Month: July 2017

Exploring digital transformation

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lemmings (1)

When I hear expressions such as digital transformation and digital leadership, the following images come to mind:

  • Millions of 0’s and 1’s transforming into 2’s and 3’s
  • An endless line of o’s and 1’s following each other like lemmings

More seriously, the following questions come to mind:

  • What is digital transformation?
  • What does it mean to my enterprise?
  • What decisions will it require?

Understanding digital transformation

So … let’s unpack digital transformation using some simple equations.

  • Digital transformation = digital strategy + business transformation
  • Digital strategy = digital products / services + business strategy

Combining the two equations, we get …

  • Digital transformation = digital products / services + business strategy + business transformation

For me, that makes things much simpler because:

  • I understand what is entailed in business transformation
  • I understand what is entailed in business strategy
  • Now, I need to understand the implications of digital products and services

Digital products and services

There are several different elements to consideration of digital products and services, including:

  • those existing products and services which are amenable to being delivered as a digital product or service
  • those new digital products or services which complement existing products and services in such a manner as to enhance the value proposition for existing or new customer segments
  • those digital products or services which can be integrated with other digital products and services from within your enteprise or from other sources

Each of these areas offer the opportunity to extend greater value to existing and new customers.

Examples

That all sounds fine – but what does it mean in practical terms for your or my enterprise? And let’s consider some pragmatic examples and not just trot out the usual, unreachable examples such as Amazon, Netflix, Air BnB or Uber!!

Depending on your enterprise – it may prove a valuable exercise, simply to list your products and services. For some enterprises, it is obvious. For others, not quite so easy.

In my own line of business, I provide consulting services. Often, these services are summarised in a deliverable (product). The consulting is largely done face-to-face and on a client site. The deliverable is typically a presentation or a document, already provided in digital form. There will often be several steps in developing the report. The early stages of the consultancy may involve some form of assessment. This could potentially be undertaken via a digital channel, enabling my client to undertake the assessment at a time and in a place that suits them, without needing to coordinate our schedules and our locations.

Of course, this is not feasible for all businesses. A friend who operates a lawn mowing and gardening business is not going to be able to offer an alternative digital product! But that does not mean that there are no digital product / service opportunities. Perhaps there are complementary digital products and services that he might offer? These could relate to:

  • booking and paying for his services
  • hints and tips for “after-care” of lawns and gardens

Ultimately, the test for complementary digital products and services relates to customer need and potential for the customer to value these, in combination with the physical products and services. A helpful approach to identification and consideration of such opportunities is to consider the “customer lifecycle”, from genesis to lapsing of a particular need. An important consideration in developing and delivering digital services is to consider the customer journey and customer experience. A disjointed, difficult customer experience will not be conducive to business growth in this area.

An example which has been given consideration by governments is the process involved in establishing a new cafe or restaurant. Depending on circumstances, the entire process can require interaction with a number of different government entities (at differing levels of government in differing national contexts) including:

  • Registering a business and business name
  • Securing licences for selling and serving alcohol
  • Gaining local authority approval for food preparation
  • Dealing with any entertainment licensing fees
  • Subsequent renewal of approvals

Such processes can involve provision of similar information on numerous occasions, and may entail presentation of considerable supporting documentation, through slow and cumbersome office / counter channels. A digital service would allow the prospective business owner to provide the necessary information once and to be able to undertake the process at a time and place of their convenience. This first emerged under a program entitled “Ask just once” – promoting the line of thinking that government agencies would move to a position where they did not repeatedly ask citizens or businesses for the same information.

Another example revolves around considering all the related events which occur in a “life event” such as moving house, where a range of changes occur in relation to:

  • the property transactions (sale and purchase)
  • utility connections (power, water, telecoms)
  • advice of change of address to other organisations

In this scenario, all three elements can prevail – replacing physical services with digital services, offering complementary digital services and integrating a range of digital services to offer greater value and convenience to customers.

Tools and techniques

What tools and techniques can be used to identify and explore opportunities and implications as part of developing a suitable digital strategy?

Changing the product or service portfolio can be effectively explored through the discipline of reviewing your enterprise business model(s). Such a review gives cause to considering the viability and sustainability of product and service offerings and their value proposition to customers and consumers.

Better understanding the value proposition for customers should prompt consideration of digital products and services and the use of digital channels to complement existing market channels.

