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Looking for Disruptive Business Models in Higher Education

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How might we use the techniques of Business and Enterprise Design to develop innovative potential business models for Higher Education. What techniques can we use to tap into the organisation, community and customers to build the Education businesses of the future.

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Looking for Disruptive Business Models in Higher Education

  1. 1. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 1 BUSINESS BY DESIGN FINAL 1.0.0 NOVEMBER 2015 Craig Martin Chief Architect, Enterprise Architects & FHO
  2. 2. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 2 Utility (Foundation) Innovate Build Advantages Assemble Prolong Advantages Mix Reduce Disadvantages WHAT'S BUSINESS ABOUT? D I F F E R E N T I AT I O N DIFFERENTIATION
  3. 3. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 3 WHAT'S BUSINESS ABOUT? S O L V I N G P R O B L E M S ‘A Leader’s Framework for Decision Making’ David Snowden & Mary Boone Unknowable: The relationship between cause and effect is impossible to determine as they constantly shift. In chaos, it is necessary to act first and then sense through the result of action how to further respond. Understanding the problem comes later. This is the domain of rapid response. Example: Natural disasters Unknown Problems: The problem is in constant flux as a change to the situation causes ripple effects and unpredictability in other aspects. Information is often incomplete. Rather than implementing a solution, devising a concept, testing, iterating and then responding is needed. Problems often become complex when human behavior is a significant factor. This is the domain of emergence. Example: Schooling experiences, organizational change management, traffic management Known unknowns: A complicated problem can have multiple right solutions. Complicated problems are understood, analyzed and then responded to. It often requires expertise to solve and is largely process driven. Solving a complicated problem often requires the right expertise along with the right tools. In this realm you may know you have a problem but may not be able to solve it alone. This is the domain of expertise. Example: Fixing a car, constructing an airplane. Known knowns A simple problem is one of cause and effect. The solution is rarely disputed. The problem can be categorized, understood and a response devised based on the information. This is the domain of best practice. Example: 1+1 = 2, solving a jigsaw puzzle. The Knowledge / Innovation funnel
  4. 4. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 4 WHAT'S BUSINESS ABOUT? F I N D I N G T H E R I G H T H E U R I S T I C The Challenge is reducing the time it takes to move from the unresolved business challenges space to the repeatable formulas space. Unresolved Business Challenges Rules of thumb Robust, repeatable and replicable formulas & processes Ultimately all innovative algorithms will become utility. * From Roger Martin (2009) The Design of Business MYSTERY HEURISTIC ALGORITHM T h e K n o w l e d g e F u n n e l This is the lean startup space This is the exploitation and industrialization space
  5. 5. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 5 WHAT'S BUSINESS ABOUT? M O V I N G F R O M E X P L O R AT I O N T O E X P L O I TAT I O N The challenge is identifying the right skills in the organisation that are able to traverse the domains of innovative intuitive thinking, and reliable analytical thinking. Unresolved Business Challenges Robust, Repeatable And Replicable Processes NPV EVA Operation Management Quality Management Corporate Governance Enterprise Patterns Portfolio Analysis IT Governance Value Engineering PRINCE2 Six Sigma & Loan Business Intelligence Strategic Traceability Financial Modelling Innovation Management Business Analysis Data visualisation Talent Management System Thinking Mission Business Model Design Stakeholder Value TOGAF Cost Engineering Solution Architecture Knowledge Ecosystem Six Thinking Hats Collective Intelligence Gamification Crowdsourcing Change Management Perception Management Wicked Problems Environmental Scanning Brand Management Integrative ThinkingGoals Capability Five Forces Root Cause Analysis Product Management HEURISTICS RULES OF THUMB ANALYTICAL THINKING INTUITIVE THINKING * From Roger Martin (2009) The Design of Business GOAL: Exploitation; Reliability Produce consistent, predictable outcomes GOAL: Exploration; Validity Produce outcomes that meet an objective A reliable system will produce the same test results every time W H O I S B E S T Q U A L I F I E D T O O P E R A T E H E R E ? A valid system will produce a result that is shown, through the passage of time, to be correct Design Thinking Business Architecture Thinking
