Adaptive Organization

THE FUTURE OF IT

In Senge’s account, Ford’s Marv Adams saw learning organization work as a way both to lead change and to build the capacity to respond to it: what he calls “adaptive organizations.”

“As a CIO, you have a unique perspective from which to see a business as a whole,” says Adams. “Today, two things stand out: the extraordinary level of connectedness of the organizations we are creating, and the interdependent and volatile environments we are operating in. At Ford today we have over three hundred thousand IT users, in twenty basic business functions, interacting through two thousand four hundred application programs, developed by six thousand IT professionals in ten different IT development groups, working with two hundred different IT vendors. And all this is exploding with the proliferation of hand-held and embedded computational devices: there are now some 35 billion microcontrollers, 750 million smart sensors, and 1.5 billion mobile IT devices in operation in the world and the numbers are growing exponentially. This higher connectivity brings greater volatility and nonlinear effects where changes arise suddenly that could not be predicted from the past. In the four years following 2000, worldwide financial damage from intentionally dangerous ‘malware’ grew tenfold to over $200 billion.

“This connectivity and volatility mean that we have to manage in a very different way. Keeping pace with the pace of change is essential to succeed. We can’t do that through our traditional top-down control mentalities, but we also can’t do it with no structure and total chaos. Continually finding the right balance between too much and too little structure will be a key to having the adaptive capabilities to survive.”

Adams believes that increased adaptive organizational capabilities represent the future of IT within organizations. “Because we are involved with infrastructures that knit together the enterprise, IT professionals have a powerful window onto how the organization succeeds or fails in operating holistically.” While these professionals’ technical responsibilities will continue, a whole new way to contribute is emerging: “helping people see patterns and manage complexity,” says Adams. “People are overwhelmed with information. This cannot be solved by just building better IT systems. It requires collaboration and systems thinking in the context of pervasive computing and real-time systems.”

At the time of this account, Adams was developing a new generation of IT staff who consult with business managers on a host of strategic, operational, and cultural change issues, using a novel synthesis of ideas from systems thinking and complexity science. They used systems thinking tools to help people visualize systemic patterns, and drew on complexity theory to frame strategic change options, such as reducing variability, changing measures, and creating new “interaction patterns.”2

For example, Ford faced the task of converting a host of legacy financial control systems to comply with the new U.S. Sarbanes-Oxley mandates. “Sarbanes-Oxley defined a set of financial controls that companies will be held accountable for. If they don’t comply they’ll fail the Sarbanes-Oxley certification, and it will affect the reputation of the company and the perceived risk for investors,” Adams says. “Company officers are also personally accountable for problems that come from lack of controls—so it’s a big deal. We thought it would be impossible to achieve certification within the first year, because we not only have many different control systems developed over forty years at Ford but we have still others embedded within acquired companies like Jaguar, Volvo, and Land Rover.”

Adams formed a working group from the different business units, and they looked at the audit data and discovered “patterns of vulnerabilities.” These patterns were further clarified through systems diagrams and dialogue sessions, which showed in particular how the IT system contributed to vulnerability. For example, the group realized that one source of problems was too much variability in reporting policies. So they defined a policy baseline and used it to replace a hodgepodge notebook of policies that had built up over decades. The company also had too much variability in how assets were defined, so the group came up with a new, simpler classification system, along with a simpler and more focused measurement system. They then trained “certified masters” to work with people around the world to check for classification consistency and share best practices, thereby creating a set of interactions that had never before existed. Before long, “we had 11,000 people across the globe using a common language to identify and work on all the control issues, and within two weeks we had most of them identified. It was amazing to see the release of energy across the organization that came with simply helping people see the systems that they were stuck in, then finding the right amount of structure to enable change.”

Adams continues, “We’re applying similar approaches to a host of problems, and learning how to build capacity so that the organization can keep pace with and hopefully improve its position in its ecosystem. Building this capacity into the culture takes time, but nature points us toward basic methods that work, such as sensing or seeing patterns; recombining ideas; and ‘mutation,’ that is, experimentation and feedback. Systems modeling, collaboration and dialogue, and looking for instances of too much variability are the analogs in the organizational system. If they can all be combined effectively, they foster innovations.”