The Incumbent’s Path to New Growth
Part 2 of 3
by Steve Wendler, Senior Strategist, & Brian Lett, Product Marketing
Part 1 of this blog series looked at how scale and stability, ever-changing market dynamics, and competition from tech giants and insurgents are the new business realities for incumbent enterprises. Succeeding against this backdrop requires a new approach to running a business and a new set of technology-enabled management capabilities. We call these cross-enterprise management (addressed in this blog post) and Cross-Enterprise AI (which will be addressed in the final post in this series), respectively.
The New Competitive Advantage
Part 1 of this blog series introduced the concept of hyperagility—sensing, predicting and capturing rapidly developing growth opportunities—as the new way businesses will derive meaningful competitive advantage and create new growth. The problem is that few incumbent enterprises, as currently resourced, managed, and organized, can achieve hyperagility. The reason most can’t: These 20th-century organizations were designed to serve large, industrial-scale, slowly evolving markets with efficiency and stability. Their characteristic features—hierarchical organizations, command-and-control operations, functional specialization and accountability, siloed infrastructures, and isolated data—now substantially hinder the ability to achieve hyperagility.
What Are the Options?
Can these obstacles to hyperagility be overcome? Yes. What’s the right way to do that? Actually, let’s start with the wrong ways to do that. For business leaders in incumbent enterprises, a lot of these approaches will sound familiar. The answer isn’t:
- A consulting engagement (usually nothing more than the prescription for the items below)
- A large-scale business transformation initiative (a.k.a., digital transformation, total quality management, change management, business process re-engineering, etc.)
- Hiring spree (hire new employees or contractors – e.g., data scientists – to do the tasks above)
- The “Four Horsemen” of major technology projects:
- Point solution—marginally extend capabilities that are already there
- Integration project—try to connect systems, data, or both
- Build project—attempting to create something new (even if the core competencies aren’t there), starting with pilot projects
- Reboot—radical rip-and-replace technology-platform overhaul
Although they’re common business responses to the lack of hyperagility, these approaches aren’t realistic for many reasons. Real results don’t happen quickly. Expenses are too high. Implementation takes too long. Return on investment is questionable. And all of that unnecessarily increases risk to the business—something every business leader wants to avoid. Current business realities require something else.
A Fundamentally Different Way to Run a Business
What’s needed is an entirely new management approach. One that starts with demand being entirely comprehended, and supply being properly informed by that insight into demand. The business continually senses what people want, and responds by always delivering value. Revenue-impacting business decisions are fully informed, and optimized across the entire portfolio to deliver the maximum yield and return. And the business is measured in entirely new ways—for example, basing product production and placement decisions on entirely new KPIs like time to achieve target yield, instead of old KPIs, like inventory turns.
These sense-and-respond capabilities also form a feedback loop that symbiotically improves both demand understanding and supply optimization. When properly orchestrated, this system enables the business to respond faster, and delivers the hyperagility and new growth that incumbents seek.
This approach is what we call Cross-Enterprise Management.
But making this real is another story. How can an incumbent make sense of the large volumes of internal and external data needed to enable these real-time sense-and-respond capabilities? Can legacy systems and processes work—and the advantages of scale and stability be preserved—when embracing a Cross-Enterprise Management model?
We’ll answer these questions—and look at the technology needed to make Cross-Enterprise Management a reality—in the final blog post in this series.