Enterprise architects are often asked to prioritize initiatives and projects. To complete this task, they need their organization’s strategies, goals, tactics and objectives. Too often, these can be very difficult to gather either because architects have never been aware that they existed or sometimes because they simply and plainly don’t exist.
To extrapolate these strategies and objectives, there are numerous business models that are being used for business design. We’ll examine eight of the most common business design methodologies and examine how each one of them can relate enterprise architecture.
As shown in Figure 1 below, the balanced scorecards, value chain, Hoshin Kanri, business model canvas, and the business motivation model are very useful to describe and understand an organization at the corporate and business levels. The business model canvas, and the business motivation model as well as the design thinking, customer journey map and simple SWOT analysis can be very useful at the product and marketing level. As for the design thinking framework, the customer journey map approach and SWOT analysis, they are ordinarily used at the initiative or project level.
The balanced scorecards framework is a strategy performance management methodology popularized in the 1990s with a semi-standard structured report, that can be used by business stakeholders to keep track of the execution of key activities in their organization that are within their control. Balanced scorecards are also used to monitor the consequences arising from these activities. These key activities can either be financial, customer-oriented, geared toward internal business processes or about learning and growth.
This business design methodology is frequently used within more traditional organizations at the corporate or business unit level. Balanced scorecards provide an enhanced alignment of projects and initiatives to the strategy of the organization. It also improves performance reporting of key activities. Once in place and operational, this methodology facilitates initiative and project management for enterprise architects since each initiative or project can now be elaborated based on the objective of each key activity of the balanced scorecards. Enterprise architects can rapidly identify related value streams, capabilities and their supporting applications that need to be enhanced for each one of these strategic initiatives.
The value chain business framework is probably more in use then balanced scorecards within organizations. A value chain is a set of activities that an organization performs in order to provide a valuable product for specific markets targeted by the organization. The value chain concept was first depicted by Michael Porter. The concept of value chain is based on a process view of an organization. Organizations are viewed as a system, made up of subsystems each with inputs, transformation processes and outputs.
How value chain activities are conducted defines costs and affects profits. The primary activities of an organization’s value chain include inbound logistics, operations, outbound logistics, marketing & sales, and finally services. The support activities are comprised of the firm infrastructure, human resources, sourcing & procurement, advertising and finally services. The combination of all primary and support activities in a value chain of an organization must then generate an optimal profit margin.
Detailed business processes are very often linked to each one of the primary activities within the value chain of an organization. As for enterprise architects, they traditionally have often linked functional capabilities to the primary and support activities within the value chain of an organization.
Hoshin Kanri originates from Japan and was popularized in the 1980s especially in the manufacturing industry. Hoshin Kanri is a 7-step process used in strategic planning in which strategic goals are communicated throughout the organization and then put into action at three levels of the organization. The 7 steps of Hoshin Kanri are 1- establish the vision and assess the current state, 2- develop breakthrough objectives, 3- define annual objectives, 4- cascade goals throughout the organization, 5- execute annual objectives, 6- have monthly reviews, and step 7- perform an annual review.
The main advantages of using this methodology include providing focus and drive towards specific and important goals of the organization; and creating a shared vision of a precise strategic plan. If in place, this methodology facilitates initiative and project management for architects by linking them to actions derived from the 3 levels of the Hoshin Kanri methodology. Again, enterprise architects can identify related value streams, capabilities and their supporting applications that need to be improved for each one of these initiatives or projects.
Business model canvas
The business model canvas is very complementary to the first three business design methodologies. Out of all business design frameworks available, this approach is the only one that clearly describes the business of an organization on one page. Everyone within an organization should have access to the organization’s current business model canvas to have an overview of what’s going on.
This more recent methodology has become extremely popular among start-ups, small and medium-sized companies. The business model canvas is a visual chart with 9 distinct building blocks describing a firm’s or product’s value propositions, customer segments, customer relationships, channels, key activities, key resources and assets, key partners, cost structure and revenue streams. It assists organizations in aligning their activities by illustrating potential trade-offs.
The business model canvas is commonly used as a business model to guide speed and agility in project delivery, as it is centered toward the offering of customer-driven value propositions composed of specific products and services. Figure 2 above demonstrates how to bridge your business model canvas to your business architecture to optimize the marketing and operating modeling of an organization.
Each element of the Key Activities building block can be related to capabilities, value streams and initiatives. The Key Resources/Assets building block can be crossed mapped to elements of the organization, capabilities, information/data and initiatives. The Value Propositions building block can be linked to value streams, products/services and journey maps. As for the other six building blocks of the Business Model Canvas, they will usually be linked to specific elements within the organization, capabilities, initiatives, value streams and stakeholders among others.
Everyone within an organization should have access to the organization’s current business model canvas to have an overview of what’s going on where they work. As for business and IT stakeholders involved in the strategic initiatives shaping the future of the company, they should also view the future state of the organization’s business model canvas that highlights the changes in all nine elements of the business model canvas.
