Case study: TMNS

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Contributors

Rufus Schep, Toon Abcouwer

Introduction

In this case study we will try to find answers for the questions we have posed in the Golden Adaptive Cycle. We have gathered information to find out whether companies could overcome crises by clearly stating and using their reason for existence. The research question we will try to answer in this case study is does TMNS use the lessons learned from the golden adaptive cycle to overcome crises?

TMNS

For this case study we have interviewed Bert Schaap, CEO of TMNS. TMNS was started in 2002, right after the dotcom bubble came to burst. TMNS noticed that in the past technical personnel was often tucked away in the basements of IT companies and did not receive the acknowledgements they would deserve. In 2002 therefor TMNS decided to gather skilled technical personnel and give them a significant role in the day-to-day business of the company. TMNS is active in the domain of Enterprise Application Integration, Business Process Management and Complex Event Processing. Enterprise Application Integration (EAI) is the use of software and computer systems architectural principles to integrate a set of enterprise computer applications [4]. Business Process Management (BPM) is a structured approach to analyse and continually improve fundamental activities such as manufacturing, marketing, communications and other major elements of a company’s operation [5]. Complex Event Processing (CEP) is a method of tracking and analysing (processing) streams of information (data) about things that happen (events), and deriving a conclusion from them. In CEP multiple data sources are combined to infer these events or patterns [6]. TMNS is active in multiple regions in the world. Their main customers are located in The Netherlands, Switzerland and the Middle East.

Theory

In this case study we would like to study whether the theory of The Golden Circle, The Adaptive cycle of resilience and the combined theory of the Golden Adaptive Cycle of Resilience. In this document we will highlight these three theories before moving on to the case of TMNS.

Theory - The Golden Circle

The Golden Circle is a model that is used to explain how organizations can become successful by thoughtful innovation. It provides “an alternative perspective to existing assumptions about why some […] organizations have achieved such a disproportionate degree of influence.” [1] Sinek believes successful organizations communicate and act based on their “why”; everything they do is related to a core set of beliefs or shared values ingrained in the organization.

Concepts

A short overview of the concepts that have been defined within the model: The “why” The “why” of an organization is its raison d'être; the intrinsic reason an organization exists, besides making a profit. It explains an organization’s true mission and its shared values. The “why” tells us how organizations motivate their users to buy and inspire their employees to innovate. Example: the “why” of Apple is “In everything we do, we believe in challenging the status quo. We believe in thinking differently” [1][8]. The “how” The “how” of an organization explains how an organization operates and delivers a certain product. Sinek disagrees with the, according to him “false”, assumption that companies only motivate and differentiate by explaining how they operate. He thinks the “how” contributes to this and that the “why” of a company fills in the missing details [1]. Example: the “how” of Apple is “challenge the status quo by making beautifully designed, simple to use and user-friendly products” [1]. The “what” The “what” of an organization describes what the activities of an organization are on the most basic level. Example: the “what” of Apple is “selling computers” [1].

Conclusion

The main message Sinek tries to bring across with the Golden Circle model is that “people don't buy WHAT you do, they buy WHY you do it” [1].

Theory - The Adaptive Cycle of Resilience

The adaptive cycle of resilience is a model that describes the cyclic development path that an organization follow in order to come up with solutions to (disruptive) changes in the internal or external environment [2]. This cycle consists of four phases: the equilibrium phase, the crisis phase, the new combinations phase and the entrepreneurship phase. The adaptive cycle can be found within organizations, which can be in a level of certainty (the organization is sure about what they can) or uncertainty (the organization isn’t sure about what they can). Next to the level of what an organization can, the adaptive cycle has another variable of input: what an organization want. This variable can be certain if the organization knows what they want and uncertain if the organization doesn’t know what they want. An organization that is certain about what it can and what it want, is in the equilibrium phase.

