How is complexity being killed? - Forth question in Stress-testing your Enterprise Architecture

It's time for the forth of seven questions in stress testing your enterprise architecture: How is complexity being killed?

First of all, let's look into which types of complexity we are facing. I can come up with at least three, there may of course be more, but this is enough for this discussion

1. Business complexity. The way our business is organized and its processes add to complexity further down in IT Systems and information.
2. IT System complexity. Our IT landscape and how we have decided to divide systems into discrete components will add yet a layer of complexity on top of the business complexity.
3. Information complexity. Both the structure, content and ownership of information throughout the enterprise adds complexity to both IT system and business.

Don't forget that complexity will be a consequence of your strategy, your goal is to get rid of all of the unnecessary complexity not aligned with your strategy. 

Complexity grows exponentially - what seems manageable initially eventually becomes a behemoth 

Just a word of caution: The costs of complexity is seen first during implementation and then while operating and maintaining the solution. The problem is that complexity costs are higher in later stages - what appeared to be manageable in design, gets hard to implement and impossible to maintain.

But let's try it out. My advise is to use these three steps to find your way to the rumble - once there you will have to navigate on your own.

• Business driven. Whatever you do, make sure there is a clear business case based entirely on business benefits, not IT benefits. Once there are clear business benefits, then the business will make sure those benefits are realized and that the complexity is in line with the business' strategy. Your responsibility is to ensure that the resulting IT Systems are not adding complexity not introduced by the business.
• Business verticals. Break down the problem into verticals and implement them one-by-one. Yes, it adds costs. Yes, it reduces risks and time. This can be done both using a best-of-breed and a best-of-suite strategy. Just do it one vertical at a time. Then you will faster learn, faster get something valuable out there and get cashing in on the business benefits.
• Business information. Information is a strategic asset in any enterprise. Decouple business verticals from an information standpoint. Then they can live their own life and evolve according to the business needs they support. Have clear ownership, clear structure and clear interfaces. Who's owning which information, for what purpose is it used and when is it updated. 

Thus you can have the business drive your architecture through verticals where information is exchanged for the benefits of the entire enterprise.

Makes sense? Let me know what you think.

More to read:

• HBR June 2011: Learning to live with complexity

Insight generating questions that brings science to the art of strategy

One thing that's bothered me in many strategy discussions is that you very easily end up in locked positions throwing oral hand grenades at each other. Even if it doesn't go that far, it's hard to get an open and curious strategy climate. I've seen top-level strategy discussions to contain much more energy and openness when moving from finding "What is the right answer" to looking for "What are the right questions".
Let's look at a set of questions that will help you find the right questions that, once answered, sets the direction and involves stakeholders in embracing the decision.
We'll go through the four most important questions: Inside-out; Outside-in; Far-outside-in; Opportunity evaluation. Note the openness in the reasoning. We're not looking for the answer, we're looking for opportunities and choices.

Inside-out: Start with your assets: activities, resources, brands, partnerships, etc and then reason outward. What are we especially good at that some segments of the market might value and that might produce a superior wedge between buyer value and our costs?

Outside-in: Start with looking at markets. What are the under served needs, which needs do customers have a hard time to express and which gaps have competitors left?

Far-outside-in: Start with analogues reasoning. What would it take to be Google, Apple, P&G or another successful organizations in your industry and context?

Opportunities generated. The result of asking these three types of questions: Inside-out, Outside-in, Far-outside-in, are a lot of questions that opens up for new opportunities once answered. Do any of them make you feel uncomfortable? If so then they posses the possibility for new opportunities that differs enough from the status quo.  Then it's time to evaluate and decide.

Opportunity evaluation: Evaluate each opportunity by asking the question "What must be true for the opportunity to be valid?". Don't ask "What is true" - that only causes heated head-on discussions - instead asking "What must be true" - you open for all sorts of opinions to be expressed.

Now you have generated a large set of opportunities and the conditions governing their validity. Once they are answered, you have gained a lot of new insights - regardless if the answer was true or false.

More to read:

• HBR September 2012: Bringing Science to the Art of Strategy

What is the key customer value proposition that is supported? - Third question in Stress-testing your Enterprise Architecture

It's time for the third of seven questions in stress testing your enterprise architecture: What is the key customer value proposition that is supported?
Your customers turn to you because they perceive a very specific value offered. Align your architecture to support that value. Never find yourself in a situation where the architecture is considered state-of-the-art and the business struggling.
What is a customer value proposition? Here's a starting point:

• Which jobs-to-be-done are solved?
• What is the correlation between the benefit offered solving the jobs-to-be-done and price?
• How does the customer value proposition differ from the competition?

It can be a daunting task to do it for the entire company. A good starting point is then to start within a sub-domain, division or geography to limit the workload and be able to get to some sort of results quickly.

