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Leading the Transformation: Changing the Dialogue
- 1. ® © 2007 GEAOEAConference – BTELL Sydney – 14 August 2007 GEAO ® Leading the Transformation: Changing the Dialogue Ben Ponne, Executive Director GEAO, Enterprise Architect EDS ben.ponne@geao.org
- 2. Page 2 EAConference – BTELL - 14 GEAO © 2007 GEAO Overview » Introduction » Enterprise Architecture context » Perspectives on Enterprises » Diagnosing Enterprises » Up the value chain » Why do you need to change the dialogue? » Business Perspectives – Strategic Design perspective – overview – Political perspective – overview – Cultural perspective - overview » Leadership » Leading Change
- 3. Page 3 EAConference – BTELL - 14 GEAO © 2007 GEAO Introduction » The Global Enterprise Architecture Organisation – www.geao.org – Independent, not-for-profit organisation for high-end professionals who work in the field of Enterprise Architecture » EDS – www.eds.com – Global IT Services company – 135,000 employees in 64 countries – Deep relevant industry expertise – A proven approach to support long-term business transformation » INSEAD – www.insead.edu – Leading Business School – France / Singapore – Multicultural perspective on Global management
- 4. Page 4 EAConference – BTELL - 14 GEAO © 2007 GEAO GEAO – Purpose / Services » Core Purpose: – To help Enterprise Architecture professionals to be successful. » Publications – Journal/ Newsletter » Membership platform – Collaboration / Communication » Participation in Conferences and forums – BTELL (Sydney) / iCMG (Bangalore) – Flipside (Singapore) / Architecture Forums » Chapters – India Chapter / New Zealand / Singapore / Beijing » Workshops on EA – Enterprise Architecture / Strategic Planning » Certification » Business Services
- 5. Page 5 EAConference – BTELL - 14 GEAO © 2007 GEAO GEAO – Target audience » MBA / eMBA level Enterprise Architects » High-end Business oriented mindset
- 6. Page 6 EAConference – BTELL - 14 GEAO © 2007 GEAO Enterprise Architecture Context Scope » “The essence of a visionary company comes in the translation of its core ideology and its own unique driver for progress into the very fabric of the organisation – into goals, strategies, tactics, policies, processes, cultural practices, management behaviors, building layouts, pay systems, accounting systems, job design – into everything that the company does.” (Source: Collins & Porras in “Built to Last”) » Enterprise Architecture = the Architecture of the Enterprise (Source: Zachman)
- 7. Page 7 EAConference – BTELL - 14 GEAO © 2007 GEAO Enterprise Architecture Definition GEAO Definition of Enterprise Architecture: Enterprise Architecture refers to the way in which an enterprise vision is expressed in the structure and dynamics of an Enterprise. Enterprise Architecture provides, on various architecture abstraction levels, a coherent set of models, principles, guidelines, and policies, used for the translation, alignment, and evolution of everything that exist within the scope and context of the Enterprise.
- 8. Page 8 EAConference – BTELL - 14 GEAO © 2007 GEAO Restriction of Design Freedom » Conceptually, Enterprise Architecture creates a restriction of design freedom for the Enterprise at various architecture abstraction levels. Vision Models Principles Guidelines Policies Top level restriction Models Principles Guidelines Policies Alignment Source: GEAO
- 9. Page 9 EAConference – BTELL - 14 GEAO © 2007 GEAO Alignment starts with understanding » We need to make the enterprise intellectually manageable – Simplify complexity » If the concepts in the mind of one person are very different from those in the mind of the other, there is no common model of the topic and no communication (Taylor, 1975) – One model will not do the job – Many stakeholders, many models – Need to distil what is significant
- 10. Page 10 EAConference – BTELL - 14 GEAO © 2007 GEAO Perspectives » Perspectives (metaphors, lenses, schemas) are cognitive structures that represent people’s construction of reality – They simplify reality and determine: – What is important and what can be ignored – What questions you ask and where your attention lies » Powerful – They make complex realities manageable » They guide processing of new information » They are resistant to change » They become universal rules
