Leading on demand businesses—Executives as architects

Fully exploiting the potential of on demand computing requires on demand business models. To respond “on demand” to the unpredicted opportunities of the moment, a business must invest in knowing earlier the meaning of what is happening now rather than in attempting to forecast better the opportunities of the future. This means concentrating on know-why, which is system knowledge, rather than know-how, which is process knowledge. Applying the principles of system design makes business executives become architects, enabling them to spot fundamental fallacies in many current business practices. For example, designing an on demand business as a system, rather than as a collection of processes linking vertical hierarchies, automatically provides alignment and clarifies roles and accountabilities. It makes teamwork a natural act and promises enormous reductions in the hidden costs of matrix management. The strategic advantage of on demand businesses will be determined by the quality of their customer-back business designs. As seen in this paper, expressing strategy as an organizational systems design must therefore become a leadership competence.