organism’s survival depends on (a) perception of information from the environment (b) correct interpretation and processing of that information, and (c) communication of information as signals that are sent quickly to the parts of the organism that “need to know” and act. This process requires efficient internal communications and coordination so that resources can be deployed in response to the signal for a swift and appropriate response.
Just like organisms in an ecosystem, businesses consume energy and resources and then create solutions and structures from those resources. The resources and results primarily take the form of information: businesses are living organisms that consume and produce information. Their agility and adaptability depend on how effectively they metabolize that information.
For example, consider how our brains and bodies act on signals from the environment and interact with the world based on integrated information systems and feedback loops. When the amygdala (the part of the brain that registers fear or desire) identifies a threat, our sympathetic nervous system (which controls the “fight or flight” response) reacts in a highly orchestrated way. Another part of the brain—the hypothalamus—instantly sends a signal throughout the body. This triggers the adrenal glands to release adrenaline, which causes a cascade of responses that we are all familiar with from instances when we are startled, such as if a car speeds toward us as we step into a crosswalk. The heartbeat increases, breathing becomes more rapid, and we feel a surge of energy. The brain also executes a new computational task—coming up with the appropriate expletives to hurl at the driver—and anticipates likely outcomes (Yikes, is he getting out of his car?). Everything works holistically to respond efficiently and effectively to the stimulus, with very little friction.
It’s easy to see why holistic and synchronized information flows are essential to survival. It would not do us much good if the brain had to rummage around our past memories of speeding cars and try to decide what to do. The same kind of holistic, synergistic, and simultaneously integrated flow of information is also what’s needed to create transformative AI solutions of the sort we read about in Allen Perkins’s story.
For an organization to function effectively, the systems for managing information and the processes for supporting information flows have to be flexible, adaptable, and responsive to market conditions. This is the “organic” nature of the organization.
In this organic view of the enterprise, the subsystems within companies, such as business units and departments, are analogous to the organs and biological systems in an organism. For these departments and functions to operate smoothly, their information needs have to be met. Marketing needs product specifications and features from the enterprise’s engineering and product development functions. Sales requires support collateral and leads from marketing. Finance needs customer and order information from sales. Each of these functions needs reliable information to achieve its objectives.
Let’s take the metaphor further. Why does it matter how effectively information flows in the company? Because the entire economy is a collection of organizations interacting in an ecosystem that follows the same principles that living biological systems follow. Just as in a biological ecosystem, the economy is a collection of entities operating in interdependent networks and competing for resources. In the case of business, those resources include time, money, talent, expertise, and the attention that ultimately comes from customers. Information flows—both within companies and in the broader economy—are at the center of this activity. Our society and its associated value chains, knowledge networks, and information flows are endlessly complex, interrelated, and nuanced, containing layers of systems upon systems at every level of interaction—from the most basic to the most mind-bogglingly complex.
Just as environments select for the strongest organisms in a particular set of conditions, so too does the economy select for the strongest and best-adapted organization in a particular market sector or niche. Many companies will go extinct as our economic environment continues to change. Yours can be one of the survivors, but only if it can adapt to those changing conditions.
SERVING CUSTOMERS EFFECTIVELY IS WHAT MAKES COMPANIES SUCCESSFUL
In biological systems, organisms succeed because they can find food and reproduce (grow). What is the analogy to this in business? It is serving customers. The enterprise that best serves the customer grows and thrives at the expensive of its competitors.
While customer-centricity is ostensibly a major focus of most enterprises today, in many cases the understanding of customer experience is immature, or is siloed in parts of the organization that “own” one aspect of customer service or customer support. That understanding of customers is largely disconnected from other critical processes. Using the entire customer journey as the anchor to programs—whether traditional information projects or cutting-edge machine learning programs—is critical to success. (I describe the customer journey in more detail in chapter 3.) The customer journey is not a single thing; it encompasses everything that the enterprise does, directly and indirectly, that impacts how its customers perceive their interactions and the value they receive. If a system or process cannot be tied to value for the customer (whether that customer is an internal consumer of information or an external paying-end customer), then it cannot be justified.
The real challenge to delivering value occurs when systems are part of the foundation for a capability that can impact the customer, but customers don’t interact directly with those systems. Infrastructure programs are notoriously difficult to justify because of the lack of a clear line of sight to their impact on the customer; but when the infrastructure is faulty, serving the customer becomes slow, complicated, or impossible. When the customer is internal, this is even more of a challenge. (I will discuss the “internal” customer in chapter 8 on productivity, but the same principles largely apply in that context.) In chapter 3, I will define an approach and framework that will show you how to establish the linkage between systems and customer value and how to communicate the value any project in the enterprise has for the customer experience.
Some of these linkages are indirect. Others may be difficult to measure. However, they all should be traceable to activities and capabilities that produce customer value. Everything that an organization does needs to improve how it serves its customers and how the enterprise creates value; each program, project, investment, and decision should be linked to a metric that impacts the customer’s perceptions of their experience and the value that they receive from their relationship with your organization. High-fidelity customer journeys (described in chapter 3) are the key to successful AI initiatives such as personalization and campaign optimization, which can transform the customer experience and deliver new efficiencies and capabilities from human augmentation and machine-enabled automation.
AGILITY AND ADAPTABILITY DETERMINE COMPETITIVE SUCCESS
It’s not enough to be customer-centric. You must also operate quickly. Speed matters in the biological world (ask the early bird that gets the worm), and increasingly, speed and agility are the factors that differentiate successful enterprises from those that lose the race.
Every enterprise needs to adapt to changing conditions in the environment (including customer needs, competition, changes in technology, and macroeconomic shifts). The faster it can do so, the better it can serve customers and beat the competition. Getting products and solutions to market faster requires faster decision-making, faster feedback, faster iterations, and faster experimentation—and each of these requires faster information flows. Friction in processes, systems, and technologies impede the flow of information and therefore slows decision-making.
Unfortunately,
