This article originally appeared on the BeyeNETWORK

We live in extraordinary times. Advances in technology coupled with global connectivity enable an almost seamless exchange of goods and services worldwide. The business intelligence infrastructures designed to facilitate these exchanges

place great demands on our organizations. To take advantage of the constant flow of new ideas and opportunities, organizations must embrace a model that allows them to continually adapt to new situations.

This article begins with a historical perspective in an attempt to illustrate the dramatic changes we have seen as well as those that are coming. We’ll see the evolution of business intelligence and the paradigms that continue to evolve. The clear message is that there is no end in sight. As the paradigm evolves, there are a new set of competencies necessary to be adaptable and innovative. Success is the reward for those organizations that can continuously realign their people, processes and culture.

A Unique Perspective

To get a sense for the rate of change we are experiencing, consider this simple analogy: Visualize a timeline where the distance from the Big Bang to the present day is one mile. Scientists tell us that the time that humans have been in existence spans only the final inch.

Consider the same timeline but with man’s existence covering the full mile. Depending on your theories about the origin of man, it’s conceivable that the time man has had modern technology would only cover that last inch. All the major inventions that define the age of information – such as electricity, radios, batteries, computers, etc. – were invented within the last century.

The ability to adapt to these changes and maintain a sense of continuity and control is both exciting and overwhelming. Fortunately, there are models from science and nature that provide a framework for thriving at this accelerated pace.

A Brief History of Business Intelligence

Business Intelligence isn’t new. It’s been a fundamental component of our business model for many years. What has changed is a direct result of advances in technology. To get a perspective, let’s look at a little history.

Years ago, most businesses were small and localized. Business owners often had very personal relationships with their customers. For example, when a regular customer would enter the local grocery or dry goods store, the shop owner often knew what cut of meat or what type of soap that customer typically purchased. It was as if the store owner had a data mart in his or her head. This highly personalized attention helped build loyalty and profits.

In those days, there were also challenges. Product availability was limited and distribution was slow. Credit purchases were based on the discretion of the store owner. Today, it’s rare to find a store owner who says, “Just pay me at the end of the week.”

Privacy issues were more localized and less regulated. Local phone operators were privy to everyone’s business and became a good source of information. If word got around that someone wasn’t trustworthy, businesses could refuse credit or even bar an individual from purchasing. Basically, enterprises were small enough for the owners to manage using an early form of business intelligence.

Things began to shift at the end of World War II. Optimism was high. The soldiers returned home and started families. Manufacturers who were producing for the war effort found themselves with excess capacity. The country was poised for growth. The Baby Boom began.

As demand for products blossomed, mass marketing emerged. Companies began manufacturing large quantities of cars, appliances, furniture and other items to meet the increasing demand. In the beginning, most products looked identical. Branding was important. However, it was difficult to measure the effectiveness of advertising.
As markets became saturated, consumers grew more selective. They began to want products and services that would distinguish themselves from their neighbors. At the same time, companies grew so large that they lost the personal connection with their customers. To compete, companies began to collect and store information on their customers. Fortunately, the technology necessary to accomplish this was emerging as well.

Today’s Business Paradigm

The Information Age has generated many opportunities for companies to uniquely serve their customers. Companies eagerly collect information with the hope of getting the right product to the right person, at the right time, at the right price, through the right channel. Unfortunately, many companies fall short of this goal. Many large, well-established companies are still silo-based. Their focus is on products, making it difficult to create a cohesive customer relationship. Many customers feel the loss of personal attention.

Other companies are more successful. They have managed to collect and store information in such a way that offers a 360º view of every customer. The same information is available from all touch points including mail, phone, and Web. While providing an efficient structure for customer relationship management, it can place strain on a company’s organizational structures. Small companies have a distinct advantage because of their lean managementand agility. They often succeed by entering niche markets and/or forming partnerships.

A majority of today’s successful companies grew out of the highly mechanistic Newtonian model first introduced in the seventeenth century. In this model, the whole is considered to be nothing more or less than the sum of the parts. The organization is separated into departments, functions and silos, and rejoined without any loss of power, value or productivity. Olsen and Eoyang (2001, p.2)  write, “The machine model is evident in current organizations. It can be seen in mechanistic thinking, focus on structure, rigorous analysis and measurement, search for root causes, decreasing variability, statistical quality control, exhaustive instructions for workers, increased specialization, drive for efficiency, and centralized command and control.” Further commentary by Olsen and Eoyang points out that this model works when systems are close, change is slow, interdependencies are low, certainty is high and variability is low.