- 11. Page 11 EAConference – BTELL - 14 GEAO © 2007 GEAO Enterprises: Micro level » Organisations are tools that permit groups of human beings to aim at and achieve goals that would be far beyond the reach of their powers as individuals. Herbert Simon (1916-2001) - Nobel Laureate in Economics 1978 Society Organization Team/department You Source: INSEAD
- 12. Page 12 EAConference – BTELL - 14 GEAO © 2007 GEAO Enterprises: Macro level Strategic Design Enterprises are machines A mechanical system crafted to achieve a defined goal. Parts must fit well together and match the demands of the environment. Action comes through planning. You are an Architect. Political Enterprises are contests A social system encompassing diverse, and sometimes contradictory, interests and goals. Competition for resources is expected. Action comes through power. You are a Politician. Cultural Enterprises are institutions A symbolic system of meanings, artifacts, values, and routines. Informal norms and traditions exert a strong influence on behavior. Action comes through habit. You are an Anthropologist. Source: INSEAD
- 13. Page 13 EAConference – BTELL - 14 GEAO © 2007 GEAO Up the value chain Procurement CTO CIO COO CEO Cost Agenda Infrastructure IT Systems Architecture Domain Expertise Business Expertise Enterprise wide Architecture Scope
- 14. Page 14 EAConference – BTELL - 14 GEAO © 2007 GEAO Change the dialogue: Why? Stakeholder Messaging priority Response to technology- oriented messaging Business Executive 1. Better 2. More 3. Cheaper Strongly negative (---) Finance/procurement executive 1. Cheaper 2. Better Strongly negative (---) Line-of-business manager 1. Better 2. Cheaper 3. More Negative (---) IT Executive 1. Cheaper 2. Better 3. More Accepting (+-) IT Manager 1. Cheaper 2. Better 3. More Receptive (+) Source: Forrester Research, March 2007
- 15. Page 15 EAConference – BTELL - 14 GEAO © 2007 GEAO Business Perspectives Leading the Transformation Strategic Design Perspective Rewards & incentive systems Formal organizational structures Informal organizational structures Political Perspective Power & politics in organizations Managing with power Cultural Perspective Organizational culture Managing across cultures Corporate Governance Leading Change Source: INSEAD
- 16. Page 16 EAConference – BTELL - 14 GEAO © 2007 GEAO Strategic Design Perspective Example: EDS Industry Frameworks HealthcareHealthcare ManufacturingManufacturing Financial Services Financial Services CommunicationsCommunications Consumer Industries & Retail Consumer Industries & Retail GovernmentGovernment TransportationTransportation Energy Enterprise and industry specific knowledge to rethink and reshape your organisation. EDS captured industry experience over more than four decades. Source: EDS
- 17. Page 17 EAConference – BTELL - 14 GEAO © 2007 GEAO EDS Example Oil & Gas Industry Framework – Oil Refining Sub-Segment Source: EDS
- 18. Page 18 EAConference – BTELL - 14 GEAO © 2007 GEAO EDS Industry Framework Example – Oil Refining • Overview • Industry Trends and Impacts • Possibilities and Solutions • Industry Insight • Regional Perspectives • EDS’ Point Of View • Desired future • Business Processes Source: EDS
- 19. Page 19 EAConference – BTELL - 14 GEAO © 2007 GEAO • Increased regulatory & environmental requirements – e.g. increasing plant efficiency and thereby reducing carbon footprint • Young workers not attracted by the image of the industry – workforce is ageing • Mismatch between crude supply and product demand – e.g. increasing demand for gasoline requires light crude oils which are in shorter supply • Mergers and acquisitions have reduced the numbers of industry players • Investment in new plant is required to improve efficiency and reduce costs • Globalization necessitates regional/global client management & relationship Breakaway Points • Improved Labor Relations •Next-Level Cost Performance •Infrastructure/Legacy Modernization Change Operational Perspective • Focus on attracting new entrants to the job market to combat ageing workforce •Invest in new technology – to streamline operations and reduce costs •Realize IT benefits Global Market Dynamics •Changing global consumption patterns due to changes in fuel specifications caused by legislation •Replacement of ageing assets – e.g. cat cracker reactor replacement in older plants •Increased need to improve energy efficiency of refining process due to increasing cost of energy •Declining supplies of light, sweet crude increase reliance on sour crudes which require more complex refining to remove impurities The oil/gas industry has undergone tremendous change in the last decade from a globalization perspective with changes in regional importance in terms of supply and consumption. Developed, industrialized societies depend on energy for growth and changes in the economics of energy impact virtually all other industries in some direct or indirect aspect. Refineries must keep pace with changing consumption patterns and demand for new fuel specifications Oil Refining Point of View Source: EDS
