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Enterprise Architecture and Governance

How are we to think about the transition in the architecture of the enterprise needed to support a transition to East-West dominance?

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Enterprise Architecture and Governance

  1. 1. Enterprise Architecture and Governance In which the enterprise is subject to the law of requisite variety, forcing a progressive capability for sustaining differentiated integrations of behavior. Copyright © BRL 2006 1
  2. 2. ASYMMETRIC ADVANTAGE. Copyright © BRL 2006 2
  3. 3. Asymmetric Advantage• The traditional approach to competitive advantage (following Porter) is based on owning something i.e. on establishing property rights.• The new kinds of disruptive competitive strategy (viz Christenson et al*) are based on creating asymmetric advantage.• Asymmetric advantage is based on knowing something that competitors don’t know that creates value for customers• There are three kinds of asymmetric advantage: 1. Know-how concerning uses of technology, 2. Know-how concerning customisation of business processes, and 3. Know-how concerning embedding services in customers’ contexts-of-use.• The third kind of asymmetric advantage depends on relating to asymmetric forms of demand* Christensen, C.M., Johnson, M.W. and Rigby, D.K. (2002) ‘Foundations for Growth: howto identify and build disruptive new businesses’, MIT Sloan Management Review, Spring . Copyright © BRL 2006 3
  4. 4. The third asymmetry: Asymmetric Demand Strategy based on extracting• Symmetric Demand maximum value from position – Those aspects of a customer situation • that can be abstracted and generalised across different contexts-of-use, and • that are treated as symmetric with supply-side capabilities Strategy based on extracting• Asymmetric Demand maximum value from relationship – Those aspects of a customer situation • that are particular to the customer’s contexts-of-use (i.e. cannot be abstracted and generalised), and • that need orchestration and synchronization of supply-side capabilities by (or on behalf of) the customer in a way that is particular to satisfying the particular indirect demands on the customer (i.e. from the customer’s customers) • that therefore demand an understanding of the indirect customers’ contexts-of-use.• Value Deficit – The gap between the symmetric and asymmetric aspects of a customer situation. . Copyright © BRL 2006 4
  5. 5. Competitive Advantage• A particular form of competitive advantage flows from each form of asymmetric advantage: 1. Superior know-how about uses-of-technology generating economies of scale: • we can produce things more economically than our competitors 2. Superior know-how about customisation-of-business-processes generating economies of scope: • we can deliver our products and services to markets more economically than our competitors 3. Superior know-how about embedding-in-customers’-contexts-of-use generating economies of alignment: • we can orchestrate and synchronize products and services dynamically in ways that change with the way the particular needs of your customers (our indirect customers) are changing.• These forms of competitive advantage are not mutually exclusive . Copyright © BRL 2006 5
  6. 6. The 21st Century challenge Technology now makes it possible to demand that products and solutions be customized, personalized, unique and distinctive to ourselves within our context (Bobbitt, 2002 ‘Shield of Achilles’) The dominant source of threat shifts from competitors (other nations) to customers (citizens and NGOs)Asymmetric demand (threat) – that demand which is specific to the customer’s particular circumstances and contexts-of-use. This may include tacit or latent demand that the customer is not yet able to articulate relating to their relationship to their customers (our indirect customers).Power to the edge* – Enabling people who directly experience a customer’s demand at the edge of the organization to be able to organise forms of orchestration and synchronization appropriate to the particular nature of the demand. – The assumption is that the organization faces many such forms of demand, and that power-to-the-edge therefore involves distributed collaboration. * Power to the Edge: Command and Control in the Information Age. Alberts & Hayes 2003 . Copyright © BRL 2006 6
  7. 7. DEFINING THE ENTERPRISE. Copyright © BRL 2006 7
  8. 8. Defining the Enterprise•The goal is to establish who are the key actors, and how they influence each other indetermining the performance of the whole: The ‘why’: The ‘how’: Will we produce the effect Are we doing that we want to? things right? Black: White: What shapes how we must the contexts the way from which the do what we things work demands do emerge Red: The domain of practice The way Blue: things particular what we do work demands W N Internal External What shapes the way White: how we must Black: the contexts from which the The ‘who for whom’: do what we things work demands do emerge The ‘what’: Are we satisfying the The way things work Blue: what we do Red: particular demands Are things working as presenting demand? Internal External they should? S E . Copyright © BRL 2006 8
  9. 9. Governance as driven by the need to Black: manage balance the contexts from which the demands emerge White: how we mustdo what we do Red: particular demands Balance Clear overall intent Blue: what we do Direction Developing effective ways of the whole of satisfying the particular demand The particular nature of the demand Problem-solving Demand Know-how Developing the best Source: East-West Dominance, Operational supporting Philip Boxer, 2006, Capabilities infrastructures . Copyright © BRL 2006 9
  10. 10. North-South vs East-West Dominance• With North-South dominance, the E-W response is subordinated to the N-S control axis – Directors’ top-down strategies (N) for how business capabilities (S) are to be used dictate the way demands are identified and responded to.• With East-West dominance, the N-S axis is subordinated to the E-W demand axis – The identification of demands (E) and the formulation of effective responses to them (W) determine the way business capabilities are directed and deployed.• The ‘Faustian pact’ delays having to develop E-W dominance – It allows the organisation to remain N-S dominant by cutting enough slack for those needing to operate E-W so that they can deal with the variations in demand they are encountering by informally flexing the system within the overall N-S control framework.• East-West dominance presumes Black: the contexts from which the N-S dominant Faustian E-W dominant asymmetric demand and means demands emerge taking power to the edge of the White: how we must do what we do Red: particular demands organisation. Blue: what we do N averages E demand E-W definition N delegates defining the S overlaid on N-S accountability to E to resources needing to model informally define the W know-how be applied to the working in the needed, defining the S market as defined reverse direction resources needed using the W know- to the N-S model how model. within its constraints . Copyright © BRL 2006 10