  6. 6. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 6 THE KNOWLEDGE FUNNEL Non-core but complex - Outsource Innovation, chaos & unresolved mysteries HIGH HIGH LOW LOW Must be done but adds little value to product or services Very important to success, high value added to products and services STRATEGIC IMPORTANCE & VALUE COMPLEXITYANDDYNAMICS Complex negotiation, design, or decision process Many business rules; expertise involved Some business rules Procedure or simple algorithm Non -Core Capabilities Core Differentiating Capabilities Everyday, highly repeatable and automated Make repeatable and reliable to gain efficiency Core Competitive Capabilities WHAT'S BUSINESS ABOUT? S P E E D T H R O U G H T H E F U N N E L Source: Adapted from “Business Process Change” by Paul Harmon GOAL: Reliably produce consistent, predictable outcomes GOAL: Validity- Produce outcomes that meet desired objectives People Dominance Process Dominance Technology Dominance
  7. 7. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 7 DEMOCRATISATION OF KNOWLEDGE T H E C O M M O D I T Y S PA C E I S G R O W I N G , M A K I N G T H E D I F F E R E N T I AT I O N S PA C E M O R E C O M P E T I T I V E Non-core but complex - Outsource Innovation, chaos & unresolved mysteries HIGH HIGH LOW LOW Must be done but adds little value to product or services Very important to success, high value added to products and services STRATEGIC IMPORTANCE & VALUE COMPLEXITYANDDYNAMICS Complex negotiation, design, or decision process Many business rules; expertise involved Some business rules Procedure or simple algorithm Non -Core Competencies Core Differentiating Competencies Everyday, highly repeatable and automated Make repeatable and reliable to gain efficiency Core Competitive Competencies Non-core but complex - Outsource Innovation, chaos & unresolved mysteries HIGH HIGH LOW LOW Must be done but adds little value to product or services Very important to success, high value added to products and services STRATEGIC IMPORTANCE & VALUE COMPLEXITYANDDYNAMICS Complex negotiation, design, or decision process Many business rules; expertise involved Some business rules Procedure or simple algorithm Non -Core Competencies Core Differentiating Competencies Everyday, highly repeatable and automated Make repeatable and reliable to gain efficiency Core Competitive Competencies OPPORTUNITY OR THREAT?
  8. 8. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 8 OUR ROUTE TO SOLVING PROBLEMS ABSTRACT CONCRETE Insight: “I want a beautiful environment” Opportunity: Paint the wall, Move, Buy new furniture, Hand a picture Problem Statement: “I need a hole” Solution Statement: “I need a drill” PROBLEM SOLUTION
  9. 9. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 9 THE EMERGENCE OF ENTERPRISE DESIGN ABSTRACT CONCRETE PROBLEM SOLUTION Understanding the problem from a human centred perspective Prototyping and testing for disruptive options Understanding problem based on drivers, pressures, environment and working out motivation Developing operating models and solutions DESIGN THINKING ARCHITECTURE THINKING ENTERPRISEDESIGN
  10. 10. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 10 ABSTRACT CONCRETE PROBLEM SOLUTION Understanding the problem from a human centred perspective Prototyping and testing for disruptive options Developing operating models and solutions NAVIGATING THE QUADRANTS A P P R O A C H E S TO C H A N G E SOLUTION FOCUSSED TRANSFORMATION FOCUSSED DISRUPTION FOCUSSED DELIVERY FOCUSSED Understanding problem based on drivers, pressures, environment and working out motivation
  11. 11. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 11 DESIGN MINDSET U N C E R T A I N T Y / P A T T E R S / I N S I G H T S C L A R I T Y / F O C U S R E S E A R C H C O N C E P T D E S I G NP R O T O T Y P E D I S C O V E R D E F I N E D E V E L O P D E L I V E R
  12. 12. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 12 ABSTRACT CONCRETE PROBLEM SOLUTION NAVIGATING THE QUADRANTS A P P R O A C H E S TO C H A N G E D I S C O V E R D E F I N E D E V E L O P D E L I V E R
  13. 13. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 13 … a discipline that uses designer’s sensibility and methods to match people’s needs with what is technologically feasible and what a viable business strategy can convert into customer value …Tim Brown, CEO, IDEO DESIGN THINKING DEFINITION › Quoted from ‘The Design of Business’, Roger Martin
