by Michael Hugos on April 30, 2014

Get out a blank sheet of paper and make two columns. Label the first column “Efficiency” and label the second one “Responsiveness”. Now think about your company and its capabilities.

Under the first column make a list of the things that make your company efficient. Capabilities for efficiency are things like highly automated and very scalable production operations to do the things your company does whether it is manufacturing, processing of insurance claims or trading stocks and commodities. Another capability under the efficiency column is the use of low cost labor as much as possible to do these things. Think of companies like Wal-Mart or Amazon.com as examples of this kind of operation.

In the second column make a list of the capabilities that make your company responsive. Responsiveness comes from things like being able to sense and respond quickly to non-standard occurrences. When something out of the ordinary happens your company notices fast and people get involved right away. It also means your company makes use of well-trained and creative problem solvers to do much of its work. Think of companies like Whole Foods Market or Lexus as examples.
For each column, list the IT capabilities that support your company in that area. An IT capability or application system may to some extent support both efficiency and responsiveness but it predominately supports one or the other, that’s why it was put in. So list it in the appropriate column. For instance ERP applications predominately support efficiency. Sales force automation (SFA) applications predominately (hopefully) support responsiveness.

Next think about your company’s business strategy. Your company either explicitly or implicitly emphasizes efficiency or responsiveness as the main way to differentiate itself from its competitors. The primary way of attracting customers is either by lowering your costs or increasing your services. If your company’s strategy is mostly about lowering costs then ask yourself if this results in your company being the low cost leader in your industry. This means you should be in the top three such companies in your industry.

We all think about low cost as being what customers want but it’s time to think again. Most of the time what companies do is just provide somewhat lower costs on some items. They don’t really stand out in a crowd of other somewhat low cost competitors. It winds up making your company just another “me too” player in a field full of companies that claim to save customers money.

There are far more ways to use responsiveness to attract customers than there are to use efficiency. This is because there are so many different kinds of customers and they each are looking for slightly different mixes of products and services to meet their exact needs. Most companies need to realize that responsiveness is a better way for them to attract customers than efficiency.

Now think about how you can use IT to make your company more responsive to customers. Remember that ERP systems are mostly concerned with efficiency so leave them alone and look for other opportunities. Here’s a hint. There is a powerful combination of three IT applications that can be used to really accelerate your company’s ability to sense and respond to changing customer needs and market conditions. That combination is composed of business intelligence (BI), business process management (BPM) and simulation modeling.

How could you combine the capabilities of these three applications? How would you use them in a fast-paced environment to make your company more agile?

Learn more in my book Business Agility: Sustainable Prosperity in a Relentlessly Competitive World


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