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Two Ways to Build for Change

“Build for change.” What an unusual slogan for an enterprise software company. Isn’t it the goal of every profitable enterprise software business to build a standardized application and try to sell it as many times and with as little customization as possible? Not at Pegasystems (Nasdaq: PEGA).

for change.” What an unusual slogan for an enterprise software company.

Isn’t it the goal of every profitable enterprise software
business to build a standardized application and try to sell it as many
times and with as little customization as possible? Not at Pegasystems
(Nasdaq: PEGA).

At PEGA, the current industry leader in
Business Process Management solutions (BPM),
change or adaptability is at the core of the company’s software development philosophy. It is
not something to be avoided. It is not something to be ignored. It is an
opportunity to provide solution
s that truly meet clients’ ever-evolving business needs.

founded PEGA in 1983, he has managed to engineer consistent and
impressive growth. In the last five years the company has generated
250% growth, reaching $
250 million in revenue in 2010 from around 100 million in

On the surface it seems
PEGA may simply be another young software company that took an early
lead in the right emerging segment. But a
few weeks ago, we interviewed Alan, the CEO
and founder of
Pegasystems, and believe there is something special
going on

As a
former competitive chess player, Alan brought an unorthodox view to the
software industry.  He realized there was an opportunity to innovate in
the enterprise software sector through a dynamic software product that
would be flexible and customizable to better
adapt to clients’ changing business needs. He wanted to empower business people by allowing them to “own the change,” at
on the
technology side

Alan put it, “If you don’t believe in the
rhythm of change, if the rhythm of change is measured in years or
quarters because you know that from writing a [technology request]
document to the delivery of the result it’s going to take a year, then
you become obsessed with putting everything into [that document]…[but]
if you believe you can really iterate every week…then your whole view
changes. This is an approach that enables continuous improvement.”

are two important strategic shifts to note in how Alan describes PEGA’s

First: rapid iteration. A revolution has been underway in the
software industry in recent years. The model was to build and test a
perfect piece of software and then release it to the world in a big
launch. But today we see the value of the rapid-iteration model in which
companies like Google launch lots of imperfect “beta” products and
adapt them as people use the software.

approach cuts against the traditional
Western view
of change: c
means uncertainty. It
abandoning the status quo.  It zaps energy.

this rapid iteration approach falls more in line with
Eastern, primarily the Taoist, view which suggests all
moments are changing.
The ball never comes to rest but is in constant motion. When the traditional
Western view says you are on the top of the pyramid, the Taoist view
says you are already falling.

Second: shift from an information-centered
view to an interface view.
Essentially the traditional view held that what programmers
needed to do was design an interface that allowed users to access
continually changing information. Your inventory changes by the minute,
but your inventory monitoring panel on your enterprise software stays
the same.


But an emerging
view is that the interface itself must continually change based on user
needs. Indeed, this view holds that the best model is one in which the
user co-creates the interface. If you really want to dive deeply into
this new view,
Kaihan’s father wrote an article on it: http://www.asc.upenn.edu/usr/krippendorff/CENTEREDNESS.html.

In practical terms, PEGA’s approach is to
create a system whose interface adapts as people need it and to do this
without having to invest in a heavy redesign process. Alan likens this
approach to building flying horses when
your competitors are building bridges.

During the
recent recession, PEGA actually grew. As IT spending improves, it makes
sense to expect PEGA to continue growing. Traditional players like IBM
have attempted to
their way into
the BPM space but have so far not been able
to challenge BPM’s leading position.


PEGA’s rise continue? It is probably too early to tell, but as long as
it holds onto its unique perspective – rapid iteration and a co-created
user interface – while its competitors cling to older mental models,
history tells us PEGA will remain unique and continue to grow


yourself the questions below to see how you can not only make your
business more adaptable to change but also profit from it:

1.    What
s of change are your competitors trying
to avoid that
could present an opportunity for you?

2.    What
fixed part of your business or service
could you change into a dynamic, continually changing one?

3.    How
can you
to change, so they stop associating with uncertainty but instead
welcome and champion it?

If you were given a blank sheet
of paper and were tasked with
redesigning an entire industry, starting from scratch, what innovative point
of view would you bring
to the drawing board?


Laurincikova, a prinicpal at Kai Consulting, contributed to this piece.

About the author

Author of Outthink the Competition business strategy keynote speaker and CEO of Outthinker, a strategic innovation firm, Kaihan Krippendorff teaches executives, managers and business owners how to seize opportunities others ignore, unlock innovation, and build strategic thinking skills. Companies such as Microsoft, Citigroup, and Johnson & Johnson have successfully implemented Kaihan’s approach because their executive leadership sees the value of his innovative technique.