  14. 14. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 14 TOOLS FOR BUSINESS DESIGN: A SELECTION › DISCOVER › Literature Review › Time Machine › Shadowing › Touchstone Tours › Service Safari › A Day in the Life › Diary Studies › The Five Whys › Journey Maps DEFINE Mapping Complex Situations Stakeholder Map Customer Persona Empathy Mapping Mind Mapping Scenarios Affinity Mapping How Might We DEVELOP Bodystorming Collaborative Ideation Co-creation Storyboards Image Boards Prototyping Heuristic Evaluation Critique Circle DELIVER Rapid Iterative Testing A/B Testing Usability Testing Ergonomic Analysis Value Opportunity Analysis Feedback Review The Key is process and emergence
  15. 15. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 15 THE PROCESS OF DESIGN U N C E R T A I N T Y / P A T T E R S / I N S I G H T S C L A R I T Y / F O C U S R E S E A R C H C O N C E P T D E S I G NP R O T O T Y P E D I S C O V E R D E F I N E D E V E L O P D E L I V E R
  16. 16. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 16 THREE LENSES OF HUMAN CENTRED DESIGN Start Here
  17. 17. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 17 FOUR ORDERS OF DESIGN › Enterprise Design › Business Design, › Organisation Design › Service Design, › UX Design, Instructional Design, › Process Design › Richard Buchanan, (1992) Wicked Problems in Design Thinking › Product Design, Engineering, Architecture › Technology Design › Information Design › Graphic Design, Visual Design • Information Design produces designs for communicating intended meaning through symbols and information • Technology Design produces designs for platforms and systems to deliver information and services • Service Design produces designs for what needs to be achieved in terms of person centered outcomes and experiences • Enterprise Design produces designs for orchestrating Service Designs and their implementation via Technology and Information designs Disruption normally occurs here
  18. 18. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 18 ABSTRACT CONCRETE PROBLEM SOLUTION Problem Definition Influencers Values Value and Valuable Value Proposition Value System Engineering Prototypes Business Scenario Business Model Canvas Problem definition Business Motivation Model Value Chain Capabilities Cross-Functional Capabilities Capability Overlays Roadmap & Planning MOVING THROUGH THE QUADRANTS D I S C O V E R D E F I N E D E V E L O P D E L I V E R
  19. 19. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 19 WHAT IS DISRUPTION? › Innovation that creates a new market › Innovation that creates a new value network › Eventually disrupts an existing market and value network › Displaces an earlier offering or technology EXAMPLES OF DISRUPTIVE BUSINESS MODELS: » Apple and their reduced switching costs and increased barriers to entry » Nespresso and their recurring revenues model » Dell and their “earn before you spend” model » Facebook and their “getting others to do the work” model » Xerox and the pay per use model » Google and the micro-advertising model » Amazon and their long tail model » Jeep » Railroads » Printing press » Gunpowder
  20. 20. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 20 WHEN DOES DISRUPTION OCCUR? › First stage of disruption, an innovator makes a product much more affordable and simpler to use (for the user) than what currently exists. › The second stage of disruption is when additional technological change is added which makes it simpler and less expensive to build and maintain the products. › The new change eventually displaces the existing market and value network, resulting in a radical improvement in performance Disruptive technologies take a while to change the market Christensen, Clayton M. (2010-09-06). Disrupting Class, Expanded Edition: How Disruptive Innovation Will Change the Way the World Learns PERFORMANCE TIME Market for old technology Market for new technology New replaces old technology
  21. 21. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 21 BLUE OCEAN  Create uncontested markets  Make competition irrelevant  Create & Capture new demand  Break value / cost trade-off  Align with differentiation AND low cost RED OCEAN  Compete in existing markets  Beat the competition  Explore existing demand  Make the value/cost trade-off  Align with differentiation OR low cost Why does disruption occur?
  22. 22. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 22 DIGITAL DISRUPTION MAP *Deloitte – Digital Disruption. Short fuse, big bang?
