ICS/IASA Conference 'How I learned to stop worrying...'

Benefit Impact Analysis
– Complex Systems Approach
(or: ‘How I Learned To Stop Worrying
And Love All This Big Scary
Digital-Transformation Stuff’)
Tom Graves, Tetradian Consulting
IASA, Dublin, June 2017

Hi.
(Yeah, nowadays
I do look a bit older...)
I’m Tom.

These days
I’d describe myself as
a maker of tools for change
– all sorts of tools...

This work is licensed under the Creative Commons Attribution-ShareAlike 4.0 International License (CC BY-SA 4.0).
To view a copy of this license, visit https://creativecommons.org/licenses/by-sa/4.0/
Tetradian www.tetradian.com
Project By Date
VersionHolomap
shared-enterprise / indirect-context
includes community, government, non-clients, anticlients, others
includes investors, beneficiaries
market / direct-context
includes competitors, regulators, recruiters, trainers, journals, others
transactional-context
includes suppliers / providers, customers / consumers, transactional partners
prospect prospectsupplier / provider
partner
client / consumer
partner
organisation
service-in-focus
…such as this…

Sales-
pitch!
https://leanpub.com/tb-changes/
New
book!

It’s all about
the money!
...and if we think it is,
that’s when we get into trouble...
Actually, no, it isn’t...

‘Economy’ literally means
‘management of the household’...
...and yes, managing the money
is important in a household,
and yes, it’s often hard...

...but maybe not so hard as the rest?

So in business,
why do we obsess so much
about the money
and yet so much (much) less
about everything else?

Hmm…
CC-BY-ND-SA ores2k via Flickr

…gonna hafta think about this one…
CC-BY-ND alexsemenzato via Flickr

How should we
track the money
across the organisation?
Perhaps split everything
into profit-centres
and cost-centres?

Where IT is viewed
only as a ‘cost-centre’,
it’s often subject to
ruthless cost-cutting…

...which leads to headlines like this:

Do government
and non-profits
only have cost-centres?
Is that why the endless
cost-cutting?

“The only
profit-centre
is a customer
whose cheque
hasn’t bounced”
Distinctions between profit-centre
and cost-centre are misleading...

A useful suggestion:
Every enterprise
is ‘for-profit’.
(We need to think of ‘profit’ in a much
broader sense than money alone.)

Shave a few corners
here and there...
...what could possibly go wrong!
(...again and again and again and again...)

Is your industry
playing a game
of pass-the-
grenade?
Understanding kurtosis-risk...

‘United Breaks Guitars’
Dave Carroll: ‘United Breaks Guitars’ http://www.youtube.com/watch?v=5YGc4zOqozo

‘United Breaks People’?
‘Video shows passenger forcibly dragged off United Airlines plane’ https://youtu.be/VrDWY6C1178

(it’s actually a Photoshopped parody, by Nick Nicotera)...
“Bad timing on your update, @united!”

(though the real one isn’t much better, if you think about it...)
“Bad timing on your update, @united!”

…defnatly hafta think about that…
CC-BY-ND alexsemenzato via Flickr

In short:
We really need a rethink
about money, cost and business

We also need
to think differently
about opportunity and risk

Digital-transformation is…
risk
opportunity
risk
opportunity
Opportunity always includes risk, risk always includes opportunity

Digital transformation
is far more political
than digital
– Ian Alexander

Digital transformation:
“It’s not not about the technology”
...but it’s also mostly not about
the technology.
See post ‘Digital-transformation – it’s about (much) more than just digital’:
http://weblog.tetradian.com/digital-transformation-its-about-much-more-than-just-digital/
– Andrew McAfee

Everyone wants to sell us
ready-made answers...
...yet the real challenge is in
finding the right questions
...“solutions!”

Finding the right questions
can be even more important
than finding the right answers
(in part because questions
tend to stay the same,
whereas answers will change
with time and context)

A business is a construct, an association of
human beings combining capital and labor
to make something.
That business has precisely the same social
responsibilities as the people it consists of.
The responsibility to play fairly ... and to
create value for all those it engages with.
– Seth Godin
Seth Godin: ‘Off the hook with Milton Friedman’
http://sethgodin.typepad.com/seths_blog/2017/06/off-the-hook-with-milton-friedman.html

“An organisation is bounded by
rules, roles and responsibilities;
an enterprise is bounded by
vision, values and commitments.”
“An organisation is bounded by
rules, roles and responsibilities;
an enterprise is bounded by
vision, values and commitments.”
Tom Graves, Mapping the Enterprise, Tetradian,
2010
Enterprise as story
Organisation aligns with structure, enterprise with story.
We need a balance of both for the architecture to work.