- 20. Page 20 EAConference – BTELL - 14 GEAO © 2007 GEAO Oil Refining Regional Perspectives Many trends in the upstream oil/gas industry are common globally such as consolidation and pressure on costs. However, there are key differences in the regions that require unique business propositions such as the changing economic viability of certain reserves and the change in gas logistics. North America • Diminishing supplies of light, sweet crude, with new deepwater reserves in Gulf of Mexico producing sour crudes (need more refining) • More flexible refining methods are needed as a large array of new crudes with different yields become available • North America has 153 of the world’s 717 refineries (132 in US) but still imports refined products from overseas to meet demand • Exposure on the Gulf Coast due to high preponderance of refining capacity which is vulnerable to hurricane damage and which is currently already running at high levels of capacity EMEA • Declining North Sea supplies of low sulphur oil are being replaced with oils with more impurities which require more refining • Legislation demanding reduced sulphur levels in motor fuel – diesel & petrol – require major investment in new and existing refineries Asia/Pacific • Enormous pressure on supply with rapidly increasing demand from China/India • New avenues of supply enablement with LNG (Japan) Latin America • Increasing demand for oil/gas • Logistics changes with LNG; opening of non-North American markets Source: EDS
- 21. Page 21 EAConference – BTELL - 14 GEAO © 2007 GEAO Oil Refining – Core Business Processes (L0) Assess Current Capacity Provide Capital Project Support Manage Construction Plan for Capital Investment Assess Future Demand Requirements Manage Maintenance Inventory (MRO) Schedule Maintenance Activities Address Break / Fix Events Plan Maintenance / Inspection Work Monitor Facility & Refining Process Execute Refinery Process Configure Facility Perform Start-up & Shut-down Execute Maintenance / Inspection Work Manage Design / Engineering Confirm Capital Project Manage Engineering Changes (EC) Plan Production Plan & Schedule Operations Manage Real Estate Develop Maintenance Programs Provide General Support Services Manage Vehicle Fleets Schedule Hydrocarbons Manage Corporate Security Provide Legal Support Manage Public Affairs Manage Process Improvement Establish & Monitor Business Direction Perform Nominations Manage Oil Movements Support Health, Safety, Environment Compliance Provide Regulatory Reporting Manage Commercial Activities Provide Laboratory Services Evaluate Current Impact Scenarios Project Future Facility Requirements Develop Optimized Portfolio Plan Facility Utilization Manage Feedstock Perform Medium- term Production Planning Manage Tank Inventories Perform Blending Manage Vessel Operations Manage Dock Operations Manage Harbor Operations Account for Hydrocarbons 7 Provide Other Business Services 6 Provide Support Services 5 Manage Refinery Logistics & Hydrocarbon Management 4 Maintain Assets 3 Operate Refinery / Plant 2 Perform Refining System Capacity Planning 1 Manage Design, Engineering & Construction Analyze Operational Performance Evaluate Outages L0 Monitor Emissions
- 22. Page 22 EAConference – BTELL - 14 GEAO © 2007 GEAO Strategic Design: Incentive systems » Some myths about pay – Low labour costs are a competitive strategy – Individual incentive compensation to increase individual’s productivity – Labour rates and labour costs » Why do incentive plans not work – Undermine the process they are intended to enhance – Rewards only buy temporary compliance – Individual rewards create competition, which destroy cooperation – No correlation between pay and performance … » Culturally shaped Source: HBR
- 23. Page 23 EAConference – BTELL - 14 GEAO © 2007 GEAO Empirical Evidence Better 43% Same 41% Worse 16% Terminated Plans (12%) Main Reasons for Termination •Missed targets/ Demoralizing 46% •Business Slump/ Hi Inventory 30% •Lack of employee acceptance 29% Business Performance Relative to Market Source: 1993 Survey of 663 performance-rewards plans. Consortium for Alternative Reward Strategies Research Better 45% Same 47% Worse 8% Kept Plans (88%)
