New Digital Enterprise Operating System: 6 Traits of a Responsive Organization

In the mad rush to digitize the economy, organizations are facing market conditions that change at an accelerating pace, according to Aaron Dignan during his keynote address, The Responsive Organization, at Softtek’s 2016 Digital Innovation Conference.

And this frenetic pace of change presents an interesting dilemma: companies encounter more competition from everywhere, there is more information than anybody knows what to do with (hence the suddenly increased value of data scientists), and there is more volatility in the marketplace as everything becomes hyper-connected.

Companies Must Become Complex Adaptive Systems

But unfortunately, most organizations refuse to face this new reality. Enterprises still operate under the traditional, command and control corporate operating system. The corporate org chart, a 100-year-old artifact, is still alive and well. ING_19064_05570.jpg

But there’s a new corporate operating system emerging, says Dignan: The Responsive Organization, and the new operating system they’re adopting, is based on the concept of complex adaptive systems.

What are complex adaptive systems? These are typically systems in nature that are made up of large members of individual participants, such as ants or lymphocytes in white blood cells, or people in cities. They come together and self-organize to succeed and to thrive, and they have very particular traits:

  • They’re made up of large numbers of participants
  • There’s never any central authority (i.e., no bosses)
  • They live by a set of simple rules encoded in their DNA or in the values or the organization - and out of that emerges new behaviors

Have you ever heard of slime mold? Although you probably wish you hadn’t, they’re a perfect example of complex adaptive systems. If you put 20 or 50 or 100 cells of slime mold on the forest floor, nothing happens. But if you put 500 in the same square inch, they band together and move across the forest floor, picking up food as they go. They require scale in order for their simple rules to make them act like a super organism.

The 6 Characteristics of Responsive Organizations

So how does a complex adaptive system look like when adopted by an organization? Dignan shared six organizational changes to help you become a responsive organization:

1.      Purpose Over Profit

Organizations must prioritize purpose over profit. That doesn’t mean “no profit.” It does mean organizations must make decisions that are aligned with their purpose instead of myopically focusing on the quarterly number.

For example, Amazon has a declared purpose over profit mentality. Their purpose is to become the one dominant player in the retail space.  They don’t optimize for profit – yet. They optimize for purpose.

2.      Silos vs. Networks

Organizational silos were a hallmark of the traditional organization, but in a hyper connected world organizations must think like a network to get better insights into their business. Everybody, including suppliers, partners and customers, becomes a part of the network.

Airbnb provides more room nights every night than any other hotel chain in the world, yet they own no real estate and have 80 times fewer employees per guest than any other hotel company. They’re completely plugged into a network of homeowners and travelers who have become part of their network, adding immense value to the company.

3.      Plans vs. Experiments

In the pre-digital world where changes were few, there was enough time to understand the business landscape, plan accordingly and to execute on that plan. But today a plan is only good for short bursts because of how quickly the economy can shift. Organizations must adopt the agile approach: build a validation model first, then execute against it while making regular course corrections based on new information.

Employees at Facebook execute hundreds of AB tests every day to improve every micro-experience for it’s billions of users. The constant improvements compound over time, making it the most successful social media network on the planet.

4.      Efficiency vs. Adaptability

Organizations used to design for efficiency. A manufacturing plant would be built to be as efficient as possible at pouring corn flakes into cereal boxes. But what if demand suddenly disappeared? What good is your efficient plant if nobody wants corn flakes?

Valve, a $4 billion software and gaming company in the Pacific Northwest, realized that if they didn’t become adaptive they couldn’t compete. Gabel Newell, Valve’s Founder, decided to simplify everyone’s job description:

  1. Find other great people like you. Everyone’s a recruiter now.
  2. Your desk has wheels on it, go find something to do. With 99.999 percent uptime on their games and platforms, and churning out hit games year after year after year, Valve is immensely productive.

5.      Control vs. Autonomy

For more than a century management was a top-down affair: executives hired people to execute their plans, not think. But today organizations must behave like a soccer team, where each player has a high degree of autonomy. To win the game, player son the field must decide, communicate, coordinate and use their instinct and skills to figure out a way to get it done.

Brazilian company Semco decided to experiment with radical autonomy. They decided to give individual units autonomy and see if anything broke. But over 30 years nothing broke. Now employees set their own vacation schedules, make manufacturing equipment purchase decisions, hiring decisions and more through a form of corporate democracy.

6.      Privacy vs. Transparency

This is the hardest for organizations to adopt, especially for those of us that work with information security; but it’s also one of the most valuable. Dignan noted that in a future that changes so fast, nobody knows what information is valuable and what your stakeholders can do with information until they do it.

A few years ago Patagonia made the decision to expose almost all their information to the public, despite protests from the top. They were afraid the public would “discover” they weren’t as green and sustainable as they advertised. But they shared everything, and the results were amazing. They started receiving suggestions for how to perform better not just from their own employees and customers, but from their competitors as well!

Formulate Your Own Recipe

Finally Dignan reiterated that there’s no set formula – each company must forge their own path. But to do that, you must ask six questions:

  1. Do you have a purpose?
  2. Are you leveraging networks?
  3. Are you planning too much and testing too little?
  4. Are you built for change?
  5. Are you pushing authority to the edge of the organization?
  6. Are you letting information flow?

As Dignan said, “There are no perfect answers.” You must take on the mission of forging your own path. Stop working on the day-to-day for a minute and think about how you are working, organizing, and deciding. Is this the right way for the 21st Century?

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