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You Know It Makes Sense to Respond

You Know It Makes Sense to Respond

When the grasslands of the marketplace are constantly shifting, organizations will only prosper if they can react - fast - to both internal and external events. That is why sense and respond (S&R) systems will inevitably - and probably in just a few short years - become commonplace.

"The organizations working to implement an EDA so far tend to be in niche application areas. I think it will remain with niche areas [the aforementioned foreign exchange; commodities or stock trading; military command and control; control of the electrical power grid; and control of chemical plants] for the next few years and then maybe in 2008 or so it will maybe be picked up by a broader set of critical functional areas," he says.

The good thing, he says, is you already have the components of EDA in your enterprise stack, and that EDA and SOA are compatible, despite the differences in their primary objectives. You can build EDA on top of SOA using SOA components.

"Developing IT to help your organization become more agile does not imply that your organization needs to respond in seconds," Chandy argues. "There are very few applications where sub-second response is required though there are many where responses in a few minutes rather than days can make a huge difference. Now IT has a chance to help the organization become even more effective in responding to events," he says. "The company already has the architectural pieces it needs to build EDA and you need only an incremental effort and cost to put it together for a different goal."

The question for each organization is whether the incremental benefits of IT for EDA exceed its incremental costs. Or more completely, do the incremental benefits of IT in helping your company become more agile exceed the incremental costs of building event-driven applications?

Growing Reliance

Society is coming to increasingly rely on sense and respond systems in areas from national security, health-care, finance, supply chains and energy and environmental protection, to security and IT infrastructure management.

Steve Haeckel first coined the term "sense and respond" as a business concept in a 1992 Management Review article. At the time he was director of Strategic Studies at IBM's Advanced Business Institute.

Haeckel has written that what began as a label describing a desirable type of organizational behaviour evolved over the next six years into "an adaptive managerial framework incorporating a set of concepts, principles, prescriptions and tools for creating and managing an adaptive enterprise". Now, he says, it has become a "comprehensive, scalable and internally consistent recasting of industrial age strategy, structure and governance to cope with the post-industrial environment of unpredictable change".

That is because a rapidly changing marketplace makes it impossible for any business to thrive for long just by making products and selling them.

"It does not matter how good you are at making widgets if the market for widgets disappears or if your competitors offer dramatically new and improved widgets faster than you can," Haeckel writes in a recent book, Adaptive Enterprise: Creating and Leading Sense-And-Respond Organizations.

In today's environment, he says, a company can only succeed by knowing how to adapt to customers even before those customers themselves know what they want. The answer is to build a sense and respond approach to promote rapid response amid change. That means using innovative ways to gather information about customer needs. Some examples: car manufacturers used video cameras in airport parking lots to discover that people often struggle to lift heavy suitcases over the high lower edges of boots. In mall parking areas, cameras showed shoppers had nowhere to put the soft drinks they bought. As a result, low boot edges and cup holders are standard features in almost every car.

Yet many still treat the term S&R as synonymous with "agile", "lean", "flexible", "resilient", or "near real-time", or to characterize adaptive technologies like agent-based modelling or to name tools and methods that support human adaptability (for example dashboards). This is wrong, Haeckel says: without a managerial model to leverage and exploit such capacities systematically and coherently, the tools' and methods' impact will be limited and operational, rather than transformational and strategic.

At senseandrespond.com, Haeckel summarizes an S&R managerial framework, noting that what is missing from most attempts to transform businesses into adaptive organizations is an adaptive management model.

"Adaptive people, technologies and infrastructures are necessary but insufficient, because the legacy industrial age management system systematically discourages the exploitation of adaptive capabilities," he writes. " . . . Those firms that have made a degree of progress in becoming more adaptive (or at least more agile or resilient) have by and large relied on process improvement, adaptive technologies, and on what Bruce Harreld of IBM has called 'the heroic model' of management - counting on exceptionally talented people to break the rules without breaking too much glass.

"Sense and respond fills the adaptive management gap. It is a fundamentally different framework for on-demand, customer-back businesses; one that systematically leverages adaptive individuals, technologies and infrastructures to produce and scale adaptive organizational behaviour," Haeckel writes.

Haeckel points out any organization that cannot trust its ability to predict future requirements must eschew planning, process designs, hierarchies of authority, and command and control. An adaptive enterprise should be able to sense and respond effectively to events on the ground, rather than relying on operational excellence to efficiently make and sell products and services that customers are predicted to want. Its core competencies must include the capabilities to: know earlier (anticipate) the meaning of what is happening now; dynamically dispatch modular capabilities in response (pre-empt); and express strategy as a systems design of roles and accountabilities.

"This transforms strategy from a plan of action into a structure for action," Haeckel notes. "The organizational design becomes the main strategic document, and policy executives must therefore acquire competence as business architects. In an adaptive sense and respond enterprise, leadership controls context, not process and activity."

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