  23. 23. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 23 › Turned off to school › Focused on passing the next test › Not excited by the classroom › No application to life after school › Discouraged from following their own interests › Knowledge = gradual accumulation of right answers acquired through effort and obedience to the instructor › Role of the instructor is to TEACH them › Right answers for everything exist MOTIVATION? RELEVANCE? AUTHENTICITY? WHY IS DISRUPTION REQUIRED IN EDUCATION? From an article by Roger Shank, Engines for Education
  24. 24. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 24 › Prescribed Curriculum › Whiteboards › Desks in rows › Books and worksheets › Paper & pencil › Focus on the front (teacher) › Read, take notes › Study as an individual › Take tests to measure learning TRADITIONAL CLASSROOM WHY IS DISRUPTION REQUIRED IN EDUCATION? From an article by Roger Shank, Engines for Education
  25. 25. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 25 PHOTO IN NEWS
  26. 26. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 26 WHY IS DISRUPTION REQUIRED IN EDUCATION? › These companies bring inputs of materials into one end of their premises, transform them by adding value, and deliver higher-value products to their customers at the other end. › Most schools and universities currently operate like a VAP business (Value chain anyone?) › Students are herded into a classroom at the beginning of the school year, value is added to them, and they’re promoted to the next grade at year’s end. › It’s a form of mass production on an assembly line Traditional education’s present value network is largely a VAP business 1. PREPARE & PRODUCE TEXTBOOKS & OTHER INSTRUCTIONAL MATERIALS 6. TEACHER TRAINING 5. TESTING AND ASSESSMENT 2. ADOPTION DECISIONS FOR CONTENT AND CURRICULA 3. DELIVER CONTENT TO STUDENTS 4. INDIVIDUAL ASSISTANCE *Øystein Fjeldstad and Charles Stabell Value Added Processes (VAP) businesses model
  27. 27. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 27 DISRUPTION ALTERS ENTIRE VALUE NETWORKS Example: Disruption will alter the entire value chain and place the student at the centre Faculty & Staff CONTENT CLASSES SOCIAL INTERACTION LECTURERS STUDENTS FACILITATORS Teach at SCHOOL and do Homework at HOME Teach at HOME and do Homework at SCHOOL Many teachers, many schools
  28. 28. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 28 EDUCATION DISRUPTION SOLUTION SHOPS › Employ experienced, intuitively trained experts whose job is to diagnose problems and recommend solutions. › Experts vs expertise FACILITATED NETWORKS › Customers exchange with each other. › Participation in the network typically isn’t the primary profit engine for participants. › Rather, the network is a supporting infrastructure that helps the buyers and sellers make money elsewhere. › The company that makes money in a facilitated network is the one that facilitates the network. This has opened up the space for other value networks in education
  29. 29. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 29 EDUCATION DISRUPTION › It is rare for a disruption to appear in just one part of a value network without the rest of the system changing, too. › When a disruption arises, a new value network almost always emerges to replace the existing one if the disruption is to be successful. › The reason the whole value network must be replaced for a disruption to occur is that, in each stage, the actors’ business models, economic incentives, and rhythms of innovation and technological paradigms are consistent and mutually reinforcing. › Companies with disruptive economics simply are not plug-compatible with the old value network. › What this means is that the entire system for creating education materials, making the decisions about which materials to adopt, and delivering the content to students must, and will, change. › It is this second stage of disruption in public education that will cause the world to “flip” and make student- centric online technology a reality.
  30. 30. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 30 VALUE SYSTEM DESIGN The Managing Risk Value System Insurance Hospitals Gyms Funerals Legal Panel BeatersTraffic Management Broadcasting & Radio Gaming The Insurance Value System Insurance Hospitals Panel Beaters Medical
