Adaptive Enterprise

Adaptive Enterprise aka as Adaptive Organization are highly flexible and have the ability to change or adjust in almost real-time by altering routines and practices in response to environmental changes (Moitra & Ganesh, 2005).[1]

Adaptive Enterprise
Figure 1. source: KBManage

The adaptive enterprise is said to have several advantages over enterprises that are less adaptive. In traditional businesses, large inventories may be built up, tying up capital. Conversely, lack of foresight can result in spot shortages. Adaptive enterprises strive to eliminate unproductive or redundant labor, information, and materials. Cash flow is improved. Sudden crises, caused by a cutoff in the supply of a single item or resource, rarely occur. Adaptive enterprises adjust operations quickly and smoothly to meet rapid changes in the market, the introduction of new technologies, and shifting business priorities. Over time, this attracts and keeps a loyal client or customer base. In the long term, adaptive enterprises evolve with changes in the global economy so that their products or services never become obsolete. The concept of the adaptive enterprise has been widely used by Hewlett-Packard in marketing its products.[2]

Qualities of an Adaptive Enterprise[3]
The adaptive enterprise is one that not only successfully weathers change in the environment, but one that leads the charge through the change and comes out on top.

  • Scalable - grows with ease to serve changing and growing customer needs
  • Extensible - augments existing business capabilities with new ones in an integrated and seamless fashion
  • Responsive - reacts quickly to changing situations to take advantage of the opportunity
  • Forward Leaning - innovates into the new business opportunities
  • Market Driving - changes the market game against the competition through innovation and preparedness
  • Modular - consists of discrete business components that can be used to rapidly assemble new capabilities on-demand
  • A Leader - is a step ahead of the competition with a voice of its own and as an inspiration to others

Adaptive Enterprise1

If the booming tech industry has taught us anything, it’s that old school business models are losing ground to organizations that have the agility and infrastructure to adapt quickly to changing economies, technology and consumer trends. A number of established companies have folded, while others have successfully transformed with new technology and products. These successful companies have become known as adaptive enterprises: a term that many are familiar with but may not completely understand the nuances that make adaptive enterprises special. The infographic above from SunGard examines the many facets of an adaptive enterprise and how it compares to an outdated organizational model[4]

Obstacles to an Adaptive Enterprise[5]
The journey to adaptability isn't easy. Removing the obstacles that are seemingly ingrained into the fabric of the organization isn't easy either. The first step to adaptability, though, is removing those very obstacles.

  • Unclear communication: creates confusion and slows any change in the organization. Leaders can help improve communications by forcing two simple questions: What is your elevator pitch? and What's the one page summary of your team? Then, you can dig in and begin to help teams and individuals adjust how they communicate and use more precise and effective language.
  • Myopia: In organizations struggling to move more quickly there is an over-emphasis of looking at things in the short term. When myopia- or nearsightedness - seems to be ingrained in an organization, the day-to-day operational activities take priority over longer term planning and unintended consequences abound.
  • Imbalanced incentives: Create incentives that reinforce adaptability and remove the incentives that don't.
  • Monoliths - The one-stop solution for all your needs: Ask yourself where your monoliths are. Begin to think about how you disassemble the monoliths.
  • Obstinance: Even when people in the organization know that being more adaptable is the right thing to do, they don't know how to take that first step. The behaviors are reinforced through the incentives and they may think that they're adaptable already. The distraction of obstinance can be removed by setting the vision of what it means to be adaptable for your organization and how each and every team needs to operate and talk about espousing the attributes of adaptability.

Benefits of an Adaptive Enterprise[6]
There are a number of benefits to adopting an Adaptive Enterprise orientation.

  • The ability to escape the "Big Opportunity Trap": This "trap" is based on a flawed assumption that a firm can accurately anticipate the future revenue potential of a new business idea. As a result many small but profitable ideas may be killed off prematurely as "too small", when they could have served as ideal bridges to tremendous growth opportunities. In isolation, at the beginning, we are typically clue-less when trying to determine if a new idea is a stand-alone idea worth "only" $100MM, or a bridge to significant new, enduring, and profitable revenue stream.
  • The ability to help firms avoid wasting their R&D investment. In most firms, ideas with substantial growth potential are developed by technologists and researchers in R&D, but - due to lack of nurturing and incubation by "the business" - are left to die on the vine and never result in any revenue growth. An Adaptive Enterprise will assign talented and influential executives to oversee the transition of new initiatives out of R&D and into a place in the business where they can grow in response to major opportunities. The result is a profitable connection between dynamically changing customer needs, and new capabilities developed by your firm.
  • Self-reinforcing nature: As your enterprise adopts the Sense & Respond techniques inherent in becoming an Adaptive Enterprise, it will naturally become more of a Learning Organization and experience a Kaizen like process of continual self improvement and learning. As you become progressively better at "Sense & Respond" you will begin to "anticipate and preempt" and will find yourself reacting in time with market conditions. By learning to sense and interpret signals from customers, you can adapt to their changing needs before a formal request is even articulated, allowing your firm to "get there first" and establish a dominant leadership position. Traditionally, this level of rapid reaction has been the domain of startups and risk-taking entrepreneurs. By adopting an Adaptive Enterprise approach, you can preempt the likelihood of newcomers entering your market and stealing market share with new value offerings.


  1. Adaptive Enterprise Definition |KBManage
  2. What is Adaptive Enterprise? Techtarget
  3. What does it mean to be an adaptive enterprise?
  4. The Adaptive Enterprise Infographic Daily Infographic
  5. Five Obstacles to an Adaptive Enterprise Matt Lyteson
  6. How Becoming An Adaptive Enterprise Benefits an Organization? [^ Fogbeam]

Further Reading