REQUISITE VARIETY

Every company needs to use technology to succeed.

By Denton Farley

Article overview

■ McKinsey & Company released an article / video interview two years ago saying that every company needs to embrace technology.

■ Digitization and disruptive technology is everywhere and will continue to effect our corporate world.

■ Everything for that matter is being digitized. From books to videos, from presentations to hand-outs our world is becoming more digital.

■ “The reason disruptive technologies are very important to all leaders—whether they’re CEOs or policy makers—is because, for the first time, we now have technology affecting every single sector of the economy.” James Manyika

Article overview cont.

■ Digitization is more than just making a digital copy of things. ■ James Manyika talks about how now, for example: the containers on

ships are being tracked digitally and this has its positives and negatives.

■ The positives are that now companies can know where all of their product is at all times.

■ This however creates a dilemma for insurance. ■ “…insurance contracts are constructed is different whether the thing

is tagged and tracked versus not.” James Manyika

The employment challenge

■ In 2008 the us, “lost something like 5.8 million jobs in manufacturing.” according to James

■ 80% of those jobs were lost because of technology. ■ Robots replaced workers as robots never tire or need breaks. ■ This was partly due to the fact that all manufacturing companies were

being driven to produce more and more. ■ According to Andrew McAfee, “Now, in the short term, economic

growth is absolutely the best way to get the hiring engine kicked in again. The robots, the androids, the artificial intelligence can’t do everyone’s job yet by a long shot.”

The employment challenge cont.

■ There seems to be a looming change that is needed for an economy to survive is that technology needs to be accepted and education increased.

■ The companies of old are becoming obsolete with technology today. ■ The Cab industry in the major cities is a prime example of that. ■ Uber instantly turned anyone who has a car into a cab. ■ James said that the current generation is more a, “income-generation”

and if you think of the solution to the employment, “question as opposed to a full-time employment problem” then you will see there are much more opportunities for income than full time employment.

The idea

■ Requisite variety is defined by Organizational Communication by Kathrine Miller as: the internal workings of the system must be as diverse and complicated as the environment in which it is embedded.

■ This concept is being seen again and again in todays companies.■ All companies, whether they are a supplies manufacturer or a nail

salon is being effected by technology. ■ They are all faced with a choice, embrace technology or not.

The idea cont.

■ There are many stories of companies that struck it big by embracing technology.

– Twitter– Google– Facebook■ Most companies are embracing technology and using it to grow their

companies on a scale never before thought to have been achievable. ■ Technology can be a major hurdle for some companies■ However, to maintain a viable company, said company needs to be as

complex as the problems they face or they will be doomed to fail.

Some companies just don’t get it. ■ There have been a few select companies that choose not to embrace

technology and in turn fail or end up stunting their growth as a company.

■ Sears and K-Mart are prime examples of this. ■ In a Forbes article about why Sears is failing it talks about how exactly

the company failed■ An interview with a former employee, “Salespeople know what moves

in their community, and what does not. However, they are never asked their opinion or insight. Instead the company thought providing the employees with I-Pads for work would motivate them. Those only served as a distraction and wasteful overhead in an already struggling brand-name.”

Sears, a once booming company now a ghost town. ■ The core of any business should be to make sure they are selling what

they specialize in and nothing more. ■ Technology is not necessarily a thing to sell for most companies.■ However, it can be used as a tool to sell things much more efficiently

and without ever having to lift a finger. ■ Sears, from my perspective, was a giant company who had the

mentality of “if it ain’t broke, don’t fix it.”■ While technology can make or break a company, as seen partly by

Sears, it doesn’t have to be hard.

More companies are being created■ More and more companies are being created each year with the sole

hopes of being successful.■ However what most founders seem to fail to realize is that to tackle

the issue your business is aiming to solve, you must be adaptable. ■ Technology makes that issue almost nonexistant.

Technology and complexity

■ With computers becoming more and more powerful, the problems they can tackle are becoming more complex

■ Take for example the fact that distribution companies like UPS or FedEx can track every one of their shipments, anywhere in the world any time.

– All of their packages are tracked by a computer system and not a human

■ This elevates the human error element from the equation almost entirely.

■ UPS and FedEx both embraced technology and realized that they would benefit immensely from using it.

