Customer Reviews

Adaptive Enterprise: Creating and Leading Sense-And-Respond Organizations

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If you are ready to accept the notion that complexity governs your external markets, but are not yet ready to accept that the same rules may apply inside your organisation, you may find comfort in this prescription. It purports to be about the distinction between a 'make-and-sell' organisation and a 'sense-and-respond' organisation. The first is production efficiency focused and second is focused on customer satisfaction. (What the author calls 'sense-and-respond' is in fact an unacknowledged version of the Kolb cycle or cycle of organisational learning cycle, so well examined by Nancy Dixon. It is essential to all forms of learning, whether that is applied to providing customer satisfaction or to playing a musical instrument)

Overtly he argues that the shift from a make-and-sell orientation to a sense-and-respond orientation is a major piece of unfinished business for organisations. The reason that he can argue this is that he 'bundles' the issue of customer responsiveness with the much wider issue of complexity and unpredictability in the environment - in other words, he argues that it is not possible to be truly customer responsive if you do not also recognise complexity in markets.

Beneath this surface argument that the new complexity requires new approaches and its characterisation as a move to 'sense-and-respond', lies the real issue, which is the defence of command-and-control from devolution of control, which the author characterises dismissively as 'communicate-and-hope'. The author develops a framework which is designed to retain the essential features of command-and -control, while building flexibility and responsiveness. He argues that forms of governance that challenge command-and-control have only been effective in smaller and simpler organisations than the giants with which he is primarily concerned. By extension, he argues that they can not work in such organisations.

The core of his prescription is the ability of central management to provide central direction to the organisation by the use of an analogy to 'fly by wire' technology. In other words, he advocates the use of modern technology to keep central management informed of unpredictable change so fast that they can respond appropriately within tight time deadlines. When a 'modular' approach to structuring organisations is added, he argues that they can respond effectively not only to the generality of customers but to particular customers. However, the question of relationships with internal stakeholders - employees - does not figure in his schematic, nor does the issue of external alliances and partnerships. Both (separately and together) challenge the capacity of command and control: it is not just customers and markets.

How different it is to be a reader in 1999 of Sense and Respond by Stephan Haeckel compared to what it was as one of the subjects in the eighties of which he writes. Then, no formal Sense and Respond model. Just "make-it-up-as-you-go" - euphemastically called "being flexible".

Now at last, something more than rhetoric to rely on. For over two decades we have been promised competitive edge through technology investment, magic formulae for change management, super profits through continuous process improvement, market dominance through customer focus and a whole lot of other so-called "silver bullets". A whole generation of management by best-seller has meant that the more things change the more they stay the same. And why? Because they have all missed the truly unique elements of Steve Haeckel's formula.

Governance principles and reasons for being have been around for generations. Leaders who do more than communicate and hope are well written-up. Organisation theory based on a systems approach is not new and modular organisation structures are not original. Neither is mass-customisation or the steering of a business based on manipulation of data managed as a corporate resource so that business transactions are reflected in decision support systems. Learning organisations based on adaptive loops are common, customer-driven process re-engineering case studies abound and project managers don't survive if they don't keep track of who-owes-what-to-whom.

So what is unique about Steve Haeckel's brew?

First, like Harold Geneen and his "grandma's soup" of the seventies, he's cooked slowly, tasted often and stirred in small amounts of lots of ingredients when the taste was not yet right. But most importantly he has based his brew on good stock. From the start he realised that you can't revive corpses. He has admitted that corporate transformation (the process that changes a caterpillar into a butterfly) and not reformation (work with what you've got) is what's needed to deal with the real world of change (continuous discontinuity).

Second, he's produced a uniquely implementable version of an extraordinarily elegant commitment management protocol. He has thereby shown how to co-ordinate systematically the dynamics of 'who owes what to whom' in a way that enforces consistency with the governance principles and other policies of an enterprise. More importantly, he has demonstrated that the key to transforming a traditional business, so that it can thrive in an environment of continuous discontinuity, lies in equipping leaders to track the interactions of negotiated commitments to produce outcomes within the boundaries of the strategic intent of an enterprise. Not only has he dealt with the human factors of this critical equation, he has translated the sophisticated theory of commitment management protocols into robust practice and exploited hitherto ignored technology. The result is an order of magnitude more powerful than the business process re-engineering with which it is all to easily confused.

