Intelligent Functions: What they are and why your company needs them

Your company, like most, is probably organized in functional silos: Finance, HR, Marketing & Sales, Operations – just to name a few. But what if these silos went away and enabled us to leverage analytic insights, to plan in an integrated way? It would fundamentally impact people, the skills they require, how the value chain operates and customer satisfaction. So, let’s look at that.

The case for change

Over the past several years, I’ve heard again and again that one thing holds true no matter what: Function is no longer the central organizing construct behind driving business growth. The old functional structure is no longer holding up. Instead, talent needs to collaborate across functions to be able to deliver end-to-end processes, which are oriented around delivering either customer or business value. And there are two reasons for that.

1. Technology is driving analytics with big data and changing the insight and information that companies must have in order to be competitive.
2. As a direct result of this change, functionally structured organizations must become far more flexible and adaptive to be able to take advantage of the data that’s there.

At their core, intelligent enterprises come from making fundamental, functional changes within the business. To create intelligent enterprises, we have to create intelligent functions. When you look at these facts, one thing becomes clear, very quickly: how interactions between functions work, from a strategic, top-down perspective—and how they need to change to support the new model.

You can't just change one function; you need to change each one, or at least understand the adjacencies between them. But at the same time, you also need to understand the technology.
It's always about people, process and technology: the data is extraordinarily important, but it is simply an enablement capability.

How is the traditional value chain changing?

A new customer-centric, outcome-oriented operating model is emerging. Digital opened the doors to consumer behavior change. This led rapidly to consumer-expectation change. Now, this change has moved firmly into the B2B space.

The result? The traditional value chain is being heavily disrupted, if not fundamentally changed. And that’s a good thing. Because that has to happen in order to build intelligent functions. And building intelligent functions throughout a business can save possibly hundreds of millions of dollars a year through better margin management in:

• Labor
• Productivity
• Working capital
• Improvement of products and services

How value-chain disruption leads to intelligent functions

As we start to think about this, the implications on business become significant. Companies start to recognize that how they’re functionally organized, and their operating models, are sub-optimal to driving these kinds of efficiencies. This is happening in industry after industry, and it’s forcing everyone to rethink how they do business.

Instead of the classic value chain by function, we should think about work very differently. I’ll dive deeper into what this looks like, including the following areas:

• HR and the workforce
• Finance
• Supply Chain
• IT

But for now, I’d like to talk about what needs to happen holistically to create intelligent functions.

Three changes to create intelligent functions

Essentially, three things need to happen in order to start building intelligent functions at your company:

1. A new kind of alignment in the C-suite: The new consumer-centric and outcome-based model is changing how the C-suite works. And that's significant, because everyone—from the CEO, to the CIO, division presidents, and the EV-level—can initially find identifying their place in this new world problematic. But it has to happen, because this pivot in fundamental thinking is the key to successfully driving change in the business. But it can also be extraordinarily complicated: for example, the CFO can't be just thinking about the finance folks. They’ve got to be thinking about the economic value of the corporation instead.
2. Defining your business model in a fundamentally new way: Your business needs to develop a whole new set of behaviors to meet the consumer world’s new demands. Offering products and services is no longer about planning, supply chain and delivery. It’s about the customer experience—it’s about ensuring the product or service gets to the customer at the right time, in the right way, when they need it. That’s the essence of the customer-centric, outcome-based model: customers don’t care about what companies have to do in order to meet their needs. They only care about the outcome: that these needs are met.
3. Innovative people are the key to change: We need to provide our people with a new set of skills: with the ability to be innovative, collaborative, and comfortable not knowing the answer. The ability to understand analytics, the ability to understand the implications of technology more quickly than in the past. These are a new set of skills that we all need to have now, that we haven’t had in the past. To be successful, we all have to evolve in this way. And this is not an untested concept: We've seen this cycle after cycle after cycle—whether it be the beginning of mass manufacturing or the first time automation took place.

My challenge to you

The key point here is the intersection of all three buckets of change and how they are driven by the new customer-centric behavior and demand model—and what companies are doing in order to satisfy this demand. The most effective change management starts from the top down, driven by C-suite, division-president and EVP-level strategic insights. Alignment at your levels provides clarity around the process of building intelligent functions and creates a gateway to change. You need to actively work to change management. You have to walk the halls and connect with your people on a literal level. Have those discussions. Talk about the art of the possible.