The equilibrium phase

The equilibrium phase is described as a state of calmness, where there is no urgent need for change. Goals and strategy are defined and there is enough support to accomplish them. Due to internal or external influences an organization can move up from the equilibrium phase to the crisis phase. This will be the case if the external influences, for example a ‘black swan’ [7], can’t be overcome and is disturbing the balance within the equilibrium phase. The external influence is in such a way present, that the organization can’t restore the balance in the equilibrium phase: a (disruptive) change is necessary. If the equilibrium phase is in rest, an internal influence is created in order to innovate. In the latter case, a crisis is deliberately created. In both situations, internal or external influence, the transition to the crisis phase is described as the release phase: a crisis is occurring in order to, eventually, return to the equilibrium phase by going through the whole cycle [3].

The crisis phase

In the crisis phase, an organization is uncertain about what it can and want. A problem must eventually be defined to move up. When the organization is in a crisis phase and knows what the problem is, the next step is to come with solutions for the problem. The organization will move up to the new combinations phase. This transition is described as a reorganization: there are solutions that makes it possible to overcome a crisis and return to the equilibrium phase [3].

The new combinations phase

The main purpose of the new combinations phase is to develop possible solutions to end the crisis phase. The new combinations phase will come up with solutions in order to innovate or to overcome a (disruptive) change. The organization is certain about what it can, but uncertain about what it want. New combinations will give insights in how to move up with a possible solution. The crisis phase and new combinations phase are categorized as the exploring half of the adaptive cycle. This half is about uncertainty, novelty and moreover for experimentation of new combinations. In both phases, an organization is exploring how the crisis is defined and what the possible solutions are to overcome that crisis. When an organization has a solution to overcome the crisis, it moves up to the entrepreneurship phase. This transition is described as exploitation: the organization is certain about what they want, but not what it can [3].

The entrepreneurship phase

In the entrepreneurship phase one or more solutions from the new combinations phase are implemented within the organization. In this phase, the implemented solutions will be monitored and evaluated. The main goal of implementing a solution in the entrepreneurship phase, is that eventually an organization will end, for the time being, in the equilibrium phase: back to a higher level of certainty about what an organization want and can. This transition is described as conservation. Its main priority is to regain the balance in the equilibrium phase [3]. If the implemented solution isn’t able to restore the balance in the equilibrium phase, another ‘black swan’ is occurring or the organization want to innovate, the organization goes through the cycle again. The entrepreneurship phase and equilibrium phase are categorized as the exploiting half of the adaptive cycle and are about market power, capital stability and conservation. The well-being will increase. In both phases the solution is present and elaborated in such a way that the organization actually move up to the (stable) equilibrium phase.

Theory – The Golden Adaptive Cycle

The Golden Circle and the Adaptive Cycle are both theories on what organisations need to so in order to become and stay successful. We believe that these theories can supplement each other in such way that the Golden Circle explains how a crisis situation can be handled. The “why, how, and what” of the Golden Circle can be linked in the quadrants of the Adaptive Cycle. In this case-study we try to link the two theories together, to provide a tool to quickly recover from a crisis situation or even to prevent it. The name “The Golden Adaptive Cycle of Resilience” refers to combination of both theories.

“Why” and crisis

In order to recover from a crisis situation we believe that one need to (re-)invent one’s “why”, as the crisis situation states that one is uncertain of what it wants and what it can do. As the golden circle states, you need to know your “why” in order to become successful. Maybe you already know your “why”, but became it outdated due to new developments in the market. In such cases it is important that you consider revising your “why” to the changed market. Before you do that however, you need to carefully determine whether your supposed “why” is your actual “why”. Is your supposed “why” the same as the perceived “why” by your customers? If is not the case, it is important that your “why” is visible in everything you do. Once you have verified that your “why” has become outdated, the next step to come out of a crisis situation is to change your “why” to the new environment. Typically a crisis triggers a disruptive change, which needs a good truthful “why” to enable the organisation to survive the crisis.