Once you have broken the workload into manageable pieces it's time to start analyzing from the key customer value proposition aspect. The following areas are covered from an Enterprise Architectural point-of-view:

• Top-line factors: 
• Jobs-to-be-done. How do we collect and generate insight into our customers? How do make that insight available to everyone within our organization and partners? 
• Channels. How do we support our channels in promoting the value and jobs-to-be-done that we help with? How do we analyze the performance and profitability of our channels? 
• Pricing. How do we make price and discount information transparent? How can we analyze correlation between insight into value and price?
• Bottom-line factors:
• Customization. Which customizations and flexibility do we offer to tailor to customer needs? How do we manage that information all the way from engineering through manufacturing to sales?
• Supply-chain. How well have we integrated the information flow from customer behavior all the way to our suppliers? What is our agility in terms of managing sudden changes in demand or supply?
• Sourcing. How have we balanced between in-house and external supply in order to have flexibility and cost-control? How well is our sourcing integrated with engineering and sales in order to create variants to meet customer demand?

Do you have other areas to be added and more questions to ask?

More to read:

• Jobs-to-be-done: Interview with Clayton M. Christensen
• HBR November 2010: Stress-Test Your Strategy: The 7 Questions to Ask

Second Question in Stress-testing Your Enterprise Architecture: Which critical effect are you aiming for?

It's time for the second of seven questions stress-testing your enterprise architecture: Which critical effects are you aiming for? In any endeavor it's important to know what you aim for, that will sharpen your decisions, prioritizations and firmness. Be extremely clear on the goals, objectives and effects you want your enterprise architecture should achieve.
The key critical factors in defining, measuring and delivering on the effects are:

• Goal hierarchy: 
• Create a hierarchy of goals that should be reached. The top goal is the critical effect you want to create. Make sure that goals means something concrete and valuable for your stakeholders and customers. If not, revise and rephrase until it does so.
• Under the top goal define sub goals that needs to be reach in order for the top goal to be accomplished. Break down each sub goal into third level goals. 
• As you go from top goal to sub goals you answer the question How will I reach the previous level of goals. As you move upwards you answer the question Why should I reach this goal.
• Visual management:
• Decide on how, who and when you communicate the goals and progress. It's important that you have a clear view on who the recipient of each message is and what they expect from the project.
• Make the communication visible. Put it up so that everyone can see it and follow it. Make it everyone's interest to follow progress and contribute.
• Decide on progress reporting structure. How will reporting add up the ladder and counter measures ripple down?
• Measurement:
• When setting goals make sure you know how to measure progress. Where will you find your data? How fast and with which frequency?
• Setup automatic data capture that collects data as they are created avoiding double entering of information.
• Make the data measurement near realtime, at least once per day and create project heart-beats showing current status.
• Celebrate success:
• Define small steps for mankind but giant leaps for the project. It is important to acknowledge even the small steps forward towards the top goal.
• Find all kinds of ways celebrating success. Involve the project team, top-management, key stakeholders and family. After all it's often your family that has paid a high price when achieving a hard to reach goal.

Once you have defined your critical effects in a goal hierarchy, communicated it visual throughout the organizations to to key stakeholders, measured the progress and celebrated success along the way you will reach your desired effect. I'm saying will because there is no way you cannot reach that goal. The sum of these activities are that you set the entire team's mindset on these effects and they will focus on them.

You will have avoided active inertia - the state where all you do is running around doing a lot of activities not moving progress forward.

The question is: Are these the critical effects or not? That can only you and the future answer.

More to read:

• HBR Nov 2010: Stress-test Your Strategy: The 7 Questions to Ask

Enjoy, advocate and bond - the loyalty process in the digital age

Loyalty has always been about two things; getting a positive word and recurring purchases. To reach that goal organizations define small enough segments allowing them to overachieve their customers expectations. With a too broad defined customer base you will most probably not meet anyone's needs.
How does then loyalty work in the digital age? Is it any different from the traditional way?
The main difference seems to be that purchasing decisions are made much later in the purchasing process, majority in the store. The other is that influence from friends and social network are much more visible and play an integral role in the decision. The Enjoy, advocate, and bond cycle after a purchase is much more important than previous. It reinforces the purchase decision and drives recurring purchasing at a much greater extent than previous. The other is that it has much greater effects on what your friends decide to purchase.

So are your marketing Euros well spent? Are they in the store in due time for the purchase decision? Are they helping your customers to enjoy, advocate and bond to the product and brand?
Here are some ideas on what could make it simpler in the customer decision journey:

• Where do your customer encounter your products and services? Is it attractive to buy? Simple and convenient? Do capture the value and experience, do the customer have to make other decisions? Make the experience the purchase, not the product itself.
• What is the physical experience? Packaging, instructions, registration, etc.
• After the purchase, is the value there to be enjoyed? If the customer experiencing any problems, can they easily get access to support and advice?
• How can the customer advocate their purchase and experience? Which ways to express themselves through real world and on the web? If I buy a SAAB, will I get something that shows I have a SAAB outside of actually showing my car? Wallet, belt, shirt, iPhone app, email signature, etc? The more digital it is the easier to turn it into actual advocacy. If it is an iPhone app then you can easily share parts of it with your friends. 
• Bonding is a little bit harder as it requires more time to build up. The advocacy builds bond as well since a recommendation reinforces ones own perception.

Take aways: 

1. Purchase decision is much later influenced by friends. 
2. Advertisement Euros in the right customer decision journey steps. 
3. Ensure customer experience to start the reinforcement feedback loop. Experience, not discrete products that needs assembly.

