Aggregated enterprise architecture wisdom
What’s the fundamental difference between a for-profit organisation, and a not-for-profit one? Or, for that matter, between either of those and, say, a government department, or an NGO (non-governmental organisation)? Short answer: none – because every organisation is a for-profit organisation. The only…
How much does it cost to acquire a customer? To retain a customer? To lose a customer? And in what sense of ‘cost’? In part this one was triggered by reading through my relatively-new copy of Business Model You, and…
“The world still reels from the fallout from the crisis of 2008 :: Who will lead us out of our uncertainty?” Those are the frame-captions for a cartoon-style advert that’s currently running on the Forbes website, for an upcoming conference…
What architectures do we need for a society and economics that’d be viable and sustainable over the longer term? And how do we scale that down to the the everyday work we do at present in enterprise-architectures and the like?…
How do we make sense of the big-picture in enterprise-architecture? The really big-picture? For those who didn’t (or couldn’t!) read the full series, here’s a (shortish) summary of each of those (rather over-long) posts… From the Introduction Part of the work I’ve been…
How do we work with change – and, especially, extreme-change – in an enterprise-architecture? At the really big-picture scale? This is the fifth in a series of posts on principles for a sane society: Four principles for a sane society: Introduction Four principles: #1:…
What’s the real role of money within design for an enterprise-architecture? At the really big-picture scale? [Apologies, folks: this one’s turned out to be really long, even by my usual standards – but unfortunately this theme is so darn controversial that it really does need the…
What rights do we need to design for in enterprise-architecture? At the really big-picture scale? This is the third in a series of posts on principles for a sane society: Four principles for a sane society: Introduction Four principles: #1: There are no rules…
What rules do we need in enterprise-architecture? At the really big-picture scale? This is the second in a series of posts on principles for a sane society: Four principles for a sane society: Introduction Four principles: #1: There are no rules – only…
How do we make sense of the big-picture in enterprise-architecture? The really big-picture? Yep, it’s that time of year again: the lead-up to the annual Integrated EA conference, where they allow me to go somewhat off-the-wall and present the current ‘big-idea’…
@remembermytweet and @tetradian explore the Types of Cost (Jan 2013).
Alex identifies a number of different types of cost, which as Tom points out are largely monetary costs. But what is a cost anyway?
An enterprise incurs a great deal of cost. and these can be broken down and classified in various ways. Accountants like to express all costs in monetary terms – so for example, human effort is translated into labour cost.
But that only works if the enterprise is directly paying for the labour, in the form of wages or contractor bills. Wasting the customers’ time doesn’t count as a direct cost to the enterprise, although it may well have an indirect cost in terms of customer complaints and lost revenue.
We might also think of anxiety as a cost. As Seth Godin comments in relation to the airline industry, “By assuming that their customer base prefers to save money, not anxiety, they create an anxiety-filled system.” Eleven things organizations can learn from airports (Jan 2013). See also my post on Anxiety as a Cost (Jan 2013).
Even for direct labour, the human cost may not be fully reflected by the wages and monetary overheads associated with employment. Many employees do unpaid overtime and incur other personal costs, and this is only visible to the enterprise accountants when it results in high levels of sickness and staff turnover.
So we need to remember the difference between a real cost and its monetary measure.
Michael Mainelli and Ian Harris have written a wide-ranging survey of economics, choice theory (game theory, psychology and ethics), systems theory, chaos theory, global warming and evolution. So what’s all that got to do with the price of fish?
One of the themes running through the book is that the price of fish bears no relation to the value of fish, especially if we are concerned about long-term value and the sustainability of fish stocks.
Oscar Wilde famously defined a cynic as one who knows the price of everything and the value of nothing. This definition has also been applied to accountants and economists. Michael and Ian are leaders of the Long Finance initiative, a movement within the City of London that aims to overcome this kind of short-term financial cynicism.
Michael and Ian describe the price of fish as a wicked problem – a problem that lacks easy definition as well as easy answers. “Sustaining the supply of edible fish is a wicked problem that presents global risks.” (p 301) And yet they suggest that the system might possibly sort itself out. “As fish run out and have to be sustainably fished, the historic underpricing of fish ceases.” (293)
But this is no time for naive optimism, and the system will undoubtedly need some intervention. “When the price is the same as the value, there are opportunities for sustainable financing. So far, price has not equaled value for fish. This is the biggest, wicked decision-making problem of all: knowing how to set a price that equals the value.” (p 295)
In other words, the problem is not just the alarming dwindling of fish stocks but the collective cynicism that not only led to this problem but also amplifies it and resists dealing with it effectively. The key word in the problem statement is the word “set” – even if a few clever people can agree what the right price of fish should be, the real challenge is to set this price into global trading and consumption systems.