The Power to Predict
Vivek Ranadive's book The Power to Predict - How real-time businesses anticipate customer needs, create opportunities and beat the competition (McGraw Hill, 2006) describes nine characteristics of real-time companies. These translate well to professional service firms. The ability to manage and adapt to change in real-time is an important aspect of strategic resilience, so with wording changed where necessary to reflect professional service firm terminology, here they are:
Client-driven - Real-time Firms define themselves as being, above all else, client centric. Concern for the client permeates all their technology, policy and other strategy and management decisions. The embrace all available channels to ensure that clients can conduct business with them in the most convenient, effective and profitable manner.
Embrace Cultural Change - They embrace the cultural change required to move from a collection of information silos to a cross-functional structure in which rich information flows between practice areas and functions. They recognize that change of this degree can inflame turf battles and scare those that are used to hoarding information. Therefore, they find ways to resolve these issues. While committed to placing the very best management information tools in the hands of all that need them, they also apply the "need-to-know" principle and enforce data security.
Management by Exception - These firms implement policies, procedures and rules that support management by exception. That is: management does not focus on controlling and ordering comprehensively through rules, so much as correcting issues that arise, that require corrective action. Although exceptions represent a small fraction of business, accountability is enforced because lapses in client service or quality are not tolerated.
Innovation - Real-time firms are not meek. They do not shy away from change. They react swiftly and easily to changing conditions, to retain and grow their business. In fact, they see each change as an opportunity to utilize their superior response capabilities to gain market share from their competitors. They realize that nothing lasts forever and are constantly searching for new ideas.
Merit-based Alliances - These firms do not form long-term alliances or interlocking relationships in the conventional sense. For them, the concept of static business relationships based on outmoded contacts is meaningless. Instead, relationships with suppliers and partners change quickly and unapologetically. Change doesn't happen on a whim but it is accepted as an inevitable part of valued long-term relationships.
Meritocratic and Entrepreneurial - These firms are not consensus orientated. Instead, they are meritocratic and fiercely entrepreneurial, preferring stars to team players. Most importantly, they provide all the tools their people need to become stars.
Leaders Provide Opportunity - Leaders don't empower employees. Instead, they organize the firm so that employees can empower themselves. They encourage employees to risk failure rather than accept mediocrity and the status quo. In turn, employees are not afraid to make mistakes.
Short Planning Cycles - Real-time driven firms have planning horizons of one year or less. Their planning specifically includes focusing resources on the invention, production and delivery of new services. Once these are proven, the planning expands outwards to capture long term value.
Event-driven Architecture (EDA) - EDA is the vital IT framework of real-time business. In EDA, future-predicting information is collected automatically and fed to all nodes in the firm where it is required. This is different to conventional "request/reply" approaches. Systems that deliver real-time market data to dealers in brokerage firms are a good example. In real-time professional service firms, these may be integrated into performance, competitive intelligence and other dashboards. A firm employing EDA makes its decisions based on the very latest information, enabling it to react far more quickly and accurately to change as it occurs.
Radanive then goes on to say that even real-time business is not enough to ensure superior results in the 21st Century. Leaders in real-time firms need to be able to employ the real-time data that they receive to operate predictively, thinking ahead and acting on what might happen as well as what has just happened. This requires an well developed ability to place individual events in context and to understand the dependencies that exist. This, Radanive says, is far more a process of constantly observing, measuring, correlating, predicting and adjusting, than about a big "Ah ha!" moment. He also emphasizes the need to strive for simplicity of action, without which nothing will be executed.
Comments, as always, are most welcome (see below.)