Being more systems savvy

What questions does this title prompt?

  • What is meant by “systems savvy”?
  • How systems savvy am I?
  • How systems savvy are the organisations of which I am part?
  • What is the value in being (more) systems savvy?
  • Why should I bother thinking, reading or trying to be (more) systems savvy?

Being (more) savvy

Let’s start with some synonyms for “savvy”

shrewdness, astuteness, sharp-wittedness, sharpness, acuteness, acumen, acuity, intelligence, wit, canniness, common sense, discernment, insight, understanding, penetration, perception, perceptiveness, perspicacity, knowledge, sagacity, sageness

“savvy” reflects the degree to which we understand “things” and can apply our knowledge and understanding to “things” and how we create, maintain and use these “things”.


Now, what about “systems”?

“systems” are one of the common ways in which we make sense of “things”, how they work and how to change how they work. In one respect, “systems” are a figment of our imagination. Why do I say that? Well, often different people view, describe and understand the same “system” in different ways. Lots of systems are sufficiently large and complex that we can’t know all that there is to know about the system. What we know about the system is influenced by:

  • what we know, in general
  • what we observe and experience in seeing and interacting with the system

Since that is different for each person, it is not surprising that the same system can seem different to different people. Hence, I find it helpful to appreciate that others probably have “a different system in mind” than the one in my mind.

Systems savvy

So, when we speak of being systems savvy, we mean that a person appreciates the finer points of understanding, designing, realising, and operating an entity through the lens of “systems” and is effective in designing, realising, operating, maintaining and changing “systems”.

Here are a couple of critical elements that are brought to bear in thinking about systems:

  • every system is part of a bigger (containing) system
  • many systems include feedback mechanisms

Every system is potentially part of more than just one containing system, prompting us to consider how a system-in-focus must operate in the context of being a part of a greater whole, where the other parts impact on the system-in-focus as much (or sometimes more) than any change to the parts of the system-in-focus might realise.

The feedback mechanisms enable the system to adjust to external factors over which the system-in-focus may have no “control” ie. they are open systems (when often “closed system” thinking is applied to their design and operation).

In particular, we also mean that a systems savvy person appreciates and practices the finer points relating to “social systems” – systems composed of people. Why? Because there are a number of critical differences between social systems and other systems.

Social systems

There is much to explore and understand about social systems – hence, our interest in continuing to:

  • explore new territory in this field
  • apply our learnings
  • share our learnings

Here are a couple of the most critical differences from our perspective. Social systems are:

  • self-designing, self-realising, self-operating, self-maintaining
  • reflective of how we make sense of the way in which we work or should work together
  • often the means by which we conceive, design, realise, operate and maintain other systems

Further elaboration on social systems is provided in a separate article.

Being brain savvy

Given that systems exist in our minds, as we learn more about how our minds work, we have the opportunity to change how we deal with systems in our minds.

Understanding more about how we think, feel, act and learn and applying this understanding is what is encompassed in being “brain savvy”.

So, we are interested in:

  • being more brain savvy
  • enabling us to be even more systems savvy

A range of different elements that are important to understanding systems, and how we govern, design, realise, operate and change them are explored in other articles, which can be found in this index.

Who are we? We are Associates with Interface Consultants. We offer services aimed at helping clients become more brain and systems savvy.

Interface Consultants are holding a lunch and learn event on being more brain and systems savvy. Further details are available on EventBrite.

Enterprise pertinence


In thinking about the problems that enterprises encounter, the following questions came to mind:

  • What problems is your enterprise experiencing?
  • What problems is your enterprise trying to resolve?
  • How do you decide that these are the most important problems to solve?
  • What questions do you ask in this process?
  • Are you asking the right questions?

The answers to some of the questions will provide some insight into the measure of your enterprise pertinence.

Enterprise problems

All enterprises encounter problems. Yet, I wonder how well enterprises deal with the problems they encounter, and more particularly, how well enterprises deal with determining which problems to resolve, what priority to give to resolving them and how much to invest in resolving them.

The constant references to failed enterprises, failed business strategies, failed change initiatives, failed IT projects, … suggests that there are no shortage of problems to address and no shortage of opportunities to get better at solving problems!

