Here’s a quick exercise on perspective, scope and how we view problems.
How big is your enterprise?
Follow that question with these two questions:
How big is it compared to the size of your organisation?
How big is it compared to the size of your team?
That’s the internal focus.
Now let’s try a different perspective:
What does your typical customer think the size of your enterprise is?
Now follow that question with these:
Who did they speak to first when enquiring about your products/services or asking for a referral to you?
Did you include the indirect sales channel or the affiliate?
How about the marketing activities that created brand awareness?
How about the pain that the customer experienced, creating the need to change? Was it caused by your product or a partner in the process?
How about the delivery driver?
Or the aftersales phonecall
Or the insurance claim?
That introduces us to the Customer Perspective and it’s usually different from the internal focus, taking into account the wider enterprise.
The Customer Perspective
While the customer is less likely to understand the difference between the concept of organisation/company/firm and the concept enterprise, they innately know the difference. They feel it and express it to you through their complaints and praise.
For instance, the delivery driver belongs to you, regardless of whether you’ve outsourced delivery or whether you pay per delivery. Even if your organisation doesn’t do delivery, but instead pays for delivery services, to a customer that’s still part of the same enterprise. If delivery goes wrong, it’s your fault. Why did you use that delivery company? Why don’t you manage them better? This is even more the case with installers. Even if you only deliver part of the service, your reputation can be tainted by those that are involved with the customer later in the process.
At the other end of the journey, did the customer speak to a salesperson who promised them features they can’t have? If that salesperson worked for a 3rd party, as in common with utilities and telcos, not only may you have the issue of a disgruntled customer (and having to work through what happened and then how to resolve the expectations), but you’ve already off to a bad start with building a relationship with the customer. This is worse when the line between your organisation and the salesperson is blurred. We see this commonly where brand artefacts are appropriate (sometimes under agreement, sometimes inappropriately) to appear to the customer that the salesperson is part of your organisation.
As news increases of looming bankruptcy for Gibson, the guitar manufacture, I’m left to wonder what happened. How did such an iconic brand end up in such a situation.
Gibson is iconic. Ask anyone to name a brand of guitar and it’ll be the answer roughly 50% of the time. I’m reminded of Harley Davidson (quick quiz: can you name another brand whose customers tattoo the brand name on their body?). Maybe Gibson fits more closely with Jack Daniels. Both represent a way of life, on the edge of 50s/60s rebellion, now more refined.
So what did happen?
I think of Rover, the once British car manufacturer, primarily based at its Longbridge plant, Birmingham. At one point, it was close to leading the world alongside other main brands, such as GM, Ford, Fiat. But over time, a lack of focus, resulted in cars that were of lower quality than those coming from elsewhere. From living in Birmingham at the time, and being subject to a number of Rover cars as fleet hire cars, I saw first-hand the issues with the brand.
Being at the head of the pack, it was easy to pick on Gibson. They were some of the most expensive factory-built, mass-produced guitars on the market. With that price tag, you would usually expect the best quality. Perhaps the best quality you can afford before having to stretch for hand-made guitars. But Gibson was releasing guitars from its plants with issues. Many of the issues may have been minor, but from a customer perspective, the severity of a minor issue inflates quickly in line with the cost of the guitar. So even a small issue on an otherwise-perfect guitar would lead to complaints.
Gibson suffered from being a old brand with the advent of the Internet, specifically newsgroups and forums where users could complain about their new purchase. Anecdotal of course, but I can’t remember seeing a good post about 90s/00s Gibsons, all posts were detrimental. For every post asking about Gibsons, there would be a number of responders pointing out how their guitar had issues, or how they’d avoided them based on having tried a few Gibsons in the past.
On the other side, Gibson benefitted massively from the increased reach that the Internet allowed them. Not solely direct advertising, but MTV + Internet showcased Gibson guitars in the hands of idols. This was back in the time before musical instrument sales had dropped significantly.
Inflation and Asian Manufacturing
The cost of guitars, especially US-built guitars was rocketing. The stronger the US Dollar, the more expensive the guitar to other purchasers in other countries. These price increases also impacted the cost of labour, with build costs increasing along with living costs (but not necessarily equal). There’s nothing special about that; it’s common for many industries.
Back in the 1970s, Japanese guitar builders started building US designs (sometimes under licence and at the request of the US manufacturer). The factories then had the ability to build their own brand guitars or for more local brands. This resulted in “lawsuit guitars” and a lot of mystique associated with them.
Following Japan, we saw Indonesia increasing the quality of basic guitars. It reached the point in late 90s where many starter guitars were sufficient for a lifetime. Similar to the concept of quick and dirty solutions being good enough, we started to see guitarists settle for cheaper guitars because the gap between the one they had and the next guitar up in quality was too much.
Following Indonesia, we began to see new successful plants in India and China. Each reducing the cost of production, but also increasing the overall quality floor, i.e. the basic guitars were improving.
The used instrument market has changed. eBay, Reverb, Craigslist and other sites and apps allow easier access to buy and sell guitars. Every year, new guitars are produced, but not as many guitars are destroyed. So overall, the guitar population increases year on year. That means that for a purchaser, there are now more used guitars to purchase from than new guitars.
That becomes interesting for a few reasons:
Used guitars are usually cheaper – considering inflation. Similar to most industries, the original purchaser has taken the bulk of the depreciation.
Gigging guitarists use guitars – so are less worried about wear and tear than in other sectors
Used guitars could come from a quality with a better perceived quality
Used guitars could be more iconic – representing the guitar sound from a particular era
From my own experience, having bought new and used, I only buy used now. There are enough guitars in the world, I’m sure I can find a used one to meet my needs.