The same disciplines, applied to your enterprise operating model, will enable identification of opportunities for efficiencies and more responsive processes in producing and delivering your products and services, offering greater value to existing or new customers.

Conclusion

Digital transformation calls for thinking about digital products and services which may complement or extend your existing products and services and which will deliver greater value to customers and enable you to offer your products and services to broader markets.

Provision of these digital products and services will leverage existing capabilities within your enterprise, but also require you to strengthen and extend your business and digital capabilities. It will demand that you better understand and manage the inter-dependencies between your enterprise capabilities and their integration to ensure that a seamless and positive customer experience is provided for the new products and services you offer through wider and more convenient channels.

Attention to development of your enterprise in this direction may be critical due to the emergence of digital products and services from existing or new competitors, but also offers your enterprise the opportunity to enter new markets which you have previously been unable to access.

Vision, purpose, enterprise

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Enterprise-development-1

EM_journey_v0-15

In a recent article, I used this simple visual to describe my approach to architecting enterprises. As you can see, it starts with a vision and ends with a roadmap for realising the vision. This attracted significant comment from a number of colleagues, prompting reflection on my approach, the communication of my approach and the visual aids that I use in explaining my approach to those with whom I engage.

Genesis

Let me start by describing the genesis and motivations for creating and using this visual. In engagement with an enterprise, an early task is to outline to the Executive the journey that we will be jointly undertaking so that they have a sense of how we will realise the intended outcomes of the engagement. This diagram is the result of multiple refinements of that visual and is often customised to reflect the particular language and position of the organisation on this journey.

In a recent assignment, the organisation had done significant work on a “strategy cascade”. As the Executive sponsor and I talked through their cascade, we were able to determine that it encompassed the main elements of vision and business model, such that the “entry point” for this organisation would be with an initial operating model they had developed, seeking to refine it to a point where it would provide input into their annual capital budgeting process.

As it turned out, I became aware during the process that the budgeting process was well in train, even before we started this journey, such that we started describing our activity to those engaged as an assurance process – providing another view on the organisation, the capabilities that they needed to realise their intended business model and their intended differentiated positioning in the markets in which they operated.

In another assignment, the starting point was an “aspirational brief” which had been developed as part of a co-design undertaking by the enterprise and their customers. That is, in fact, how that artefact came to become part of this visual.

In many assignments, the journey ends up being different than indicated by this simple graphic – but that is only known in reflecting back on the journey, which has been an adaptive experience, determining the activities in the course of discovering the new possibilities that might be pursued in iterating through development or refinement of their business model(s) and operating model. It is important, though, to provide a simple representation and to let the journey unfold – any more complex representation becomes confusing and difficult to explain, without greater appreciation of “what is to come”. That is a critical point – my colleagues know “what is to come” because they have been on this journey many times, but often this is the first time for my clients and they need to be afforded the opportunity to discover and shape the most appropriate path for their enterprise.

Disrupted world

In the last forty years (my working life), the world and the working world have changed radically. It was common, in my early working life, to encounter a planning process which essentially entailed forming a vision for where the enterprise wished to be in five to ten years and developing a plan for “getting there”. And to a fair degree, this worked.

Turn the clock forward, and it no longer works! Why not? Because by the time the plan is executed, the world has changed so that the vision is no longer relevant or appropriate. In fact, the vision may entail a range of operating assumptions that are simply no longer valid. This change is reflected in expressions such as market disruption and business model disruption. Markets are changing rapidly, with new entrants bringing new business models and new ways of thinking and operating that can totally undermine the business model of an organisation. I am sure I don’t have to reference the oft-quoted enterprises or industries in which we have seen these changes occur.

Hence, the disrupted world can mean that our visions are no longer relevant or if relevant may be subject to radical disruption within the next five to ten years. In this respect, establishing and creating a vision for our organisation has become an ineffective approach to planning, architecting and designing. This can lead to developing a vision of our organisation as opposed to a vision of the world in which it will be operating. But that, too, might not be reflective of the manner in which our organisation has adapted and evolved in a change world.

Yet, we need some ongoing expression of the enterprise we are pursuing and the motivations underpinning our enterprise. If a vision is not suitable, how do we express our purpose and motivation?

