Date post: | 01-Nov-2014 |
Category: |
Business |
Upload: | boxer-research-ltd |
View: | 1,933 times |
Download: | 1 times |
.
Enterprise Architecture and Governance
In which the enterprise is subject to the law of requisite variety, forcing a
progressive capability for sustaining differentiated integrations of behavior
1 Copyright © BRL 2006
.
ASYMMETRIC ADVANTAGE
2 Copyright © BRL 2006
.
Asymmetric Advantage
• The third kind of asymmetric advantage depends on relating to asymmetric forms of demand
• The traditional approach to competitive advantage (following Porter) is based on owning something i.e. on establishing property rights.
• The new kinds of disruptive competitive strategy (viz Christenson et al*) are based on creating asymmetric advantage.
• Asymmetric advantage is based on knowing something that competitors don’t know that creates value for customers
• There are three kinds of asymmetric advantage:
1. Know-how concerning uses of technology, 2. Know-how concerning customisation of business processes, and 3. Know-how concerning embedding services in customers’ contexts-of-use.
* Christensen, C.M., Johnson, M.W. and Rigby, D.K. (2002) ‘Foundations for Growth: how
to identify and build disruptive new businesses’, MIT Sloan Management Review, Spring
3 Copyright © BRL 2006
.
The third asymmetry: Asymmetric Demand
• Symmetric Demand – Those aspects of a customer situation
• that can be abstracted and generalised across different contexts-of-use, and
• that are treated as symmetric with supply-side capabilities
• Asymmetric Demand – Those aspects of a customer situation
• that are particular to the customer’s contexts-of-use (i.e. cannot be abstracted and generalised), and
• that need orchestration and synchronization of supply-side capabilities by (or on behalf of) the customer in a way that is particular to satisfying the particular indirect demands on the customer (i.e. from the customer’s customers)
• that therefore demand an understanding of the indirect customers’ contexts-of-use.
• Value Deficit
– The gap between the symmetric and asymmetric aspects of a customer situation.
Strategy based on extracting maximum value from position
Strategy based on extracting maximum value from relationship
4 Copyright © BRL 2006
.
Competitive Advantage
• A particular form of competitive advantage flows from each form of asymmetric advantage:
1. Superior know-how about uses-of-technology generating economies of scale: • we can produce things more economically than our competitors
2. Superior know-how about customisation-of-business-processes generating economies of scope: • we can deliver our products and services to markets more economically than our
competitors
3. Superior know-how about embedding-in-customers’-contexts-of-use generating economies of alignment: • we can orchestrate and synchronize products and services dynamically in ways that change
with the way the particular needs of your customers (our indirect customers) are changing.
• These forms of competitive advantage are not mutually exclusive
5 Copyright © BRL 2006
.
The 21st Century challenge
Asymmetric demand (threat) – that demand which is specific to the customer’s particular circumstances
and contexts-of-use. This may include tacit or latent demand that the customer is not yet able to articulate relating to their relationship to their customers (our indirect customers).
Technology now makes it possible to demand that products and solutions be customized, personalized, unique and distinctive to ourselves within our context (Bobbitt, 2002 ‘Shield of Achilles’)
* Power to the Edge: Command and Control in the Information Age. Alberts & Hayes 2003
The dominant source of threat shifts from competitors (other nations) to customers (citizens and NGOs)
Power to the edge* – Enabling people who directly experience a customer’s demand at the edge
of the organization to be able to organise forms of orchestration and synchronization appropriate to the particular nature of the demand.
– The assumption is that the organization faces many such forms of demand, and that power-to-the-edge therefore involves distributed collaboration.
6 Copyright © BRL 2006
.
DEFINING THE ENTERPRISE
7 Copyright © BRL 2006
.
•The goal is to establish who are the key actors, and how they influence each other in determining the performance of the whole:
The domain of practice
White:
how we must
do what we
do
Blue:
what we do
Internal External
Red:
particular
demands
Black:
the contexts
from which the
demands
emerge
The way
things
work
What shapes
the way
things work
The ‘who for whom’:
Are we satisfying the
presenting demand?
The ‘why’:
Will we produce the effect
that we want to?
The ‘what’:
Are things working as
they should?
The ‘how’:
Are we doing
things right?
Defining the Enterprise
N
S E
W
White:
how we must
do what we
do
Blue:
what we do
Internal External
Red:
particular
demands
Black:
the contexts
from which the
demands
emerge
The way
things
work
What shapes
the way
things work
8 Copyright © BRL 2006
.
Governance as driven by the need to manage balance
Direction
of the whole
Operational
Capabilities
Developing the best
supporting
infrastructures
Demand
The particular nature of the demand
Problem-solving
Know-how
Developing effective ways
of satisfying the
particular demand
Balance
Clear overall intent
Source: East-West Dominance, Philip Boxer, 2006, http://www.asymmetricdesign.com/archives/32
Black:
the contexts
from which the
demands
emerge
Red:
particular
demands
Blue:
what we do
White:
how we must
do what we do
9 Copyright © BRL 2006
.
North-South vs East-West Dominance
• With North-South dominance, the E-W response is subordinated to the N-S control axis – Directors’ top-down strategies (N) for how business capabilities (S) are to be used
dictate the way demands are identified and responded to.
• With East-West dominance, the N-S axis is subordinated to the E-W demand axis – The identification of demands (E) and the formulation of effective responses to them
(W) determine the way business capabilities are directed and deployed.
• The ‘Faustian pact’ delays having to develop E-W dominance – It allows the organisation to remain N-S dominant by cutting enough slack for those
needing to operate E-W so that they can deal with the variations in demand they are encountering by informally flexing the system within the overall N-S control framework.
• East-West dominance presumes asymmetric demand and means taking power to the edge of the organisation.