Thirdly, he has successfully integrated a carefully selected inventory of proven components to produce a result in which the whole is considerably greater than the sum of the parts. The finished work displays a lustre that only comes from extensive rubbing against the real world. Key to this outcome has been Steve's understanding of the organic nature of the system that is an adaptive enterprise. For him, the system that deals with the problem of responding to the unpredictable is more than a mere academic abstraction. Each ingredient he has introduced has had to stand up before hundreds of discerning critics - his own customers to whom he has been accountable for an 'outcome'. Steve has understood that an adaptive enterprise is a dynamic interaction between real people, innovative technology, sophisticated intellectual concepts, practical leadership skills and sound information management methodologies.

Neither one or all three of these unique elements of the Haeckel formula can magically make any old 'bus driver' a brilliant 'cabbie'. Nor, should they. This is not a book for the addicts of management by best seller. But any leader of a traditional corporation who can't 'sense' that Steve has got the problem right, who can't 'interpret' commitment management as a survival issue and who doesn't 'decide' to embark on an integrated journey of corporate transformation ought to 'act' in the interests of shareholders and make way for the present. The future is here and the early adopters of the Haeckel method of transformation will make change their ally and the unexpected their active business partner.

As a former CIO of Westpac Banking Corporation and after 25 years in electronic banking I offer a word of advice. If you operate a traditional business in today's market place you will ignore this book at your peril.

Adaptive Enterprise covers two separate but related topics - mass customisation (customisation at mass production costs) and agility (capability to deal with changes in the business environment and the associated high levels of uncertainty). The book is primarily focused on service industries, where services can often be customised through organisational (re)configuration (hence the agility dimension). Most importantly, the book covers the difficulties of moving from make and sell to sense and respond - difficulties often ignored in cookbook style business books. The book also addresses application of systems thinking to enterprise design - an important topic that is not covered enough in business books. Those interested in agility will also find Appendix B useful. Here one finds a decision process to use when one is faced with significant uncertainty. Overall the book is refreshing in its honesty. After reading this book you might also want to read some follow-ups: Mass Customisation (Joseph Pine); Agile Virtual Enterprise (Ted Goranson) and Agile Manufacturing (Paul T. Kidd).

Paul T. Kidd

As I am quoted as saying elsewhere "I wish I had had this book years ago!" In 1994 when Steve first introduced me to these principles, now so clearly set out in the book, I intuitively recognised their brilliance, and usefulness. The problem came in trying to implement a process that was itself in the throes of development. There is many a slip between "grasping the concept" and "making money from it."

In one sense, there is little that is completely new in this book. But, what a gem, where else have all the essential pieces been put together in such a logical and user friendly fashion?

I note that reviewers have not yet reached the Annexures. Using the "Adaptive Decision Process" resulted in the most exciting and valuable discussion of high level business strategy that I have ever been involved with. Debating with my management team the many strategic choices that were available to us in about 35 areas was a time consuming exercise. It took all of a day! As we progressed we found that we had developed about five possible strategies for the future. We were rather confused as to how we would make the many choices. Then came the enlightenment from modeling the financial impacts of each. We discovered that there were only a few choices that had significant financial impacts. And for once the entire management team was agreed on what these few vital choices involved. Talk about a powerful management process! This very powerful approach is hidden in an Annexure. Readers be warned, there is gold in the pages of this book, but there is so much that it is easy to miss much of it.

Another gem is the Commitment Management Protocol. My dream is to computerise this in such a manner that my email in box becomes my "promise" list showing what I owe to whom when, and what who owes to me when. Performance management becomes quite simple. This is despite the fact that we are now in an era when jobs can no longer be planned, scheduled and delivered according to schedule because those troublesome folk, our customers, do not want the standard services or products our assembly lines are designed to deliver. They want something almost unique to them.

The idea of "negotiating" conditions of satisfaction makes so much sense that I cannot believe it has taken so long for someone to write about it.

My congratulations to Steve Haeckel on a great addition to "wisdom literature".

Many business books focus on the best practices of 1995 or earlier, which dooms the reader to being constantly behind the curve in developing and implementing best practices. This book is one of the rare exceptions that attempts to push the organization beyond today's best practices. I applaud the effort and found that the metaphors were powerful, and the thinking about how to implement the new concepts to be solid. I was pleased to see the references to newer ways of understanding customers (such as behavioral observation). Most companies are using outmoded ways of tracking and responding to customers, and this book has many good things to say in that direction. A potential weakness of the book is that it does not say much about how to anticipate customer responses so that you can start preparing well in advance for significant adjustments. Not everything can be done instantaneously as the customer changes. I liked that the book focused more on customers than on competitors (the overemphasis on outdoing competitors is a flaw of many academic business books, especially from Harvard Business School Publishing). The greatest strength of the book is a thoughtful discussion of the organizational consequences of creating more flexible and successfully adaptive enterprises. I was not convinced that anticipating change is as impossible as the book suggests, but this ability to sense and respond is very helpful when you miss (which will certainly occur in many cases). If you want to usefully stretch your mind about the rapid changes in your market, this book is a valuable resource for you. It will help you overcome your stalled thinking about how organizations should focus and operate. Enjoy!