Corporate lifecycle

Taking a slightly different angle, I have found “Managing Corporate Lifecycles” by Ichak Adizes offers a range of valuable insights into the architecting and developing of organisations. Adizes speaks of four key dimensions through the acronym PAEI:

  • Purposeful
  • Administrative
  • Entrepreneurial
  • Integrated

He speaks of each of these coming to the fore at different stages in the lifecycle of an organisation and offers an “optimal path”, which takes a balanced approach to each of these dimensions. Elements of this thinking are reflected in several of my articles, including one on enterprise integration and wholeness.

Reflecting on his book takes my mind to thinking about:

  • Enterprise integration
  • Enterprise and personal integrity
  • Enterprise completeness
  • Enterprise and personal fulfillment
  • Enterprise and personal awareness

All of these require some sense of purpose and may entail some vision of the enterprise and people we aspire to be.

Evolving purpose

Another line of thinking that has been influential for me has been Ackoff’s classification of systems which revolves around the concept of being purposeful. Ackoff defines this as any entity which is able to change either of the means or the ends by which the entity operates. This is a key element of strategic planning and its use of the concept of capability, where exploration occurs in relation to:

  • the new markets (ends) which may be pursued with existing capabilities (means)
  • the new capabilities (means) which might be required within existing markets (ends)

Ackoff classifies systems in terms of whether their parts are purposeful / non purposeful and the whole is purposeful / non purposeful, naming the systems with purposeful parts and whole as social systems (since it is the people element which brings the social construct of purpose to this purposefulness).

As you would appreciate, when we explore using existing capabilities to pursue new markets, we are exploring new purposes for our existing capabilities. Hence, the need to be flexible (and alert) when exploring strategic directions, seeking to shape our future and potentially change the purposes of our organisation.

Evolving architecture, development and enterprise

It seems to me that the development and sustainment of successful enterprises engages us in evolving our purpose and hence the expression of the enterprise that our organisation is pursuing.

As we evolve our enterprise, we must equally evolve the way in which our enterprise develops, and accordingly, must also evolve the way in which we architect and design our enterprise.

Approaches to architecting enterprises inevitably engage in envisioning the future environment in which they will operate and the way in which they will operate in such environments. It is incumbent on all of us who are involved in leading, architecting, designing, developing and sustaining enterprises that we appreciate the manner in which vision and purpose must evolve and be balanced and adaptable.

As we pursue these activities, we may express our vision and purpose for our enterprise, for our development and for the manner in which we architect and design our enterprise.

Genetics

Hopefully, then, it will come as no surprise to consider that we are genetically wired to be enterprising. I am sure there are authors and thinkers I could reference here! My simplistic view is that being enterprising helped us when we were hunters and gatherers, recognising that collectively we could achieve more than individually. It has helped us through each of the ages – agricultural, industrial, and information / knowledge age. Our enterprising capacity has enhanced our capability to survive and has been further concentrated through our ongoing evolution.

Our enterprising nature has enabled us to develop envision, shape and realise our future, to evolve our visions and our expressions of purpose and to pursue these evolving visions and purposes.

Our enterprising nature enables us to design and realise purposeful organisations, able to give attention to changing the means or changing the ends as we sense and respond to the environment in which we operate.

Conclusion

Perhaps visions and purposes are means and not just ends? Perhaps they are helpful if we appreciate and use them in an adaptive manner as an instrument for conceiving of possible futures and evolving our capacity to realise these futures in a rapidly changing world?

Food for further thought and reflection!

Engaging enterprise architects

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Business people in office

There are a number of key motivations behind the articles which I have written over the last 18 months, which may help in appreciating the manner in which I have approached the task of communicating the essence and value of architecting enterprises. These drivers include:

  • contributing to economic, social and environmental development
  • engaging Boards, Directors, Executives and Managers
  • exploring architecture as a preventive rather than corrective measure
  • continuing my commitment to using plain business language
  • linking with other well-established and sustained resources
  • extending systems engineering to enterprise systems engineering

Economic, social and environmental development

I am convinced that architecting enterprises leads to higher accomplishing enterprises, whether the enterprises are pursued within, by or across multiple public, private or community sector organisations. Mature, sustained architecting capabilities enable enterprises to more effectively achieve their intended outcomes, whatever combination of financial, economic, social and environmental dividends they realise. To that extent, improving enterprise performance is a means of making an effective contribution to the future economic, social and environmental wellbeing of the community, state, nation and world in which I live.

