I attended the Gartner conference in Phoenix and heard from many speakers and analysts. The key theme at the conference was that of a bimodal supply chain. For those who did not attend, this phrase might not mean much. In this post, I will try to explain this phrase.

In simple terms, the talk seemed to be that there are two modes of doing business. One mode focuses on doing something steady and have done it for years. They have invested time and money in getting better at how they do things. They typically rely on time tested tools and techniques and prefer to minimize surprises. They are interested in measuring market share. The companies operating in this mode know their strengths and weaknesses and make money while doing what they do best.  The typical approach is conservative. Generally speaking, they are risk averse and try to be predictable and reliable. They tend to move towards following standards and exercise rigorous governance regimes. Any change in this mode seems to be evolutionary in nature.

If you are familiar with the work of Treacy and Wiersema on the three value disciplines of operational excellence, customer intimacy, and product leadership, this mode of working comes closest to the companies that want to become leaders in operational excellence.

The second mode by contrast almost acts like a disruptor. In this mode, a business is focusing on innovation. The company takes an exploratory approach and is inherently adaptable in its approach. The company does not feel bound to too many rules and is in general risk-taking. These would be the business who would be considered innovators in this world. They seem to be trying to bring about a revolutionary change to the marketplace.

Again, looking at the work of Treacy and Wieresma, this second mode would come closest to strategy of product leadership.

The best explanation of the two modes came from Noha Tohamy of Gartner. During one of her talks, she talked about the two modes as being Samurai and Ninja respectively. I did some searching and found this nice comparison between the two.

Samurais (Mode 1) Ninjas (Mode 2)
Noblemen From lower classes of Japanese society
Followed the Bushido code of fighting Followed an unorthodox style of fighting
Used hand-to-hand combat weapons Preferred sneak attacks, and smaller weapons
Wore metal clad suits of armor Wore black outfits of cloth covering all but their eyes

So far, what I have described are the two modes. The next step was where the whole bimodal thing came about.

The main idea of bimodal is that successful companies need to operate under both modes. In order to meet customer demand, keep customers satisfied, retain market share, mode 1 is absolutely necessary. However, no company of any reasonable size can make progress without innovating. And to innovate, one needs to operate under mode 2. One needs to think very differently under the two different modes. And there are companies who will lean more towards one mode or the other based on their unique circumstances.

The companies with bimodal supply chains understand the tension between the two modes. They plan to operate in the two modes simultaneously. This can show up in the form of small teams (think Ninja), or splitting out of the innovative business units into their own entity so that they could play by a different set of rules. The companies who can find the right balance between the two modes will have a better chance of succeeding in business.

Those are some of my observations. Were you there? What are your thoughts? I am eager to hear them.

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