  31. 31. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 31 DISRUPTIVE MODELS ARE EMERGING IN THE CUSTOMER DRIVEN SPACE SELLER DRIVEN ENTERPRISE CUSTOMER CENTRIC ENTERPRISE CUSTOMER DRIVEN ENTERPRISE “Maximize product profitability” Push Selectively Target Pull (collaboration) DATA ANALYSIS SERVICE Interactive & Proactive UNDERSTANDING Segmented Individualized CUSTOMER OFFERS Intra-enterprise bundles Inter-enterprise bundles ORGANISATION Integrated Function Customer Outcome CHANNELS Segment Driven Integrated and Seamless “Maximize market share” “Maximize customer lifetime value” MARKETING Passive & Reactive Interactive & Reactive Insight as Art Factual insight Predictive insight Broad Product Driven Singular Functional Silo
  32. 32. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 32 EDUCATION DISRUPTION › Platforms that facilitate the creation of user-generated content. › Simple to develop online learning products that students will be able to build products that help them teach other students. › Parents will be able to assemble tools to tutor their children. › Teachers will be able to create tools to help the different types of learners in their classrooms. › Rather than being “pushed” into classrooms through a centralized selection process, they will be pulled into use through self-diagnosis—by teachers, parents, and students. › Facilitated networks, not VAP businesses, will be the business models of distribution. › Ultimately, people will assemble learning modules together into entire courses whose approach is truly student-centric—custom-configured to each different type of learner. What will this facilitated value network look like? Connectivism + Constructivism = The facilitated value network
  33. 33. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 33 THE STUDENT CENTRIC CLASSROOM › For several years, most teachers and students will still have conventional textbooks. › But little by little, textbooks will give way to computer-based online courses—increasingly augmented by user-generated student-centric learning tools. › The second, or student-centric, stage of this disruption will move to the mainstream when users and teachers start piecing together enough tool modules to create entire courses designed for each type of learner. › At some point, administrators, education committees, and unions will recognize that even without explicit administrative decisions ever having been made, student-centric learning has become mainstream. › Analysis done by Clayton Christensen, suggests that this will happen in approximately 2014, when online courses have a 25 precent market share › The Disruption is more about the role of the teacher than the change to the classroom › Instead of spending most of their time delivering one-size-fits-all lessons year after year, teachers can spend much more of their time traveling from student to student to help individuals with individual problems. The Disruption Journey
  34. 34. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 34 THE STUDENT CENTRIC CLASSROOM › Instead of spending most of their time delivering one-size-fits-all lessons year after year, teachers can spend much more of their time traveling from student to student to help individuals with individual problems. › Teachers will act more as learning coaches and tutors to help students find the learning approach that makes the most sense for them. › They will mentor and motivate them through the learning with the aid of real-time computer data on how the student is learning. › This means, however, that they will need very different skills to add value in this future from the skills with which education schools are equipping them today. › Since customization will be a major driver and benefit of this shift to student-centric online technology, increasingly teachers will have to be able to understand differences in students and be able to provide individual assistance that is complementary to the learning model each student is using. › Because student-centric technology allows for far more personalized attention from a teacher, we can do something counterintuitive in education—increase the number of students per live teacher. › Facilitating this disruption of instruction has the potential to break the expensive trade-offs in which school districts have been trapped so that individual teachers can do a better job and give individual attention to more students. › As a result, there potentially will be more funds to pay teachers better. The Disruption is more about the role of the teacher than the change to the classroom
  35. 35. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 35 NEW VALUE ENGINES MUST BE CREATED TO CATER FOR NEW VALUE NETWORKS AND BUSINESS MODELS The Selling Concept - Product Driven The Value Concept - Customer Driven The Marketing Concept - Customer Centric Production Products Selling and Promotion Profit Through sales volume STARTING POINT FOCUS MEANS ENDS Target Market Segment Segment Needs Integrated Marketing Profit through Increased Market Share STARTING POINT FOCUS MEANS ENDS Target individual Customer Intention Outcome Marketing Profit through customer lifetime satisfaction STARTING POINT FOCUS MEANS ENDS The customer driven shift The digital strategy focus