Living in South Australia, an economy that has a higher proportion of small-to-medium enterprises (SMEs) than most other states in Australia, prompts me to explore ways in which architecting can be applied practically and deliver value to these organisations. In considering Directors as one part of my audience, I am conscious that one third of the 40,000+ members of the Australian Institute of Company Directors lead, direct and manage SMEs, reinforcing the significance of the SME constituency.

When considering Australian commercial businesses, statistics indicate the following profile:

  • 1-19 employees – 755,000
  • 20-199 employees – 78,000
  • 200+ employees – 5,000

Architecting offers the prospect of enhancing the performance of all of these organisations, well beyond the current profile which predominantly entails the 5,000 commercial businesses with more than 200 employees, plus other large organisations in the public and community sectors.

This orientation and motivation has prompted me to write articles which enable any leader to bring architectural thinking to bear in the enterprises in which they are engaged.

Directors, executives and leaders

Executives and leaders have always been the architects of enterprises. This does not change with the introduction of a more disciplined approach to architecting. Architecting of enterprises will always be done by executives and leaders. If done by others, this can compromise the efforts and value provided by these individuals, as executives and managers will inevitably change the architecture developed on their behalf by others. Even where advice is sought or tasks are delegated to others, it is critical to the sustainment of the enterprise and the integrity of its architecture, that executives and leaders understand the manner in which the architecture is expressed and maintained.

With the increasing degree of disruption to business and operating models, Boards are giving increasing attention to the intended business and operating models for their enterprise. This requires that the language used in expressing the architecture of the enterprise is based on natural business and governance language. The ability of executives and leaders to present meaningful architectural outputs and decisioning, and to demonstrate a mature architectural capability within their enterprise will offer significant confidence and assurance to Directors.

To that end, I have explicitly chosen to convey the approach to architecting enterprises in a manner that will be readily and easily understood by directors, executives and leaders. I have also chosen to demonstrate how the architecting capability speaks to corporate governance by attending to the integration of business and operating models with a sound, well recognised governance model.

Prevention rather than cure

Architecting has a number of different objectives, and one of these is to enable stakeholders to more easily deal with complexity. I recall early in my involvement in discussions on LinkedIn in The Enterprise Architecture Network (around 2012), there were views expressed that enterprise architecture just made enterprises more complex. This typically arose in discussions relating to the need to document the current architecture, where extensive effort could lead to high costs with limited value derived from these activities.

It occurred to me that:

  • architecting enterprises was most typically undertaken in large corporate and government organisations, with few smaller organisations making use of this capability
  • architecting capabilities were often directed towards dealing with organisational silos and to achieving greater organisational integration and wholeness
  • large enterprises arise from smaller enterprises that are less complex (or so I assumed)
  • embedding architecting capabilities in smaller enterprises might prove easier to effect and might aid in preventing the emergence of organisational silos

In this manner, I formed a simple view of disciplined attention to architecture being a treatment for various organisational ailments, which might be more readily addressed by taking a preventive approach. At this time, I also read Ichak Adizes “Managing Corporate Lifecycles”. Adizes looks at enterprises through the lens of their growth, pre-conception through childhood, teenager years, early adult life, maturity and through to death. Adizes also speaks of:

  • growth and change causing disintegration and requiring re-integration of our enterprises
  • an optimal path entailing earlier, balanced attention to integration

Viewing architecting as a tool for integration, this further encouraged me to consider the architecting of smaller enterprises (which I have explored in a number of other articles).

Plain business language

The nature of architecting systems is that it entails recognition and exploitation of common principles and patterns. That can lead to the creation and use of terms which seek to be neutral across multiple contexts and agnostic to the structures established in enterprises.

As examples:

  • the term organisation may be used as a more general term rather than business, corporation, government agency, or community body
  • the term enterprise may be used to accommodate the pursuit of an endeavour by part of an organisation, an entire organisation, or multiple organisations

However, it can also lead to terms which are foreign and unfamiliar to stakeholders.  “Segment” is one such concept which comes to mind.  Whilst it makes sense, it is not a term which is commonly used in normal business and executive conversation.

I have a preference to find and use terms that stakeholders already use and understand, and to avoid “special” language which can become exclusionary. This highlights a key aspect of my thinking and practice – taking an inclusive approach.