Perspectives across the boundary
We need to understand each of these perspectives
See post ‘Digital-transformation – it’s about (much) more than just digital’:
http://weblog.tetradian.com/digital-transformation-its-about-much-more-than-just-digital/

Outside-in…
CC-BY Fretro via Flickr
“Customers
do not appear
in our processes,
we appear in
their experiences.”
Chris Potts, recrEAtion, Technics, 2010

‘User experience’
is more than the behavior
of your product or service;
it covers all interactions
your customers have
with your company.
– Bard Papegaaij
See post ‘The whole experience’ http://weblog.tetradian.com/the-whole-experience/

If the organisation says it ‘is’ the enterprise,
there’s no shared-story - and often, no story at all.
Whose story?

The minimum real enterprise is the supply-chain
- a story of shared interactions and transactions.
Whose story?

The organisation and enterprise of the supply-chain take
place within a broader organisation of the market.
Whose story?

The market itself exists within a context of ‘intangible’
interactions with the broader shared-enterprise story.
Whose story?

Enterprise is…
Every point in the architecture includes every other point
...fractal!

The story is not solely at the whole-of-business level
- we can generalise it to any type or level of context
Whose story?

Every service has its own myriad of stakeholders
Whose story?

A stakeholder
is anyone
who can wield
a sharp-pointed
stake
in our direction…
CC-BY-NC-SA evilpeacock via Flickr
Who are the stakeholders?
(Hint: there are a lot
more of them than we
might at first think…)

And, to use a certain
four-letter word…
GDPR!

Boundary of identity vs control
Outsourcing does not outsource responsibility!
See post ‘Boundary of identity, boundary of control’: http://weblog.tetradian.com/boundary-of-identity-vs-control/

The boundary-of-control
delimits what the managers
think the organisation is…
the boundary-of-identity
delimits what everyone else
thinks the organisation is.
See post ‘More on boundary of identity versus control’: http://weblog.tetradian.com/more-on-identity-versus-control/
Outsourcing does not outsource responsibility!

...we need a whole-context model like this.
To make sense of GDPR...

Enterprise as
“the animal-spirits of
the entrepreneur”
CC-BY-ND archaeon via Flickr

‘Business-model mechanics’
Strategyzer: ‘Why Some Business Models Are Better Than Others’
http://blog.strategyzer.com/posts/2015/4/7/why-are-some-business-models-better-than-others

(includes Value Proposition Canvas to link organisation and customer)
Business Model Canvas
supplier stuff stuff we do customer stuff
money stuff
Strategyzer: https://strategyzer.com/canvas/business-model-canvas

Four dimensions described for Business Model Canvas
Business-model context

...it provides overview of business-model as a whole
BMCanvas is whole-org only...

Example implementation-detail shown – needs to be fractal
...we need to flesh out the detail!

“Real-world detail can break
the best-looking business-model
without even breaking out a sweat.
“We need to have a better sense
of that detail before committing
ourselves to a lot of hard work
and ultimate heartache.”
See post ‘Hidden risks in business-model design’
http://weblog.tetradian.com/hidden-risks-in-business-model-design/

Market rules and interactions impact on customer-relations
Need to expand out to market...

...out to entire shared-enterprise

Don’t try to ‘boil the ocean’!
Always aim for ‘Just Enough Detail’

And remember, it’s fractal…
…fractality provides simplicity, protection against overload
CC-BY-NC-SA gjshepherd via Flickr

Enterprise
as a system
...or, to be more pedantic,
system-of-systems interacting and intersecting
with other systems-as-systems-of-systems,
but we won’t worry about that just yet...

Start with an assertion:
Everything in the enterprise
is or represents a service.
(If so, we can describe everything
in the same consistent way.)

A tension exists between what is, and what we want.
The vision describes the desired-ends for action;
values guide action, describing how success would feel.
Why anything happens

A service represents a means toward an end
– ultimately, the desired-ends of the enterprise-vision.
The nature of service

Services serve.
(That’s why they’re called ‘services’…)
What they serve is the story,
via exchange of value.
(And if we get that right,
they can sometimes make money, too.)

Services exchange value with each other, to help each
service reach toward their respective vision and outcome.
Relations between services

Value-flow is ‘horizontal’, but connection is first made by
‘vertical’ connection to shared-value and value-proposition
How connection happens

Each service sits at an intersection of values (vertical)
and exchanges of value (horizontal)
Values and value

Each service sits at an intersection of values (vertical)
and exchanges of value (horizontal)
Values and value-flow

Services link together in chains or webs, as structured
and/or unstructured processes, to deliver more complex and
versatile composite-services.
Supply-chain or value-web

Many different forms of
value, investment, benefit
– where the meaning of ‘value’
arises from the enterprise-story

Dimensions of value
Most real-world entities encapsulate composites of dimensions

No distinct dimension for money?
No need: money is a composite of
‘conceptual + aspirational’
– an arbitrary number
associated with a brand
(Money-as-cash is ‘physical + conceptual + aspirational’
– but that’s another whole story...)

Always remember
the human elements:
skills, knowledge, commitment
and much much more...

Enterprise Canvas visual-checklist (aka ‘the robot-chicken’?)
Value, structure, system, story

Keeping on-track: value-proposition
See post ‘What is a value-proposition?’
http://weblog.tetradian.com/what-is-a-value-proposition/

Value-proposition is not
“the fancy name
for your product or service”
– it’s how you
propose to deliver value
to the entire shared-enterprise.
(Value-proposition provides the link
between why, how and with-what.)