  36. 36. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 36 ‘Enterprise Lifecycle's 2014 © Enterprise Architects PTY LTD PERORMANCE TIME ENTERPRISE BRAND PLATFORM BUSINESS MODEL BUSINESS CAPABILITIES PRODUCT PRODUCT AND BUSINESS MODELS GO STALE Organisations…and architects need to be able to provide the means to enable this change
  37. 37. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 37 DIFFERENT BUSINESS MODELS NEED TO BE MIXED Innovate Build Advantages Assemble Prolong Advantages Mix Reduce Disadvantages Aggregator Category Leader Consolidator Customizer Disintermediator Experience Provider Fast Follower Innovator Platform provider Premium Player Regulation Navigator Reputation Player Risk Absorber Solutions Provider Value Player Structure vs Behaviour - Utility Business Model Stereotypes provide a set of standard business model execution styles to work with Standard assembly patterns of functional and cross functional capabilities can be leveraged as foundation business models to kick-start your efforts * Based upon “The Essential Advantage” Leinwand & Mainardi
  38. 38. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 38 *Adapted from Geoffrey Moore’s: Dealing with Darwin Each industry moves along a life cycle, with different opportunities for competitive advantage at each stage CHANGING BUSINESS MODELS Innovative business models are developed towards the end of the maturity phase Introduction Growth Maturity Decline TOTAL INDUSTRY REVENUE TIME DISRUPTOR ENTERS MARKET SHARE, REVENUE & COST BECOME KEY PRODUCT INNOVATION REDUCES PROCESS INNOVATION BEGINS PRODUCT LEADERSHIP CUSTOMER INTIMACY OPERATIONAL EXCELLENCE V A L U E D I S C I P L I N E O R I E N T A T I O N T H R O U G H T H E I N D U S T R Y L I F E C Y C L E Business Model Transition
  39. 39. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 39 THE COMPLEXITY OF BUSINESS MODEL DESIGN HAS INCREASED Leading and Best Practice Research, 2011/2012 Scope: 1765 CEO’s and 2936 business leaders representing all major countries and industries
  40. 40. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 40 NON-CORE CAPABILITY (MEET) The goal is to meet market standards, exploitation and reliability Produce consistent, predictable outcomes Focus on effectiveness and efficiency CORE COMPETING CAPABILITY (COMPETE) The goal is competitive parity Focus on innovation and efficiency CORE DIFFERENTIATING CAPABILITY (BEAT) The goal is competitive advantage, exploration & validity Focus on innovation and efficiency Produce outcomes that meet an objective FROM THE BUSINESS MODEL TO THE CAPABILITY RESOURCES A reliable system will produce the same test results every time A valid system will produce a result that is shown, through the passage of time, to be correct C O S T V A L U E 5% 15% 80% LEADING AND BEST PRACTICE RESEARCH, 2011/2012 THE ENVIRONMENT BUSINESS MODEL Revenue Model Value Model Product & Service Model Performance Model Cost Model Operating model Differentiating Capability Non-Core Capability Competing Capability
  41. 41. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 41 UNDERSTANDING THE ENGINE TO PRODUCE THE BUSINESS FIT The operating model delivers the infrastructure required to deliver the products and services to the customer segments THE ENVIRONMENT BUSINESS MODEL Markets Industries Customers Market Segment Channels Customer Relationships Value Proposition Offering: Services/Products Processes/ Value Chains Capabilities Business Service Functions Data Applications Technology MARKET MODEL OPERATING MODEL PRODUCTS & SERVICES MODEL Aligning what is valuable to the customer and what is value to the businessis referred to as the business fit. This means that the engine delivers both aspects and is the ideal mix an organization needs to engineer for.
  42. 42. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 42 LINKING MARKET MODELS TO PRODUCT AND SERVICE MODELS T H E V A L U E & V A L U A B L E I N T E G R AT I O N Products and Services Valuable to the Customer PRODUCT N PRODUCT I PRODUCT TPRODUCT Y PRODUCT K SERVICE DSERVICE N SERVICE H SERVICE P PRODUCT B SERVICE N SERVICE T PRODUCT S SERVICE A PRODUCT X PRODUCT H SERVICE O PRODUCT N PRODUCT ESERVICE C SERVICE Q SERVICE N SERVICE T SERVICE B Customer Outcome CUSTOMER INTERACTION MAP, CUSTOMER SEGMENT ABC Establishing my account is quick and simple… Integration is quick and easy, with the right help available Efficient, with choices that make it convenient I know when the shipment will arrive I can find out whether my shipments were delivered; I get a meaningful resolution to my problem “I want to set-up my account” “I want to get ready to send my products” “I want to send a shipment” “I need to know when my shipment will arrive” “I want confirmation that my shipments have arrived” “Something has gone wrong with my delivery…” % of accounts set-up in <X hours % of accounts that utilise more than X % of orders with no manual intervention % of articles with at least 4 scans Service Delivery Performance Metric # of complaints per million products RESEARCH EVALUATE PURCHASE USE INTEGRATE SERVE Value to the Business
