responsive business is strategically focused and tactically agile
DESCRIPTION
A responsive business is focused on long term trends and able to get things done in 30 - 60 - 90 day cycles. Profit comes from more than just efficiency - companies need to respond to continually changing and unpredictable markets. Let's talk about how that can be done.TRANSCRIPT
© 2013 Center for Systems Innovation [c4si]
1 www.MichaelHugos.com
The Responsive Company:
Strategically Focused&
Tactically Agile
Michael Hugos
CENTER FOR SYSTEMS INNOVATION[c4si]
© 2013 Center for Systems Innovation [c4si]
2 www.MichaelHugos.com
Overview of Briefing
Part 1 – Business Realities
Part 2 – Moving Toward Responsiveness
Part 3 – Business Case Study
© 2013 Center for Systems Innovation [c4si]
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PART 1
Business Realities
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• Efficiency requires predictability and stability
• Both are now conspicuously absent
• Responsive enterprise is to real-time economy as assembly line was to industrial economy – source of wealth creation
• Respond to changing customer needs by wrapping products in blanket of tailored, value-added services (they are information based)
• Use responsiveness to differentiate yourself or else participate in “grim race to the bottom”
• Tale of evolving mobile phone… is it a phone or a fashion?
A Continuum Between Two Needs
Efficiency Responsiveness
© 2013 Center for Systems Innovation [c4si]
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People Want More than Low Price
Products meeting higher level needs are worth more
Sneakers cost: $20 or >$100
Cars cost: $16,000 or >$40,000
As soon as basic needs are met, people want something more
© 2013 Center for Systems Innovation [c4si]
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The Value-Added Paper Cup
Ordering
Labeling
Delivering
Receiving
Invoicing
Usage Reporting
Budgeting
Surround commodity items with tailored blanket of value added services
Every product has two components
Actual Item or Service (commodity, easily copied, low margin)
Information Component (tailored to each customer to achieve desired results)
“Never sell a naked commodity”
© 2013 Center for Systems Innovation [c4si]
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Strategy is a mental tapestry of
changing intentions for harmonizing and focusing our efforts;
as a basis for realizing some aim or purpose in an unfolding and often unforeseen world,
of many bewildering events and many contending interests.
John Boyd, A Discourse on Winning and Losing
© 2013 Center for Systems Innovation [c4si]
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PART 2
Moving Toward Responsiveness
© 2013 Center for Systems Innovation [c4si]
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Traditional Business Structure
Information OrdersVP of THAT
VP of THIS
MANAGER A
MANAGER B
MANAGER C
PAWN 1 PAWN 2 PAWN 3 PAWN 4 PAWN 5 PAWN 6
What worked well enough ONCE is way too slow NOW
The Boss!
© 2013 Center for Systems Innovation [c4si]
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Network Organization Structure
Enterprise Coordinator says WHAT Business Units free to choose HOW
Coordination replaces control
Network of autonomous business units
Enterprise Coordinator
Business Unit A
Business Unit B
Business Unit C
Business Unit D
Business Unit B
Business Unit B
© 2013 Center for Systems Innovation [c4si]
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Responsive Organizations• Whole Foods Market
– Basic operating unit is the store team (10-20 people)
– Senior managers say WHAT, teams say HOW
– Very profitable grocery company in highly competitive business
• U.S. Marine Corps
– Basic operating unit is the platoon (20-40 people)
– Philosophy of command requires decentralized decision making
– Epitome of effective modern, mobile, military
• Network Services Company (I was CIO for 6 years)
– Network of 86 independent distributors
– Owner operators insure quick, autonomous decision making
– Profit opportunity for each distributor on national accounts
© 2013 Center for Systems Innovation [c4si]
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Strategy of Focus and Response
• Three feedback loops illustrate how focus and response works
• Responsiveness is a blend of balance and agility with the awareness to know when to do which
• It is continuous, incremental change…
LOOP 1: Awareness = Observe and respondLOOP 2: Balance = Improve existing processesLOOP 3: Agility = Create new processes
Create New Operating Processes
Market Data & Customer Desires
Detect New Threats & Opportunities
Deliver Business Success
Analyze Non-
Standard Input !!!