This is part of the reason that I commenced focusing on business models and operating models, now becoming more widely referenced by Boards, Executives and Management Consultants through research and tools such as:

  • Business model canvas
  • Value proposition canvas
  • Operating model canvas

Linking to other resources

When I first encountered Bruce McNaughton, I found that he was always trying to relate different frameworks to those well established frameworks that his clients use and/or are familiar with. Where this was possible, he would prefer to use the language in these frameworks and link his approach to architecting enterprises to these frameworks.

This makes great sense to me. It means that these elements will be developed and maintained by the appropriate bodies and will be familiar to many of my clients. Examples include:

  • ISO 9001 quality management
  • ISO 31000 risk management
  • Recognised project management and program management frameworks

Linking to these resources narrows the scope of architecture frameworks and the effort to sustain them, as well as making the architecture framework more readily understood by key stakeholders.

Applying enterprise systems engineering

A more recent driver has been to explore and apply concepts which have been outlined in the field of enterprise systems engineering.

I was introduced to this field through “Beyond Alignment: Applying Systems Thinking in Architecting Enterprises” ed. John Gotze. This has since led me to INCOSE – the International Council of Systems Engineering – an international organisation advancing the discipline and profession of systems engineering, including enterprise systems engineering and socio-technical systems engineering. This provides a strong base for advancing enterprise architecture in its broadest context, being a natural part of enterprise engineering.

Early engagement with INCOSE through its International Symposium 2017 being held in Adelaide has afforded me the opportunity to explore the extent to which my articulation and practice of enterprise architecture aligns with the lines of thinking being advanced through this body. As I learn more, I expect this may result in further refinement of the language that I use in these articles and in engaging with directors, executives and leaders in architecting enterprises.

Important elements in the capability development lifecycle include:

  • stakeholder engagement in problem definition and redefinition
  • refining and building shared understanding of conceptual models

In this regard, it is important to “start simple” such that the learning journey is shared by all stakeholders.  Those facilitating the process must bear in mind that they hold a much more sophisticated model and understanding of the lifecycle processes which stakeholders will progressively learn by sharing the journey.

Summary

These different factors have remained as part of the context and motivation for the series of articles that I have developed, including the most recent one on the approach that I take to architecting.

It is aimed at providing a clear and simple approach (as outlined in my first article entitled “Enterprise architecture – plain and simple“) to architecting such that directors and leaders can apply the thinking tools that architecting offers to their ongoing role as architects of enterprises and assurers of the architecture of enterprises.

Approach to architecting enterprises

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Many of my articles have been about particular concepts, topics, models or perspectives relating to architecting enterprises. In that regard, they have not offered as much about the process of architecting or the methodology that we employ.

This article seeks to explore this territory, offering a simple approach which can be applied to any enterprise-as-a-system, and on which I may elaborate in later articles.

Enterprise models

Our method uses three key models:

  • Governance model
  • Business model
  • Operating model

The governance model entails application of the Tricker model, which is introduced to any Director undertaking the Company Directors Course offered by the Australian Institute of Company Directors. Key areas that are given attention are shown in the following diagram.

Tricker-model

Use of this model this model means that the activity of architecting the enterprise is easily integrated into the corporate governance model and will be familiar to many Directors, not only in Australia but also in other countries.

The second model is the business model, taking an enhanced approach to the Business Model Canvas. An example of a business model representation for a disability organisation is shown in the following diagram.

New-disability-business-model

Further exploration of business models and their development is provided in:

The third model is the operating model which is developed to enable the enterprise to realise its intended business model(s). An example of an operating model for a fictitious taxi company is shown in the following diagram.

TTC-operating-model

Further exploration of operating models is provided in:

Transformation program

By iterating the use of business models and operating models, an enterprise can:

  • articulate its business strategy
  • express its intended business and operating model
  • enable the organisation to assess capability gaps
  • develop an investment portfolio and transformation program

Overall, this approach is reflected in the following diagram.

EM_journey_v0-15

As with the business models and operating models, this can be applied to any enterprise, whether it relates to a multi-organisational venture, a single organisation or part of an organisation.

Applying this pattern

If you interpret the diagram to mean that one creates a vision for where an enterprise should be in five years’ time, a roadmap to get there, and then religiously follow that roadmap for the next five years, then you will find it very 1970s thinking – as commented by a colleague.

