Delivering Actionable Strategy
through Business Architecture
William Ulrich - TSG, Inc.
[email protected]
www.tsgconsultinginc.com
www.businessarchitectureguild.org
Copyright © TSG, Inc. 2013
1
Overview
• Defining strategy and strategy mapping
• Strategy in the business ecosystem
• Mapping frameworks
• Leveraging business architecture to make strategies
actionable
• Mapping strategy to initiatives
• Driving business strategy through IT solutions
Copyright © TSG, Inc. 2013
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What is Strategy & Why Map It?
• Strategy may be defined as:
– “the pattern or plan that integrates an organization’s major
goals, policies and action sequences into a cohesive whole” *
• The strategy map represents various aspects of
strategy in readily digestible ways
• Strategy mapping is a business architecture discipline
* J. B. Quinn, “Strategies for Change: Logical Incrementalism”, Academy of Management Review
(Homewood, IL: Richard D. Irwin, Inc., 1980)
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Breaking Down Strategy into Parts
• Aspects of strategy include some basic core concepts
– Goal: The end toward which effort or ambition is directed
– Objective: Specific, time-targeted, measurable, attainable
target that an enterprise seeks to meet in order to achieve
its goals
– Action Item (or Tactic): Decomposed aspects of a strategic
plan that highlight what is to be done to deliver on a given
objective
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Business Strategy Challenges
• Businesses may not have a strategy
• Businesses may not share strategy with key
stakeholders
• Strategy is not articulated in useful perspective to
make it actionable
• Strategy is good, but does not translate into
actionable results, projects, funding or solutions
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Strategic Concepts in Business Ecosystem
Who? &
Where?
What?
Customers,
Partners &
Competitors
Why?
Policies, Rules,
Regulations
Who? &
Where?
Capabilities
Organization
What?
How?
How Well?
Metrics &
Measures
Vision,
Strategies &
Tactics
What?
Information
Value
Streams
Products &
Services
Initiatives
& Projects
Decisions &
Events
Business Architecture
Why?
How?
When?
Source: A Guide to the Business Architecture Body of Knowledge (BIZBOK™), Part 1
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Benefits of Strategy Mapping
• Strategy Mapping Benefits*
•
1.
Supports organizational alignment
2.
Assists organizations in adapting rapidly to competition, market factors
3.
Enables the rationalization of initiatives
4.
Supports value and capability-centric investment
5.
Provides ability to monitor an organization’s progress towards
objectives
Strategy maps provide common baseline on which to base
actionable plans that result in defined, funded initiatives
*Source: A Guide to the Business Architecture Body of Knowledge (BIZBOK™), Section 2.1, Release 3.1
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Various Strategy Mapping Options
• Selected, commonly used strategy derivation and mapping
frameworks
– Business Model as input to Business Strategy
– Strengths, Weaknesses, Opportunities, Threats (SWOT) analysis
– Five Forces Model (Porter)
– Norton Kaplan “Strategy Map”
– Business Motivation Model (BMM)
– Hoshin Kanri
• Approaches range from providing input to strategy to offering a
framework for representing strategy
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Business Model Frameworks are Useful in
Defining Input to Strategy
• Business Model: “A business model describes the rationale of how an
organization creates, delivers, and captures value.”*
• Business models are gaining popularity with management
• Books such as Osterwalder’s Business Model Generation provide insights into
modeling creativity
• Executives are creating their own business models to motivate their
organizations
• Business models can coexist with business architecture and are not in
competition or an alternative to business architecture
*Business Model Generation, Osterwalder, Alexander and Pigneur, Yves, Self-Published, 2010, Page 14
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Sample Business Model Canvas for Insurance
Key
Partnerships
-
Key Activities
- Building
Reseller
Relationships
- Building Agent
Relationships
- Regulatory
Management
Agents
Advertisers
Resellers
Key Resources
Value
Propositions
Customer
Relationships
Customer
Segments
- Customer
Service
- One Stop
Shopping
- 24 Hour Access
- Personalized
Service
- Source for All
Insurance
Needs
- Investor
Confidence
- Continuous
Renewal
-
-
Reinvestment
Capital
- Agent Network
- Product Catalog
Channels
-
Internet
Direct Sales
Agent Sales
Reseller Sales
Cost Structures
Revenue Streams
-
-
Personnel Costs
Outsourcing Costs
Reseller Fees
Agent Royalties
Commercial
Residential
Specialty
Needs
Initial Sale Revenue
Annual Policy Renewal
Special Fees
*Business Model Generation, Osterwalder, Alexander and Pigneur, Yves, Self-Published, 2010, Page 14
• Canvas provides executives with a common framework of critical business
focal points
• Each focal point or combination of focal points can trigger a set of
objectives that would be incorporated into the overall strategy
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SWOT Analysis
