Adaptive Enterprise

Adaptive Enterprise is one of the best books I’ve read about what it really takes to build a learning organization. The core idea in the book is that companies need to evolve their strategies, operating models, and cultures to adapt to the pace of change and complexity of the information age. Haeckel lays out several ways that a “sense-and-respond” organization differs from a “make-and-sell” organization. He shows how your organization can become more customer-driven, using regular insights into how your value proposition is resonating with customers to adapt and guide your improvement efforts. Haeckel is not just making an argument for how to reduce pain points along your customer journey. He shows how you can reimagine-your broader “business design,” applying the adaptive loop in complexity theory (sense->interpret->decide->act) to the enterprise overall. He lays out a path to anticipate and preempt change rather than react to it.

There are several key differences between a sense-and-respond and a make-and-sell business design:

1.    Shift to agility and ability to respond to customer signals vs. operating efficiencies as the primary focus for your business design. Not surprisingly, making this evolution results in significant cultural tension that your leaders need to address. 

2.    Reorientation from product focused to relationship and process improvement focused. Becoming more customer-driven doesn’t mean that you are no longer interested in quality management and operating efficiencies. But the toolkit, skills, and behaviors to address the “cost of quality” shift as you become more of a sense-and-respond organization.

3.    Evolving the operating model and governance from a more sequential approach to a networked and parallel one. This takes the principles of driving enterprise agility beyond IT to a deeper level.

4.    Broadening the information architecture from a top-down and functionally driven approach to one that embraces democratization of insights and working together in cross-functional teams.

In the book, Haeckel shows how being more customer-back in your business design enables you to find insights more systematically about your customers that they may not even be able to fully articulate themselves. This is highly complementary to the concepts in Clued In by Lou Carbone (which I reviewed previously on my top ten list), which should not be a surprise, as the two have collaborated over their distinguished careers. In an article together for MIT Sloan Management Review titled “Managing the Total Customer Experience,” they introduce several pragmatic tools that Lou builds on in Clued In. An “experience audit” allows you to build deeper insights into the full set of clues along the customer journey that impact how customers feel about themselves and how this translates into their relationship with your brand. An “emotional motif” distills these clues down to a few words that become a touchstone for how clues are developed and tracked over time. The emotional motif becomes part of the narrative and storytelling by your leaders with the organization for communicating, implementing and monitoring a broader “experience management system.”

Haeckel’s prescription for building a sense-and-respond organization also aligns with several of the core concepts in Leading Outside the Lines, by Jon Katzenbach and Zia Khan (also on my top ten list). Haeckel recognizes that building a sense-and-respond organization requires focusing not just on building capabilities to drive from insights to action but focusing on behavior adoption across the enterprise. Haeckel focuses on the role of leaders to help evolve the business design, leveraging both formal and informal organizational change levers. He emphasizes the importance of leadership commitments to signal and guide change, rather than a command-and-control approach.

One of the core challenges for an adaptive enterprise is translating noise into meaning faster than data arrives. This challenge has only grown larger given the expanding volume of data, especially unstructured data that make up your data signals. Unstructured data - which includes all of your interactions with customers across any touchpoint where you have a record of the conversation, such as your call centers, social media, chatbots and messaging in-app or via text message – are growing exponentially as companies seek to build more personalized experiences and as previously in person experiences have a digital trail. Building more actionable insights from this data is a key requirement for an adaptive enterprise. Fortunately, the capabilities for AI and organizational learnings for how to embed insights into scalable approaches to enterprise agility and quality management are becoming more mature.

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