7 years, 1 month ago

Strategic use of business models: implementation

This is the fourth posting in my series on the strategic use of business models. This is the last posting on the theory side before presenting an example in the next and final post of the series. So far I have discussed the way I see strategy work and the types of models that are used there. I have also shown how the business model canvas should be the focal point for architecture work: this is where the results of strategic analyses come together. In this posting I will switch from strategizing focused on external positioning of the firm to an organizing perspective, and show that enterprise architecture is the tool to go from strategy and business model to execution.

The nature of Enterprise Architecture work

A lot has been written about the field of Enterprise Architecture over the last few decades. Various definitions and frameworks have been proposed. While some definitions are somewhat abstract and focus on such things as structure with a vision, or normative restriction of design freedom, we at BiZZdesign have a pragmatic view on what EA really is:

EA is a conceptual tool that helps organizations get a deeper understanding of their own structure and of the way they work. It provides a map of the enterprise and it is a route planner for business and technology change. Important uses of it are in systematic IT planning/ architecting and in enhanced analysis and support for decision-making.
(Handbook enterprise architecture BiZZdesign, 2012).

In a sense, the prime goal for enterprise architecture is to answer a fundamental question: how do we organize ourselves in order to be effective? This is the route planner aspect of our definition. It should be noted, though, that route planner implies two things: on the one hand the dot on the horizon, the point that we wish to reach (which can be expressed using e.g. ArchiMate) and on the other hand the journey from reality to dream, the way to get there (which can be achieved using e.g. TOGAFs ADM).

Linking the canvas to Enterprise Architecture

From the perspective of this blog series, both TOGAF (process) and ArchiMate (modeling) are relevant. Both standards are discussed in detail in other serious on this blog by my colleagues Sven van Dijk and Bas van Gils and Im assuming that readers of this posting are at least vaguely familiar with these standards.

Lets start with the moment after several strategic analyses have been completed, strategic options have been prioritized and tested out on the canvas after which a new business model was agreed upon. The question that arises at this point is: how do we move forward? How do we organize ourselves in order to become who we want to be? This is where enterprise architecture kicks in. In my opinion, the new business model is an ideal starting point to kick off a new ADM cycle. In a sense, the new business model is an aspirational view of what we want the enterprise to be. By spinning off an architecture cycle, we can find out what we have to do in order to get where we want to be.

From canvas to ArchiMate

Translating the canvas to ArchiMate will help in order to analyze the impact of the newly developed business model on the current state of affairs. This can be seen as part of phase A vision, and should kick off more detailed analysis in subsequent phases. This is not as hard as it may seem initially. For example:

  • Partners and Customer segments from the canvas are typically translated to the business actor concept of ArchiMate
  • Customer relations are translated using the business collaboration concept
  • Key activities are translated to behavioral elements, such as business processes, business functions, or even application functions
  • The value proposition is translated to ArchiMate using the Value concept, or to a set of services

This is not a full mapping, and by no means is this the only mapping: our tool BiZZdesign Architect actually gives modelers a lot of freedom as well as guidance in which concepts to use for the specific mapping. This allows our clients to very precisely define and fine-tune the way the mapping is implemented, and thus express precisely what the consequences of the new business model are going to be.

Translating the canvas to an ArchiMate model is, of course, only the first step. TOGAFs usual phases and techniques including roadmapping, risk management etc. can help in assuring successful implementation.

Closing the loop

There is an interesting catch that is often missed in this context that I would like to point out here: there should also be a feedback loop from the architecture level (i.e., the early phases of TOGAF) to the strategic (i.e., business model) level. This has to do with the fact that the new vision may seem very attractive and aligns well with our key resources and activities, but the organization might not be ready for change at this scale!

The TOGAF standard has an excellent tool in place to catch such risks. The Enterprise Transformation Readiness Assessment, especially when combined with risk management approaches keep enterprise transformation projects on track, making sure that new strategies and business models get implemented, if and only if the organization is ready to execute!

If it turns out that the organization is not ready for change on a large scale, or if the proposed change turns out to be too risky to implement then TOGAFs iterative and incremental nature comes into play: in this case it would be wise for organizations to go back to the drawing board and have another hard look at their business model!

Outlook

In the next and final posting of the series we will present a short case study that illustrates the concepts and techniques introduced in this series so far. It will be somewhat longer than the items posted so far. It is scheduled to be posted in February. If you have any questions, or suggestions: please drop me a note using the comment function below, or send an E-mail to h.franken@bizzdesign.com