So if your business model is centred on selling new guitars, it’s going to get difficult.
Good now is better later
Unlike many products, there’s no obsolescence in a guitar. The general trend is the opposite to the trend in technology. Guitars are usually deemed to get better with age. That’s not something I necessarily agree with, but I won’t argue with the market. There are two elements here:
Perception that guitars get better with age
Perception that older guitars are better because they were originally built better
So there’s little point in buying new when used guitars are good enough if not better. Whether planned or not, technology has a tendency towards obsolescence; guitars do not. So there’s little incentive for a guitar owner to buy a new guitar, based on the state of their current guitar. A guitarist will buy a new guitar when they have outgrown their current one, e.g. if they bought a basic guitar and then wanted to upgrade to a better model. Guitarists can also be fickly and buy based on colour or other specification, but that behaviour is equal across all ranges and hasn’t changed with time, so irrelevant here.
The protection of certain timbers (and hence the living trees) as found in CITES regulation is a red-herring for this brand. On one hand, it affects all guitar manufacturers, or at least the majority of them. On the other hand, it does affect the margin by increasing the cost. It slows down transactions, resulting in some sellers and purchasers not wishing to go through the hoops necessary to sell a guitar, especially cross-border. Bear in mind that some woods involved in CITES were primary woods for guitar-building; it didn’t affect only rare woods. Gibson have had issues with the formality of wood laws, but other than a potential knock-on affect due to impacting cashflow a few years ago, I don’t see a major issue here. Like many guitar builders, alternative woods or sources of woods are considered.
Lack of innovation
My issue here isn’t the lack of innovation at Gibson, but probably the adoption of innovation. Gibson have innovated on the product, feature the much-maligned robot tuners, chambered bodies, locking sockets and so on. Most of those innovations have been ridiculed as moving the brand away from what it’s meant to be (in the eyes of the customer). Guitarists can be funny about this idea, they want the guitar as it was built in 1959, or any another famous year; complete with substandard components.
This applies to all the brands with historically, famous guitars. Guitarists can be awkward regarding innovation with cultural expectations influencing responses.
With innovation, I usually see types within a company. The first is the product innovation, i.e. what innovations can be added to the existing product line or new products created. That’s where Gibson have gone. The second is innovation in how the product is produced. I’m not sure if Gibson have done this or not.
Investments and Non-Core Business
Similar to other major guitar-building brands, Gibson have entered other related markets and customer segments. They acquired other guitar brands to appeal to other users – including the ability to separate cheaper related guitars, in the case of Epiphone. Gibson also acquire Cakewalk for its software and has very recently stood down that product line in order to focus on its core business.
The other main divergence from core is into audio electronics being the majority stakeholder in TEAC and the acquisition of Royal Philips consumer audio division, Woox.
What’s the Answer?
You can see evidence of a few well-tried strategies already in place in Gibson.
In light of reducing guitar sales, it reduced the workforce
In light of producing fewer newer guitars, it requires less manufacturing space and so can sell existing plants and search for cheaper sites
In light of reducing revenue and profit in its main revenue stream, it has been diversify; exploring other related markets. I’m reminded of BATS‘ diversification into more acceptable brands.
In light of reducing profit, it has stopped production on a non-core product (Cakewalk)
All of those are typical strategies, but in a way, they feel more tactical with the aim of reducing the current pain, without longer-term direction.
The longer-term direction may be more painful still, if the company is to survive. The guitar-building business and the consumer electronics business are very different. They could sell to the same segment, allowing for some positive combination of cross-product marketing, but they don’t need to be part of the same group.
At some point, we’d have to question how profitable the underlying core of the business is. Simply put, does Gibson guitars generate more money than it spends to build and sell the guitars? Then factor in the cost of loans and debts, what scale of business does actually work?
Ideally, we’d see Gibson retreat to a smaller size, concentrating on its iconic models, simplifying the product range to those that sell well. That company does not need to innovate in the product line, instead it needs to innovate in how it builds the guitars and how it sells. It could learn lessons from Schecter or PRS as they were back in the 1980s and 1990s. What scale worked for them? What did they focus on? How did they ensure quality? Unfortunately we may not see that see that comfortable retreat.
I’ve written about Gibson as a single entity. In face there are two main companies to be aware of::
Gibson Brands – this is the primary company
Gibson Innovations – home audio leisure company
There are other additional companies held by Gibson Brands, e.g. TEAC.
Primarily, my interest is with Gibson Brands. That’s the original company (although under different names previously). That’s the core business.
But regardless of how good, well-liked, or profitable a core business is (at least in terms of unit cost), if it is saddled with too much debt, then there are risks. If you want to read about the effects of debt on otherwise-healthy companies, the Rolling Stone article on Mitt Romney is a good starter.
From reading the post at Far Out Magazine, it could be that the recent news is a ploy regarding a struggle between investors and the board. Everything I’ve written above is still true.
There was a radio commercial the other day with the following line:
“We’ll beat your quote from a well known car buyer”
So that’s one company referring to a second company but without mentioning to that second company by name. At what point did they realise that the other brand was so strong, they didn’t actually have to name it, since it would be obvious through context to anyone listening which company they were referring to?
It implies that, for the intended audience, it’s the unnamed brand that is the strongest in that market sector for that product/service, not the company that’s chosen to advertise.
So did the company who commissioned that spot realise that they’ve surrendered market space to another brand? Was this an attempt to gain market share by encroachment through undercutting (“we do the same job for you as Company X, but we’re cheaper/provide better value”)?
It’s an odd strategy to take and I can’t think of a company that has survived longer-term with that approach.