That is not how the process “works out”. Nevertheless, it is the case that whenever a change in business model is contemplated, a number of change initatives will inevitably emerge. It is also the case, that whenever I encounter a client there is a “portfolio” of change initiatives in train, whether or not they are being managed as a program and portfolio, and that there will be elements of this cycle that are layered on top.

Sometimes, my starting point is the current portfolio, working backwards to ascertain whether there is clarity about the capabilities being improved, the operating model being realised, and the business models being pursued. So, the cycle may be entered at any point (because annual capital budgets create a cycle anyhow) and in any direction.

 

Exploring business capability gaps

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Over ten years ago, I encountered a professional services organisation which was seeking to improve the performance of its sales capability. As I looked at their existing capability, I found:

  • well-defined processes for the various elements of the sales cycle
  • a leading CRM based system to support the process
  • effective coordination, collaboration and measurement across the team and with other parts of the enterprise
  • good support mechanisms for proposal development, review and submission

Yet, there were significant differences in performance across the different members of the sales team.

This brought home to me the people element of any business capability – there are elements of people’s skills, knowledge, experience, attitude and behaviour which influence how successful they are in their roles. No amount of process improvement or systems improvement or supporting IT tools would make any difference for some individuals.

It was not longer after this that I started an assignment with another client, where we were engaged to develop a high level business and technology architecture, gap analysis and roadmap for business and technology initiatives to improve the performance of a division involved in major infrastructure projects. The Executive had already determined the key business initiatives but had not assessed where technology could best contribute.

It was at this point that we decided to undertaken an initial assessment of the ten identified initiatives, asking the Executives to nominate for each initiative, the extent to which the gaps in current capability were attributable to deficiencies in:

  • business practices – people’s skills, knowledge, attitude and behaviour
  • business processes
  • business information systems

This proved to be an important initial assessment, as there were a number of initiatives where the information systems were regarded as highly suitable, but attention needed to be given to business practices. This allowed us to direct more time and attention to deficiencies in business process and information systems, and for the Executives to attend to improvements in business practice.

A few years later, two different clients required assistance in developing business and technology architectures, assessing critical gaps and developing associated business and systems transformation roadmaps. It was at this point that we developed the following visual for prompting conversations with business executives around the composition of their business capabilities and the nature of the deficiencies that were impacting on their business performance.

CC

 

This could be developed further, going from a qualitative assessment to a more quantitative approach. In all likelihood, such analysis is more likely to be part of the development of a detailed business case than in the broad assessment of capability gaps for development of transformation strategies and plans.

Irrespective of these issues, this approach to exploring different dimensions and perspectives as to the deficiencies of business capabilities has proven to be very helpful to a wide range of business executives. It has been particularly helpful in opening their eyes to the possibility that significant business improvement may be achieved through quite small investments in improving business practices rather than the normally large investments required in improving business processes and supporting IT systems.

This was borne out again in a recent client situation where there were significant concerns about the delays in generating employment contracts. Initially, the HR Executive and IT Executive started exploring the need to integrate a recruitment system and a payroll system. As early analysis was undertaken, it was determined that the delays were attributable to the manner in which requests were prioritised and allocated, and that a change in the organisation of staff and in the triaging of incoming requests would make a far greater improvement than any initiative to integrate the two systems.

This is not meant to imply that IT systems cannot make a difference – simply to make clear that other factors can be more significant, and that there is a need to understand the business-system-in-focus and options for improving its performance. Such an approach requires the business architect or business analyst involved to appreciate the distinction between the business system and any supporting IT systems.

This article has been developed to further elaborate on the manner in which being clear about the distinction between business systems, information systems and IT systems is important and of value to business stakeholders and business improvement project members, first introduced in the article “Trinity of systems”.

Transforming enterprise performance

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What drives transformation and change in enterprises?  Why do they need to change?

In a dynamic environment:

  • customer needs change, prompting changes to the products and services offered
  • competitors introduce new offerings which change the perceived value of products and services offered
  • new opportunities emerge for offering different products and services

Each of these require changes to products and services offered and, in all likelihood, require changes to the enterprise capabilities which produce and deliver these products and services.

Each will require changes in operation and changes in performance.

Enterprise performance

Is the performance of your enterprise satisfactory?  Could it perform better? Does it need to perform better?

How do you measure the performance of your enterprise?  How do you know whether the current levels of performance are adequate?  How do you know these performance levels can be sustained?

Exploring enterprise performance will require exploration of outputs and outcomes, both at the enterprise level and at the capability level.