- 24. Page 24 EAConference – BTELL - 14 GEAO © 2007 GEAO Strategic Design: Formal Organisational Structures » Functional, divisional, matrix (and combinations) – Each has strengths and weaknesses » Example: Functional Design – Activities are grouped together by common function from top to bottom of the organisation - E.g., production; sales & marketing; accounting & finance » Strengths – efficiency within departments – economy of scale – knowledge and skill development – best with a stable environment and few products/services » Weaknesses – slow response to external change – weak horizontal coordination, leading to overload in decisions at the top – less innovation – restricted view of overall organizational goals Source: INSEAD
- 25. Page 25 EAConference – BTELL - 14 GEAO © 2007 GEAO Strategic Design: Informal Organisational Structures SOCIAL CAPITAL HUMAN CAPITAL Use your own knowledge and expertise Coordinate other people’s knowledge and expertise Individual contributors Managers and leaders Source: INSEAD
- 26. Page 26 EAConference – BTELL - 14 GEAO © 2007 GEAO What can you do? Evaluating your Social Capital Source: INSEAD Team Members Supervisors Outside Partners Other Functions Mentor Social Support BREADTH Does the network allow access to diverse groups? » Seniority » Nationalities » Places of work DEPTH Does the network allow for effective use of your time and energy? » Duration of the relationship » Frequency of interaction » Strength of the relationships LEVERAGE Does the network allow you to influence key individuals and to maintain autonomy? » Number of contacts » Density of ties among contacts » Centralization
- 27. Page 27 EAConference – BTELL - 14 GEAO © 2007 GEAO Political Perspective » Power – the ability to get people to do things they wouldn’t otherwise do » Politics is the use of power to either – Gain more power – Exert influence (other than formal, legitimate authority) The fundamental concept in social science is Power, in the same sense in which Energy is the fundamental concept in physics. —Bertrand Russell
- 28. Page 28 EAConference – BTELL - 14 GEAO © 2007 GEAO Sources of Power » What you are (personal capital) – Power derived from your ability and expertise » Where you sit (positional capital) – Power derived from the role you play in the organization » Who you know (relational/social capital) – Power derived from your networks Source: INSEAD
- 29. Page 29 EAConference – BTELL - 14 GEAO © 2007 GEAO Cultural Perspective Symbols, stories, lingo, rituals, dress Artifacts are repositories of meaning. A change in artifacts can, with time and consistency, produce a change in basic assumptions. Artifacts The values we talk about or think we have Espoused values are starting points, and some can become assumptions, but once we get to know a culture, sometimes we will see espoused values do no support the artifacts Espoused Values The fundamental premises that we hold about our world but that are not commonly articulated. Basic Assumptions Source: INSEAD
- 30. Page 30 EAConference – BTELL - 14 GEAO © 2007 GEAO Managing across cultures Case: The Bull market » Saturday morning – Grafft arrives at the restaurant where he was to meet Senor Vasquez. He finds Mario, who is very gracious and informal (asks to be called by his first name). They are briefly joined for the meal by Mario’s family. No business is discussed all morning. » High noon – Now alone, and over several drinks, they start discussing business. Grafft is feeling a little “tipsy.” He describes the next several hours as a “bullfight,” although friendly. » Later that afternoon... – Talks slow down as the first dinner guests arrive for cocktails. Mario suggests a change in environment and recommends a local inn. – Grafft had already been forced to phone friends and change plans three times. He now had a headache. He also felt that the discussion had reached a bit of an impasse, but he felt that the relationship was developing… » Gored! » …but it was worth it…Vasquez writes a contract on a paper napkin and a check that leads to $3 million in sales of printers
- 31. Page 31 EAConference – BTELL - 14 GEAO © 2007 GEAO What predicts success? » Sense of humor, tolerance, and curiosity » Language skills » Spouse and family issues » Previous international exposure Ref. Schneider and Barsoux, Managing Across Cultures, Prentice Hall 1997.