Looking at Mintzberg’s 5Ps, we can see that as a strategy as a position, although the position taken or aimed for is usually a stronger one. Instead, this creates a competition of price and the resulting race to the bottom.
The business of gyms is an odd one. It’s full of business principles from the 1970s with a thin veneer of customer service from the 1990s.
What’s the modern approach?
Let’s look at the typical issues with modern gym memberships. If you search on a few review sites or social media, you’ll commonly see a number of prospects who turned their back on transitioning to customers mixed with disgruntled customers. From a cursory glance, there are significantly more unhappy customers than happy customers and the gap between is wider than in any other industry that I can think of.
So what’s the reason behind this? I think it could be due to gym managers and owners applying the wrong business model.
From a very simplistic viewpoint, we can fit products onto a continuum from commodities, feature-based through to bespoke.
A commodity is the same wherever you buy it from. It’s not different if you buy from a or b, the same experience applies. In the end, you’ll own the same product.
Moving from commodities, we encounter feature-based products. Here the differentiator is the set of features on offer. This is where we start to introduce concepts of value in relation to the features provided. Some features cost more than others, but in the end we’re buying features, so we’ll try to choose the features we want, or at least those that we think we want. On the other side of the negotiation, we see salespeople selling features or solutions to problems or issues.
Further up the continuum and we move to customisations, where we can take a feature-based product and have it customised to our needs. The cost is a combination of the product, the features, the customisation and the perceived value of the brand.
At the far end of the continuum from where we started are the bespoke products. These are developed from scratch to meet our requirements.
We can also introduce the concept of service quality. This could range from no service (e.g. simple automation with no choices), through a service wrapper to complete bespoke services.
Depending on the offer, we may have to take into account the total cost of the purchase (e.g. including the transaction fees, shipping, etc). So the differentiator becomes how cheaply, quickly we can receive the product and how much we’re prepared to pay for the total combination.
Moving further along, we encounter products that are becoming commoditised, i.e. the same product, but the differentiator could be the service wrapped around that product. This is where we start to see our perception of the brand in how it will look after us if something goes wrong with the purchase.
Customised products, by necessity of the interaction involved, include a higher level of service quality than the pure commodity products.
Where do gyms fit in?
Depending on the gym chain, they may have a sales and service model for the wrong type of product being offered.
Gyms as a whole tend to be following a sector-agnostic trend of delivering cheap as cheaply and simply as possible or selling quality as expensive. But there is confusion in the industry. There are a number of chains who don’t seem to have decided on their position. We see that by how they respond to complaints, by how well they maintain equipment, by how smooth they make the enrolment process, etc. In other words, they’re branding themselves as quality, but not following up on the offer. Customers and prospects are beginning to notice this. More importantly, with the advent of more pervasive social media and review sites, their opinions are more public and wider-reaching than at any time before. This will impact the pricing model, since it will become more difficult for a gym chain to obfuscate pricing per customer.
At the higher end of the chain,we see that expensive gyms hide the pricing structure which is indicative of bespoke services and possibly higher-end customisation. But neither of those attributes ever apply. At most, a gym is feature-based. So we find ourselves in an odd mix of worlds, where:
the monthly cost is expensive or very expensive (depending on how good your haggling skills were) considering the feature-based angle,
the sales approach is based on selling bespoke products
prices are hidden
the salespeople are usually too junior/low paid if a gym for selling bespoke services (but probably appropriately paid when we consider it’s a feature-based or commoditised-product sale)
customer service, whether as resolution of complaints or, more importantly, how customers are treated in terms of contracts, doesn’t reflect the levels we’d expect of bespoke dealers
If we relate this the world of cars, we could consider the lower-end of the market as the Škoda – perfectly good cars, made for a cheaper segment with fewer features than in more expensive cars. The higher end would be comparable to the more expensive Audis or Lexus. That also leaves room at the extremes, e.g. for Bentley and Rolls Royce at the top end. For each of those car companies, there’s a different sales method. We’d expect to see the salespeople on different packages. Similarly prices are more transparent at the lower end of the market.
Let’s put this back together.
If we take a lesson from car brands, combine with the industry-agnostic trend, we end up with a split:
either commoditised-product or feature-based product
implying limited features (think of the basic features from a Kano model)
simple sales, maybe even automated
Transparent pricing, more expensive than low-end
simple sales, more likely to be human, but still a simple process
better customer service
Different pricing model
Scarcity, e.g. limited memberships
immaculate customer service
Looking at it from this angle, we see that there are gyms which attempt to avoid the low-end of the market, but are not at the exclusive end. But they don’t fit comfortably in the Feature-plenty. Bear in mind that Audis, Lexus and Škodas are still bought on a combination of features and brand. They’re still cars that you can order online. If you can’t find one local, you can simply find one somewhere. We can’t say that to the same extent for Bentley or Rolls Royce.
In most industries, we may be able to predict congruence with the trend, however the gym industry seems based on 1970s principles and exhibits a complete inertia to listening to customers, let alone delivering what customers want.
In the UK, we’re seeing more budget-brand gyms following the Basic model above. Prices are listed online and with fewer surprises or secret, it permits an automated sales process. Even so, they’re still applying joining fees rather than increasing the monthly fee by a small amount. Although that may be because the memberships gyms are already priced at triggering amounts, e.g. £14.99 + a £25 joining fee sounds better than £17 per month.
We also see very exclusive gyms with limited memberships, exorbitant monthly fees and joining fees, but catering to those that can afford it and those that want to be seen in the places to be.
Unfortunately the middle ground is badly managed. If they remain as they are, with the same customer-unfriendly practices, they will lose customers to the better basic gyms. This will become more prevalent as the basic gyms continue to reinvent what a gym means, by adding better customer service and as the basic gyms increase their offer by heading towards the feature-plenty model described above. Some of the customers will move to the truly exclusive gyms.