This is a starting point for grounding what might be a much needed or much valued transformation of your enterprise.  The question of performance can be approached in numerous ways – this particular topic is about two models to explore which will enable you to:

  • evaluate your enterprise
  • develop a transformation strategy (if necessary)
  • execute your transformation program
  • realise measurable and sustainable improvements in enterprise performance

Exploring business models

Business models provide a means of exploring external demands for change.

To understand the essential elements of business models, you may wish to explore the following articles:

From these, I hope that it is evident that business models provide a means of developing a shared view of:

  • the products and services an enterprise intends to offer
  • the value proposition of these products and services to prospective customers

Exploration of these issues can lead to identifying changes in enterprise performance to offer:

  • different products or services
  • enhanced customer experience in using the products and services
  • lower cost (and price) products and services

This can be the beginning of identifying critical changes which an enterprise needs to effect.

Exploring operating models

Operating models provide a means of exploring internal demands for change.

To understand the essential elements of operating models, you may wish to explore the following articles:

From these, I hope that it is evident that operating models provide a means of developing a shared view of:

  • the capabilities required by the enterprise to pursue its intended business models
  • the capability gaps which need to be addressed and which may be evident through issues in capability performance

Summary

Given the fractal nature of enterprises and of these two models, they provide a highly effective means of exploring internal and external demands for change and transformation which can lead to realising improved enterprise performance.

Enterprise integration and wholeness

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As outlined in my article about enterprise challenges, enterprises experience and effect change. In so doing, they compromise their integration with the environment in which they operate and their internal integration. Ichak Adizes refers to this as dis-integration which then requires re-integration.

Architecture is fundamentally about the design and realisation of integration and wholeness within enterprises. Just as with individuals, the more that a person or an enterprise is “at one with their environment, with others and with themselves”, the richer the life that the person or enterprise leads.

Experiencing dis-integration

If you have been part of a small enterprise, you may well have had the experience of and the need to deal with transitioning from:

  • knowing everything about the enterprise to only knowing some things about the enterprise
  • doing things yourself to trusting and delegating others to do things
  • feeling like a family to feeling less connected and perhaps even lost or ignored

This requires attention to the essential elements necessary for consistent practice to occur in a more distributed fashion across a larger number of teams and staff.

Even in small enterprises, challenges emerge in ensuring that the organisation operates in a manner which is sufficiently consistent to achieve its goals and aspirations. These arise in relation to individual thinking patterns, individual behaviours and individual exercising of key processes – whether they be core value adding, client facing processes or support processes which need to provide internal services consistently.

The issues that arise can be quite simple and include ensuring:

  • consistency in the fulfilling of a role or function by two different people that was previously performed by one person or the person to whom a role or function has been delegated
  • flexibility to respond to differing circumstances without being overly constrained by structures created to provide the consistency described above

These situations lead to dis-integration as others involved are unable to readily deal with the different behaviour or need to expend greater effort in responding to varying behaviours.

Potential responses

Enterprises have a variety of mechanisms by which they achieve consistency, integration and wholeness within teams, including:

  • articulation of a common vision and supporting values
  • establishing clear policies, standards and guidelines
  • establishing supporting systems

These and other mechanisms need to integrate in a coherent manner across the entire enterprise, such that, in the words of Tom Graves, they describe the architecture of the enterprise, enabling the enterprise to

“work together better”

This entails the enterprise in establishing and sustaining a foundational capability in describing the principles, models, structures and guidance that enables all participants in the enterprise to act in an integrated and coherent manner to realise the enterprise goals and aspirations.

These capabilities are needed in small enterprises and will serve the enterprise well through all facets of growth and development, providing the enterprise with greater flexibilty, agility and scalability.

Optimal path

Doug McDavid introduced me to the book “Managing Corporate Lifecycles” by Ichak Adizes. This explores the different stages of development in the “corporate lifecycle” and outlines four management roles which are critical to this development.

Adizes identifies an optimal path for the growth and development of enterprises which requires that the integration role is given greater attention, earlier in the life of enterprises – as it is often the last of the four roles that is given attention.

In essence, Adizes recommends establishing the integration capability at the outset of establishing an enterprise, ensuring that as each change and development occurs, appropriate capabilities exist and are exercised to address any consequential disintegration and necessary re-integration.