Haeckel has written one of the most thoughtful and useful books on the enterprise available today. By use of simple metaphor, Haeckel makes the distinction between the existing build-and-sell model and his proposed sense-and-respond model. Build-and-sell firms are like bus companies with fixed routes and schedules designed to meet predicted customer demand. Sense-and-respond firms are like taxi companies that dispatch cabs in response to customer demand. Although the concepts are well presented and readily understood, Haeckel offers the reader no easy answers!

Hackel avoids using the usual metaphors of complexity science but instead adopts and explains the term "adaptive enterprise". This choice enables him to focus upon three essential elements of business - governance, leadership, and commitment.

Beware! Adopting his customer focus concepts will produce radical organizational change. For instance, "Sense-and-Respond firms do not forecast demand for products and services. But they do place selective bets upon the stability of fundamental customer needs and on what capabilities should be in their modular response repertoire." The need to create modular organizations that support modular products - a point often misunderstood in practice by even progressive build-and-sell firms - is well made in Appendix A.

Haeckel frequently returns to the theme of a phased transition to a sense-and-respond model and demonstrates a profound understanding of the risk and reward of change in an existing organization.

In visiting hundreds of firms and speaking to thousands of executives, I've yet to find anyone who has expressed as clearly as Stephan Haeckel how technology will change the nature of business relationships.

I've spent years thinking about what it will take support 1to1 relationships on a mass scale. But now I plan to take a few nights off... the answers are all in this book.

A friend once spent months drawing and rejecting plans of a new addition to his home, before giving up and hiring an architect. When my friend saw the architect's plans, he knew instantly that the architect had come up with the perfect solution, because he understood the challenges in so much depth.

Much as I'd like to be the architect, in this case I am the homeowner, and I recognize beyond a shadow of a doubt that Adaptive Enterprise is the next best thing to knowing next year's stock prices today.

Don't just read this book; live with this book. The ideas in it will separate the winners from the losers for years to come.

Reviewed by the President of Accelerating1to1

The book talks about creating Sense and Respond organisations and adopting operational strategies similar to the approaches taken by the German 'Mass-Customisation' school of thought, i.e. using technology to create an information factory then combining it with granular modular production techniques to deliver on-demand services. To my mind this solution falls well short of the Sense and Respond Vision the author expertly outlines. But don't let the wrong solution prevent you from adopting the right vision. This book and the vision it outlines is very important for the world of work today, where old buiness models have reached the end of their useful life.

While the technology theme is very strong in the book,(as you would expect from a stategy school based at IBM) its underlying message is the need to deconstruct the very fabric of the organisation and introduce structures that can close the duration between 'sensing' and 'responding' to a level that establishes a truly on-demand capability. Their analogy of obtaining the responsiveness of 'Fly-by-Wire' systems in aircraft works well in this respect

More space might have been given to the approaches required to change the management mindsets and behaviours.

I would caution companies not to think of this solely as a technology solution otherwise they may be in danger of simply creating a more sophisticated form of make and sell with the technology solution providing a disappointing response to sensing the wrong needs.

The book outlines a brilliant strategic case for the adoption of Sense and Respond principles.

Stephan has brought the term 'Sense and Respond' to the attention of a very large audience and has since this book developed it into a fully fledged post-industrial managerial model.

A great read for people who are passionate about creating breakthrough organisations.

Stephan Haeckel and Adrian Slywotzky start to make sense of some very complex issues. The "set ups" lead you through logical construction to come to entirely different conclusions than one might expect. Now that he's put together the architecture, it will be a challenge to see if we can put the engineering behind it to instantiate these organizations.

This is a great book! While traditional methods of planning have fallen out of favor due to discontinuous change, this book offers a pragmatic, sense-and-respond approach. Stephen Haeckel, Director of Strategic Studies at IBM's Advanced Business Institute provides an comprehensive stepwise plan to help your company transform itself into a change-empowered organization rather than one befuddled and unprepared for it.