“How” and new combinations

In the new combinations phase one works to find new opportunities, based on what it can do. This phase matches with the “how” from the Golden Circle, because this assumes that one knows what competencies are available in the organization. These competencies are what the organization can do and thus the “how” and the new combination phase matches. The primary concern of this phase is determining what your competencies are.

“What” and entrepreneurship

In a period of entrepreneurship the organisation should find what it can do based on its ambitions, or what it wants. This phase could be seen a part of the “what” of the Golden Circle. It is the part in which the “what” is formed. As we will see in the next section, the “what” is split across the entrepreneurial quadrant and the equilibrium quadrant, because in those quadrants the organization either knows what it wants or is searching for its “what”.

“What” and equilibrium

The “what” on the Golden Circle is in the equilibrium quadrant a constant, a given. For the organisation this is the moment that their product or service is in a phase were no large or disruptive changes take place. Once these do take place, the organisation moved to the “what” and crisis quadrant.

Practice – The Golden Circle

TMNS is an organization born from the ashes of the dot-com bubble. In order to become successful TMNS had to differentiate itself from its biggest competitors: large system integrators such as Cap Gemini. Instead of just relying on its “what” and “how” the organization also had to rely on its “why” to survive the fallout of the dot-com bubble and create a place for itself in the market it is operating in.

The “why” of TMNS

When TMNS entered the market a lot of big system integrators were all doing the same thing: implementing the same platforms over and over again, lacking the commitment to provide the customer with the best possible solution and service. They instead erected large organizational structures to support an equally expensive corps of business consultants. After returning from a business venture in the United States of America, TMNS founder and CEO Bert Schaap noticed the status quo and wanted to change the market. He founded TMNS and set out to provide his customers with the best possible service they could get.

The “how” of TMNS

During the dot-com bubble almost anyone could get a job in ICT, qualified or not. TMNS realized that without qualified, skilled and above all else MOTIVATED personnel it would not be able to provide a better service than the system integrators. Whereas the big system integrators focused on scale size and increasing their customer base (i.e. “the spreadsheets”), TMNS was focused on its “why”; customer satisfaction was the main priority of the organization. One of the ways TMNS focuses on its “why” is the organization’s so-called 3C-rule: every action taken by a TMNS employee should have a positive effect (or at least not a negative effect) on (1) the Customer, (2) the Colleague (i.e. employee) and (3) the Company. The 3C-rule can be applied in all sorts of situations. Bert Schaap presented the simple case of the business lunch. Whereas TMNS sees this as a way to improve the relationship between the customer and TMNS (and the employee) most large system integrators nowadays see this as an expense. In some cases it is even expected that the consultants themselves pay for their business lunches. It is only logical that this will have a negative effect on the amount of business lunches and in turn the way their customers will perceive the company these consultants are working for.

The “what” of TMNS

The core business of TMNS is and always has been providing consulting and engineering services geared towards making complex software work for their customers. The CEO of TMNS also described it as simply “making technology work”. One specific example of TMNS’s “what” is a completed project in Turkey. TMNS was hired by a Turkish telecom company to create a solution that would give a customer of the telecom company five hundred SMS text messages after each five dropped calls in the same week. Whereas in the Netherlands we rarely get dropped calls, this situation is much more common in Turkey. TMNS succeeded in creating the monitoring solution the customer specified, which has been in use up until this day.

Practice - TMNS and the adaptive cycle of resilience

When TMNS was founded in 2002 it was mainly concerned with the new combinations phase. TMNS its main priority was to deliver a ‘state of the art’ service to customers. TMNS does this by hire employees that have knowledge of what they are doing. TMNS thus ensures that the customer will get what it wants. In the years after the foundation TMNS became more fragmentized. Like other companies, TMNS wanted to grow. The important issue here is that TMNS did not want to grow in one step to be the best company, but in small steps taking advantage of the IT-consultancy market. Therefore TMNS focused itself on the entrepreneurship phase. In this phase, all the new combinations where exploited. Eventually, after the exploit of the new combinations and the going through the entrepreneurship phase, TMNS went back to the equilibrium phase.

