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Enterprise engineering and governance the vertical dimension

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This presentation suggests a Requisite Organization based work levels approach to enterprise engineering and governance.

This presentation suggests a Requisite Organization based work levels approach to enterprise engineering and governance.

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  • Operations StrategySpecific to an operating unit, e.g. a sales office or retail outlet.Has a defined scope. Emphasizes cost-effectiveness resource productivity maximization, leveraging any synergies and distinctive competencies that the business has.Functional StrategyAbout efficient and effective development and coordination of resources within a functional area. The strategic issues are related to business processes and the value chain. Functional Strategy provides Business Unit and Corporate Strategies with information on resources and capabilities and translates higher-level strategic plans to actionable departmental plans.Business Unit StrategyDeveloped within a single-business company or a business unit of a multi-business corporation. Focuses on the business model, on positioning the business vis-à-vis product/service life-cycles, on the distinctive competencies, on scope of the business, and on the integration of functional strategies.Inter-Organizational StrategyConcerned with the relationships between the organization and its partners, competitors, suppliers, customers, and associations.Corporate StrategyFocuses on how multi-business organizations develop their existing business units, acquire or create new ones, and retreat from businesses to ensure sustainable corporate viability.Enterprise StrategyAddresses the organization's role in society, including all aspects of its environment: economic, social, political, legal, and technological.
  • I: IncipientAt this level, real governance does not exist, but idiosyncratic activities are guided by fixed target standards for performance. Mutual expectations and responsibilities are informal, and policies and processes still incipient.II: OrdainedOrdained governance relies on vertical lines of command and standardization for coordination. It aims at optimizing work practices and quality standards and managing deviations from the acceptable limits of performance. Teams are endowed discretion to differentiate services to different customer groups.III: ConnectiveConnective governance connects multiple teams across functions to rethink work systems and processes within an operational domain. Key mechanisms include structural means such as formal roles, committees and councils. Policies are set to regulate open-ended, discretionary decision-making and ensure systematic work.IV: CoordinativeCoordinative governance coordinates functions and projects beyond operational domains to set goals and to devise new systems and structures. This is attained through organization-wide programs and strategic systems (e.g. balanced scorecard, critical success factor analysis, service-level agreements, performance management, profit sharing schemes, etc.). Rules are established to govern policy-making.V: CollaborativeCollaborative governance integrates organizational functions to a coherent business entity to reshape the business model and establish respective norms. It calls for relational capabilities: informal collaborative relationships, value-based practices and normative controls. Vision guides the establishment of governance rules.
  • IT AlignmentThe notion of business-IT alignment actually exacerbates the business-IT divide, by sharpening the distinction between the two. IT is seen as a separate, value-adding function, relegated to a subordinate role that needs to be aligned with business. Such languaging implies support rather than unity; as if IT is asking for a permission to be on the board -- or at least on board.When IT is "aligned" with business, IT function is seen as a mere service and cost center. The emphasis is on present-day value realization: only IT projects that are "aligned" with the current enterprise strategy are approved, financed and prioritized. IT may satisfy all the idiosyncratic and sometimes conflicting business requirements, but does not accommodate any future contingencies. The traditional approach of "IT follows business" gives little consideration to strategic IT capabilities and systemic competencies needed to create new IT-driven business opportunities.The focus of IT is on operational quality and reliability - producing predictable outcomes on a consistent basis. Consequently, human judgment and error is removed from work that is codified, digitized and automated through IT. Variance is eliminated through cascaded goals, metrics and controls that are ultimately passed down to the IT function in top-down, deterministic manner. This results in clearly separated, relatively independent sub-functions and sub-systems that have their own goals and ways of working. It is assumed to be enough to know how the constituents integrate with each other and work together. The internal logic of the components is considered irrelevant. Respective governance arrangements focus on minimally required compliance, internal control and risk management.IT EnablementWhereas IT alignment is about supporting the current enterprise strategy "top-down", IT enablement means enabling the future enterprise strategies in a "bottom-up" fashion. IT is designed to enable (re-)engineering value and produce relevant outcomes with some trade-off for consistency; it balances the focus on reliability with focus on validity to create value, not only today, but also in the unfolding near future. The value of IT comes increasingly from how it is used rather than from the technology itself. Human judgment and discretion increase in importance.IT enablement creates enterprise flexibility and capability to change. IT is effectively arranged in anticipation of changes, whose exact nature cannot be accurately predicted. Pertinently designed enterprise architecture is an essential means for enabling expeditious business redesign. Rather than tightly following the enterprise strategy, IT "vicariously selects" components, competencies and capabilities likely to accommodate future contingencies. Service-Oriented Architecture is a case in point of an attempt to enable flexible reassembly of processes, capabilities and services in new, innovative ways.IT enablement perspective calls for a distributed, competence-based view on governance, in which IT solutions are led by business, enabled by enterprise architecture and IT infrastructure.Business-IT ConfluenceWhereas IT enablement is about enabling enterprise effectiveness through a design-oriented approach, business-IT confluence transcends the mere equilibrial and adaptive stance and embraces resilience in the face of transformative, unpredictable change. The "wicked problems" of today's interdependent and rapidly changing environments call for hybrid thinking and confluence of business and IT.Not only must enterprise architecture address the initial design and building of a robust system but also the successive designs and continual renewal of a resilient system. As business models are periodically reinvented in alignment with the continually shifting value proposition, the architecture must allow for major overhauls from a balance state to a reorganized new balance. Gartner has already coined the term "panarchitecture" for this emerging approach.IT not only enables business change, but creates the very vital conditions for new, transformative business models. The upsurge in e-business, facilitated by the Internet, in the 1990s, for instance, represented a major disruption to incumbent businesses, as unconventional exchange mechanisms and transaction architectures suddenly enabled entirely new ways to innovate, create and deliver value. Business increasingly follows IT, not the other way around.Business-IT confluence perspective requires network governance that relies on shared goals and values in coordinating highly interdependent work.