More to read:

• HBR Dec 2010: Branding in the digital age

First Question in Stress-testing Your Enterprise Architecture: What is the driving purpose behind the business?

We've come to the first of seven questions to ask when stress-testing your Enterprise Architecture: What is the driving purpose behind the business?
The purpose of asking this question is to put the focus where it belongs: Why do we exist? What purpose do we have?
The answer to the driving purpose behind the business is underpinning all the other questions.

So how can the driving purpose behind the business be broken down into smaller pieces? Here's one way of breaking it down:

• What is the purpose? What value are we contributing to the world and justifies our existence? Some strategists claim that there are really only two main strategies possible to follow; cost focus addressing a mass-market or niche markets with value and segmentation focus. 
• Clearly articulate which of the two strategies you are following. In which terms is low-cost defined? How will low-cost develop over time? Which niches are you targeting now and will it be on segmentation or additional niches further growth will come from?
• For example IKEA, the furniture retailer, is following a low-cost mass market strategy. Adhering to a low-cost strategy its IT should be in line with that both from an IT perspective and from which business process support is most crucial. Within furniture retailing the supply-chain and store operations are most critical to maintain the low-cost of overall operations. Providing state-of-art supply-chain systems in line with operations, meeting their requirements of total-cost of shipping and keeping store balances in line with targets are among the most cost cutting actions IT can provide.
• What is the drive behind the business? What pushes it forward? Is it product development, customer satisfaction, geographic coverage or some other dimension? 
• Be specific on which drive your are focusing on right now. The drive varies over time and can be different things at different times. 
• For example Ericsson, the telecommunications company, were first driven by product development during AXE switch development, then by expanding globally through its product leadership, then products again when the mobile industry took up speed and now it is customer satisfaction in its professional services line. Following these shifting demands means that IT should shift focus over time. The critical issue is to know when to invest in supporting a certain area and when to stop further investments. It is as important to stop investments to afford supporting new growing dimensions.

When designing an Enterprise Architecture be sure to answer the question What is the driving purpose behind the business? and how it is supported, enabled and grown through the EA work.

More to read:

• HBR Nov 2010: Stress-test Your Strategy: The 7 Questions to Ask

Stress-test Your Enterprise Architecture: The 7 Questions to Ask

Defining an Enterprise Architecture enabling IT to successfully capturing the business requirements is a daunting task. Have I captured the essence? Will architects and business analysts understand it? Is it pushing our business forward through improved alignment between business and technology? Those sorts of questions are always spinning around when defining an Enterprise Architecture. A recent article in HBR "Stress-test your strategy: the 7 questions to ask" inspired me to think of the 7 questions that would help stress-test an Enterprise Architecture. Here's my take on those questions. In coming posts I will dive into each of the questions to further add some meat.
What do you think are the relevant questions to ask stress-testing en enterprise architecture?

Here's my 7 questions stress-testing your Enterprise Architecture:

1. What is the driving purpose behind the business?
• The enterprise architecture is there only to support the business purpose, right? Making sure that the architecture supports, enables and drives business is make-or-break. The reminding 6 questions assumes that the right business purpose is in the bulls-eye.
2. Which critical effect are you aiming for?
• Be extremely sharp on the effect that the architecture should deliver in its own right. It's easy to do a lot of everything and nothing of what is important. Measure and visually communicate current state and progress. Avoid finding yourself in a state of active inertia.
3. What is the key customer value proposition that is supported?
• Your customers turn to you because they perceive a very specific value offered. Align your architecture to support that value. Never find yourself in a situation where the architecture is considered state-of-the-art and the business struggling.
4. How is complexity being killed?
• Be very clear and upfront with how complexity is eradicated from both IT and business processes through the architecture. Scale back on fancy solutions. Simplify and design for evolution. 
5. Which collaboration is generating creative tension?
• Generating new ideas and improving execution requires extensive collaboration internally and with external stakeholders. Enabling and pushing collaboration through both tools and also more importantly through open access to the central business systems will spur further performance improvements.
6. How are the implementation boundaries defined?
• Central to any architecture implementation is how it is sequenced, domains affected, and what is not touched. Without clear boundaries scope creeps during implementation. There's always this domain or system over there that needs to be touched. Timing and risk will be severely affected if the boundaries are not well defined. What not to do is as important as what to do.
7. What architectural implementation uncertainties keep you awake at night?
• Your architecture is not better than its implementation. The success depends on the way it is implemented. To succeed you have to carefully monitor the uncertainties during implementation. Which parameters you choose to keep your eyes on has to be connected with question 1 and 2; business purpose and customer value proposition. Ensure that the implementation secures successful realization of those answers.

Designing and implementing a successful enterprise architecture requires making tough, sometimes hard choices. These questions will hopefully further refine your architecture making business success a fact. There's no magic bullet that can zero in on the pitfalls of your architecture - just hard work and diligent implementation. Only then can you be confident that your architecture is on track.

More to read:

• HBR November 2010: Stress-Test Your Strategy: The 7 Questions to Ask