The Egypt case

The adaptive cycle of resilience is more reflected in the project activities of TMNS. For example, TMNS had a customer in Egypt that wanted to have their consultants flown in over to Cairo. In Cairo the consultants would work on a project. The consulting team flied January 18, 2012 to Cairo, settled itself and began the preparation for the project. On January 25, 2012 there where demonstrations in Cairo which leaded to the deposition of the Egyptian president. Those demonstrations were so violently that is was not safe for the consultants to carry out their job. The consultants considered a suburb of Cairo as a safe spot, but the CEO decided that the consultants would fly back to The Netherlands. When the consultants were in The Netherlands, the next question was how the project would develop further, because TMNS ensures that the customer gets what is wants. The project was set up in The Hague (home office of TMNS) and after two weeks it was possible to reach the customer in Cairo by phone. It was decided to go through with the project from The Hague. This experience led TMNS to introduce a new way of working: off-site working on a project. The relation with the case above and the adaptive cycle is that TMNS ensures their promise to the customer. The consultancy team was flown to Cairo to make preparations and eventually start the project, which corresponds to the equilibrium phase. After the consultancy team was settled in Cairo, a few days later a crisis was released: due to the demonstrations, which became violent, the safety of the consultancy team was no longer guaranteed. Duo to this external influence, the consultancy team wasn’t able to continue with its work; reorganization of the way of working was required. In the new combinations phase a few solutions where thrown on table as a solution on the arisen crisis: either continue the project in a suburb of Cairo or return to The Netherlands (exploring phase). The latter was chosen as a solution. Back in The Netherlands, the project eventually continued, with some delay due to the communications. Arrangements were made so that the project was set up in the home office. A new way of working was developed: off-site working. In the entrepreneurship phase this new way of working was exploited in the organization of TMNS and worked successfully. Eventually, off-site working became a standard for projects executed for a customer outside The Netherlands. With the implementation of this ‘new technique’ and its results, TMNS eventually returned to the equilibrium phase (exploitation phase).

Product commodity

The adaptive cycle of resilience is recognized in the product commodity of TMNS. Customers can have a specific project in an area where TMNS does not have the knowledge of that specific area. TMNS wants to develop itself to have experts of all expertise available. The equilibrium phase describes that there is a project in a specific area that the customer wants to be executed by TMNS. A crisis occurs, because TMNS has no expert in the area of knowledge. TMNS will move up to the crisis phase and eventually to the new combinations phase: a solution is given by hiring an expert in the specific area of knowledge. The entrepreneurship phase describes that the project can be executed with the right knowledge. This ensures that the customer get what it wants. In the end, TMNS will go through the conservation transition to the equilibrium phase. Another example is the economic crisis. The economic crisis had an external influence on the adaptive cycle of TMNS. In the equilibrium phase, the number of projects was normal. When moving up to the crisis phase, the number of projects was decreasing and if the number of projects is decreasing, less employees are needed. A solution to overcome this crisis was to reorganize the workforce. Eventually, due to natural attrition the number of employees was decreasing to a minimum that was enough to overcome the crisis. TMNS returns to the equilibrium phase.

Disruptive changes

Disruptive changes are changes where the organization must change their objectives and come with solutions to overcome a crisis. By focusing on projects with a strategic character, TMNS is less affected by disruptive changes. This is done by dividing the projects over sectors and countries. By choosing for this kind of strategy, TMNS can have a part in the IT-market in different ways, in different countries and having a stable and harmonious equilibrium phase.

