The new business operating model in the next normal
A decentralized company that is globally and intelligently connected, one whose employees can work from anywhere, whose customers and partners can succeed from anywhere, and whose definition of success includes all its stakeholders, is a boundless company.
A boundless company means boundless access to talent, boundless inclusivity and equality, a boundless platform for innovation, boundless ecosystem of ecosystems, boundless opportunities to co-create value at the speed of need, and boundless business model innovation opportunities. A boundless company will require purposeful relationship transformation in decentralized and digital-first next normal. It also requires alignment, execution rigor and most importantly a new operating model.
Becoming boundless is the logical evolution of the Connected Company in this digital-first, decentralized everything world. Boundless Companies transcend the limits of traditional organizations. They are designed to achieve Holistic Success, generating value for their customers, business partners and communities as well as for themselves and their employees. This success is realized by resources who are individually empowered to be Autonomous, Connected and Mobile, and who are collectively organized to be Integrated, Distributed and Continuous.
In this article, our second on the Boundless Company, we discuss how companies can and must become boundless in their responsiveness to both current and future customer needs and market conditions and in their associated decision making and action taking. We introduce the Boundless Operating Model, our update to other contemporary sense-and-respond or situational awareness models, as a guide to help organizations design and develop the necessary processes and capabilities for amplifying and accelerating their responsiveness.
Models of Situational Awareness
How do companies make themselves aware of what’s going on around them and how do they respond to those inputs? As we started to think about how companies can develop these capabilities, we looked at other situational awareness models to see what we could learn from them. One of the models that we have used is known as the Observe-Orient-Decide-Act loop, aka the OODA loop, that was designed by military strategist John Boyd. His goal was to explain how fighter pilots can succeed in a combat setting. His insight was that the ability to sense and respond to rapidly changing conditions more quickly than an adversary gives the pilot a competitive advantage. The OODA loop describes the processes required to sense and respond and enables the military to design the most streamlined ways of doing so. This model has been broadly adopted by the military and by businesses who can use it as a conceptual framework for designing and developing business management processes. The goal, as in the military setting, is to enable faster strategic decision making and innovating than competitors through effective process management.
As we did our research, we realized that the OODA loop is very similar to another sense and respond model that we have discussed in a previous article, namely the Sense-Perceive-Decide-Actuate model of autonomous vehicles (see below):
In this model, the need for the process to work in a continuous loop is not clearly described but is of course critical to the vehicle’s ability to act effectively. Otherwise, in nearly all respects, the models are identical, showing that responsive systems in complex and dynamic environments have the same or equivalent process needs, whether those systems are controlled by biologic, technologic or hybrid intelligences. All can be Boundless!
The Boundless Operating Model
Both models are very useful but in our view they are missing, or are at least silent on, three aspects of the connected world that are of great importance to contemporary businesses:
First, boundless companies live as part of markets and ecosystems and communities, not apart from them. The idea of a company going it alone is no longer tenable. Identity is not defined in terms of isolation and exclusion but in terms of connectedness and inclusion. We will address how to build a Boundless Identity in a future article. From a model perspective, we want to be able to show that a boundless company is connected to a larger ecosystem and that everything it does happens within the context of that ecosystem.
Second, situational awareness by itself is no longer enough. Today’s company needs to be “horizonally” aware as well. Horizonal awareness means being connected to the larger world beyond the immediate here and now. Companies need to be able to see “further down the road” in exactly the same way that an autonomous car can be aware of conditions anywhere along its journey and can take active steps to anticipate and avoid problems, all because of its global as well as local connectedness.
Third, boundless systems are self similar at different levels (also known as fractal). This means that individual resources within a boundless company are themselves boundless and have the same responsibility as the company to be responsive to the immediate needs of their customers and to current market conditions, as well as to be attuned to and prepared for future ones. And just like the company as a whole, when individual employees and teams take action they do so in the world, not in a vacuum. Most models ignore the context within which work takes place. Our model must place action and reaction in its context, local or global, and it must be able to work at the individual, the team and the company levels.
The outcome of these considerations is the Boundless Operating Model, shown below in its overview version. We want to introduce the main features of the model here and will dive into details in a follow-up article.
The most obvious difference in this model compared to the other two above is that we have separated the four processes into two domains, namely Connection and Autonomy. On the left hand side of the model, the domain of Connection, we have the Sense and Act processes which happen in, and in connection with, the larger world of which the system is a part. We have shown two loops on this side. The smaller loop (in yellow) describes the local and immediate world in which the system acts. This is the same as the “situation” in situational awareness. The fighter pilot, the autonomous car, the company and the team, sales rep or project team all have to be enabled and equipped to sense and respond to the situation they find themselves in, to react to a car slowing down in front of them, to have the information available to them to respond effectively to a customer call, and so on.