Standardize Operating Processes
Eliminate Root Causes
LOOP 2 Balance
LOOP 3 Agility
LOOP 1 Awareness
© 2013 Center for Systems Innovation [c4si]
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IT Enables Responsiveness
• Maximize leverage of existing systems and infrastructure with services oriented architecture (SOA)
• Support for responsive operations is layered on top of existing systems (ERP, CRM, SCM, etc.) as needed:
– Data Warehouses and Business Intelligence (BI)
– Business Process Management (BPM)
– Simulation and Predictive Analytics
• Use parts of old systems in creation of new systems; grow systems iteratively as needs unfold
• SOA + Virtualization + Cloud + SaaS + Mashups = Responsive
© 2013 Center for Systems Innovation [c4si]
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Company and Strategic Partners
Company focuses on core functions that produce unique value-add for its customers
Company out sources support functions to strategic partners
Alliance Partner
‘B’
Alliance Partner
‘A’
Alliance Partner
‘C’
Support Support
Core
Customer
Customer
CustomerStrategic partners provide tailored bundle of products & services
CoreCore
Support
Company
Data Ctr/Cloud Computing
Business Process Outsourcing
SaaS Apps
© 2013 Center for Systems Innovation [c4si]
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PART 3
Business Case Study
“Agility in Action”
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Disruption of IT Paradigm - AGAIN
• SOA, Virtualization, Cloud Computing and Agile Development offer new opportunities for IT infrastructure that is fast, flexible, cost effective and embedded in business processes
• Three unequivocal standards of IT and Business Agility: 1) No Cap Ex 2) Variable Cost 3) Scalable Platform
• Those that master the use of these technologies and techniques will set the pace for everyone else
• “I’m all for progress. It’s change I don’t like.” Mark Twain
© 2013 Center for Systems Innovation [c4si]
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Case StudyOffice Productivity
App Servers
ERP System
Data Warehouse
Production Scheduling
Inventory Control
Doing Business in Real Time
• Old-line candy company selling through traditional low margin retail channels
• People see opportunity to sell “designer chocolate” and related items in cozy storefront setting
• Company decides to quickly market test idea by opening a few stores
• Need systems support in 90 days!
• Consider TCO of solution: lease/buy; sunk costs; scalability; flexibility
• Business agility calls for IT agility…
© 2013 Center for Systems Innovation [c4si]
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Case StudyOffice Productivity
App Servers
ERP System
Data Warehouse
Production Scheduling
Inventory Control
Store POS System
Store Support Ver 1.0
Doing Business in Real Time
• Concept is a success
• Accelerate rollout of new stores… what next?
Supply Chain DW
SOA
SaaS
Server Virtualization
SOA
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Case StudyOffice Productivity
Hybrid IT Architecture
App Servers
Data Warehouse
Supply Chain DW
Inventory System
Production Scheduling
Analytics & Simulation ERP
Store POS System
CRM
Store Support Ver 2.x
SOA
SaaSCloud Computing
• No Cap Ex
• Variable Cost
• Scalable
Extend In-House Systems in Cloud
BPM
CloudThe
Cloud
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Lessons Learned So Far…
• Web portals and mashups provide unified user interface by replacing different system screens with common GUI front-end
• Maximize use and re-use of existing applications (ERP/CRM/SCM) with SOA and WOA (web oriented architecture)
• Maximize server utilization through virtualization
• Split systems processing between in-house platforms and cloud/SaaS platforms; host new system in-house or in the cloud as security and business needs dictate (cloud computing nascent but evolving quickly)
• Extend in-house systems, improve performance of applications and reach new users and customers via cloud computing options
• Continuous incremental change to IT infrastructure as business unfolds (No big bang projects!)
© 2013 Center for Systems Innovation [c4si]
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Change is the one predictable thing
in a world where so much else is so unpredictable, and companies
optimized to deal with change will certainly be more
successful than companies not optimized to deal with change. That is
why responsiveness trumps efficiency; that is why
responsiveness and the business practices that bring it about are the
basis for sustainable prosperity in this century.
Michael Hugos,
Business Agility: Sustainable Prosperity in a Relentlessly Competitive
World
© 2013 Center for Systems Innovation [c4si]
22 www.MichaelHugos.com
Learn More
• Business Agility: Sustainable Prosperity in a Relentlessly Competitive World, John Wiley & Sons publisher, 2009
• Business in the Cloud: What Every Business Needs to Know About Cloud Computing, John Wiley & Sons publisher, 2010
Presentation excerpted from two of my books:
Join the conversation on my blog at CIO.com Doing Business in Real Time
Briefing management in strategies for agility; mentoring teams in agile development.
Reach me at: www.MichaelHugos.com