Practice - TMNS and the Golden Adaptive Cycle

TMNS has a very distinctive “why”, focusing on the well-being of the employees. Using this “why” they provide the best possible service to their customers. It’s seen through the whole company that the focus is on the employees: they get a lot of freedom (3C); none were fired due to the 2008 economic crisis; and even when the interests of the customer are at stake, the employees come first (for instance in the Egypt case). With the Golden Adaptive Cycle TMNS should be able to overcome crises. In this case study with did not identify any crises that directly impacted TMNS and required them to recombine, according to the ‘new combinations’ phase. An example, although not a genuine crisis, could be the Egypt case. Because employees come first, but the interests of the customer are never forgotten, they were able to recombine their competencies to create a new way of working (offsite projects). Because we don’t see any genuine crises, we are not able to confirm that the Golden Adaptive Cycle is used in TMNS. We do see that the “why” is actively used in TMNS and it seems likely that their “why” has prevented them from entering crisis situations. By having the employees’ best interests at heart and thereby providing the customers with the best value, they are able to improve and stabilize their organization.

Conclusion

As discussed in the previous chapters the Adaptive Cycle of Resilience describes a cyclic development which companies going through. This cyclic development consists of four phases, the equilibrium, crisis, new combinations and entrepreneurship. Within TMNS the phases of the Adaptive Cycle of Resilience are acknowledged. The crisis phase is actively being avoided by planning ahead and planning of projects. Employees are invited to deliver input for the entrepreneurship phase of the model. The Golden Circle tells us that companies need to focus on the “why”, their reason for existence. If the “why” is intrinsic in the company and is actively propagated companies will have a better chance of success. The “how” describes how products and services are made or constructed and the “what” in the model described the actual products and services of the company. By starting with your “why”, instead of starting with the “what”, companies should be more successful compared to companies that do start with their “what”. The Golden Circle therefor shows the “why” in the centre of the circle. The “why” is the most important concept for a company to focus on. This employee influence is one of the aspects following from the “why” as identified in The Golden Circle within TMNS. We found the “why” of TMNS being providing customers with the best possible service they could get. This “why” is clearly visible in the way TMNS treats and recruits their employees and how TMNS lets them play a role in the organisation. We therefor conclude to have found that The Golden Cycle is acknowledged in TMNS. Combining the two aforementioned theories we devised the Golden Adaptive Cycle. This combination of the Adaptive Cycle of Resilience and the Golden Circle looks at how companies can overcome crises. We conceive that with the use of a clear and well communicated “why” companies can overcome crises. Our Golden Adaptive Cycle model did however not clearly show in this case study. Due to the fact that TMNS is so actively avoiding crisis by planning ahead with their projects and with upcoming new ideas we cannot identify whether TMNS avoids their crises by returning to their “why”. We also think that TMNS being around for ten years would have influence on our model. It might be useful to check this model within organizations that have overcome a crisis to check its validity. We can however conclude that given the “why” of TMNS, which we have found using The Golden Circle, TMNS actively avoids crises by offering their customers the best possible service. By staying close to this mantra we do conclude that using your “why” will improve or stabilize your organization. We suggest to do further research on the Golden Adaptive Cycle in order to see whether the “why” of a company could get this company out of a crisis situation.

References

[1] Simon Sinek, Start with Why - How Great Leaders Inspire Everyone to Take Action, Penguin Books, 2011 [2] Drs. A.W. Abcouwer and drs. B.G. Parson, Sustainable Assertiveness – the adaptive cycle of resilience – Can curiosity be organized?, 2012 [3] C.S. Holling and L. Gunderson, ‘Resilience and adaptive cycles’ in: Panarchy, understanding transformations in human and natural systems, Springer Link 2001 [4] Julie Gable, "Enterprise application integration", Information Management Journal, March/April 2002 [5] M. Zairi. Business process management: a boundaryless approach to modern competitiveness, Business Process Management Journal, 3 (1): 64-80, 1997 [6] Ivy Schmerken, Deciphering the Myths Around Complex Event Processing, Wall Street & Technology, May 15, 2008 [7] M. Le Merle. How to Prepare for a Black Swan. Strategy + Business, 64. 2011. [8] Appelbaum, S. H., Marchionni, A. & Fernandez, A., 2008. The multi-tasking paradox: perceptions, problems and strategies. Management Decision, 46(9), pp. 1313-1325.

Contributors

Rufus Schep, Toon Abcouwer