Enterprise engineering and governance   the vertical dimension Enterprise engineering and governance the vertical dimension Presentation Transcript

  • Enterprise Engineering and Governance – The Vertical Dimension
    Concept Material
    © Janne J. KorhonenRequisite Remedy
  • Key Tenets
    The complexity of the business environment must be matched with requisite systemic response of the organization (or network of organizations).
    This response is enacted in roles with increasing degrees of latitude for discretion, judgment and decision-making.
    Each level of work roles needs to add genuine value to the previous one.
    The roles must be filled by people whose capabilities at least match the complexity of the role.
    Thediscontinuous steps in the nature of human capability and respective complexity of work underlie the hierarchical structure of organizations.
    Managerial hierarchy, per se, does not impede organizational work.
    In contrast, a requisitely stratified organization with clear accountabilities and authorities begets high performance.
    Organizational dysfunctions are first of all attributable to deviation from the above principles.
  • VII-VIII Long-term sustainability
    V-VI Innovation, transformation
    III-IV Effectiveness
    Board Member,
    Super Corporation CEO
    I-II Efficiency
    VI+ Executive Leadership
    Strategic organizational leadership: culture, values, vision; business portfolio
    VIII
    Conceptual-Abstract
    Dialectical
    VII
    Corporate CEO
    Corporate EVP
    VI
    Business UnitPresident
    V
    IV−V General ManagementBusiness models,
    products, services
    General Manager
    IV
    Symbolic-Verbal / Logical
    III
    Unit Manager
    I−III Operations
    Day-to-day work, supervision, first-line management, departmental management
    First-Line Manager;Specialist
    II
    Supervisor; Operator
    RequisiteOrganization as Guiding Metadesign
    I
  • Stratified Approach to Achieve Concurrent Objectives
  • Leverages of Change at Different Levels
    VII
    Metafieldcoverage
    Value
    Systems
    VI
    Multi-fieldcoverage
    Reinventing
    V
    Fieldcoverage
    Innovation
    Domain
    IV
    Comprehensive provision
    Reengineering
    III
    Systematic provision
    Situational
    response
    Added-Value
    Domain
    II
    Restructuring
    I
    Prescribed
    output
    Adapted from Rowbottom and Billis (1987), Hoebeke (1994) and Hamel and Prahalad (1994)
  • Strata I-III: Interpersonal Managerial and Supervisory Leadership
    III
    1-2 years
    MRU
    < 300
    3 mo – 1 year
    II
    MKU
    < 70
    < 3 mo
    I
    Adapted from Jaques and Clement (1991)
  • VI
    Strata IV+ Leadership
    50+ years
    VIII
    VII
    VI-
    Corporate Organization
    Strategic organizational leadership: culture, values, vision
    20-50 years
    10-20 years
    V
    IV-V
    Unified Business Units or DivisionsGeneral organizational leadership: local culture
    5-10 years
    2-5 years
    IV
    Adapted from Jaques and Clement (1991)
  • Requisite Manager-Subordinate Relationships
    Stratum N+1
    Stratum N
    Stratum N-1
    Requisite
    role
    relationships
    Roles too close
    Roles too apart
    Adapted from Jaques and Clement (1991)
  • Exemplary Corporate Alignment
    Adapted from Jaques (1998)
  • Exemplary Business Unit Alignment
    Adapted from Jaques (1998)
  • Strategy and Strata
    VIII – Enterprise Strategy
    VII – CorporateStrategy
    VI – Inter-OrganizationalStrategy
    V – Business UnitStrategy
    IV – FunctionalStrategy
    III – OperationsStrategy
  • Vertical Dimension of Enterprise Engineering (Str I–V)
    Enterprise
    Architecture
    Business
    model
    Strategic Architecture
    New Business Development
    Co-evolving
