Becoming a Responsive Enterprise
"Software-driven companies are taking over the world because they are responsive organizations, built on ’sense and respond’ instead of ’plan and predict’." Vikram Kapoor, CEO at Prowareness, stated this when he talked about how organizations can increase their responsiveness at the GOTO Amsterdam 2016 conference.
Kapoor argues that in the next decade every large scale organization will be digitized and will effectively become a software-driven enterprise. In his talk he explored ten forces which help organizations to become responsive:
- Extreme customer centricity
- Moving mission
- Extreme transparency
- Autonomous mini companies
- Experimentation process
- Self-scaling culture
- Rhythm of learning
- Decreasing the mass
- Software centric and data driven
The more a large organization masters these forces the higher their responsiveness index and more responsive they become said Kapoor.
The distance between an enterprise and it’s customers is drastically going down. Kapoor mentioned that it’s a challenge for many enterprises to get very close to their customers and become responsive, but they need to do this to deliver value and survive.
Traditional organizations rely on strong procedures, yearly planning and waterfall projects to deliver to their customers. To become responsive organizations needs to establish a moving mission and a strong culture. Their management style changes to giving mandate to teams of empowered professionals. These teams can deliver products using an agile way of working.
A responsive company is extremely customer centric. They are obsessed with customer experience. Kapoor gave an example on customer experience from Coolblue (a Dutch retailer with many specialized webshops and physical shops in major cities). In stead of outsourcing the delivery Coolblue decided that, for products like washing machines and refrigerators, they wanted to do the delivery themselves. They offer next day delivery free of charge, where the machine is also installed and connected. Customers can track the delivery on-line and receive an SMS with the delivery time the latest 30 minutes before actual delivery. Kapoor mentioned that as Coolblue want to deliver an outstanding end-to-end customer experience they need to do "the last mile" themselves.
To become responsive an organization should encourage self management. It’s important that employees think about their ambitions and have clear ideas on where they want to go so that they will stand up and take responsibility said Kapoor. If employees know what the customers need, and feel that they are able to do it, they will take responsibility and go for it.
You can set up autonomous mini companies to arrange for self-management said Kapoor. Each mini company (he calls them tribes) can be more responsive because they are smaller. They will have they own identity and profit and loss responsibility, but will share the DNA of the organization.
If you expect employees at all levels to take decisions you need to make sure that they have the information needed to take them. Kapoor talked about the "wall of transparency" from Prowareness. Everything that the company wants to share is on the wall: Salaries, bonuses, team backlogs, sales and orders, recruitment, etc. People are encouraged to ask questions about the information presented on the wall. Sometimes it can be tough for managers to answer them, but they will do the best they can to establish openness.
You can create a self scaling culture from the inside out by splitting cells or sending out ambassadors. The culture remains the same, as it is spread to the new cells said Kapoor.
When you are going faster it can go at the cost of learning. Kapoor stated that to become responsive you need to implement a relentless rhythm of learning. The company needs to make time available to think about things and learn. A way to implement learning is to have a heartbeat consisting of: start, stop, scoreboard, evaluate, adapt, and gamify. This heartbeat creates a rhythm to learn and improve continuously.
Big organizations often adapt slow. Mass is the single most important things that is holding back responsiveness said Kapoor. It needs to be reduced to become responsive. Kapoor suggested to overcome fear of control and give responsibility to the people.
InfoQ interviewed Kapoor after his talk:
InfoQ: Which kinds of technologies can enable organizations to become more responsive?
Kapoor: Technologies is a very interesting question. I think software in general and data driven decision making helps an organization to become responsive in a huge way. I would recommend reading the WSJ article by Marc Andreessen called why software is eating the world to find out what an enormous force software is becoming in helping organizations to become more responsive.
InfoQ: Can you give an example showing how a "responsive organization" reacted to an event or situation that happened?
Kapoor: The most eloquent example is of Tesla motors. They found out that the distance between the ground and the baseplate of their cars was too small so a lot of there cars were hitting speed bumps. This was becoming a serious problem. A normal car maker would have to recall all the cars and make expensive adjustments to their suspension systems. Tesla did a software update to all there cars so that next day all the Tesla cars rose just a little bit. Problem was resolved!
InfoQ: How did their reaction make a difference, how did the organization benefit?
Kapoor: I think that the car drivers were happy that the cars did not have to go back and it saved the Tesla company a huge amount of money and bad publicity.
InfoQ: Any advice for organizations that want to become more responsive to change?
Kapoor: It is a journey and not a goal. You are never there and you are always improving. The change starts with putting the people in the centre of who you are and what you do. If people are running on intrinsic motivation, all other pieces fall into place. In that case the organization becomes more responsive as people are engaged with their environment.