To counter this, those middle ground gyms will have to change. They can choose to be Basic, Feature-Plenty or Exclusive. Whichever is chosen, all 3 options require change.
At first glance, Feature-plenty appears to be easiest since they’re already charging more than Basic gyms, providing more features for that charge, but it would require a wholesale change in customer experience, from the sales process, on boarding, through to day-to-day experience, resolution of issues and membership retirement. That may look like a lower profit but there are enough case studies proving that focussing on the customer experience results in higher profit.
The change to Exclusive may be better done with a rebrand. Keeping the same brand will not carry the same perceived value regardless of what is done to the chain, at least not in sufficient time frame to prove return-on-investment.
The change to Basic may not be feasible for all the middle ground gyms due to the size of gym involved. The Basic gyms are typically smaller than the middle ground gyms. That’s possibly because they don’t rely on numerous features and so don’t need as much space to accommodate those extra features. Or it could be a attribute of the building costs, i.e. simpler to find a smaller space than a larger space suitable for a gym.
I simplistically take the view that Service Design is the concepts and methods of Design Thinking applied to making services work better for their customers. It’s a definition that works in the circles I most commonly move in, i.e. directors, programme directors, etc. It allows me to set the stage in which service design and design thinking both play.
However on the same stage, we commonly find KPIs, OKRs, Business Architecture, etc. And the stage starts to look crowded very quickly. We also start to see people pulling in different directions, like someone has let a mouse loose in the chorus of an Italian opera.
Operas and plays have directors, often many directors each responsible for their own domain, but with one artistic director responsible for the overall vision.
Now imagine what would the stage look like if the director asked the question “How might we…..?”.
It’s the opening line of many a design thinking ideation round. And it serves many purposes, explained better by others elsewhere.
Taking the stage analogy further, I hear questions such as “How might we produce more colourful costumes?”, “How might we light the back of the stage better?”, “How might we fill this part of the stage?”.
All of them are good questions and relate to the specific problem that has been uncovered during the discovery phase.
What they’re not doing is thinking of the entirety of the show. They just resolve the problem that was uncovered for their part of the show.
How might we approach this differently?
What they’re not doing is asking “How might we aim to deliver a better show?”
Let’s look at that question more thoroughly.
It’s got the typical format of “How might we…?” introducing the concepts of inclusion, a shared problem, and an indication of possibilities and potential.
I didn’t stop at the simpler question of “How might we deliver a better show?”. That’s where service design typically fits.
If we step back from the stage and consider an organisation, even applying service design in this way would be a stretch. At this scale, we’d be trying to apply service design to the whole organisation, e.g. how might we deliver better services? Where typically each service would have its own change activity, often in the form of design sprints, etc. Instead, the simpler question of “how might we deliver a better show?” could be translated into a top-down design question for an organisation of “how might we deliver better products and services?”, “how might we become a better organisation?” or similar organisation-wide design questions.
However, the question I introduced earlier focusses on the aim, not necessarily the end result. It asks about how might we aim to deliver. In focussing on the aim, it allows us to explore the goals and how goals are set. It leads us to question what goals would be required in order to deliver a better show. In understanding the goals, we have to understand what good looks like, what counts as successful and not just in the eyes of the board, but in the eyes of customers. If we set the concept of goals smart enough, this could easily set the scene for continual improvement.
Alignment with Business Architecture
Back to the organisation, now that we’re asking about the aims, and we’ve looked at the goals, we can start to see how the goals for the enterprise could be set. This brings Service Design up to the area where it aligns with Business Architecture. While this may seem at odds with a top-down approach of setting KPIs, we have to ask the question of why wouldn’t we want to develop an organisation that is driven by achieving its goals that deliver value to customers?
Alternative Business Motivation
By combining Business Architecture with Service Design, there is the possibility of redefining the concept of Business Model Modelling. Typically that’s a top-down approach, modelling external influencers, assessments, goals, objectives/outcomes, etc. Taking the combined service design/business architecture approach would result in metrics that matter to customers as the metrics percolate up through the organisation, not cascade down as is more common.
Whereas the concept of One Metric That Matters may suit startups as they redefine/focus on a different metric per stage of development and growth, it would not be expected to change as often in a more mature organisation. Instead, we may see a single metric that is of most interest for a cycle of improvement. But here’s the clincher – that metric would be an aggregate of the metrics defined by exploring the problem space with customers, not one that’s defined by an executive board.
However we may see a situation where an executive board decides to steer the organisation away from its current model towards a different business model. In that case, we would consider a more top-down approach.
In Black Sheep or Shepherd, I introduced the idea that Business Architecture isn’t aligned with Enterprise Architecture as well as we may expect from looking at traditional structures for Enterprise Architecture.
I’ve had several conversations about that topic since, all raised by the person I was talking with, rather than me asking them. And we’re all coming to similar set of conclusions:
Business Architecture doesn’t fit well within Enterprise Architecture (more on this below)
Business Architecture as a profession is maturing
Organisations who are using Business Architects are using them differently
Business Architecture may be better defined as a peer capability to Enterprise Architecture, rather than within EA.
Let’s take each in turn.
1. Business Architecture doesn’t fit well within Enterprise Architecture
I covered a lot of this in Black Sheep or Shepherd. The traditional implementation of EA originates from an IT perspective. Enterprise Architecture is typically initiated from with the IT function. While EA is meant to include Business Architecture in parallel to Technical Architecture, etc, Business Architecture is typically the last to be included and takes a position following Technical Architecture.