Given how many problems might be encountered and the investment in effort to analyse the problem, design and assess potential solution options, develop and integrate these solutions into our enterprises, there is a need to:

  • assess and prioritise the problems, their solutions and the value they will deliver in terms of enhanced enterprise performance and outcomes
  • assess the cost and value of assessing and prioritising any prospective problem

This is what leads to considering whether we are asking the right questions about:

  • the problems we are experiencing or might experience
  • the extent to which these problems might prevail given changes in the ecosystems in which they operate or in the directions we might pursue (whereby some problems might not arise)
  • the root causes of the problems we are experiencing
  • how we perceive the problems that might or might not arise

Attention economy

What is the attention economy? How is it relevant to enterprise pertinence?

The attention economy reflects a view of our lives as being awash with information commanding our attention. Think of all the information coming to you via:

  • television, radio and print media
  • emails commanding your attention and action
  • social media – Facebook, LinkedIn, Twitter feeds

There are only so many “waking hours” in a day, so there are only so many “signals” to which you can give your attention. Here we have a supply and demand problem – one where “economics” comes into play. There is more demand for your attention than there is supply of attention that you can give. How do you decide which to ignore and which to consider? We make choices as to the allocation of our time and attention. We deem one signal to be more pertinent to our life and the various enterprises in which we engage. This is the “stuff” of work / life balance, of strategic versus tactical, of relevant versus irrelevant, of attention versus distraction.

It is as much about how we spend our “personal” time as it is about how we spend our “work” or “enterprise” time. Our awareness of problems and attention to problems is part of enterprise pertinence.

Power of questions

How do we identify problems? How do we assess problems? How do we assure ourselves that we are assessing problems well (right) and assessing the right problems?

This is the business of quality, assurance and governance, asking questions and asking the right questions. In governance roles, one learns to ask questions and one learns to recognise powerful questions. An example is the question all Boards must ask themselves and should be able to answer:

  • What constitutes success? How would we recognise success?

This is also the field of learning, single, double and triple loop learning:

  • Single loop learning – are we doing things right?
  • Double loop learning – are we doing the right things?
  • Triple loop learning – how do we decide what is right?

In understanding and exploring any area of activity, it becomes evident when asking a leader in the field a particular question, and they respond “That’s a good question” or “I have thought of asking that question”. Such situations of evidence of high individual and (potentially) enterprise pertinence.

Enterprise development

With the increasing complexity of the environments in which enterprises operate, we appreciate that enterprises must adopt an adaptive approach, where they need to learn about their situation and the associated problem space before being able to consider potential solutions. This will engage us in asking a range of questions, often around the five interrogatives:

  • Why?
  • What?
  • How?
  • Where?
  • When?

Deloitte University recognises this growing dynamic, and advises clients that we are transitioning:

  • from the industrial age where successful enterprises successfully scale efficiency
  • to the knowledge age where successful enterprises successfully scale learning

That entails developing the capability of asking and answering the right questions – the capability of developing enterprise pertinence.

Are you asking good questions in your enterprise?

Vision, purpose, enterprise



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.


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.


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.


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!

Transforming enterprise performance

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


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

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


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

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.



Exploring business models

This article extends on my first article about business models, where I outlined the key elements of such models and the value in developing such models.  This article explores:

  • the use of business model thinking for any system within an organisation
  • the relationship of the business model to other familiar techniques
  • the different considerations that arise in different enterprise contexts, with some specific examples

Systems within the enterprise

Traditionally, the concept of developing a business model has been applied at the enterprise level, inviting exploration of customers, products/services, value propositions, channels (on the output side of the business) and suppliers, partners, activities / capabilities (on the input and production side of the business) and developing a financial model that reflects an appropriate outcome (break-even or profit, depending on the type of enterprise).

These concepts can just as legitimately be considered for any system within the enterprise, whether that is an enterprise capability or an organisational unit.  It might be a particular “line of business”, a “shared service”, or a support function.  Taking people (or human resource) management as an example, it is feasible to consider:

  • the HR Branch (or organisational unit) providing products and services to the enterprise as customers with appropriate consideration of value propositions and channels, etc
  • the people management capability as a whole across the entire enterprise providing products and services to employees and to managers as customers with appropriate consideration of value propositions and channels, etc

Care needs to be taken in such treatments.  For the HR Branch, there is the risk of assuming its continued existence, whereas the people management capability model allows consideration of alternate sources for products and services. A genuine exploration of services and value propositions should test these against competitors (or other options) in either scenario.

