How Cognitive AI Can Finally Deliver Resilience to Enterprises
The current world we live in is tremendously complex, competitive and demanding in terms of our adaptive mechanisms.
“I’ve always believed that when the rate of change inside an institution becomes slower than the rate of change outside, the end is in sight.”, Jack Welsch
This is called the Red Queen’s race, based on the novel Alice in Wonderland. As you evolve, the other organisms in the system, including the environment itself, are also evolving. And the greater the number of co-evolving organisms, the faster the rate of change, so you need to run faster and faster just to hold your place.
Need for Resilience
In business development and economics today, robustness is no longer the point. Robustness means freeze due to incapability to adapt to changing reality. What organizations really need is resilience.
Resilience is an intrinsic characteristic of all living systems. Living systems are purposeful, complex, adaptive, and self-organizing.
Rodin’s (2014) resilience framework has five components:
Being aware of one’s situation and vulnerabilities
Being diverse, in order to mount a range of responses
Being integrated, in order to ensure collaborative solutions
Being self-regulating, in order to prevent disruptions from cascading through the system
Being adaptive, in order to improvise in the face of challenges
Organizational Resilience
In terms of organizational resilience, we need to look at the way a company adapts to its environment. Gulati (2009) identifies four levels of organizational resilience:
Level 1 firms talk as customer oriented, but they are too rigid, because they view the market through their own product portfolio
Level 2 firms systematically gather customer information and channel it to the appropriate units. They thoroughly understand their heterogeneous customer base, can thus distinguish precise customer segments and needs and can tailor their products accordingly. Despite that, they still focus on their products, viewing their customers through the lens of the company’s offerings, focusing on customers’ experience with their purchase while ignoring the larger problems that customers may be trying to solve
Level 3 firms focus first on the problems their customers are trying to solve, and only then turn to their products, configuring their offerings to address those problems. Further, they conserve resources by allocating them only to those tasks that will help customers most. They turn encounters with select customers from transactional to relational. They have mechanisms to foster greater integration between their disparate units. Sometimes they even bust those units apart, replacing them with structures more closely aligned with their customers. Despite all this, at a structural level, they are unwilling to eradicate the final rigidity that holds them back: their own borders. They think outside the box but live inside one
The most resilient companies—level 4 firms—are more attached to producing solutions to problems than they are to the products and services they offer. They are no longer concerned whether the inputs they use to solve customers’ problems are their own or assembled through a network of partners. The entire firm architecture reorients around a common axis—the customer and all borders are made permeable, the functional ones and also those of the firm’s boundary and connection with other partner companies
Resilience Practically
Technology
Technological advancements are disrupting the quality and even nature of services and products provided. New technologies emerge, rendering the ones new 5 years ago obsolete. Last year’s trends get economy of scale and network effects to spread like a virus and establish completely new business models and never before seen use-cases, transforming how our society operates, how it manifests and what it is.
Employees
Companies need to invest in continuous training and development to ensure their workforce isn't lagging. There's a constant need for employees to update their skills, teams need to cooperate across the organization, they need to be updated with current trends and share best practices globally.
Consumers
Today's consumer is online, well-informed, and has a plethora of choices. Loyalties can shift swiftly, making it imperative for companies to constantly align with customer needs and feedback. Social media has given consumers a powerful voice. A single negative review can go viral, causing significant damage to a brand. Companies need resilience to respond to such challenges promptly.
Competition
With the digital revolution, entering many business sectors has become easier. Startups and new entrants can disrupt the market, challenging established players. The business world sees constant M&A activities. These can reshape industries, requiring companies to recalibrate their strategies.
Connected Companies: Resilience through Merge of Organizational Structures and Information Technology
Organizations need to better structure themselves and get all the support from information technology they can get. Essentially, each organizational unit should be self-organized and use information technology to stay connected to the rest of the organization. Gray and Vander Wal 2012 introduce the idea of “pod” structured organizations.
Pods are organizational units are inherently modular so they can scale up fast. There’s a huge amount of tacit experience in each pod, because each pod is like a tiny fractal snapshot of the entire business—focused on customer value.
Platforms are then IT systems used by specific pods. They support they ability of pods to interact with customers in different contexts and environments. A shared platform allows them to compare their experiences, learn together, and keep track of information they all need to do their work. The most helpful knowledge should then be built into the platforms.
A service-oriented architecture (SOA) (Townsend 2008) is needed to allow coordination among individuals and small teams, while letting them plug in and work in the way they want to.
Connected companies are networks that live within other networks
Platform Functions to Support Pods
Information and Knowledge Management: A pod should have direct access to centralized databases, knowledge bases, and repositories. This enables them to make informed decisions without always having to go through a hierarchy.
Finance: Access to financial data, budgets, and forecasts can help the pod understand the financial implications of their decisions.
HR and Talent Management: Help with recruitment, training, and addressing any personnel issues. HR can assist with the growth and development of pod members, ensuring they have the skills needed to operate autonomously.
Legal and Compliance: If the pod is making decisions that have legal or regulatory implications, it should have a means of quickly consulting with the company's legal and compliance teams.
Supply Chain and Procurement: If the pod requires external resources, it should have the autonomy to negotiate with suppliers and make procurement decisions, while still aligning with the broader organizational policies.
Technology and IT: The pod needs robust IT support to ensure that its tech tools are always up and running. Direct access or connection to IT teams can help in implementing new technologies or tools specific to the pod's requirements.
Communication and PR: If the pod's actions or decisions have external communication implications, it should be connected to the company's communication and PR units. This ensures that the company speaks with one voice, even if many autonomous decisions are being made.
Other Pods: Inter-pod communication is essential. If multiple pods are working on related projects or share dependencies, they need to coordinate effectively. This might be facilitated by periodic sync-ups, shared tools, or liaison roles.