A typical Enterprise Architecture structure would include Application Architecture, Infrastructure Architecture, Data/Information Architecture and Business Architecture. Usually implemented in that order when originating from an IT perspective. In fact, I’ve often seen the sub-architecture of Process Architecture being implemented before Business Architecture.
This is opposite to what we would expect if we were able to plan it logically. In that case, we’d apply Business Architecture first in order to understand the aims and vision of the organisation, then organise everything around that vision. That’s where the other architecture domains come in. That’s the method as described (but often not followed) within TOGAF ADM. Start with the agreements, architectural principles, then business architecture to define the requirements for the other architecture domains.
2. Business Architecture as a profession is maturing
While we could say this of almost any profession, the rate of progress and thought-leadership in Business Architecture has progressed noticeably over the last few years. Prospects and clients are more aware of what it can do for them, internally within organisations there are more allies for the need for Business Architecture. It’s not all rosy, but it is improving.
Not only are the consultancies improving in their offer and the clients are improving in their knowledge and their requests, but short-term resource agencies are also improving in their placement of business architecture. More people involved in the wider enterprise are now talking about the value of business architecture. It’s still not prevalent and there’s often sales activity involved in influencing clients and prospects in the value, but it is increasing.
3. Organisations who are using Business Architects are using them differently.
Many of my requests for work come from portfolios or programmes rather than central, corporate enterprise functions. It is the change function of the business that is seeing a need to create order within the organisation and hence wanting the services of a Business Architect to assist with that. Typically, these assignments also stretch into guidance on business analysis although that can be considered separate. The indication though is that’s how the clients are seeing the tasks at hand. They see that the technology is taken care of through technical design authorities, etc and want a similar structure for business decisions.
This can be extended to a point where a change programme uses business architecture which then informs a corporate function. That corporate function realises the value and initiates their own business architecture initiative. When done well, these two different business architecture functions concentrate on their own objectives while ensuring alignment between corporate and change function. When done badly, they compete.
4. Business Architecture may be a peer capability to Enterprise Architecture
I find myself discussing future designs with Enterprise Architects, not because the designs have to go through them in terms of governance, but as a peer review. It does raise the question of whether they’re should be a consolidated governance route and review boards, not just technical design authorities. I have created design authorities that focus on business design (including the use of technology) rather than the technology solutions as would often appear before a technical design authority.
In addition, if we take the EA implementation diagram mentioned earlier, we can see that there are several transition states; one after each phase where only a subset of the Enterprise Architecture has been implemented. The typical transition state follows phase 2, where we see EA comprising Infrastructure and Application Architectures, all governed through an EA route. But with Business Architecture and Data/Information Architecture governed through other routes.
That combined, with the multiple design authorities, is indicative of an immature EA function, leaving us with two choices:
Improve the maturity of the EA function and the role of Business Architecture within it.
Engage Business Architects as peers to Enterprise Architecture
(1) only works if the initiatives are not IT focussed and that there’s more well-rounded support and engagement for that function.
(2) is what many clients are doing. They’re seeing EA as not performing what they require of the function, so they engage a Business Architect to provide and cover that gap.
Where to go from here?
That leads me to my premise. Even though EA is mature as a concept, it’s implementation is poor in a number of organisations, especially those that treat EA as a subset of IT.
Wherever EA is a subset of IT, then Business Architecture should short-term be driven by change portfolios. In parallel, the organisation should consider how to achieve wider adoption of the EA function within the organisation. Ironically, that task is most suited to Business Architects.
Whichever route, there has to be single point at which all designs come together for review. Not necessarily reviewing the designs themselves, but at least the design principles behind them. That review function is the start of a homogenous Enterprise Architecture function.
Moreover, we should concentrate on Business Architecture first where possible. Relying on existing architects is fraught with issues, most of all leading the organisation down a technology-driven path, rather than a business-vision/purpose path as would be more appropriate.
So consider a revised implementation timeline to reflect the earlier presence of Business Architecture, whether within or as a peer to EA.
As a profession, Business Architects are in danger of becoming defined by just one of the products that they create. Unfortunately, it reduces the value that the profession can provide to organisations and limits expectations of prospects and clients.
What went wrong?
Imagine a fine-dining chef who makes tacos once at the request of a favourite customer. The chef knows tacos will do the job, she knows they’re sustenance, she knows that there are better products and even advises the customer of what she can do instead. But the customer wants tacos, so she delivers.
Other people like tacos as well. So she becomes known as a taco chef and the world is left short one fine-dining chef. Or rather, she’s no longer unavailable to provide the fine-dining experience since she’s now cooking tacos at the request of many customers. She knows she can do more and tries to prompt customers through educating them of other ideas and concepts. But the tacos are pleasing the short-termism of the current customers. It keeps them fed for an hour until they start to feel hungry again. She’s diligent and adds as much nutrition in them as she can. She listens to each customer, understands their needs and can plan a superb meal that will keep them well-nourished for hours. But the customers want tacos and end up hungry again in a hour or so.
The tacos could be cooked by someone on a lower salary. But they may not have her knowledge of nutrition and attention to detail. So yes, they’d still be tacos but not tacos of the quality that she’s been producing.
That’s our taco
And that taco situation is what I see with Business Architects. We’re commonly requested to perform a documentation task, e.g. “document the current business”. It’s usually followed by “so that we can …..”. Look on any job boards for contract Business Architects and you’ll see the activities we’re requested to perform. It’s usually the pattern described above of “document the current business”. Roles for permanent Business Architects are usually wider since clients don’t want professional expertise for just 6 months; they’re thinking longer-term.
The contract clients request knowledge or even certification of TOGAF or Zachman, but you don’t need knowledge of those to be able to document the business.