How does an enterprise give attention to integration? This can be done by:

  • establishing and sustaining an architecture which provides the guidance for achieving sustained integration
  • ensuring that the architecture and integration capabilities are based around a holistic approach to change and a focus on realising enterprise wholeness
  • establishing sufficient self-awareness within the enterprise that sounder decisions are made, avoiding the costs associated with rework that would arise once poorer decisions are found to be wanting

Summary

Developing and sustaining an architecture of an enterprise enables the members of the enterprise to operate in a more integrated and coherent manner and to realise greater wholeness across the enterprise – a challenge that all enterprises face.

 

 

Enterprise challenges

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All enterprises face challenges (of varying magnitude and complexity). These challenges are either problems to be solved or opportunities to be pursued. One way of considering these challenges is through the following three lenses – those arising due to:

  • external change
  • internal change
  • growth and development

External change

It hardly needs saying these days – change is constant, change is accelerating, living with change is the “new normal”.

For any enterprise, there is a vigilance required in understanding the environment in which they operate. A high performing enterprise can suddenly find that its performance is dipping – not because it is doing anything different, but because it is not doing anything different. The market now expects and values something different to what the enterprise has become excellent at offering and providing, and the enterprise must respond accordingly.

Customers needs may change, competitors may introduce new services which place our own services in a different context, new entrants may shake up the market. Disruption to the market or environment in which enterprises operate require enterprises, whether small or large, to monitor the changes and respond to the changes.

Internal changes

Even if there were no external changes, there is still the challenges that arise from internal changes. Such changes may or may not be initiated by the enterprise.

It only takes one person to leave and be replaced for “things to be different”, requiring the enterprise to take action to ensure that its products and services are offered and delivered in an acceptable manner. Even if there are no personnel changes, there are internal disruptions that can occur, whether that be:

  • someone being away sick or on holiday
  • someone learning or discovering a different way to complete a task or fulfill their responsibilities
  • some change in workplace dynamics, arising from changes in behaviour or interactions between staff

As with external changes, these internal changes demand appropriate attention and response from managers and leaders, whether this is for small or larger enterprises.

Growth and development

As enterprises develop and grow, they face a range of challenges. If you have been part of a small enterprise, you may well have had the experience of and the need to deal with transitioning from:

  • knowing everything about the enterprise to only knowing some things about the enterprise
  • doing things yourself to trusting and delegating others to do things
  • feeling like a family to feeling less connected and perhaps even lost or ignored

Think about the changes that occur in progressively transitioning through the following stages:

  • A founding CEO and his / her team of five to seven staff
  • An independent CEO with four direct reports being managers, each leading a team of five to seven staff
  • A third generation CEO with six direct reports being executives, each leading a team of five managers, each leading a team of eight to ten staff

Think about the changing dynamics across this transition:

  • A vision, potentially developed in collaboration with the initial team, being a shared vision through to a vision which may be rarely referenced, which may have tenuous connection with the individual aspirations of each staff member
  • A structure which was a simple one line reporting structure and evolved through numerous changes, taking varying account of particular staff strengths and weaknesses, changing market demands and geographical presence
  • A consistent set of practices because each were performed by a single individual, but now are undertaken to varying degrees of consistency, potentially extending across multiple teams, with varying touch-points with external entities, whether they be customers, suppliers, partners, regulators, etc
  • The challenges of communication within a single team as compared to an enterprise of 250 staff, with four levels in its organisational structure, operating in varying locations and with varying work arrangements

Change and integration

I have found the thinking expressed by Ichak Adizes in his book “Managing Corporate Lifecycles” to be helpful and use it here to draw together a number of different elements.

Adizes speaks of change causing disintegration and requiring re-integration of our enterprises. Each of the elements that I have described entail questions about the degree of internal and external integration of an enterprise.

External integration reflects the degree to which the enterprise understands and operates in harmony with the markets / environments in which it operates. This does not exclude the possibility of being a disruptive force. Such disruption will only be successful where the products and services offer value to prospective customers, consumers and associated stakeholders.

Internal integration reflects the degree to which the enterprise holds a coherent view of its aspirations and their realisation, and the associated structures and practices it develops and sustains to support their realisation.

The challenge that all enterprises face is that of sustaining internal and external enterprise integration. Lest this be treated as technical statement, an alternate expression is that the challenge for enterprises, as living systems, is to develop and sustain themselves as healthy, holistic beings.