Strategic Oversight or Steering Committees: While the pod is autonomous, its actions should align with the broader strategic objectives of the organization. Some companies employ steering committees or oversight groups to ensure alignment without dictating day-to-day operations.
Customer Support and Feedback: If the pod is delivering customer-facing products or services, it should have direct access to customer feedback and support channels. This ensures that the pod can quickly adapt based on real-world feedback.
Structuring of an Example Company into Pods
Let's create a fictional example of a software company called "TechLoom" which wants to divide its product development team into pod structures to enhance agility and innovation:
Step-by-Step Decision Process for Creating Pods at TechLoom:
Clarify the Purpose:
TechLoom wants to respond more rapidly to customer needs, improve collaboration, and foster innovation by allowing smaller teams to own and iterate on specific product features.
Understand the Current Structure:
TechLoom has a traditional hierarchy with a centralized product development team, a separate QA team, design teams, and several layers of management.
Identify Core Functions or Services:
TechLoom identifies that within product development, they're managing: user experience, back-end infrastructure, user profile features, e-commerce integrations, and mobile app development.
Define Pod Responsibilities:
TechLoom decides to create five initial pods:
User Experience Pod: Focused on overall UI/UX across all products.
Infrastructure Pod: Managing the back-end, server health, and performance.
Profile Management Pod: Working on user profile features like login, user data management, and security.
E-commerce Pod: Concentrating on shopping, checkout, and payment integrations.
Mobile Pod: Developing and iterating on the mobile application version of the product.
Size Matters:
TechLoom adheres to the "two pizza rule," aiming for each pod to consist of 6-8 individuals. Each pod has a mix of developers, a designer, a product manager, and a QA tester.
Assign Leadership and Set Autonomy Levels:
Each pod has a lead (could be a product manager or senior developer) responsible for coordinating with other pods and higher management.
Each pod is given autonomy in decision-making concerning its domain but within the bounds of company goals and vision.
Facilitate Inter-Pod Communication:
Bi-weekly "Pod Sync-Up" meetings are instituted where pod leads share updates, challenges, and upcoming goals to ensure alignment.
Collaboration tools like Slack are set up with channels for each pod and cross-pod projects.
Implement Feedback Mechanisms:
Monthly reviews are established where each pod evaluates its performance, receives feedback, and adjusts goals or processes.
A shared dashboard is created for tracking progress, issues, and performance metrics for each pod.
Review and Iterate:
After six months, TechLoom reviews the pod structure's effectiveness, gathering feedback from each pod about what's working and what challenges they face.
Adjustments are made based on feedback. For example, TechLoom might decide to split a larger pod into two or change the responsibilities of certain pods based on the company's evolving priorities.
Integrative Cognitive Platform for E-commerce Pod at TechLoom
Companies need ways to constantly monitor, analyze, and adapt to change
Such integrative platform would have following functions:
Centralized Knowledge Base:
An integrated database pulling e-commerce-related information from systems like inventory management, user analytics, and transaction databases, norms and policies, best practice descriptions, strategic plans, tactic descriptions, brand identity, etc. The LLM sifts through vast data, categorizes information, and builds an index sustaining all possible angles of inquiry.
Intelligent Search:
A search function that scans the entire organization's data across all platforms. Able to find a document and feed it into the LLM to get the angle of the question the user needs for his current task. Search is enhanced by understanding context, user roles, and project specifics, delivering more accurate and meaningful results.
Direction of Communication:
A module where each member of the team gets perfect mix of information he needs to perform his tasks according to the up-to-date strategy and all other considerations. Explains complex documents in context and in simpler terms, maps strategy to actionable items, and provides examples or case studies for better understanding.
Data Insights:
A dashboard displaying metrics key for the particular team member, giving him a look at the causalities between what is going on in the enterprise and what how it manifests in OKR/KPI performance. Explains how each metric impacts business objectives, and can infer relationships based on historical data and predictions.
Idea Formulation & Conceptualization:
A brainstorming space for coming up with improvements in policies, strategies, tactics, implementations. Suggests alternatives how things could be done and what could be expected outcome. Example problems solved could be new checkout features or loyalty programs. LLM assists in shaping these ideas with market trends, competitor analysis, and potential ROI calculations.
Decision Assistance:
A module tailored for cracking dilemmas by providing data-backed recommendations, weighing pros and cons for each scenario. Examples of problems include introducing new payment methods or optimizing shipping logistics.
Stakeholder Communication:
Templates tailored for communications with stakeholders, such as suppliers, logistics partners, or payment gateways. The system automatically translates strategy and decisions made into ready-made communications to spread the message to stakeholders faster and in a more memorable and explorable way, than in meetings. Assists in crafting precise, data-backed communications to ensure smooth e-commerce operations.
Onboarding & Training:
A training space with resources for new members or upskilling. Personalizes training based on the role, team objectives, and individual's background, ensuring faster onboarding and more relevant skill development.
Feedback & Continuous Improvement:
A space for feedback on projects, tools, or team dynamics. Analyzes feedback, identifies patterns, and suggests actionable steps for improvement.
In this exploration, we've unveiled the transformative potential of integrating cognitive features into organizational structures. By conceptualizing and embedding these advanced capabilities, particularly through platforms tailored for specific pods, companies can achieve unprecedented levels of agility, data-driven decision-making, and proactive adaptability. This integration not only streamlines operations but also makes organizations remarkably resilient. In a business landscape characterized by rapid change and uncertainties, such resilience—fostered by the harmonious blend of human expertise and cognitive technology—positions companies at the forefront of innovation, ensuring their continued relevance and success in the face of future challenges.
