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SCRC Meeting Dec 1 – 2, 2011: Creating Agility in an Uncertain Environment

Agility and uncertainty seem to be the hallmarks of today’s operating environment. Fear, uncertainty, and doubt cloud the horizon for many economic forecasts.

The essence of this next meeting is to break current thinking on operating models, in which organizations are managing based on transactional boundaries, using simple deterministic ways of thinking. The environment we are faced with today is more akin to the dynamics associated with Complex Systems. Complex Systems Theory grapples with how organizations adopt in the face of dynamic change and evolve over time, with those organizations best able to adopt ultimately surviving. A further branch of thinking suggests that firms which survive essentially co-evolve with those entities around them. This line of thought, sometimes called the “resource based view”, suggests that the changing relationship between a firm’s activities and entities in its competitive environment creates whatever distinct capabilities it draws on for sustained competitive advantage. In simpler terms, the organizational processes that occur with other entities in the value chain together provide the “emergent” strategies that shape how the organization survives.

As with Darwinian selectionist theory that states that living things evolve as their parts (organs, biomolecules, or genes) mutate, organization theorists would suggest that organiations adapt as each of the supply chain competencies (representing micro-agents – the individual activities that make up the entire organization) influence selective advantage for the firm as a whole. Again, translating this into operational thinking, organizations that drive collaborative behavior with their key supply chain partners in their daily routines, contracting approaches, and relationships, co-evolve to a higher level of performance that allows all entities in the chain to not only survive, but adopt to the rapidly changing environment around it. More importantly, …”in co-evolutionary processes, the fitness of one organism or species depends on the characteristics of the other organisms or species with which it interacts, while all simultaneously adapt and change.” This evolution occurs even in an environment that is characterized by rapid change, regulatory pressure, new technology, and other major challenges. As Kauffman notes, “A critical difference between evolution on a fixed landscape and coevolution is that the former can be roughly characterized as if it were an adapt search on a “potential surface” or “fitness surface”, whose peaks are the positions sought. In coevolution, there may typically be no such potential surface, and the process is far more complex”.

Being able to adapt to the environment thus seems to be a function of an entity’s ability to sense, understand, interpret, and assimilate or act to the environment. This requires that different parts of the species be able to effectively sense and communicate its knowledge from extremities. So how does this work when thinking about organizations? Is there a parallel concept?

In this meeting, we will have a number of high level thinkers looking at these issues from several different perspectives.

Steve Allen, Economics Professor at NC State, will explore the dynamics of the current economics environment, and what it means for industries who need to plan in uncertain times. Steve has spoken in the past and has been very well received.

Rob Barnes, Director of the Center for Counterintelligence in Washington, will share his views on the culture of the intelligence community, and what is needed to drive successful monitoring and prediction of environments.

Jason Schenker, CEO of Prestige Economics, will talk about some of the trends in major commodities, currencies, and global market forecasts, and the implications for supply chain managers. Jason spoke at our last SCRC meeting to much acclaim.

Finally, John Zapko, Chief Procurement Officer from Lenovo, will speak on the subject of dealing with uncertainty in the PC market, and the challenges of dealing with major disruptions such as the Thailand Floods.

Some of the questions addressed will be the following:

How can organizations transfer concepts of agility into their contractual relationships?

What are the necessary changes that have to happen?

How can we move away from contract compliance, to contracts as an element of embedded relationships?

How do we segment not just transactions, but suppliers, and focus on inter-enterprise relationships not just within nice boxes of categories, but indeed across streams of work and of risk?

This will make for one of our most interesting meetings to date! Be sure to sign up if you can!

Reference: (Kauffman, S.A. 1993. The Origins of Order: Self-Organization and Selection in Evolution. Oxford University Press, New York.)