Business motivation model
Many enterprise architects performing business architecture will usually include in their practice the business motivation model. Adopted by the Object Management Group, the business motivation model provides a scheme and structure for developing, communicating, and managing business plans in an organized manner.
Here are basic definitions. A mission is a short statement of why an organization exist, and often specified more precisely with a vision statement to be achieved within a finite timeframe and made of a series of long-term goals and short-term objectives. Strategies consist of high–level plan items that also include short-term tactics to achieve an organization’s major goals under conditions of uncertainty. A goal is a desired result that an organization envisions, plans and commits to achieve within a finite timeframe. As for objectives, they are essentially short-term goals whose achievement brings an organization closer to its long-term goals. Objectives are derived from tactics, which are conceptual short-term actions to deliver and execute a strategy.
Should its organization have either the balanced scorecards, the Hoshin Kanri business model methodologies or another type of business model in place, an enterprise architecture team should easily be able to extract the goals and objectives necessary to design the architecture of initiatives and/or projects. Understanding the strategies, goals and objectives of its organization, makes its possible for an enterprise architect to select and build the relevant value streams to be examined, the most adequate capability measurements, and design precise business outcomes for its initiatives and projects.
If goals and objectives are nowhere to be found in the organization, the enterprise architecture team will need to extract them from management. Obtaining goals and objectives would be ideal. Many enterprise architects often have to fallback on less precise strategies and tactics because of the reluctance of some managers to commit to precise goals and objectives.
As for the design thinking methodology, it relates more to products and services that are offered by an organization and it is not strictly speaking a business design methodology. It refers to the cognitive, strategic and practical 5-step process by which design concepts for new products and services are developed by designers and/or design teams.
These steps consist of i) empathize, ii) define, iii) ideate, iv) prototype, and v) test. ‘Empathise’ means to develop a deep understanding of the challenge. ‘Define’ implies to clearly articulate the problem to solve. ‘Ideate’ involves brainstorming potential solutions, select and develop the ideal solution. ‘Prototype’ requires to design a series of prototypes to test all or part of the solution. Finally, ‘Test’ means to engage in short-cycle testing process to refine and improve the solution. Many of the key concepts of design thinking are identified through studies, across different design domains, design cognition and design activity either in laboratories or in natural contexts.
Design thinking has several advantages. It provides to it users the opportunity to view a problem from different perspectives. Design thinking also encourages creative problem solving. It also increases the odds that the outcome meets the organization’s objectives and the client’s desires.
Customer journey maps
Examining customer journey maps is becoming the norm within many customer-oriented organizations, as it is a visual representation of every experience your customers may have with you. It describes the story of a customer’s experience with either your products, services or brand from their original engagement and into possibly a long-lasting relationship.
A customer journey map can easily be associated to a value stream and its value stages as shown in this article entitled ‘Architecting and delivering optimal customer journeys’. A customer journey map is made-up of several steps and sub-steps that a customer can experience. Each step includes facets, like the interaction type with other stakeholders that a customer may experience. It will often also include the customer’s goals, the opportunities and challenges that the organization offering a product has, the various touchpoints that the organization can have with its client and the emotion experienced by the customer at each step of its customer journey.
There are numerous reasons why customer journey maps are so popular within organizations. They are very useful to bridge the communication gap between sales, marketing, and operations. They provide a better understanding of the customers by building a higher emotional connection with them. Finally, customer journey maps also identify holes, where initiatives need to be planned with all the necessary value stages and enabling capabilities to fill them with effective touchpoints. Journey maps do not need to be limited to customers. They can also apply to partners, vendors, regulators, internal stakeholders, etc.
Finally, SWOT analysis are very common and simple to understand. They can be used just about everywhere by enterprise architects at the business unit, product, service, initiative and project level. It was invented in the 1960s by Albert Humphrey. SWOT analysis is a strategic planning technique used to help an organization identify strengths, weaknesses, opportunities, and threats related to business competition or project planning.
Each one of these eight business design methodologies can enhance the work of an enterprise architecture team. They should use what ever business or product model methodologies that are in used in their organization to model their business architecture artifacts. If none are in place, they should fallback to the business motivation model and extract at minimum strategies and tactics from their business managers.
Daniel Lambert is a marketing and finance strategist assisting expanding companies in their growth, their business architecture and ultimately their digital transformation. He has worked in the past with organizations in a broad array of industries: financial services, insurance companies, telecom, utilities, pharmaceuticals, transportation, computer software, healthcare, and the public sector.
Mr. Lambert is currently VP Business Architect at Benchmark Consulting. Benchmark provides digital transformation consulting services and is also the creator of the collaborative IRIS Business Architect software application for enterprise architects, business architects, IT/Solution architects, and business analysis to optimize planning and roadmaps from strategy to delivery. Benchmark Consulting has clients of all sizes from as little as 800 employees to as large as 400,000 employees. In his previous life, Mr. Lambert was also a venture capitalist. He was involved in these successful and very profitable exits: Giganet sold to Broadcom; Kinaxis now trading on NASDAQ; SFI sold to BMC Software, Taleo sold to Oracle, and Telweb sold to Schlumberger.