  43. 43. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 43 CUSTOMER BEHAVIOUR: UNDERSTAND THE EMOTIONAL ROL L ER COASTER OF YOUR CUSTOMERS Incremental, significant or transformation changes required to improve the experience
  44. 44. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 44 BUSINESS BEHAVIOUR MEETS CUSTOMER BEHAVIOUR What Value Maps are now required to address the sub-optimal customer experience What are the value maps required to deliver this outcome
  45. 45. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 45 THE ENVIRONMENT BUSINESS MODEL Markets Industries Customers Market Segment Channels Customer Relationships Value Proposition Offering: Services/Products Processes/ Value Chains Competencies Business Service Functions Data Applications Technology FOUR LEVELS OF MIXING AT THE CAPABILITY LEVEL Its at this point that business begins to see the true value of using capabilities Standard functional capabilities can be aligned to a value chain Cross functional capabilities assemble and mix functional capabilities to achieve outcomes in the value map or driver tree Cross functional capabilities each drive out different outcomes. Underlying functional capabilities will have varying perspectives of capability maturity and capability uplift You can also use cross functional models as scenarios to test the capability anchor model validity
  46. 46. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 46 BUSINESS MODEL EVALUATION BUSINESS MODEL OPTIONS ARE EVALUATED AGAINST VALUE DRIVERS OR BUSINESS MODEL MECHANICS TO DETERMINE SHORTLISTS
  47. 47. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 47 ARCHITECTURE DELIVERY MODELS E VA LU AT I O N O F ST R AT E G I C B U SI N E SS O P T I O N S The capability mixes are evaluated against each scenario to determine the optimal path going forward REQUIREMENTS: PROGRAM “X” REQUIRES A $100M 5-YEAR NET BENEFIT AND MUST BE IMPLEMENTED IN UNDER 3 YEARS. Business Models Value Streams
  48. 48. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 48 UNDERSTANDING VALUE, PERFORMANCE AND MOTIVATION W H AT C O M E S F I R S T ? Mission Strategies Tactics Vision Goals Objectives OUTCOME C A P A B I L I T Y People Process Technology Information Business Model Value Chain Capabilities Performance Model Value Model ENDMEANS HOW
  49. 49. B U S I N E S S D E S I G N B Y C R A I G M A R T I N - E N T E R P R I S E A R C H I T E C T S / F H O | PAGE 49 ONE SIZE DOES NOT FIT ALL DIFFERENT PROBLEMS REQUIRED DIFFERENT ORGANIZATION STRUCTURE RESPONSES Christensen, Clayton M. (2010-09-06). Disrupting Class, Expanded Edition: How Disruptive Innovation Will Change the Way the World Learns
  50. 50. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 50 ABSTRACT CONCRETE PROBLEM SOLUTION Understanding the problem from a human centred perspective Prototyping and testing for disruptive options Understanding the problem through drivers, pressures, environment and working out motivation Developing operating models and solutions SEQUENCING THE PROCESS W H E R E TO S TA R T ? TRANSFORMATION FOCUSSED DISRUPTION FOCUSSED Problem Motivation Business Model Problem MotivationBusiness Model
  51. 51. B U S I N E S S D E S I G N B Y C R A I G M A R T I N - E N T E R P R I S E A R C H I T E C T S / F H O | PAGE 51 “ARCHITECTURE THINKING” MOTIVATION MODEL BUSINESS MODEL SERVICE MODEL CAPABILITY MODEL People ROADMAP GOVERNANCE * Closed feedback loop to Motivation Model Vision Strategy Blueprinting Roadmapping Governance Information Technology Process Design Thinking: Empathise, Define, Ideate, Prototype, Test MARKET MODEL MEANS ASSESSMENT INFLUENCERS ASSESSMENT MEANS ENDS MACRO ENVIRONMENT INDUSTRY SCAN SWOT PERFORMANCE • Financial • Customer • Internal (current) • Internal (long-term)
