The external environment
Research from Morgan Stanley suggests that this year sales of smartphones and tablet PCs will outstrip the combined sales of laptops and PCs. Around 650m handsets will be shipped globally in 2011- nearly one for every 10 people on the planet.
This, combined with the phenomenal growth of social media (will Facebook be the 2nd biggest “country” by the time this article is published?) are just two forces that have made consumer demand for mobile access to services a worldwide reality to which traditional clicks and mortar organisations have found it difficult to react. Add to this scenario the breakdown of traditional barriers to travel (with cheaper flights and fewer political restrictions to travel) and we find that consumers are receiving good service in one location and expecting to get the same or a higher standard of service in all locations and from all service providers.
Access to services on the move has also blurred the distinction between buying behaviour as a consumer and buying behaviour as part of an organisation. The way we are served in our favourite coffee on the journey to work dictates the standard of service we then expect from all of our service providers (B2B or B2C) for the rest of the day.
Unpredictable, discontinuous change is thus an unavoidable consequence of doing business in 2011 and, as that discontinuous change is now predominantly driven by customers, an organisation that does not sense and adapt will die.
Market led strategic change
Piercy introduced the concept of market sensing in 1991 and in all of his subsequent writing has re-emphasised the need for organisations to adapt to their external (market) environment. His emphasis on changing the whole organisation to meet the needs of its customers was ahead of its time and, possibly because he is a professor of marketing as opposed to strategy or organisational development, his work has received less attention than it deserves. In 1999 Haeckel (with the stamp of authority you get from having both “Strategic” and “IBM” in your job title) picked up on the need for organisations to be “adaptive” and forecast the need for companies to transition from a “make and sell” philosophy to “sense and respond”.
How then does an organisation adapt to this environment?
For “new” enterprises flexibility can be built in from the start. Partly this will be a result of the entrepreneur’s vision and the culture that s/he inculcates into the organisation from day one. Partly this flexibility or agility will be facilitated by reliance on today’s technology rather than technology that was right for an organisation 5, 10 or 20 years ago. Remembering that technology is only technology to those who were born before it was invented, becoming an agile/ adaptive organisation is much harder for an older business – particularly those businesses operating in conservative markets or those being led by people who consider e-mail to be innovative!
Despite the fact that “In Search of Excellence” was published in 1982 the 3 hard elements of the McKinsey 7S model still provide a good framework for discussing what can be done to help these clicks and mortar companies. Peters and Waterman’s mantra of “People, Customers, Action” still applies:
Strategy is no longer something developed at the top of an ivory tower, set in concrete and imposed on those “below”. Speed of market development means that strategy is built around principles but details will change based on feedback from the environment in which the business operates. A learning and adaptive organisation needs to improve market sensing by reducing the lag between market action and corporate reaction. This can be facilitated by using social media like applications where strategists can “follow” or “like” threads of conversation between, for example, product developers and customer service staff.
The structure of an organisation can have a disproportionate effect on efficient dissemination of information. Any organisation that still draws an organogram with the CEO at the top should spend some time in the sin-bin reading Vineet Nayar’s book “Employees First”. A business’s organogram reflects its attitude to customers and tends to define the way in which information is expected to filter through to the business’s leaders. Often this will mirror functional silos through at least 6 levels of management and factoring in the spin of the politically motivated, much information from the market is corrupted by the time it reaches a decision maker.
It is most useful to consider “systems” as both the processes that link a company’s resources and the IT platforms and applications that facilitate the implementation of all of the 7 S’s. A 20th century organisation has both processes and IT systems that mirror the hierarchical and functionally oriented structure around reporting lines. The adaptive organisation re-designs its processes from the customers’ perspective – i.e. horizontally from the outside in. Taking this approach, there are only 4 macro level processes in a business and considering how to orient the organisation to these will significantly improve sensing ability.
Using technology to manage and add value to these processes will ensure a company is agile and adaptive. I call the customer oriented application of IT “technogility”
Anyone with an MBA will tell you that strategic analysis starts with the external environment and a good strategy takes advantage of opportunities the market and other external factors present. However, many organisations try to take advantage of these current opportunities using strategies, structures and systems that are past their sell-by date. Whole company adaptation to markets is key to business success in this decade and technogility is a concept that can help to turn resources and competences into competitive advantage.