The vestiges of these beliefs are seen in many companies as they struggle to adapt to change while attempting to manage all the moving parts. Over the last decade, we have seen a few companies achieve huge successes. When we look into how it was accomplished, the models are very different from those we see in established organizations.

Meg Wheatley writes (1992, p. 9), “The Newtonian Model of the world is characterized by materialism and reductionism – a focus on things rather than relationships and a search, in physics, for the basic building blocks of nature.” As Wheatley makes a non-traditional leap to the importance of relationships, she captures the essential building block for the new paradigm.

The Emerging Business Paradigm

New models are emerging from both biology and quantum physics that provide insights into the organizational evolution that is being driven by the increasing influx of information. Biology is based on a cyclical design that optimizes sustainability. In this model, there is no central management delivering orders and meting out consequences. In its immense complexity, it continuously self-organizes to insure its survival.

Leading organizational thinkers are looking to biology for models of corporate sustainability. It provides insights into management in our complex modern world where cause and effect are not so clearly defined. Kevin Kelly, founding editor of Wired Magazine, describes the biological link in his 1994 book, Out of Control (p.2), in which he suggests biology’s increasing influence on how we view organizations. “Clockwork logic – the logic of machines – will only build simple contraptions. Truly complex systems such as a cell, a meadow, an economy, or a brain (natural or artificial) require a rigorous nontechinological logic. We now see that no logic except bio-logic can assemble a  thinking device, or even a workable system of any magnitude."

Quantum physics has arrived at a similar place through the realization that as we observe our universe, we influence what we see. What we observe is changed by our observation. We can begin to see the interconnectedness of everything. Interestingly, this concept emerged in scientific circles around the same time that businesses began to link through mass networks.

Now that we are quickly evolving as an interconnected web of structures and ideas, how do we manage? Fortunately, numerous insights can be gleaned from these scientific models. To gain understanding, we must first lay the groundwork with a powerful model of the evolution of business intelligence.

Evolution through Business Intelligence

Our move toward the use of more sophisticated business intelligence leverages this interconnectedness in its evolution. In the book, Information Revolution (Wiley and SAS, 2006), Davis, Miller and Russell present a powerful information evolution model that takes us from the old paradigm to the new. Each level is a necessary step to progress. The following overview of each level describes the trend toward interconnectedness:

Level One: The Operational Enterprise
Many small businesses, start-ups and silo-based companies operate at this level. The power is with the individual, and the focus is on day-to-day tactics. With the right talent, a business can thrive to a certain point or in a limited market. As it tries to grow, the individual focus can lead to inefficiencies, redundancies and errors. Since there is little intention to coordinate silos, alignment does not play an important role. Skills in social interaction and teamwork are of little value.

Level Two: The Consolidated Enterprise
Organizations at this level are beginning to operate as a system within the departmental level. Knowledge processes are optimized to support operations at department levels. This may not serve the enterprise goals. Teamwork is encouraged in small, homogenous areas, but interdepartmental collaborative efforts are challenged by the competitive structure of the organization.

Level Three: The Integrated Enterprise
An enterprise-wide perspective dominates organizations at this level. Integrated knowledge systems generate value by standardizing processes that promote coordinated marketing efforts. Resources are mobilized around market and customer relationships that optimize long-term value. Alignment becomes critical at this level as departments strive to coordinate their actions to serve the enterprise goals. Competencies in the areas of communication and collaboration are critical.

Level Four: The Optimized Enterprise
Adaptability is the distinguishing competency of organizations at this level. All knowledge systems are linked across from back office to customer touch points. Information and data analyses are real-time and closed-loop. Individuals have access to enterprise-level knowledge and are empowered to make incremental improvements. Change-readiness is an inherent part of the culture.

Level Five: The Adaptive, Innovating Enterprise
A culture of innovation enables organizations at this level to flourish. Sustainable growth is supported by the total integration as well as the alignment of the people, processes, culture and structure. Collaboration and cooperation are core competencies for this level. All knowledge systems are linked and dynamically adjust to changes. Each employee is empowered and encouraged to take on the role of leader.

According to Davis, Miller and Russell (Information Revolution, p. 46), no organization has truly reached Level Five. Some have pockets of Level Five competencies, but most organizations find it difficult to deal with constant change.

My next article will delve into the science that is emerging to support the information evolution. We will discuss the organization as a complex adaptive system, and we’ll explore a framework and introduce some powerful dynamics that can be used to navigate and flourish in a Level Five organization.