Keeping on-track: value-balance
See post ‘Services and Enterprise Canvas review – 3D: Investors’
http://weblog.tetradian.com/services-and-ecanvas-3d-investors/

We need to consider
investments and returns
of every applicable type,
to and from
every type of stakeholder.
(‘Applicable type’ is determined
by the shared-enterprise values.)

Keeping on-track: validation
See post ‘Services and Enterprise Canvas review – 3C: Validation’
http://weblog.tetradian.com/services-and-ecanvas-review-3c-validation/

Validation-services:
for each enterprise-value:
- build awareness of the value
- build capability to enact support
- enact in practice at run-time
- assess and review
(for continual improvement)

How does value flow across
the shared-enterprise?
What drives value-transitions
and value-transforms?
How does each interaction help
to build and maintain trust?

The service-cycle
(transactions depend on (reaffirmed) reputation and trust)

Identify the elements that help to pull from one phase to the next
Five Elements and service-cycle
Performance
Purpose
People
Preparation
Process
PoliciesValues
Events
Completions
Success
(start here)
Trust /
Commitment
(Initiating-Events)
(Completion-Events)

Service-cycle and story-cycle
(Start here)

Every instance of service is also a project in its own right
Project-cycle and service-cycle
Performance
(adjourning)
reporting etc
Purpose
(forming)
strategy etc
People
(storming)
HR etc
Preparation
(norming)
scheduling etc
Process
(performing)
production etc

Similar exchanges apply across every interchange and flow
Exchanges everywhere…

The service-cycle applies across all of these connections
Enterprise and service-cycles
shared-enterprise
market
procurement
product-
development
+ marketing
receive
materials to
inventory
make shoes
store and
ready shoes
for shipment
sales and
service
accounts
payable
manage
budget,
operations
accounts
receivable
identify and
support
suppliers
obtain
materials
pay for
materials
identify and
support
customers
deliver
shoes
be paid for
shoes
supplier customer
gain supplier
respect
gain customer
respect
verify supplier
satisfaction
verify customer
satisfaction
gain / maintain market respect
gain / maintain enterprise reputation
verify market satisfaction
verify enterprise satisfaction

BUT…
if we try to take short-cuts,
the cycles will break down…
(short-cuts give seemingly-better results in short-term,
guaranteed-failure in the longer-term…)

“Quick-money’ service-cycle
(transactions eventually fail from loss of reputation and trust)

‘Quick-money’ failure-cycle
(incomplete short-cut
after transaction-profit
slowly erodes trust / respect,
breaks continuity of service-cycle)

Service Canvas model, inverted
(“Our strategy is last plus 10%” - breaks integration with enterprise)

Yes, we need to get it right
on managing the money
– yet also on managing
all other forms of value as well

“The NHS, though it needs to
run efficiently, is not a business.
“It is about diagnosing, treating and
caring for patients in the best way.
See post ‘The Demoralised Man’ http://weblog.tetradian.com/the-demoralised-man/
“All its other functions should be
subservient to that.”
– Heather Wood

“The NHS, though it needs to
run efficiently, is not a business”
...neither are most businesses!
See post ‘The Demoralised Man’ http://weblog.tetradian.com/the-demoralised-man/
Always start from the values,
not the money

value-flow
(‘how’,
‘with-what’)
value-flow
(‘how’,
‘with-what’)
These are distinct flows – don’t mix them up!
values
(‘why’)
values
(‘why’)
profit
(money and more)
profit
(money and more)
Values, value-flow, money

Values-first enables full connection with shared-enterprise
Doing it right: values-first…

Money-first causes disconnect from shared-enterprise
Doing it wrong: money-first…

The core metric
of all business is
trust
Trust that we will keep our promises
Trust that we will keep on-track to our values

Making money
is a side-effect of
staying on-track to values
Simple.
(though rarely easy...)
Saving money
is a side-effect of
being effective on-purpose

If we focus too much on money,
we lose track of value.
If we focus on the ‘how’ of value,
we lose track of the ‘why’ of values.
Always start from the values.
(Not the money.)

Whenever we explore
questions about money
always start from the values
– not the money!

Contact: Tom Graves
Company: Tetradian Consulting
Email: tom@tetradian.com
Twitter: @tetradian ( http://twitter.com/tetradian )
Weblog: http://weblog.tetradian.com
Slidedecks: http://www.slideshare.net/tetradian
Publications: http://tetradianbooks.com and http://leanpub.com/u/tetradian
Books: • The enterprise as story: the role of narrative in enterprise-
architecture (2012)
• Mapping the enterprise: modelling the enterprise as
services with the Enterprise Canvas (2010)
• Everyday enterprise-architecture: sensemaking, strategy,
structures and solutions (2010)
• Doing enterprise-architecture: process and practice in the
real enterprise (2009)
Further information:

ICS/IASA Conference 'How I learned to stop worrying...'

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