses for adaptiveness vs efficiency

Success in adapting to unpredictable change stems from good systems design, not from good process design.

 

But when there is rapid and dynamic change in customer preferences and a high degree of innovation in available capabilities, success and even survival depend increasingly on improvisational, ad hoc procedures, which cannot be designed in advance.

 

Designing a business as an adaptive system of roles and accountabilities makes it possible to change business models much more rapidly.

 

Technorati tags: ondemand, adaptive, adaptive_enterprise, ondemand_enterprise, resilient_enterprise, business_architecture, business_strategy, business_design, executives

The first!

I decided I had something to share with the BlogSphere, so I created this new Weblog to post ideas and toughts on Innovation, Services Science and Business.

Stay tuned!