- 32. Page 32 EAConference – BTELL - 14 GEAO © 2007 GEAO Leadership It’s about people … Making enterprise architecture effective involves the substantial issue of attempting to affect the behavior of staff not under direct control, which brings with it serious political difficulties that can undermine the best of efforts. -Forrester
- 33. Page 33 EAConference – BTELL - 14 GEAO © 2007 GEAO3333 Scott AdamsScott Adams Dilbert
- 34. Page 34 EAConference – BTELL - 14 GEAO © 2007 GEAO Leadership Development: Basic Methods Learning by the book Academic content, such as cases, books, articles Learning from living examples and forums Listening to others tell their story, watching, even copying, but usually at arms-length Learning from interactive coaching experiences Sharing and analyzing your own behaviour, and then working on an action plan to improve Broad Insights & Frameworks & Ideas Custom- fitting & Depth & Active work
- 35. Page 35 EAConference – BTELL - 14 GEAO © 2007 GEAO3535 Our Ancient Emotions References: - LeDoux, J. (1998) The Emotional Brain - Loch, Galunic, & Schneider (2006) “Balancing Cooperation and Competition in Human Groups: The Role of Emotional Algorithms and Evolution.” Journal of Managerial and Decision Economics. Source: Prof. Charles Galunic, INSEAD
- 36. Page 36 EAConference – BTELL - 14 GEAO © 2007 GEAO3636 Emotional Intelligence » Emotional Intelligence (EI) – sets apart leaders from others – IQ and technical skills are threshold capabilities » EI has a genetic component but can be learned » EI components are: – Self-awareness – Self-regulation – Self-motivation – Empathy – Social Skills References: Daniel Goleman, “What makes a leader?” HBR 1998 Emotional Intelligence 1995 (book) Salovey, Brackett and Mayer (2004) Emotional Intelligence: Key Readings on the Mayer and Salovey model.
- 37. Page 37 EAConference – BTELL - 14 GEAO © 2007 GEAO Leading Change: Nissan Case » “Nissan has its back to the wall” » First week action – Made possible by homework and setting the conditions for success (taking a trusted team with him; gaining promise of full control) » Homework: asking questions for 2 months
- 38. Page 38 EAConference – BTELL - 14 GEAO © 2007 GEAO Summary » Enterprise Architecture is more than IT » Without a good understanding of the business everything underneath is at risk » IT services companies and departments want to move up the value chain » This needs a different conversation » Leading the transformation has many aspects » Many leaders don’t overcome the Dilbert principle » Emotional intelligence sets leaders apart from others » Leading transformation is about implementation
Editor's Notes
- #3 <number> At the end of this presentation I want you to walk away with : Awareness that IT organisation and departments need to move up the value chain and that this requires a different conversation … An appreciation of the business perspective on transformation …
- #4 These are the organisations that I have to give some credit for this presentation In this presentation you will find a balanced set of slides on theory as well as practice from the following organisations: GEAO – Professional organisation for people who work in the field of Enterprise Architecture INSEAD – A top rated business school based in Fontainebleau and Singapore. EDS – Global IT Services company
- #5 These are some slides on the Global Enterprise Architecture Organisation I won’t go through them in detail. They are part of the conference pack and you can read them afterwards if you are interested.
- #6 GEAO’s target audience are business people More than 95% of our certified Enterprise Architects have an MBA or business degree or are in the process of obtaining a business degree.
- #7 <number> I want to elaborate a little bit on the scope of Enterprise Architecture before I give you a definition. There is a lot of confusion here and in many instances Enterprise Architecture does not refer to the Architecture of the Enterprise but the Enterprise wide IT Architecture
- #8 <number> This is the GEAO definition of Enterprise Architecture.
- #9 <number> It starts at the top with the vision. Without a good understanding of the vision everything underneath is at risk. Alignment is key – Everything in an organisation needs to move in the same direction. This refers back to Collins and Porras they found that the essence of a visionary company lies in the translation of the vision into the very fabric of the organisation. This translation needs to work very well. The whole ball of wax needs to align with the vision.
- #10 Enterprises are very complex. In order to make this complexity intellectually manageable and to communicate about an organisation we need models to simplify this complexity.