UPS

■ “The question for both companies is whether management changes and technology investments can help them to avoid a repeat of the chaos that engulfed UPS last Christmas, when demand surged more than anticipated. Volumes on its busiest day, December 23, were 13 per cent up on 2012’s peak and the network was clogged. Many packages were delivered after December 25.” (Write 2014).

■ Only three years ago UPS was so clogged that it failed to deliver packages when it was supposed to.

■ Now they have invested Millions of dollars in a new system to manage the routes their drivers are assigned and deliver packages more efficiently.

■ The thing about technology is that it does not miss things if programed correctly. The technology behind UPS’s new delivery system plans the best root for each driver all without any human interaction, simply based on the packages they have on the truck.

FedEx

■ “FedEx already operates all 33 of its ground network’s hubs in the US on Worldport’s highly automated model, with minimal handling by humans. Mr Maier says it expects to start introducing such advanced technology in still more, smaller facilities.” (Write 2014).

■ FedEx has to keep up as well. Both FedEx and UPS are continually trying to make more deliveries during the day than the other. More deliveries mean more money.

■ Technology is 100% behind both of these companies now and it is proving its effectiveness.

What other companies can learn?■ Again, Requisite variety is defined by Organizational Communication

by Kathrine Miller as: the internal workings of the system must be as diverse and complicated as the environment in which it is embedded.

■ Both FedEx and UPS are embedded into a highly demanding environment where time is a major determinate of success.

■ If a package is not delivered on time the sender and receiver of the package might use their competitor next time. That means less potential money for the company.

The idea of being complex as the problem you are solving. ■ Many companies around the world are beginning to understand that the

market is constantly changing. – Most might argue that it is always changing, yet from the perspective of

technology, a company can be made or broken overnight all due to technology. ■ Technology may seem daunting to companies that have been around for years

and always have done things a certain way. ■ Going back to the classical approaches of management where Frederick Taylor

used his Time and motion studies and would find “the one best way” to accomplish a task. We find that that idea still applies to management today.

■ *However the idea that there is only one best way and it should be done like that forever is flawed in todays society.

The idea cont.

■ The idea that something should be done one way and one way only is a very archaic way of thinking.

■ What companies that have been around for years should understand is that, with technology there is always a better way of doing something.

■ If not today then a year down the road, there will be another way of doing something that could save you much more money than you could have even imagined.

Conclusion

■ Companies in today market are faced with a much different challenges than were around 50 years ago.

■ Technology has greatly changed the landscape of the marketplace and because of that companies are forced with a decision.

– To embrace technology or to continue as they are. ■ Companies must remain flexible enough to embrace technology but

complex as the problems they are trying to solve.

Questions for existing companies

■ Below is a list of potential questions for companies that have existed, yet have not adapted technology to their model.

– What would you loose if you adapted your business to embrace technology as a core idea?

– Who would be effected by an adaption of technology?– What always seems to be a bottle neck in your company?– Who would most be against an adaption of technology in the

company?

Questions for future/ startup companies■ Below is a list of possible questions those starting a business or ones

who have started a business already yet they are facing problems.– What form of communication do you use in your organization?– What type of business are you trying to achieve?■ Commerce, Service, or some other business type?■ Why are you doing business?■ What potential bottle necks do you see in the future of your

organization?

Requisite variety

■ Is defined by Organizational Communication by Kathrine Miller as: the internal workings of the system must be as diverse and complicated as the environment in which it is

embedded.

Work Cited

■ Mourdoukoutas, P. (2015, June 10). Four Strategic Mistakes That Haunt Sears. Retrieved February 06, 2016, from http://www.forbes.com/sites/panosmourdoukoutas/2015/06/10/four-strategic-mistakes-that-haunt-sears/#21aa103013b1

■ Why every leader should care about digitization and disruptive innovation. (2014, January). Retrieved February 06, 2016, from http://www.mckinsey.com/insights/business_technology/why_every_leader_should_care_about_digitization_and_disruptive_innovation

■ Wright, R. (2014, August 12). UPS and FedEx invest in technology to meet soaring demand - FT.com. Retrieved February 06, 2016, from http://www.ft.com/cms/s/0/0123be4c-1d78-11e4-8b03-00144feabdc0.html#slide0