Businesses that don't become "adaptive enterprises" may be doomed to failure in a Darwinian business world, Hewlett-Packard Co.'s chairman and CEO, Carly Fiorina, said Tuesday.
Fiorina admitted recently that HP's "adaptive enterprise" was an elusive concept. But at Forrester Research's Executive Strategy Forum in Boston, Fiorina discussed the idea in detail. She described how to achieve it and why businesses should strive for it.
Fiorina described the adaptive enterprise concept as a general framework for thinking about all aspects of a business, including its customers, services, partners and technology. In an adaptive enterprise, processes are interconnected, and strategic business decisions can be implemented quickly, broadly and easily.
"The adaptive enterprise is a state in which the fundamental technology in an enterprise enables anything the business chooses to do," Fiorina said. "If I make a decision to change something, how long does it take to do it?"
Building an adaptive enterprise requires four steps, Fiorina said. First, companies must simplify their processes. Complex organizations lack adaptability, she warned, and their inflexibility drives higher costs.
Second, organizations must standardize, she said. Standardized processes "drive increased flexibility and drive down costs." Next, organizations must become more modular. Fiorina claimed that most customers get only 30% utility from technology investments they have already made, and she argued that, with modularization, they will get 80% utility.
Finally, Fiorina said, organizations must integrate internal functions, ensuring that all their processes work together. Integration is only possible if the first three steps toward becoming an adaptive enterprise have been completed, she said.
"This sounds right. If you can't adapt, you can't survive," said conference attendee Ian Goldsmith, director of product marketing at Digital Evolution, a Santa Monica, Calif.-based Web services company. "The rate of innovation is stunning."
Fiorina gave a few examples of how HP is working to become an adaptive enterprise by shunning complexity and embracing the ability to simultaneously make and implement business decisions. When Fiorina first arrived at HP, the company was hosting 1,600 Web sites for employee training, but it now has a simpler system. Fiorina also said that at one time it took more than five weeks for HP to add a supplier to its supply chain, but now it takes less than two hours.
For Dave Goelz, a senior manager with MCI's vertical solutions group, Fiorina's idea of an adaptive enterprise is both obvious and elusive. "This stuff isn't rocket science, but we complicate it," he said. "Part of it is just about being a good company."
Fiorina also spoke broadly about the future of technology. She said that we are leaving an era in which people looked for the next "big thing" and "killer apps" and moving into an era in which "every process will become digital, mobile and virtual." She also saw a future in which small companies may struggle for survival against bigger, one-stop shops.
"There will be small startup companies, ultimately, but those small companies will need to find ways to achieve sufficient levels of reliability," she said. "The technology industry will recover … but few [companies] have the scope to sustain innovation."
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