They may want specific knowledge of their industry sector (e.g. SOX and MiFID II for finance) and they may want experience with specific tools. But if the role requires a Business Architect, then documentation will be the activity.
They may even want knowledge about Business Architecture offerings specific to their industry sector (e.g. MODAF or ETOM). That last element can assist with documentation, especially if there are reusable models in the sector-specific offering.
But in the end, the client is asking for someone to document their current business. There’s often little thought for what to do with the documentation once it’s been produced. Some clients think ahead to wanting a future model, but don’t give much thought as to what to do with the gaps between current and future or how to evaluate benefits of different future models.
That’s our taco. Documenting the current business is the Taco of Business Architecture.
How did we get here?
Let’s take a look at some of the definitions for Business Architecture and then do the same for Enterprise Architecture. We would expect them to be similar, with Business Architecture being more focussed on the business domain.
Business Architecture Definitions
wikipedia: “a blueprint of the enterprise that provides a common understanding of the organization and is used to align strategic objectives and tactical demands”
OMG: “defines the structure of the enterprise in terms of its governance structure, business processes, and business information.”
The BA Institute – “defines the enterprise value streams and their relationships to all external entities, other enterprise value streams, and the events that trigger instantiation.”
The common theme in these is that Business Architecture is referred to by the deliverable or product that it creates. It’s output is the definition of the enterprise business.
Whereas I’d see Business Architecture as an activity. I’d expect to see more relating to its purpose, what it does and why it does it.
Interestingly, TOGAF (also by OMG) describes the context of the first few steps of the ADM with:
“a knowledge of the Business Architecture is a prerequisite for architecture work in any other domain (Data, Application, Technology), and is therefore the first architecture activity that needs to be undertaken, if not catered for already in other organizational processes (enterprise planning, strategic business planning, business process re-engineering, etc.).”
TOGAF, in the paragraph above, implies Business Architecture as an activity.
Enterprise Architecture Definitions
Let’s look at definitions for Enterprise Architecture and see if they exhibit the same characteristics.
Wikipedia defines EA as “a well-defined practice for conducting enterprise analysis, design, planning, and implementation, using a comprehensive approach at all times, for the successful development and execution of strategy”
MIT CISR defines EA as “the organizing logic for business process and IT capabilities reflecting the integration and standardization requirements of the firm’s operating model.” Jeanne W. Ross, Peter Weill, David C. Robertson
Gartner defines EA”is a discipline for proactively and holistically leading enterprise responses to disruptive forces by identifying and analyzing the execution of change toward desired business vision and outcomes”
Enterprise Architect Body of Knowledges defines EA as “analyzes areas of common activity within or between organizations, where information and other resources are exchanged to guide future states from an integrated viewpoint of strategy, business, and technology”
Here we see words such as discipline, practice, logic, guide. There’s a mix of nouns and verbs in that list, but they all indicate activity, for instance, you’d only have a discipline if you were to produce something.
We seem to have lost that concept with the Business Architecture definitions, although the TOGAF ADM excerpt does imply that Business Architect involves activity.
The Tao of Business Architecture
I’m going to approach this from a different direction and simplify the concept.
1. Business Architecture assists strategy
Business Architecture only exists because of strategy. Without strategy, Business Architecture has no purpose, no reason for being. We would just be producing documents for the sake of producing documents. Either those documents have to be useful or the process of creating the documents has to be useful, otherwise Business Architecture is a waste in any organisation.
Business Architecture relates to how that strategy is developed and maintained, how that strategy is implemented, how different strategies are evaluated and indeed, even the documentation of current strategy.
A description of the current landscape and challenges
A description of the future target that can respond to those challenges
A plan to get you to that future
For Business Architecture (and also Enterprise Architecture), those concepts make a lot of sense and can be interpreted as:
A description of the current architecture. In this case business architecture, specifically the BMM, organisation units, influencers, partners, governance, etc
A description of the future target. In this case, the goals, outcomes, changes to capabilities, future organisation units
A plan to get you to that future. In this case, the change programme and work packages (most likely later supported by programme and project plans).
Here is the crux. Business Architecture is not only those documents, but it is the activity involved in producing those documents. There is more value in a Business Architect assisting an organisation in defining their strategy, challenging, providing other options, providing analyses, etc than there is in the delivered documents. It is the analysis and the progression of the conversation and the development of knowledge within the enterprise that is of most value. For some clients, the future state doesn’t need to be written down at the end of the assignment because the organisation has developed to the point that all know the common direction. The direction has become subsumed into organisational knowledge and culture. That’s not common, but the fact that it can happen, indicates that we’ve assigned value to the wrong part of the contract.
2. Business Architecture assists the enterprise
When I read the EA definition earlier from the Enterprise Architecture Body of Knowledge, I found that it described Business Architecture with one element missing:
“analyzes areas of common activity within or between organizations, where information and other resources are exchanged to guide future states from an integrated viewpoint of strategy, business, and the use of technology”
The simple addition of “the use of” alters the definition to be suitable for Business Architecture. I also like the focus on “future states” rather than current.
3. Business Architecture assists goals
This is fundamental for me. When I’m explaining to people what I do, I avoid phrases such as “I architect businesses” in the same way that a programme manager may say that “I manage programmes”. Instead I simplify for the layperson and say that:
“I help organisations do what they want to achieve”
and often the first step of that is
“assisting the organisation’s executive define what it wants to achieve.”
From my perspective, the majority of large issues within organisations stem from a lack of alignment. I find that larger organisations evolve to a state of disparate, loosely connected governance models that are not aligned with a central set of themes (or goals in this case). I work to align an enterprise so that it can focus resources on what it want to achieve, briefly (or as briefly as is reasonable) documenting where it is now, developing the future vision and then assisting the executive in steering the company towards that vision.
