Managing Costs and preparing for the future.
The future arrives quickly and in ways that continually surprise: only those ready to adapt will survive and prosper. Companies need to create the processes that enable them to adapt easily, quickly and effectively to changes and opportunities without harming other parts of the company.
A company’s processes do not exist separately from the people who run them. Administrators enable the rapid adaptation needed to succeed while protecting the whole company. By creating self-adaptive systems, companies are more than robust-they maximize potential. This requires redesigning systems to:
1. enable people to determine and make necessary changes so that processes adapt quickly, successfully and effectively
2. decouple processes so that changes in one part do not harm other parts.
The dangers of cost-cutting
When times are tough, companies cater to the short term and cut costs. However, long term needs are important. John Wells has identified six typical responses from companies that are facing cost cutting pressures.
• Level Zero. Leaders promise cuts but don’t deliver –long term success doesn’t materialize. Their focus is on other, narrow goals – not on creating a company capable of rapid and successful adaptation.
• Level One. Drastic, arbitrary, ill-conceived cuts are made that fail to deal with the causes of difficulties. Only by resolving fundamental, structural causes can a company hope to redress the situation.
• Level Two. Redesigning processes to meet current needs. While this cuts immediate costs, it fails to build for the future. This leads to higher costs as the company repeatedly overhaul the system to keep pace with competitors.
• Level Three. Although future needs are considered, plans are constrained by the need to stagger initiatives according to what can be afforded.
• Level Four. Leaders plan for the unknown by creating adaptable systems that are decoupled from each other so that targeted changes can be made easily, without harming other activities.
• Level Five. Leaders ensure that companies can weather storms. Systems are decoupled and people are seen as enabler of those systems. Decoupling is the first step, but the right culture need s to be in place to make it happen. Trust and enable your people to assess situations and make changes quickly and effectively. This is when companies are agile and adaptive.
The problem of IT
IT structure is problematic: it is company-wide and an entrenched monolith – so much so that IT is often quoted as a major barrier to change. It is essential that IT does not impede the ability of individual parts of a company to adapt. Decoupling processes are necessary for adaptive systems.
Only by creating a culture of self–adaptation will companies be future-proof.