Sense and respond business strategies

by Bruce Kasanoff on October 17, 2012

Most innovations today depend on interconnected networks, few of which may be owned or controlled by your own company. In such an environment, the intelligence your firm brings to each interaction that drives its profitability and growth. This is a dramatically different approach than has existed in the vast majority of mass production firms.

What is intelligence in this context? It’s having something of value to share with others, and knowing specifically what to share with each individual person or organization. If all you do is talk at a person (“buy Product A… it smells so sweet”), that’s not intelligent behavior.

To act in an intelligent manner, you have to be able to “sense” what’s happening and then “respond” accordingly. In the middle, your organization has to be able to “reason.”

In business, you may be “sensing” a customer’s actions via her iPhone, via satellites you don’t control, via the website of retailers you don’t control, etc. Likewise, you may be sensing inventory levels in a merchant’s store or warehouse you do not own.

Your response may be direct (i.e. your representative places an immediate phone call to the customer), or indirect (i.e. your credit system authorizes the transaction to take place on the other side of the world.)

In between, your systems and people have to operate with a sense of reason that fully comprehends the value of customer experience. This reason must be imbued with practicality – not every customer is profitable to serve, for example – and be firmly entrenched in the position your firm seeks to hold in the world of commerce.

Most firms lack the ability to behave in this sort of intelligent manner, and most managers lack even a modest comprehension of the ways that mass customization differs from mass production. Even owners of small and medium-sized businesses often possess a mass production mentality, simply because that is the way business have been taught for successive generations.

In a business, “reason” requires literally creating a set of rules, programs, policies, partnerships, standards and metrics that in sum total amount to reason. But before you get to that sort of detail, you have to develop an organizational mindset that grasps the essence of smart innovation.

By the way, this sort of sense/reason/respond approach is very similar to the logic that underlies robots, which represent another example of digital technologies spreading throughout our world. On some levels, an “intelligent” robot is quite similar to an intelligent website; both sense changes in the world around them, apply reason, and then respond accordingly.

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