Black:
the contexts
from which the
demands
emerge
Red:
particular
demands
Blue:
what we do
White:
how we must
do what we do
10 Copyright © BRL 2006
N-S dominant
N averages E demand defining the S
resources needing to be applied to the market as defined using the W know-
how model.
E-W dominant
N delegates accountability to E to
define the W know-how needed, defining the S
resources needed
Faustian
E-W definition overlaid on N-S
model informally working in the
reverse direction to the N-S model
within its constraints
.
Direction
of the whole
Operational
Capabilities Developing the best
capabilities
Customer-centred
response
Organising the service
around the customer
Problem-solving
Know-how
Learning new ways of
providing services Regulation
Clear overall purpose
balance
Governance secures sustainable balance
Copyright © BRL 2006 11
.
Sustaining East-West Dominance
• Sustaining East-West dominance requires: – Leadership that can sustain power-at-the-edge
• A leadership model that can sustain the dynamic alignment of infrastructures to demand
– An East-West approach to demand • Collaborative relationships with customers within their
contexts-of-use developing strategy-at-the-edge.
– Infrastructures with agility • Capabilities delivered within a framework of stratification
and granularity able to support distributed collaboration.
– Horizontal accountability • The ability to hold accountable those with authority at the
edge
Copyright © BRL 2006 12
.
THE LAW OF REQUISITE VARIETY
The progressive development of the ability of the enterprise to integrate differentiated behaviors
13 Copyright © BRL 2006
.
Integrating differentiated behaviors
what who/m
why how
what
who/m
why
how
op
erat
ion
al
fun
ctio
nal
po
siti
on
al
rela
tio
nal
inside outside
realization
identity
domain of relevance
‘above the strategy ceiling’ – unquestioned assumptions implicit in the way the enterprise does business, but ‘none of the business’ of the people working there
‘above’ the strategy ceiling
Defining Agency
Law of requisite variety
Progressive development of ability of enterprise to integrate differentiated behaviors
Definition of agency
Type of ‘culture’ (way-of-doing-things)
Copyright © BRL 2006 14
Integration of differentiated behavior
Differentiation of behavior
.
Evolving Enterprise Architectural Patterns
task system boundary
managing director/boundary manager
operational managing director/ boundary manager
boundary
task system
functions: purchasing, production, sales, HR
functional
SBU managing directors/ boundary managers
functional ‘professions’: purchasing, production, sales, HR
task systems
‘push’ relation to the line
CEO
positional
SBU managing directors/ boundary managers
functional ‘professions’: purchasing, production, sales, HR
task systems
‘push’ relation to the line
CEO if directive
relational
VBU relationship managers
op
era
tio
na
lp
osi
tio
nal
rela
tio
nal
‘pull’ relation to the line
Copyright © BRL 2006 15
CEOs if collaborative
.
On being edge-driven
• Only the relational form of organization can be edge-driven without relying on faustian forms of organization.
Copyright © BRL 2006 16
.
4 DIFFERENT FORMS OF GOVERNANCE
Different forms of ‘fit’ need different forms of governance
Copyright © BRL 2006 17
.
South: Developing the best
supporting capabilities
(methods + skills + tools)
North: Direction of Strategic
Business Units (SBUs)
Directed Governance1: (functional culture)
Copyright © BRL 2006 18
.
West:
business
process
know-how
in support
of the line
Cost to the ‘line’
Directed Governance2: (positional culture)
Copyright © BRL 2006 19
.
Group 1
Group 2
… Group
n
Sites and Locations
Joint Venture
Acknowledged Governance: (positional cultures)
Copyright © BRL 2006 20
.
Business-to-Business
support relationship
East : Virtual
Business Units
(VBUs) organised
around the
customer’s
demand
Balance: Demand-
side Regulation
Distributed Governance: (relational culture)
Copyright © BRL 2006 21
.
Balance: demand-
side regulation
Group 1
Group 2
… Group
n
Sites and Locations
Self-Regulation
Collaborative Governance: (relational culture)
Copyright © BRL 2006 22
.
Summarizing the different forms of governance
Acknowledged (positional culture)
Collaborative (relational culture)
Directed (operational,
functional or positional cultures)
Distributed (relational culture)
Single Enterprise
Multiple Enterprises
Product- or Solution-centric
(centre-driven)
Customer experience-
centric (edge-driven)
Balance: demand-
side regulation
Group 1
Group 2
…Group
n
Sites and Locations
Self-Regulation
Business-to-Business
support relationship
East : Virtual
Business Units
(VBUs) organised
around the
customer’s
demand
Balance: Demand-
side Regulation
Group 1
Group 2
…Group
n
Sites and Locations
Joint Venture
West:
business
process
know-how
in support
of the line
Cost to the ‘line’
Copyright © BRL 2006 23
.
Relational Culture
• In both cases – The focus is on being edge-driven – Performativity depends on the strategy at the
edge – There is demand-side regulation of
performance
• In the single enterprise/distributed approach, this depends on the CEO’s (and stakeholders’) understanding the need to take up asymmetric forms of leadership.
• In the multi-enterprise collaborative approach, asymmetric leadership has to be emergent, and therefore critically dependent on the presence of demand-side regulation to ensure competition based on creating shared value*.
Copyright © BRL 2006 24
Balance: demand-
side regulation
Group 1
Group 2
…Group
n
Sites and Locations
Self-Regulation
Business-to-Business
support relationship
East : Virtual
Business Units
(VBUs) organised
around the
customer’s
demand
Balance: Demand-
side Regulation
Collaborative
Distributed
* Porter, M.E. & Kramer, M.R. Creating Shared Value: How to reinvent capitalism – and unleash a wave of innovation and growth. Harvard Business Review, Jan-Feb 2011