In short, it boils down to: “What direction do you want to go in? Then let’s define what we need to do to get you there.”
Business Architects need to retake the definition of the profession, in order to move clients and prospects from the Taco of Business Architecture to the Tao of Business Architecture.
This should be done with a focus on Strategy, Enterprise and Alignment and a lesser focus on documentation for the sake of documentation.
And since new technology is developed every month and every year, would we be looking at a Techtechtech sector in a decade?
It’s seems ludicrous to think of it that way and it is indeed ludicrous. The reason it sounds so odd to have a Techtech sector is that we’re allowing ourselves to be focussed on the technology that’s enabling us to replace the older business models.
If you get a nice interface to your banking account and that bank account has a different charging model to the older high street banks, does that make it fintech? According to the hyped world, then yes. But it’s stilll banking. It’s still finance. In reality, the newer entrants are just doing what the incumbents should have been investing in more heavily a few years ago.
In some cases, newer entrants who are smaller are working out how to make a profit without the expectations of having to pay the large salaries of traditional banking, without having to pay large, multiyear leases for high street premises, etc. The main lever they’re using is initially technology, but sometimes it’s other elements of the business model that are being altered. That’s a critical point to realise; it’s not always the technology that is being used as a lever for change.
Let’s take the example of First Direct, the HSBC bank that had no high street branches and regularly received excellent customer satisfactions scores compared to its high-street cousins. Mint, Smile and Egg all followed with variants of similar business models. They had changed one element of the business model. They had focussed on the channel of interaction, forcing a channel shift from face-to-face to telephone (at the time) and online (later when the technology caught up). Everything else (apart from perhaps some of the branding/marketing) was the same as the high-street.
What we’re seeing now is other entrants prepared to look at other components of the business model, such as where the revenue is generated (e.g. subscription versus visible transaction vs bundled transaction cost vs bundled products and so on).
Here’s a simple concept: Take the Business Model Canvas and apply SCAMPER to each section. It’s that easy to generate new ideas and that’s what seems to be happening in every sector.
But this isn’t really fintech. Yes, tech is opening up opportunities and provides the ability to change different elements of the business model that would have been more awkward or at least not cost-effective to change before. But, again, it’s still banking. So let’s just call it finance. The big question for incumbent banks is, rather than relying on their current business working in the future, they’ll have to accept that different models will emerge. And it’s their choice if they want to be delivering those models, enabling others to deliver them on their behalf, or simply be swept away as their market share is eroded by competitors.
Let’s get this straight. I’m not against the concept of Fintech. I’m against the fact that the concept exists separate to the Finance sector (or rather a subset of it). I believe that every sector has a duty to innovate, improve and invent. For sector x, we don’t need xtech.
There’s an additional angle to this which I’ll cover in the next article.
In this article, I’m going to introduce the Blueprint element of MSP.
What we’ll cover:
The MSP Blueprint
The MSP Mission
Some of the capabilities that we’re affecting
The start of work packages
What we won’t cover
The detail of the organisation design (e.g. current and future designs)
The full capability map
Do not consider this article to contain the definitive method for documenting the combination of MSP, Business Motivation with Archimate.
I have more confidence in the previous articles and the documentation contained within them than in what I’m covering in this article. See the Aside below for more detail.
Similar to the previous diagrams, I’ve used a grey frame to indicate the MSP Blueprint. Unlike the one I used for the MSP Programme Brief, in this article, I’ve included the content I’d expect to see within the Blueprint within the same grey frame. Remember that the frame is visual only.
Again, following the previous articles, the Blueprint is a document and has been modelled as a Archimate Deliverable.
I expect a Blueprint to take the information from the Mandate and deliver a description of what the organisation/technology will look like when the change has been delivered. A key component of that is what large-scale changes we’re likely to see during the course of the programme. In this case, I’ve used:
Archimate Course of Action to denote the:
The red frame is visual again. I’m using it to highlight the different sections of the Blueprint.
I expect the designs within Blueprints to be draft or incomplete, especially in Programmes that are tasked with designing the future operation of an organisation. That may appear in conflict with the typical requirement for a Blueprint that states the design upfront (as part of the Brief and Blueprint) before the programme can be funded, but some Programmes are iterative or need to learn from Assessments before the design can be finalised. And it’s that type of programme that I find myself more commonly working on; those that have the mandate to define the future, without knowing what that future will look like at the start of the programme. So we develop the future design over time and produce iterations of the Blueprint.
Fortunately, we can start with Design Principles, e.g. what criteria can we set that constrain our designs later on? An example here is “Enterprise above Siloes”. I’d usually have a longer description about what this means and how it will affect design further downstream. In this case, we will design the best solution for the enterprise rather than for an individual department. That principle will most definitely come in useful later when considering organisational design.
These Design Principles are modelled as:
BMM Directive (Business Policy/Business Rule)
It’s worth noting that I’ve strayed from pure BMM here. From the definition of BMM 1.3:
“Directives govern Courses of Action”
Directives include Business Policies and Business Rules. Courses of Action include Strategies and Tactics. The concept of a Courses of Actions producing Directives doesn’t appear to exist within BMM.
The reality of the model may be different in that we’d likely see a Work Package acting as the initiation phase of the Programme and the main deliverable would be the Blueprint. That deliverable includes the broad strategies in how the objectives will be met and the business rules that will be used to constrain the more detailed design later on.
The work package would be initiated based on the Mandate and Vision in order to create the Blueprint and the Mission. There would have been a package of work before this to cover the work necessary to produce the Brief following the Mandate, but as I mentioned in that article, I wasn’t covering work packages at that time. More importantly, in most organisations, it probably wouldn’t exist as a formal Work Package anyway.