The larger loop (in green) describes the global and near future or emerging world in which the system also has to act. The autonomous car is not only connected to the other cars around it and knows through its sensors its real time position relative to them and the other entities on the road, it is also connected to the larger world and knows the emerging conditions further on down the road. As a result it can predict the likely impact on its own “mission” and take pre-emptive actions to avoid it. All companies now have access to predictive and prescriptive data analytics and the successful ones will be those that use them to make informed decisions and take anticipatory action, either to avoid knowable challenges or to exploit knowable opportunities or both. We call the green loop “horizonal” to express this broader context in both time and space that all companies must be connected to in order to succeed.
On the right hand side of the model, the domain of Autonomy, we have the Frame and Decide processes. Of immediate importance here is that in a post-pandemic, do-anything-from-anywhere world, a company’s teams and employees are all increasingly distributed and remote from the center and must therefore be given the Autonomy to make timely and accurate decisions about how to fulfill their missions. The company will need to revamp its management and supervision processes in the form of resource orchestration in order to deal with this decentralized and autonomous workforce. We will return to the resource management theme in the context of this model later and will show how and where orchestration itself and other management functions like planning and forecasting take place. Meanwhile, the company itself must also be autonomous in the sense of having a unique identity and mission, despite its connection and its boundless nature.
As previously mentioned, the Boundless Operating Model is designed not only to support the requirement for all companies to have situational and “horizonal” awareness but also to work at both individual and collective levels. Companies can use the model to design and develop processes for individual employees, teams of employees as well as organization-wide business management processes.
As a final point, the naming of the model’s four processes is virtually identical to the two models described above, with only a few minor differences. We believe Sense is more appropriate than Observe given that this model can apply as well to technology systems like autonomous vehicles as it can to human organizations. We prefer Act to Actuate simply because it feels more direct. The only significant difference in the naming is Frame instead of Perceive or Orient, and we chose it because we feel that Frame is a more action-oriented word and it connects the model to the disciplines of design thinking and innovation which we think continue to be relevant and important to designing for the Boundless paradigm.
Purpose and principles of a boundless company
Another important distinction with the new operating model is the important role of purpose. Purpose has to guide relationship transformation in the next normal. It is about a mindset shift. Companies need to transcend their traditional operating models, limits and definitions of success. For example, in the next normal, a shift in mindset may include:
From Profit to Purpose From Standalone to Connected From Individual to Ecosystem From Hierarchy to Network of NetworksFrom Shareholders to Stakeholders From Office to Anywhere From Centers to Everywhere
A shift in mindset with a more purposeful operating model can lead to the following principles of a boundless company:
These are the principles of a Boundless company, the new model for success in the digital first, decentralized everything world where you need to be anywhere and everywhere. We have witnessed arguably 10 years of cultural and technological transformation in the past year. We also experienced evolving societal values, customer and employee changing expectations, all pushing companies to transcend their traditional roles. The transition from profit to purpose as the “job” of a company, or as “the business of business”, is a symptom of a larger shift, really a paradigm shift in the very definition of what a company is or should or could be.
A boundless company has to be CONNECTED to the world, to customers, to markets, to unknowns. A boundless company has to be able to INTEGRATE all the inputs from the world to make sense of them. They come in from different media, different channels in different forms A boundless company has to give their teams AUTONOMY to act and react rapidly to customer needs A boundless company has to build CONTINUITY, so it is not working on historical data but real time and future looking signals. It has to speed up your cycles to handle this. Activity Based Intelligence (counter terrorism), not historical data analysis. A boundless company has to build MOBILITY to do anything from anywhere, serving customers everywhere A boundless company needs DISTRIBUTED capabilities and resources, to recognize that customers live, work, shop, play locally and decentrally, therefore able to reach all stakeholder wherever they are. A boundless company has to act for HOLISTIC SUCCESS, focusing on the success of customer, employees, partners, communities and their environments.
In short, the Boundless Operating Model is an evolution of other situational awareness or sense and respond models that are designed to reflect dynamically changing conditions (unlike for instance the PDCA or Deming Cycle which was designed for continuous improvement in stable conditions or relatively controlled environments). It places an autonomous entity, be that an employee, a team or a company, in the context of a connected world both locally and globally and it can be used by companies as a conceptual model to identify, define and develop processes that will enable it to act decisively and at the speed of need in that world.
In our next article on the Boundless Operating Model we will focus on the new management processes that will be needed by boundless companies to enable and direct their equally boundless talent and other autonomous resources.
This article was co-authored by Henry King, a business innovation and transformation strategy leader at Salesforce. Henry King is an innovation and transformation leader at Salesforce and author of Flow Design, a new design paradigm for organizations and experiences based on the principles of movement and connections. King is a former CIO with 30 years of consulting and executive experience, both in the US and internationally, with expertise in innovation, design thinking, and information technology. King also teaches innovation and design topics at the School of the Art Institute of Chicago and the Institute of Design.