    Product/
    service
    portfolio
    Segment Architecture
    Business Change
    Proactive
    Business
    processes,
    capabilities
    Work System Development
    Capability Architecture
    Responsive
    Information
    systems
    Reactive
    System Architecture
    IS Development
    Static
    Technical Design
    Application Development
    Infrastructure
    Design
    Development
  • Requisite System Views and Requisite Cognitive Logics
  • Levels of Governance
  • Agile Governance Model1.1(Adaptedfrom Korhonen, Hiekkanen, Lähteenmäki, 2009)
    Strategic
    Steering
    Strategic,external
    StrategicDecision-Making
    Enterprise
    Coordination
    Strategic,internal
    Tactical Decision-Making
    Domain Coordination
    Tactical
    Operational Decision-Making
    Operations
    Planning &
    Support
    Operational
    Real-Time
    Development and Execution
    Design, Planning and Support
  • IT Governance is Contingent on the Strategic Context
    Complexity
    of Strategic
    Context
    VII
    Strategic
    Innovation
    VI
    Recentralization
    Business-ITConfluence
    Business-Centric
    Federal
    V
    Solution
    Integration
    IV
    Decentralization
    Business-ITEnablement
    IT-CentricFederal
    III
    Service
    Infrastructure
    II
    Centralization
    Business-ITAlignment
    I
    Centralized ITG
    Based on Peterson (2004)
  • The Evolving Relationship Between Business and IT
  • Map to Service-Oriented Business and IT
    Korhonen, Hiekkanen, Heiskala(2010)
  • 1) Dijksterhuis et al. (1999)
    2) Fallow (2007)
    Requisite Leadership
  • Requirements Engineering at Different Levels
  • References
    Dijksterhuis, M.S., Van den Bosch, F.A.J., Volberda, H.W. (1999). “Where do new organizational forms come from? Management logics as a source of coevolution”. Organ. Sci. 10 (5), 569–582.
    Fallow, J. (2007). “On Being Heard: Insights from Complexity Theory and Values as Touchstones for Effective Executive Communication Across the Levels”, in Ken Shepard, Jerry L. Gray, James G. (Jerry) Hunt and Sarah McArthur (Eds.) Organization Design, Levels of Work & Human Capability, Global Organization Design Society.
    Hamel, G., Prahalad, C.K. (1994). Competing for the Future. Harvard Business School Press, Boston, MA.
    Hoebeke, L. (1994). Making Work Systems Better: A Practitioner’s Reflections. John Wiley & Sons, Chichester, UK.
    Jaques. E., Clement, S.D. (1991). Executive leadership: A practical guide to managing complexity. Arlington, VA: Cason Hall & Co.
    Jaques, E. (1998). Requisite Organization: A Total System for Effective Managerial Organization and Managerial Leadership for the 21st Century. Revised second ed. Cason Hall & Co. Publishers, Baltimore, MD.
    Korhonen, J.J., Hiekkanen, K., Lähteenmäki, J. (2009). “EA and IT governance − a systemic approach”, in: Politis, J. (Ed.), 5th European Conference on Management Leadership and Governance. Academic Publishing Limited, Reading, UK, pp. 66–74.
    Korhonen, J.J., Hiekkanen, K., Heiskala, M. (2010). Map to service-oriented business and IT: A stratified approach. AMCIS 2010 Proceedings. Paper 157.
    Peterson, R. (2004). "Crafting Information Technology Governance", EDPACS - The EDP Audit, Control, and Security Newsletter, December 2004, 2–24.
    Rowbottom, R., Billis, D., 1987. Organisational Design: The Work-Levels Approach. Gower, Aldershot, UK.
  • Further Reading by The Author
    Anatomy of Agile Enterprise weblog:www.ebizq.net/blogs/agile_enterprise
    Korhonen, J.J. (2010). “Anatomy of Agile Enterprise”, CEO Today, November 2010, 76–78.
    Korhonen, J.J. (2010). “Challenges for the Decade”, Requisite Remedy Whitepaper, January 2010.
    Korhonen, J.J. (2011, forthcoming). “Systems Thinking and Enterprise Architecture Governance”