  52. 52. B U S I N E S S D E S I G N B Y C R A I G M A R T I N - E N T E R P R I S E A R C H I T E C T S / F H O | PAGE 52 MOTIVATION MODEL BUSINESS CAPABILITIES IM ROADMAP GOVERNANCE * Closed feedback loop to Motivation Model Information Process MEANS ASSESSMENT INFLUENCERS ASSESSMENT MEANS ENDS MACRO ENVIRONMENT INDUSTRY SCAN SWOT PERFORMANCE • Financial • Customer • Internal (current) • Internal (long-term) S O C I A L I S E W I T H B U S I N E S S , L I N K E I M E F F E C T I V E N E S S T O B U S I N E S S G O A L S A N D R I S K , O B T A I N C O N S E N S U S , M E A S U R E & M O N I T O R LINKING INFORMATION CAPABILITY ROADMAP TO BUSINESS CAPABILITY, RISK AND MOTIVATION Understand business motivation with respect to information management Identify the critical business capabilities to support the strategies Define roadmap – prioritised to support timely delivery of EIM capability linked to business need 1 2 3Understand changing needs for a digital business Identify the information risk appetite and risks Assess how application strategies are impacted by low EIM capability maturity Identify the EIM capabilities materially impacting business capability and information risk – pertinent to the business motivation 4 6 7 8 9 Measure and monitor performance 5 Assess how business capability effectiveness is materially impacted by low EIM capability maturity 1 2 3 4 6 8 7 Information Risk Digital Requirements 9 APPLICATIONS 5
  53. 53. B U S I N E S S D E S I G N B Y C R A I G M A R T I N - E N T E R P R I S E A R C H I T E C T S / F H O | PAGE 53 MOTIVATION MODEL CLOUD SERVICE OFFERINGS CAPABILITY MODEL ROADMAP GOVERNANCE * Closed feedback loop to Motivation Model Information Technology Process MEANS ASSESSMENT INFLUENCERS ASSESSMENT MEANS ENDS MACRO ENVIRONMENT INDUSTRY SCAN SWOT PERFORMANCE • Financial • Customer • Internal (current) • Internal (long-term) S O C I A L I S E , O B T A I N C O N S E N S U S , M E A S U R E & M O N I T O R CLOUD STRATEGY & ROADMAPPING JOURNEY Understand the motivation for Cloud Understand the risk appetite of the business and the risk profile of the offering Obtain consensus, support and commitment 1 2 3Understand business requirements for Cloud Identify and classify assets going into the Cloud Assess the Cloud service offerings Define the roadmap 4 5 6 7 8 Measure and monitor performance 1 2 3 4 5 6 7 Information & Risk CLOUD REQUIREMENTS 8 APPLICATIONS
  54. 54. B U S I N E S S D E S I G N B Y C R A I G M A R T I N - E N T E R P R I S E A R C H I T E C T S / F H O | PAGE 54 ROLES & OP. MODEL HUMAN CENTRED SERVICE AND CAPABILITY DEVELOPMENT CAPABILITY MODEL ROADMAP GOVERNANCE * Closed feedback loop to Motivation Model MEANS ASSESSMENT MOTIVATION MODEL INFLUENCERS ASSESSMENT MEANS ENDS SERVICE MODEL / CATALOGUE WHAT WHY COMMUNICATION ENGAGEMENT MODEL DEMAND ANALYSIS SOURCING BUSINESS CONTEXT HOW WHO WHERE WHEN CAPABILITY ASSESSMENT BUSINESS MODEL C U S T O M E R P E R S O N A S V A L U E P R O P E M P A T H Y M A P S CURRENT FUTURE SERVICE DESIGN PROCESS ENABLES
  55. 55. B U S I N E S S D E S I G N B Y C R A I G M A R T I N - E N T E R P R I S E A R C H I T E C T S / F H O | PAGE 55 THE BUSINESS OF ARCHITECTURE ROADMAP ROLES & OP. MODEL GOVERNANCE * Closed feedback loop to Motivation Model MEANS ASSESSMENT SERVICE MODEL / CATALOGUE COMMUNICATION ENGAGEMENT MODEL DEMAND ANALYSIS SOURCING CAPABILITY ASSESSMENT MOTIVATION MODEL INFLUENCERS ASSESSMENT MEANS ENDS BUSINESS MODEL CAPABILITY MODEL BUSINESS CONTEXT Where When Who How Why What Enables MANDATE SERVICE CO-DESIGN CURRENT FUTURE
  56. 56. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 56 ABOUT zero HOURS A DAY BACK OFFICE VENDOR ALIGNMENT MORE THAN 1600 PEOPLE TRAINED IN ARCHITECTURE PRACTICES (AND RISING) 12YEARS IN BUSINESS 8GLOBAL OFFICES 1600 MORE THAN 10,000 DAYS OF ARCHITECTURE SERVICES DELIVERED LAST YEAR 10,000 oneCOMMON METHOD 20 four sixOPERATING IN 6 CONTINENTS
  57. 57. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 57 OUR SERVICES Servicing the Strategy and Architecture needs of Global Organisations STRATEGY CONSULTING › Business Architecture › Strategic Services & Operating Model Design: » Business Services & Capabilities » IT Services & Capabilities › Segment Strategies and Roadmaps: » Customer Experience & Digital » Enterprise Information Management » Big Data Analytics » Applications » Cloud & Infrastructure » Security, Risk & Resilience » Innovation Management PRACTICE DEVELOPMENT › Architecture Service Model Design › Architecture Operating Model Design › Service and Capability Readiness Assessment › Professional Training and Certification (Business Architecture, Information Management, TOGAF®, CDMP®, ArchiMate® and Design Thinking) › Project Architecture Resources › Architecture Talent Strategy and Professional Development › Architecture Back Office Services
  58. 58. C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 58 QUESTIONS?

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