Intelligent enterprise

Intelligent Enterprise is a management approach that applies technology and new service paradigms to the challenge of improving business performance. The concept, as articulated in James Brian Quinn's seminal book Intelligent Enterprise posits that intellect is the core resource in producing and delivering services. This approach is referred to in business jargon as Knowledge Management.

This article is about the management approach. For the magazine, see Intelligent Enterprise (magazine).

Paradigm

This paradigm highlights that in today’s world, highly intelligent systems is the key to expanding industry, but that the correct organizational set up is required to do so. Organizational set up includes "autonomous problem solving, intelligently seeking solutions and taking whatever action is required".[1]

Managers should provide a rewarding work environment, lower friction, and energize within the company.[2] By outsourcing the less core functions to superior vendors, firms will become more centralized in core components.[3] However, the degree to which the intelligent enterprise can be successful depends on the "competencies of the people and its operational capabilities"[4] such as, structure, policies and systems. In order to achieve exceptional success, the combination of utilizing intelligence and competitive information of the environment is essential.

Real life examples

Honda

Once Honda began, it competed with companies such as Toyota and other Japanese producers – however, outsourcing many of its components to achieve high economies of scale and solely focusing on the development and production of its manufacturing operations made it successful – in addition to developing an organized leadership team.[5]

Apple

Apple when introduced to the highly competitive computer environment retailed for about $2000 but cost less than $500, as over 70% of its components were outsourced.[6] Instead, Apple focused on the design, logistics, software and product assembly. Due to the concentration of only a few knowledge adding services, Apple was able to rise to the top of the highly competitive PC market and attain great sales.[7]

Advantages of intelligent enterprise

Gupta states that more available information will lead to better decision-making and thus, would be beneficial in a macro economic sense.[7] In the 1990s, the implementation of new technologies created this churn of high productivity level – thus, helping the macro economy as it enables faster growth and lower inflation. In turn, faster economic growth leads to higher real wages and a decrease in unemployment.

As well as benefiting the macro economic goals, it also has a great impact within the industry. Due to easier access to information, it helps industries view their demand and supply between productions. Therefore, a reduction in product volatility and tighter inventory levels are usually expected.

Gupta separates the advantages of Intelligent Enterprises into 3 different levels: Operations, Tactical and Strategies.[7]

Operations: In an operative view, intelligent enterprises sets the platform in which automates processes and allows the access to all data information which may have been physically and logically dispersed at one time.

Tactical: Tactically, it helps in making better decision-making as information is easily accessed and can also reduce the length in which they are made.

Strategies: The reduction of operating times promotes the reduction of operating costs thus leading to better customer services. In addition, advanced business decision-making follows to better tactical strategies.

Limitations of intelligent enterprise

However, as with all business theories, there are limitations. Palmer, a Ph. D student, has found that corporations and businesses are blinded at the fact that in order for intelligent enterprises to work it is both the inner and outer of businesses, which need to work hand in hand. The inner of a business includes the following: strategic planning from the management, resource efficiency, opportunities, processes and interaction with the environment.[8] On the other hand, the latter would include those such as the general economy – economic pressures, corporation’s mergers and takeovers – in hand, have an effect internally.

It is important to note that humans are the intelligence behind the technological systems and to affirm the validity is still very limited. Human beings have many qualities that are different to that of a technology apparatus (psychological and sociological), which needs to be taken into account. Therefore, limiting this theory to that of a technological approach should not be the sole focus of a corporation.[8]

References
  1. Thannhuber, Markus J. (2004). The Intelligent Enterprise: Theoretical Concepts and Practical Implications. Germany: Physica-Verlag Heidalberg.
  2. Quinn, James Brian (1992). Intelligent Enterprise: A knowledge and service based paradigm. United States of America: The Free Press.
  3. Wiig, Karl M. (2007). The Intelligent Enterprise and Knowledge Management. Texas: Knowledge Research Institute, Inc. S2CID 15643503.
  4. Yingzhao, Ming; Dexiong, Feng. Research on the Intelligent Enterprise Based on Intelligent Behaviour. Proceedings of the 7th International Conference on Innovation & Management. Wuhan, P.R.China: School of Management, Wuhan University of Technology.
  5. Quinn, James Brian (1999). "Strategic Outsourcing: Leveraging Knowledge Capabilities". MIT Sloan Management Review. Retrieved 21 October 2014.
  6. Choo, Chun Wei (1995). Information Management for the Intelligent Organization. Medford, New Jersey: Information Today/Learned Information.
  7. Gupta, Jatinder N. D.; Sharma, Sushil Kumar (2004). Intelligent Enterprises of the 21st Century. London: Idea Group Publishing.
  8. Palmer, Kent D. (2007). Exploring Intelligent Enterprise System Limitations. CA: INCOSE.
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