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Sense and Respond

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What Is Sense & Respond?

"Sense and Respond" is a concept which was developed within the science of control theory several decades ago. Historically the concept was used in closed systems such as factories or refineries and involved making comparisons between measurements of industrial processes and the expected values of those measurements. Operating settings of the systems involved would then be adjusted in order to reduce or eliminate any discrepancy. Starting from about the early 1980s use of the term spread to include descriptions of behavior in certain open systems, including chemical, biological, ecological and cybernetic systems. These Complex adaptive Systems are systems in which the behavior is emergent, and evolves from a limited set of basic rules and constraints.

The Sante Fe Institute is one of the leaders in Complex Adaptive Systems research, and describes "sense and respond" behavior as being based on an interative "Sense - Interpret - Decide - Act" cycle. This cycle is very similar to the famous OODA loop theory developed by Air Force Colonel John Boyd to explain why US fighter pilots were able to outperform their North Korean counterparts during the Korean War.

The idea of "Sense and Respond" as a business concept was first articulated by Stephen H. Haeckel in 1992. His article in the American Management Associaton's Management Review introduced the concept as a label representing a new business model, approach to business strategy, and a set of principles and tools for becoming what he called an Adaptive Enterprise. Specifically, Haeckel identified six concepts which are core to becoming an adaptive enterprise:

  • Knowing earlier
  • Managing by wire
  • Dispatching capabilities from the customer back
  • Commitment management
  • Authentic and rigorous negotiation
  • Designing an organization as an adaptable system

Why Should I Care About Sense & Respond?

Most executives in business today acknowledge that we live in an era of hyper-competition, where competition is based on nonstop strategic maneuvering among competitors, dynamic price-quality positioning, and brutal competition to protect (or invade) existing product based or geographically based markets. In this world, it is is very difficult to build and maintain a truly sustainable competitive advantage. Many firms in a hypercompetitive environment are actually hanging on for dear life, fighting for their very survival.

Given this back-drop of hypercompetition, today's business organizations are desperate to identify the changes that will allow them to survive, prosper, and profit, today and into the future. And while many firms have tried reengineering, process improvement initiatives, right-sizing, TQM and other quality initiatives, benchmarking, and other efforts to gain and sustain an advantage, the gains from these initiatives are often ephemeral and / or quickly copied by competitors. Though executives recognize the need for a deeper and more transformational change, such change has proven difficult to effect. Stephen Haeckel explains why in this quote from his Management Review article:

Business theories are different than business models. Business models can be thought of as high-level strategies for converting customer needs into shareholder value. A business theory is an institutional sense-making framework—an overarching context within which business models are conceived, and to which they must conform. It is a managerial framework that provides internal consistency to decisions about enterprise purpose, strategy, structure and governance. And it must be consistent with the external environment in which those decisions will be made. A managerial framework shapes the internal logic that informs business practices, principles, measurements and the predispositions of policy-level managers. Over time, it becomes deeply embedded and increasingly tacit, resulting in underlying premises that are rarely examined, even if there is general recognition and acceptance of a new set of external realities. That’s one important reason why it is so profoundly difficult to effect truly transformational change.

Sense and Respond and the Adaptive Enterprise orientation represent a truly transformational change, the kind of change which is needed to remain competitive now and for decades to come. As the jacket notes from the book The Adaptive Enterprise point out:

Unpredictable, discontinuous change is an unavoidable consequence of doing business in the Information Age. Because this intense turbulence demands fast — even instantaneous — response, many large companies are fragmenting themselves into smaller, quick-response units. But in doing so, they relinquish important advantages of scale and scope. Is it possible to have it both ways? Can large, complex firms adapt successfully and systematically to unexpected change? "Yes", says Steve Haeckel, "but only if leaders learn how to manage their organizations as adaptive systems."

How Can Sense & Respond Benefit My Organization?

Many current management challenges, including the directive to "become truly customer-oriented" are nearly intractable problems, due to the prevailing "business theory" in place within an organization. Likewise, the idea of "empowering employees" often fails to produce the expected impact, as the outdated "make and sell" paradigm is rooted firmly in place. However, switching to a post-industrial "Sense and Respond" paradigm results in these problems disappearing or being deal with systematically, as a natural consequence of moving to a model where the prime function of the business is to sense - and then respond effectively to - changing customer requirements and market conditions.

Additionally, Sense and Respond results in a critical timing advantage in which the firm addresses customer needs earlier in the adoption lifecycle, when innovative product and service offerings are most profitable. Stronger engagement with the customer community also reduces risk associated with investment into research and development and allows for a faster iterative feedback loop between the firm and its customers.

When an organization has become an Adaptive Enterprise which fully embraces the Sense & Respond paradigm, it becomes alert, aware, nimble and ready to react, much like the zebra which senses the danger of an approaching lion on the savannah, and scampers out of harm's way. Sense and Respond may be the difference between survival as an independent entity, or a painful and value-destroying failure for firms operating in today's chaotic and hyper-competitive markets.

How Do I Implement Sense & Respond?

Sense & Respond is not a product, or a suite of products, or a simple changing to operating tactics which can be mandated from the top down and then ignored. For a firm to move from an Taylorian "make and sell" paradigm to "Sense & Respond" requires a fundamental reinvention of the enterprise.. a change in its very DNA if you will. In the same way that a reptile cannot become a mammal by gluing some hair to its body, an enterprise cannot become an Adaptive Enterprise by rolling out a new technological product, or by issuing a few memos to the rank and file.

Of course, no firm can stop doing business today and take years to reinvent itself in the "Sense and Respond" mold. A firm can, however, begin adopting the behaviors of a Sense & Respond firm today, and allow the new business theory to percolate throughout the organization over time, during which the organization continues to operate using a hybrid of the "make and sell" and "Sense and Respond" approaches. And while this might sound somewhat akin to changing a flat tire while the car is still moving, it appears to be the best way forward for firms who choose to embrace the new way of doing business which is demanded by our current environment.

New technological capabilities are typically required to make this transition, and this is where Fogbeam Labs can help you. Our products include offerings for Enterprise Social Networking, Information Discovery, Enterprise Search, Knowledge Management and Collaboration which support the ability to detect signals faster, distribute and reuse knowledge more efficiently, and extract meaning from apparent noise.

For more information on how our offerings can help you compete and survive in these challenging times, contact us today.

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Citations

This page is based, in part, on material gleaned from the corresponding Wikipedia page, as well as the main Sense & Respond resource site at http://www.senseandrespond.com/