Adaptive systems are a special class of open systems that are continuously evolving. They feature dynamic networks of agents that interact with each other and their environments.
Examples of complex, adaptive systems include ant and bee colonies, the stock market, and biological ecosystems, as well as human organizations such as political parties, companies, and cities. And because of its ability to shift and change, the behavior of the whole system cannot be predicted by just analyzing its parts in isolation.
So what happens when we reimagine a company more like an adaptive organism, rather than a stable machine? We can tap into an ever-changing array of stimuli to instantly decide on the best course of action.
Why Companies Can No Longer Operate Like Machines
In today’s knowledge economy, we tend to predict how a business is doing by measuring key components like sales, finance, and HR. However, this analysis would only be accurate if the corporate world is a closed system, which was the case years ago. Historically, we designed companies like machines. We constructed the organizational chart to divide large chunks of work and separate them from each other into finance, sales, operations, and so forth. We devised workflows that process inputs into outputs: raw materials into products; prospects into customers; and complaints into resolutions.
This kind of company – the divided company – needed separate functions. In turn, decision makers did not always have a sense of the larger environment they were working in. Over time, they became masters at handling tasks, but lost touch with the bigger picture. They were disconnected from customers and the overall purpose of the organization. Even worse, inelastic policies and procedures were needed so people could function efficiently without impeding on each other’s work.
In this case, the problem was scale. As the number of employees grew, the profit per employee shrank. Efficiencies of scale were offset by an increase in bureaucracy, which led to siloed and disconnected divisions and overhead costs that grew as the company expanded.
Eventually, the company reached a point where the cost of controlling such a business exceeded the benefits of new growth. The company became so focused on its internal structures and organizational chart that it lost touch with its customers.
AI Taps Into All of a Business’ Senses to Predict and Win
To compete, companies should use advanced technologies, such as artificial intelligence (AI), to make sense of an exponentially growing volume of inputs. This approach allows two-way communication between humans and systems and the opportunity to take maximum advantage of low-friction capabilities.
Natural interactions that remove unnecessary aspects from our daily work lives allow us to seize the full promise of hyperconnectivity. These capabilities drive better ease of use, require less training, and accelerate time to meaningful insight. In essence, the rigid corporate machine of the past is transformed into a responsive organism – a connected company, so to speak.
A connected company is a complex, adaptive system that functions more like an organism than a machine. It contains a distributed network of brains, eyes, and ears everywhere – whether they are employees, partners, suppliers, customers, or assets.
When you design for a connection, you design for a company powered by people. But more important, you design for agility, robustness, resilience, productivity, and longevity – all characteristics of a Live Business. And when your company can respond dynamically to change, it can learn and adapt amid an uncertain, ambiguous, and constantly evolving environment, continuously learning as it moves forward.
For more on the digital economy and its impact, check out the research paper “Live Business: The Digitization of Everything” on the Digitalist Magazine online.
Dinesh Sharma is the Vice President of Digital Economy at SAP.