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3/3/2011
11:51 AM
Venkatesh Rao
Venkatesh Rao
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The Four Horsemen Of The Enterprisocalypse

Follow these four steps--in order--as you consider how or whether to modernize your business processes.

Here's a basic Enterprise 2.0 adoption analysis question:

The owner of a process within business function X, within corporation Y, operating in market Z comes to you for help. Her process involves collaboration among multiple contributors to certain business documents. The incumbent process is a COBOL-based beast comprising klutzy editing and messaging workflows, reporting logic, and various business rules. Most of the complexity doesn't even apply to 90% of the cases the process handles.

What would you recommend?

Did you say something along the lines of "use a wiki for 90% of the cases, and put in a simple exception-triggering process for the other 10%"?

Sorry, wrong answer. Try again.

Are you starting with a thought like, "Well, you've got to talk with all the stakeholders, understand their concerns and roles, and the costs of the legacy system..."?

Bzzz! Sorry to cut you off, but that too is the wrong answer.

The reason these answers are wrong is that they cut directly to the fourth stage of a four-stage analysis process I like to use, which I call Dissolution, Disruption, Disaggregation, and De-engineering. Call it the Four Ds. I like to think of them as the four horsemen of the enterprisocalypse. They ride in that order, not abreast.

Tool-happy evangelists are eager to rush to the fourth D because that's where they can add value and do business--by de-engineering (simplifying cumbersome old processes with E 2.0 software). Problem is, in more than half the cases, you should be giving up by the third D. Unless the target adoption opportunity survives the first three stages of analysis, it's not even a problem worth solving.

So why might the problem not be worth solving?

OK, my original question was a trick question, but I did give you a hint by using variables instead of specific details. Unless you're incredibly naive or in the snake-oil business, you would never diagnose an E 2.0 problem, or offer a prescription, without knowing the details. There are no general answers.

The correct answer is "insufficient data."

Depending on how you fill in the three placeholder variables--business function (X), corporation (Y), and market (Z)--you might never get to the fourth stage of analysis.

The mistake tool-happy evangelists make is that they assume that E 2.0 is about a function-by-function, process-by-process replacement of E 1.0 elements with corresponding E 2.0 elements. They think it's like making a building more energy-efficient by walking around and switching out all the incandescent bulbs with compact fluorescent bulbs.

So why do the X, Y, and Z matter?

Would you bother solving the problem if X, the business function in question, were the stateside customer service department of a company in an industry where every competitor has successfully outsourced its call center operations to India or the Philippines? Of course not. You'd wait for the outcome of a C-suite decision on the outsourcing question first.

Y, the corporation or organization, matters. If we're talking about the U.S. Army, and the document process in question generates intelligence reports, the solution is going to be very different from what a retailer or transportation company would choose. It would rely on special precedents like the CIA's Intellipedia and specialized technology of the sort being developed by Palantir. Commodity 2.0 tools are doomed.

Z, the market, matters, too. Would you bother solving the problem within the classified ad sales department of a major newspaper? Of course not. That market is gone, and the elements of the business designed to serve it should be put on end-of-life support. Putting more money into them is stupid.

Four Ds Dissected

To think more systematically about how the X, Y, and Z variables matter, you must understand the four Ds.

Dissolution refers to the forces destroying entire sectors of the economy, and affecting every sector at least a little. The smart businesses experiencing these forces are harvesting and exiting or shrinking those businesses. The dumb ones need to be put out of their misery.

Disruption is a weaker effect by which a small, agile company on the margins of the markets of a bigger company eventually grows up and disrupts the incumbent. While many innovations can cause disruption (such as the Wii remote in gaming), what's special today is that the same innovation (2.0 technology) is enabling disruption in multiple markets at the same time. Unlike dissolution, which replaces professionals with amateurs, 2.0-enabled disruption replaces one class of professionals with another. Businesses will survive in these sectors, but the question is, which ones?

Advertising is an example. Traditional advertising businesses are being killed by 2.0-based substitutes, as well as by the market share grabs of the adjacent PR and direct sales sectors. Creative copywriters are losing ground to SEO specialists. Ad salesmen are losing ground to PR pitchmen.

For many industries weathering dissolution, disruption is undermining an entire generation of incumbent companies at the same time. The smart people are switching sides: leaving the disruptees and moving to the disruptors, creating a massive talent migration.

Disaggregation is weaker still. Companies that have the capacity to survive both the dissolution and the disruption forces are being forced to reorganize dramatically. Companies that survive both dissolution and 2.0-enabled disruption must still respond to the disaggregation forces and "unbundle" and "rebundle" themselves the right way. The steel industry, for instance, is in no danger of either dissolution or disruption; it's simply too capital-intensive. In steel, Arcelor-Mittal has taken over the infrastructure side of the business. Boutique electric-arc players are taking over innovation on special alloys and materials. The customer relationship side of the industry is being slowly taken over by players like mfg.com, a marketplace for machine shops.

This brings us to the least important of the four forces, the one that evangelists obsess far too much about. If a company survives dissolution, disruption, and disaggregation in roughly the same shape it was in 10 years ago, then you can ask how to adopt E 2.0 within a specific business process. That is, you can go around replacing the E 1.0 light bulbs with E 2.0 light bulbs.

So remember the handy mnemonic: XYZ and the 4 Ds in order. Don't mistake it for a formula. It's merely a reminder of what you should be thinking about. I'll be writing more about how to do that in future columns.

For now, I can't resist the obvious punchline: It takes five E 2.0 evangelists to change a light bulb, four to analyze each of the four Ds, and one to actually change the light bulb.

Venkatesh Rao is a writer and independent researcher at ribbonfarm.com and the author of Tempo. He can be contacted via LinkedIn.

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