In the article about Operating Models, one of the four primary systems is the Development System as shown in the following figure.
I have been prompted to further elaborate on enterprise development because of:
- the increasing interest in effective business transformation and business change and the related field of digital transformation
- some recent commentary on the development system element of operating models
The latter can be found on Andrew Campbell’s Operating Model blog where he comments on the representation of operating models that I have outlined.
This has led me to elaborate further on:
- the role and purpose of this system
- the increasing importance of this system
- the place of this system in the enterprise lifecycle
- the implications of ignoring this system
- a maturity view of this enterprise capability
Let me start by talking about the naming of the system, and by indicating that others may have or prefer alternate names. I chose “development system” because I believe it is helpful to consider:
- enterprises as living systems which adapt, evolve, develop and mature in response to internal and external factors
- change and transformation as processes which develop the capabilities of an enterprise to realise its goals and aspirations
- the transition from an existing operating model to an intended operating model as an enterprise learning and development process
The term also relates well to other enterprise activities such as:
- business development
- organisational development
- leadership development
- professional development
Role and purpose
The development system exists to fulfill a purpose which can be expressed in different ways, including:
- Develop the necessary enterprise capabilities to execute business strategy
- Transform the enterprise from its current to intended state
- Design, plan and implement the necessary changes to realise the intended enterprise
The system exists from the moment that the founder creates the enterprise through to its current form. It supports the development of the enterprise through its lifecycle. An interesting set of perspectives on the enterprise lifecycle is provided by Ichak Adizes in his book “Managing Corporate Lifecycles”.
In the past, I have not incorporated this system and its subsystems in my descriptions of the architecture of an enterprise. However, the importance of its inclusion has become evident over time. Contributing factors include:
- Commentary on the failure of business strategy execution. It seems to me that such failure either arises due to poor strategy or poor execution. The latter reflects a failure of the development system – and its role in establishing the necessary capabilities to fulfill the requisite business strategy.
- Commentary on change failure or project failure. Both of these are about the failure of the development system. An enterprise can have the best strategy in the world, but if it cannot be realised, then it is of no use to the enterprise. Hence, there is a need to understand the adequacy of development capabilities and address these if strategic capabilities are to be realised.
- The increasing degree of change in the market / environment in which enterprises operate means that the demand and necessity to change and develop is becoming an increasingly important aspect of any enterprise. This is reflected in an increasing allocation of resources to the development system within many enterprises.
- In John Kotter’s article in HBR – Accelerate, John outlines the concept of a “dual operating system” within enterprises – the operational system and the change / transformation / development system – which he sees emerging in response to the increasing demand for enterprise agility and the significantly different features and culture required in these two systems.
Hence, it seems to me that the demands for enterprises to change, transform and develop in a more adaptable and agile manner for their ongoing viability and sustainability are such that attention to the development system is not just becoming increasingly important, but is becoming unavoidable.
The enterprise development lifecycle is shown in the following figure.
The development system converts business strategy into enterprise operations. The performance system monitors the development system and the operations system in relation to progress and realisation of the intended outcomes. This provides inputs into subsequent cycles of strategy development.
Typically, key activities within the development system will include:
- Refinement of the intended business model(s) and operating model required to effect the business model(s)
- Development of the transformation or change strategy to realise the intended operating model
- Formation and execution of the transformation program to put the change strategy into effect
The implications of failing to give attention to the development capabilities of an enterprise include:
- Ongoing change and project failure
- Higher than anticipated costs and lower than expected outcomes in effecting business strategy
- Unnecessary revision to business strategy due to assumptions that the business strategy was deficient where it may be weaknesses in execution and deficiencies in change management capabilities
- Unnecessary risk to enterprise viability due to an incapacity to respond to market disruption in a timely and cost effective manner
The development capability is simply another capability within the enterprise. It can be assessed in terms of its maturity, just as any other capability, identifying the different dimensions to the capability and which of these may require improvement. In part, the value of the maturity view is one of acknowledging and leveraging the areas of strength, and determining those particular dimensions where learning and/or change is required. With the increasing degree of change occurring in enterprises, early attention to the maturity of this capability will be critical for many enterprises.