Increase Revenue using Gartner’s Pattern-Based Strategy
Gartner’s Top Prediction for 2011 mentions that four IT-enabled initiatives – context-aware computing, Pattern-Based Strategies, social networks and the channeling of IT staff innovation toward enterprise product development – can potentially directly increase enterprise revenue.
According to Gartner, as business look for opportunities to gain a competitive advantage, Pattern-Based Strategy (PBS) will help leaders harness and drive change, rather than simply react to it. One of their blog (http://blogs.gartner.com/andrew_white/2009/08/10/what-is-your-pattern-based-strategy/) states that “Pattern-based Strategy is a good example of one of those rare new ideas that was given a chance”. But there are many others who think it is not really new and the opinions range from “PBS is just common-sense”, “PBS is what business has always been doing in some form or other”, and Gartner’s “PBS is nothing but glorified Data mining”.
A Pattern-Based Strategy provides a framework to proactively seek, model and adapt to leading indicators, often-termed “weak” signals that form patterns in the marketplace. According to the picture in the Gartner presentation www.gartner.com/…/dec2_patternbasedstrategy_ygenovese_11am.pdf (which by the way is pretty good in explaining the idea) shows “Weak Signals” as the intersection of “Market/Economic”, “Customers” and “Vendors”.
Gartner acknowledges that today elements of Pattern-Based Strategy are being applied by organizations before pointing out that adopting all the disciplines of PBS by both business and technology providers (who enable the transition) would result in significant market advantage.
Gartner points out that Pattern-Based strategy is a continuous cycle – seek, model, and adapt – and not a prescriptive recipe, and as such, involves a change in the mind-set of both business and IT leaders.
1. Seek – Organizations should focus on detecting leading indicators of change in order to spot change early and quantify risk. Business leader have to learn how to “listen” carefully to identify the relevant signals and understand when the signals are patterns that require a response.
2. Model – Modeling to be used to determine which patterns represent great potential or risk to the organization by qualifying and quantifying the impact. Using a collaborative process, business must simulate the potential significance, impact and timing of patterns.
3. Adapt – Business and IT leaders must adjust strategy and operations decisively to capture the benefits of new patterns with a consistent and repeatable response that is focused on results.
The four disciplines of Pattern-Based Strategy are:
1. Pattern Seeking – seeking signals and creating new patterns.
2. Optempo (operational tempo) advantages – improving the enterprise’s ability to match pace to purpose by adapting to patterns of change.
3. Performance-driven culture – extending the traditional performance focus from measuring what happened in the past to focusing on leading indicators and scenario planning, and using measurable results to drive desired behaviors.
4. Transparency – the demonstration of corporate health and strategic use of transparency for differentiation.
Pattern seeking means looking at both inside and outside the organization focusing on the:
- Competencies, activities, technologies and resources that expose signals which may lead to a pattern that will have a positive or negative impact on strategy or operations
- Areas of vulnerability or risk and innovation/opportunity for the business.
Pattern seeking involves exploiting sources of information like people activities, processes and the new power of the collective (made up of individuals, groups, communities, crowds, markets and firms) on the social platform as source of patterns. By ignoring new patterns that form from weak signals, and misclassifying stronger signals to fit within the norms of a current business strategy, could result in Businesses losing sight of exceptions that provide valuable leading indicators of market changes.
Monitoring a larger array of data streams, tuning to more varieties of patterns create a huge advantage as companies would be better educated about their environment and therefore in a better position to make a sound business decision.
Gartner terms optempo advantage as representing the set of coherent guidelines and actions necessary for maximizing the allocation and utilization of enterprise resources as new patterns emerge. To improve their organization’s competitive rhythm, enterprises must first understand the levers – people, process and information – that they can control to drive change. Optempo advantage gives the way to shift the levers to appropriately to speed up, slow down or change direction to take advantage of new innovations or avoid organizational risk.
Gartner recommends that companies equip themselves with the ability to tune their business practices “at the right speed”. Typically, the faster you can change the way you do business the better. In other cases – for e.g., workforce skill / role change – it means enabling a slower pace of change. Another example is where an airline observed that a slower pre-boarding security process surfaces behavioural clues and accordingly added steps in its process.
A performance-driven culture enables an organization to monitor leading indicators of change, and where performance is used to enable change through the alignment of organizational resources to strategic performance metrics. In addition to measuring performance, organizations should look at leading performance and risk indicators to provide a forward-looking focus. Similarly performance metrics must permeate all levels of an organization and not stop with financially oriented outcomes.
In the PBS context, transparency means both the demonstration of corporate health and the strategic use of transparency for differentiation. If organizations can evolve transparency to set the right expectations of seeking new patterns and responding with consistent results (rather than once-a-quarter financial results), it would enable them to enter new markets, gain access to funds and demonstrate differentiation. Transparency usage is explained by showing how Walmart making public the taxes it pays in individual jurisdictions is a means of courting those places that need extra revenue and would welcome a Walmart outlet.
When extra effort is put to describe the organization practices, business rules or business processes, sharing within the organization improves and results in better alignment. The new digital era with its social networking has changed how people trust, share and engage. It is inevitable that companies will be more engaged with social activities and more truthful. As an organization gets better at the seeking, modeling and adapting of a Pattern-Based Strategy, it becomes more transparent, putting pressure on competitors.
Technology plays a significant role in supporting the seek, model and adapt framework of a Pattern-Based Strategy. In addition to existing technologies – business intelligence, rules-based engines, performance management, service-oriented architecture, business process management, wikis for sharing – PBS needs new technologies that identity patterns, model the effects and enable organization to adapt to these patterns. Technologies are also emerging to seek patterns in nontraditional areas such as social software sites, the Internet and collaborative groups.
Additional information is available on the Pattern-Based Strategy micro site on Gartner’s Website at http://www.gartner.com/technology/research/reports/pattern-based-strategy.jsp. While Gartner’s explanation has too much hype and jargons, a more down-to-earth explanation of Gartner’s pattern based strategy is available at http://techondec.wordpress.com/2010/04/20/pattern-based-strategy-a-survival-guide-explained/.