Business Ecology and Customer Connections

A recent conversation with Harvey Koeppel, executive director of the Center for CIO Leadership, got me thinking about context and its role in business ecology. Koeppel made the point that companies in both the developed world and in emerging markets are focusing more on customers. In established companies in the developed world, that translates to consolidating multiple data warehouses to improve the quality and timeliness of customer data across the enterprise.

In emerging markets, there's the same interest in being more customer driven, but the approach is radically different, focusing more on web, mobile, broadband and real-time analytics to get intelligence from a million tweets and quickly feed that information to front-line salespeople to influence which products they're pushing right now. In both cases the customer focus is being driven by the C suite, and it depends on customer analytics, but it's a completely different game, Koeppel says. In part there's an inherent difference: established companies have decades of legacy systems to support, and the vast majority of their budgets go to keeping those things running and adapting them to new environments -- e.g., putting a web front end on an old Cobol system -- while emerging companies start out using broadband and capturing and manipulating data in real time. Established companies are focusing more on their internal business ecology while emerging companies more easily see themselves and operate in a broader ecosystem.

A similar gap is emerging between the public and the private sector, Koeppel says -- in particular in government's embrace of social media and a focus on data over process. The private sector historically has focused on business process, then applications, then finally data, according to Koeppel, himself a former CIO, but what's happening in government is turning that on its head. Initiatives like Data.gov and New York City's Big Apps contest start with the data -- lots of data -- and then engage people to make it useful with some interesting and surprising results. The World Bank just today announced that it was opening its data catalogue and holding an Apps for Development competition.

All of this is where the connection to business ecology comes in. No organization exists in a vacuum. Whether we talk about companies in emerging markets engaging on the fly with customers in a giant sensing/responding mode, or government entities opening the floodgates of raw data to let constituents make something useful and unexpected of it, the way the world works is changing. It is, I think, a time to avoid incrementalism and short-term thinking. It is a time to question existing business models and reconceive them within a more porous context, in relation not only to customers but also to suppliers, partners and other entities. It's time to build a new kind of structure, one that focuses less on controlling the environment and more on finding a place within it.

I wonder, however, if -- technology issues aside -- large enterprises can overcome their own solipsism to recognize the relevance of other entities, processes and frames of reference. Can they overcome their own legacy mental models to place themselves in a larger context? Of that I'm not so sure.

Comments

[Roanne Neuwirth]

Abbie - this is a nice post, and you outline the challenge for large enterprises well. This is where community comes in. Those successful large enterprise who thinking long term, and placing themselves in a larger context, are proactively and deliberately leading and participating in communities with their customers, their employees, and other key stakeholders. They are focused on evolving mutual value and extending opportunity in the context of their broader environment.

[Michael McDermott]

I am glad to see folks discussing emergence vs. entrenched players. There is an entire set of driving forces and circumstances that differ considerably with life cycle phase. These driving determine how an organization should enact/enable/approach change. If a company/product progresses from emergence to growth to mainstream, there is an overwhelming tendency to optimize around that market/product. This is all well and good, but continued optimization (whether with legacy or modern enablers) is a game where a company assumes an equilibrium. In reality the equilibrium, if it exists at all, is at best punctuated.

Through continuous optimization of products/processes/technologies, etc. a company becomes entrenched and starts to ossify. The trick to fitness is to have structures that are quickly adapted to new conditions as well as having a highly developed observation and detection system that alerts the company to weak signals - signals that portend the emergence of something that might disrupt (or viewed another way, enable) growth. This depends entirely on whether the signal is found, realized for what it is and acted upon with respect to their own set of circumstances.

Even within industries that have a slower dynamic, companies tend to add weight as they age. This weight is a kind of operational complexity that erodes effectiveness and efficiency. If this internal tendency is not recognized, the fitness of the organization will suffer even in a stable environment until complexity outweighs operational capability and the organization is forced to transform - radical departures from the norm - or die out.

Michael

[Harvey R Koeppel]

Thanks for your commentary Abbie. Your message should serve as a wake up call for those entities who are still consumed by the considerable momentum of their legacy heritage. The work of Business "Ecologists" should additionally be recognized and accepted by all enterprises as an important way forward in support of the growth and development of sustainable customer-focused business value everywhere...

Harvey R. Koeppel
Executive Director
Center for CIO Leadership