This is not novel.  The application of customer service thinking to corporate services occurred several decades ago now.  For those with experience in such initiatives, it should be easy to recognise the focus as having been the “enterprise” or “system of interest”, to which the business model can be applied. This demonstrates the value of applying this “business model concept” in a fractal manner to any designated system-of-interest.  As such, it can be applied to any identified system-of-interest or organisational unit.

Relationship to other techniques

Whilst I was familiar with business-model-as-financial-model, I had not encountered the Ostwerwalder analysis and structure until about two years ago. Prior to that, along with many other architects, I had applied a range of traditional modeling techniques to the enterprise.

The simplest technique involved the use of a Context Diagram, placing the enterprise as the system-of-interest, and showing the external relationships to suppliers, partners and customers, each of which are considered in the business model .

As I started to explore value chains and value streams, it became evident that I could apply models used in Six Sigma and Lean thinking, in particular SIPOC, by considering the enterprise as a single process (P), and showing the suppliers (S), inputs (I), outputs (O) and customers (C).  This was (and is) a useful tool in making explicit these elements of the enterprise, as is the case when developing an expression of the business model.  Then, the core value stream could be expressed as a series of inter-connected SIPOC models as the next level of decomposition.

Another model which I have used is IDEFo, providing a different perspective by treating the enterprise as a function, and reflecting the inputs, outputs, controls (governance) and mechanisms (processes) which underpin the function.  Again, this model reflects some elements in common with the business model concept.

Each of these techniques demonstrates how the applicability of a system-related model to the enterprise, many of them paralleling elements that are included in the business model concept.  Analysts familiar with these techniques will be readily able to apply them to enterprises.

Application in different settings

There are different and distinctive differences in business models applied to different sectors.  Some assume that business models are not applicable to government and community sector organisations.  The following outlines some of the differences and demonstrates that the business model concept offers utility and value in all enterprise settings.

Public sector enterprises

These enterprises operate in more complex environments, where additional considerations are necessary.  Yet, the same concept and general principles can be applied, and potentially deliver additional value by establishing greater clarity and understanding of the way in which these enterprises can address the goals and objectives which communities set and expect of them.

The most obvious differences are that often public sector enterprises:

  • are not required to make a profit or realise a return on assets or investment
  • do not derive their income (revenue) from their customers
  • do not have choice as to their client / customer base
  • are measured on outcomes rather than outputs

(I may write a separate article to elaborate on these differences, as they are fundamental to better understanding the differing management challenges facing public and private sector managers.)

Business models are able to be accommodate these differences, as long as appropriate consideration is given to distinguishing between:

  • customers and consumers – customers being those who pay for products / services and consumers being those who use the products / services
  • treatment of income versus revenue, and profit/loss versus surplus/deficit
  • outputs and outcomes – the latter arising as an effect of the existence or use of an output

In order to treat these elements appropriately, greater attention must be given to:

  • the use of language and terminology
  • the varying stakeholders who may have interests and be beneficiaries of the enterprise beyond simply considering customers
  • the varying value propositions and benefits which may be afforded to the differing stakeholder groups

For example, I find it helpful to consider the following dimensions:

  • Financial dividends (afforded to owners and shareholders)
  • Economic, social and environmental dividends (afforded to other stakeholders)
  • Balancing of value propositions for owners, customers and employees (at a minimum)

Each of these can be explored and expressed in an enhanced business model representation.

People management as an enterprise

This provides an example of applying business model analysis to part of an organisation as opposed to an entire organisation. Whilst it is feasible to consider the HR organisation unit, it is often wiser to consider the entire people management capability or system, as there are elements of this system within the role of every manager and executive, in addition to any specialist services which the HR organisation unit may provide.

In considering this capability or system, the business model concept prompts consideration of:

  • customers – Executives, managers, employees
  • services – from workforce planning and industrial relations to payroll
  • channels – face to face, phone and online / self-service
  • suppliers and partners – providing specialist services
  • capabilities required to deliver the various services

An important element in this process is applying a combination of the business model concept and systems thinking concepts.  It is common in support functions to seek to optimise a particular function, when it is only part of the whole, and optimising a part may result in sub-optimal outcomes from a broader enterprise perspective.