On the right of the grey frame, I’ve include a blue frame for High Level Organisational Design.
Within that, we have 3 teams of East Team, North-West Team and South Team. Behind the scenes in a separate diagram (but the same repository), I’ve documented a change from 3 teams which are based on sales, marketing and product support/after support and decided that following the Design Principle of “Deliver Local Where Possible” that each of the teams will be restructure with multi-skilled staff to deliver the same capabilities in the 3 locations. This is a fabricated example so we don’t have enough information to evaluate whether this would be a good thing for the organisation. But it is a typical change.
The teams are modelled with the:
Archimate Business Actor
Since this is the Blueprint and focusing on the future, I’ve only included the representation for the future organisational design, not the current.
The teams mentioned earlier deliver Business Capability. I’ve included high-level capabilities (typically Level 1 or Level 2 depending on your starting point) in this diagram: Sales Management and Marketing. A common capability map would include lower levels of capability, e.g. sales reporting, etc. The Capability Map itself would be a separate, but related diagram. We would then have the option of including lower level capabilities in the Blueprint if appropriate. For the purposes of this article, I’ve chosen two higher level capabilities.
For the type of programme listed here, we would expect the programme to be active in developing the capabilities, perhaps even creating them if they don’t exist yet. However considering the main changes revolve around a re-alignment of roles and locations, then the Business Capabilities would still be the same, just delivered in all locations and probably delivered by a different skill set.
Business Capability does not fit in MSP or BMM and is an artifact from Business Architecture. Hence there are no MSP or BMM objects to reference as equivalent.
To highlight this change, I’ve used a green frame for Capability Changes. This isn’t a concept specifically in MSP or BMM, instead it’s more about the changes being introduced by the programme, from a Business Architecture perspective.
Capability Change is an modelled as:
Archimate Course of Action.
I’d suggest thinking about the Courses of Action used earlier in the Mission as defining how we are going to support the goals and the Course of Action in the Capability Change as how we are going to implement the Mission.
This Capability Change of “Cross-skilled roles” is essential to the implementation of the re-aligned teams to the right of the diagram.
The final part of a Blueprint is how the programme will deliver its changes, e.g. how will it apportion work and govern the activities going forward?
I’ve used a turquoise frame to highlight the work packages resulting from the Programme Initiation. These are the work packages that will deliver the objectives.
These do not fit within the BMM, but do relate to it.
Archimate Work Packages were used to model:
MSP/Prince2 Work packages/Work Streams
BMM – no corresponding object
The Work Packages deliver the outcomes based on fulfilling the requirements.
Admittedly, the integration of the methods, tool and standards started to become murkier here with little clarity in how changes are supported. Most noticeable of the issues were:
Finding an approach to model how Business Capabilities relate to other artefacts such as future teams. I’ll publish the diagram that contains the changes in a following article and you’ll see why the artefacts shown in today’s diagram were chosen.
Documenting the relationships between Directives and Courses of Action and their use in programmes that implement change in strategic direction.
Some of that confusion could be:
my lack of familiarity with the Archimate language for these artifacts.
the lack of detailed documentation and examples for these Archimate artifacts. There is some very good documentation available. However, in common, with most EA tools, they’re great at documenting how to use the tool within a static context, e.g. defining a current state. But you then have to find a way to use them to depict different states, e.g. as an organisation evolves over time. This can range from prefixing artefacts and diagrams, creating folders based on phases, using attributes to denote which phase an artefact should be in, etc. This “how to use the tool” information is usually held by the implementation consultants of each tool. They’ll know what has worked elsewhere, what pitfalls are involved if you deviate, etc.
that the modelling language hasn’t been designed to do what I want to do
that the tools doesn’t reflect the modelling language (I’ve no evidence to say it hasn’t implemented and all reason to believe it that Archi is an accurate representation of Archimate)
that it is just a first draft, subject to change and that future versions will depict a better model
At the moment, it would be wise to view the diagrams and model included in these articles as a draft. They are open to discussion and subject to change.
I’ve developed a Partnership Map, designed to help us think about which companies we partner with and why.
With my clients, I’ve often found workshop attendees confused (at least initially) by the term partnership. If you use other well-known tools such as the Business Model Canvas, maybe you’ve encountered similar issues.
We all use the term partnership, but rarely question what we actually mean by it. I usually revert to asking what the partnership entails. If it’s one company paying another for services, is that really partnership?
There are two parts to the target
The Map itself: designed so you can print it large and place your partnering companies on the map
A table of the definition of the tiers. I’ll admit this is a very rough draft, but I thought it better to get it out in the world and improve with collaboration, rather than it just being the product of one person.
How to use it
Work through each of your partnerships and place them according to their sector and tier.
Once all partnerships are on the map, step back to look at them
Evaluate whether that partnership should exist, moved tiers or become a supplier-client relationship. Think of partnerships moving from outside to inside or vice versa, or partnerships being consolidated across sectors.
If a particular partnership is giving cause for concern, then consider using the Partnership Canvas for more in-depth analysis.
This is a first draft; it’s my first attempt at putting down my thoughts into a picture.
There are a few tasks before I’d consider it a first release:
The alignment of the words to the circle isn’t spot-on. I’ll wait to see if the quadrants and sectors change first, before making it neater.
The definitions of the tiers and the actions need more thought
Validate the quadrants – I’m not comfortable with the name Business Capability; it’s a working title
Validate the sectors – Do these need to change, add sectors, merge sectors?
I’m happy to collaborate on it, so get in touch at @alanward and let’s talk.