  11. 11. Governance secures sustainable balance Clear overall purpose Direction of the whole Learning new ways of Organising the service providing services around the customer RegulationProblem-solving Customer-centredKnow-how balance response Operational Developing the best Capabilities capabilities . Copyright © BRL 2006 11
  12. 12. Sustaining East-West Dominance• Sustaining East-West dominance requires: – Leadership that can sustain power-at-the-edge • A leadership model that can sustain the dynamic alignment of infrastructures to demand – An East-West approach to demand • Collaborative relationships with customers within their contexts-of-use developing strategy-at-the-edge. – Infrastructures with agility • Capabilities delivered within a framework of stratification and granularity able to support distributed collaboration. – Horizontal accountability • The ability to hold accountable those with authority at the edge . Copyright © BRL 2006 12
  13. 13. The progressive development of the ability of the enterprise to integratedifferentiated behaviorsTHE LAW OF REQUISITE VARIETY. Copyright © BRL 2006 13
  14. 14. Integrating differentiated behaviors Law of requisite variety domain of relevanceIntegration of how why identitydifferentiated realizationbehavior what who/m ‘above’ the strategy ceiling inside outside Differentiation of behavior why Definition who/m Defining Agency of agency how what relational operational positional functional Progressive development of Type of ‘culture’ ability of enterprise to integrate (way-of-doing- differentiated behaviors things) ‘above the strategy ceiling’ – unquestioned assumptions implicit in the way the enterprise does business, but ‘none of the business’ of the people working there . Copyright © BRL 2006 14
  15. 15. Evolving Enterprise Architectural Patterns functional operational managing director/ boundary managermanaging director/boundary manager functions: purchasing, boundary task system production, sales, HR operational boundary task system CEOs if positional collaborative relational SBU managing CEO CEO if directive directors/ boundary SBU managing managers directors/ boundary VBU managers relationship managers functional ‘professions’: functional positional purchasing, ‘professions’: production, purchasing, sales, HR production, sales, HR ‘push’ relation to the line ‘push’ relation to the line relational task systems ‘pull’ relation task systems to the line . Copyright © BRL 2006 15
  16. 16. On being edge-driven• Only the relational form of organization can be edge-driven without relying on faustian forms of organization. . Copyright © BRL 2006 16
  17. 17. Different forms of ‘fit’ need different forms of governance4 DIFFERENT FORMS OFGOVERNANCE. Copyright © BRL 2006 17
  18. 18. Directed Governance1:(functional culture) North: Direction of Strategic Business Units (SBUs) South: Developing the best supporting capabilities . Copyright © BRL 2006 (methods + skills + tools) 18
  19. 19. Directed Governance2: (positional culture) West: business processknow-howin supportof the line Cost to the ‘line’ . Copyright © BRL 2006 19
  20. 20. Acknowledged Governance:(positional cultures) Joint Venture Group Group Group … 1 2 n Sites and Locations . Copyright © BRL 2006 20
  21. 21. Business-to-BusinessDistributed Governance: support relationship(relational culture) Balance: Demand- side Regulation East : Virtual Business Units (VBUs) organised around the customer’s demand . Copyright © BRL 2006 21
  22. 22. Collaborative Governance: Balance: demand- side regulation(relational culture) Self-Regulation Group Group Group … 1 2 n Sites and Locations . Copyright © BRL 2006 22
  23. 23. Summarizing the different forms of Group 1 governance Group 2 Joint Venture … Group n Balance: demand- side regulation Self-Regulation Group Group Group … 1 2 n Sites and Locations Sites and Locations Multiple Acknowledged Collaborative Enterprises (positional culture) (relational culture) Directed Single (operational, Distributed Enterprise functional or positional cultures) (relational culture) Business-to-Business support relationship Balance: Demand- side Regulation West: business processknow-how Product- or Customerin supportof the line Solution- experience- centric centric East : Virtual Business Units (VBUs) organised around the customer’s Cost to the ‘line’ (centre-driven) (edge-driven) demand . Copyright © BRL 2006 23
  24. 24. Relational Culture• In both cases Collaborative – The focus is on being edge-driven Balance: demand- – Performativity depends on the strategy at the side regulation Self-Regulation edge Group 1 Group 2 … Group n – There is demand-side regulation of performance• In the single enterprise/distributed approach, Sites and Locations this depends on the CEO’s (and stakeholders’) understanding the need to take up asymmetric Distributed forms of leadership. Business-to-Business support relationship• In the multi-enterprise collaborative approach, Balance: Demand- side Regulation asymmetric leadership has to be emergent, and therefore critically dependent on the East : Virtual presence of demand-side regulation to ensure Business Units (VBUs) organised around the customer’s competition based on creating shared value*. demand * Porter, M.E. & Kramer, M.R. Creating Shared Value: How to reinvent capitalism – and unleash a wave of innovation and growth. Harvard Business Review, Jan-Feb 2011 . Copyright © BRL 2006 24
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    Nov. 24, 2015
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    May. 26, 2015

How are we to think about the transition in the architecture of the enterprise needed to support a transition to East-West dominance?


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