- #11 Your leadership as Enterprise Architects is fundamentally about your perspective and understanding --- effective leadership is a lot about having a good sense of “how things really work here” I cannot overstate the importance of it. Every decision, every human interaction depends on your understanding of the situation. We tend to get locked into seeing things from one single perspective. It’s efficient but it may not be the best perspective, it will give you an incomplete or sometime outdated view of the world. One of the more effective skills of organizational leaders have is the art of reading the situation that they are trying to manage or organize. Skilled managers are very good at this—they have the ability to develop an appreciation of the situation being addressed. They have the capacity to remain open and flexible, suspending judgment when possible, until they have a more comprehensive view of the situation In the case of organisations, which are extremely complex human systems, no single perspective will provide a complete picture. So you need to think in terms of more than one metaphor. I will provide an overview of the three most powerful perspectives used to describe and understand organisations.
- #12 People like you and me make up an organisation. That’s way we have organisations in the first place. Micro-perspective … (see GEAO newsletter article July-August 2007)
- #13 Go to next slide to show that people Macro-perspective – (See GEAO newsletter article Jul-Aug 2007) Read story of Lou Gerstner to illustrate importance of culture …
- #14 <number> Margins are eroding at the bottom – commodity starts to kick in This requires organisations to move up the value chain
- #15 <number> Cheaper The stakeholder is looking for solutions that reduce IT operational costs and meet technical requirements. Messages should target cost metrics such as operational expenditure (opex) and capital expenditure (capex) reductions. Better The stakeholder is looking for solutions that address internal and/or external business operational issues. Messages should target operational performance metrics on making the business better for employees, partners, suppliers, and customers — such as process improvement, employee productivity, and customer satisfaction. More The stakeholder is looking for solutions that address profitability/revenue growth issues. Messages should target business performance metrics on ongoing viability and increasing the value of the business, such as increasing revenues, innovation, and market share while reducing liabilities and threats
- #17 <number> EDS captured industry experience in frameworks that allows consultants and Enterprise Architects to have a meaningful dialogue with the business. E.g. some frameworks contain financial information which allows us to talk the language of CFOs I will now let you have look in EDS’ kitchen …
- #18 I choose the Oil & Gas industry framework and in particular the Oil Refining Sub-Segment. Each industry framework in EDS has many sub segments. Think about the transportation framework – Air transport, Baggage handling, Shipping, Navigation, etc … Now, let me show you around in the kitchen of EDS …
- #19 <number>
- #22 <number>
- #23 See Harvard Business Review reports …
- #24 Let’s see some evidence on what’s the situation on pay for performance. This is a survey done on manufacturing firms with PfP for about 2 years There is no difference. Among the reasons note that the first 2 things might be just implementation, but the third one is culture.
- #25 This is another area that you as an Enterprise Architect need to be aware of. You need to know how to design or re-design an organisation? Or at least you need an understanding of the current way an organisation is structured, because this has an impact on other things you do in the organisation, including your IT
- #26 As a leader of transformation, you will need to move from Individual Contributors Managers and leaders Consultants are often “Individual Contributors” – Why do we need consultants? Who uses consultants? Let me put this differently … Who has children? Who thinks his children are ugly? You will bring another kind of capital to the table … Individual Contributors Their knowledge and experience Managers and Leaders Coordinate other people’s … Leading a transformation focuses on your social capital
- #27 These are the different aspects of your social network that you can develop as an Enterprise Architect Depth: the number of contacts is not the most important thing. Although, you see a kind of competition emerging on LinkedIn. Some people have more than 500 contacts. You have to ask yourself what the quality of these connections are
- #28 See GEAO newsletter article.
- #29 These are your main sources of power. Again, it shows the importance of social networks. If you work in the transformation of an organisation this is important.
- #30 See GEAO Newsletter
- #31 See INSEAD case study …
- #32 This is some research that has been done across cultures …
- #34 <number> Who is the most read author of books on leadership?
- #35 <number>
- #36 <number> See page 33 “The New Leaders”
- #37 <number> When Jeff Immelt, who took over from Jack Welsh, did a presentation of 20 minutes last year at INSEAD in Fontainbleau. MBA’ers asked him how he became a CEO – give us the secret … Jeff’s answer was “Leadership is a Journey deep into yourself”
- #38 INSEAD Case study that I selected because it clearly shows the various aspects of a business transformation – besides IT
- #39 <number>