• SWOT analysis assesses a business’s Strengths, Weaknesses,
Opportunities and Threats
Helpful
Harmful
Internal
Strengths
Weaknesses
External
Opportunities
Threats
• Basic approach involves listing factors in each category and
using these to formulate strategy
• For example:
–
–
–
–
Strength: Technological skills
Weakness: Poor distribution channel availability
Opportunity: Changing customer tastes
Threat: Closing geographic markets
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Porter’s Five Forces Model*
•
Five Forces Model provides insights into pricing, costs and profitability**
•
Five Forces Model provides a finer grain analysis of competitive scenarios as input
to strategy
*Source: “The Five Competitive Forces That Shape Strategy”, Harvard Business Review, Jan. 2008
**Source: Understanding Michael Porter, Margretta, Joan, HBR Press, 2012, Chapter 2
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SWOT & Five Forces Model Drive
Strategy Formulation
• SWOT and Porter’s Five Forces Model enable strategy
formulation
• Other strategy mapping frameworks further strategy
formulation and articulation
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Norton Kaplan Strategy Map*
Strategy Map
Productivity
Strategy
Financial
Perspective
Customer
Perspective
Improve Cost
Structure
Expand
Revenue
Opportunities
Increase Asset
Utilization
Enhance
Customer
Value
Customer Value Proposition
Price
Quality
Availability
Selection
Functionality
Product/Service Attributes
Internal
Perspective
Growth
Strategy
Long-term
Shareholder Value
Operations
Management Processes
-Supply, Production,
Distribution, Risk Mgmt
Customer Management
Processes
-Selection, Acquisition,
Retention, Growth
Learning &
Growth
Perspective
Service
Relationship
Innovation Processes
-Opportunity ID, R&D
Portfolio, Design/
Develop, Launch
Partnership
Brand
Image
Regulatory & Social
Processes
-Environment, Safety,
Employment, Community
Technical Capital
Human Capital
Culture
Leadership
Organization Capital
Alignment
Teamwork
*Source: R. S. Kaplan and D. P. Norton, Strategy Maps: Converting Intangible Assets into Tangible Outcomes
(Boston: Harvard Business School Press, 2004)
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Norton Kaplan Strategy Maps
• Consider the difference between Porter’s Five Forces Model and the Norton
Kaplan (N/K) Strategy Maps (per Robert Kaplan):
– “Porter's work helps managers formulate their strategy. Our [N/K] work provides the
discipline to ensure that the formulated strategy has specific objectives for shareholders
and customers, an explicit customer value proposition, the critical internal processes for
creating and delivering the value proposition, and aligned human resources, information
technology, and organization culture.”
Source: Mapping Your Corporate Strategy, HBR Working Knowledge Interview with Robert Kaplan
• Strategy map offers a framework for articulating strategy in a variety of
contexts
• Strategy maps, in some cases, try to frame implied solutions by introducing
processes into the framework (e.g. Norton Kaplan Strategy Map)
• Introduction of implied solutions must be tempered when mapping strategy
to business architecture (which is not process-centric)
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Defining Objectives within the
Strategy Map
• Can begin at top defining high-level strategies
– Expand Revenue Opportunities, Enhance Customer Value, etc.
– And then define lower level customer, internal and supporting
objectives to feed these high-level strategies
• Or begin at lower levels
– “Recognize customer at any point in lifecycle, regardless of how
customer contacted company”
– And then abstract these into higher level perspectives
• Objectives must then have corresponding action items, which
become strategic directives
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Business Motivation Model (BMM) –
Representing Strategy
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Source: Business Motivation Model (BMM), www.omg.org/spec/BMM
17
Hoshin Kanri – Interpreting Strategy
•
Hoshin Kanri provides transitional perspective moving from
Mission/Strategy through Goals/Action items
•
Enables simple decomposition through management layers
Source: http://www.hoshinkanripro.com
•
Begins with mission and
strategy
•
Ties strategy to objectives
•
Aligns objectives with
measurable goals
•
Goals are then mapped to
action items
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Source: http://www.hoshinkanripro.com
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Using Business Architecture to Turn
Strategy into Actionable Results
• Business uses business architecture to assess issues, visualize impacts of
vision and strategy, and drive transformation strategy and solutions
Business Strategy
•
•
•
•
•
•
Business
Architecture
Articulated
Via
Mission and Vision
Policy, Rules and Regulations
Goals and Objectives
Executive Priorities
Customer Requirements
Strategy and Tactics
•
•
•
•
Enables
Organizational Alignment
Business Capabilities
Information Concepts
Value Streams
•
•
•
•

Actionable
Results
Well articulated business
priorities
Business-driven roadmaps &
funding
Collaborative projects /
initiatives
Business-driven IT architecture
transformation strategy
Most organizations bypass the second stage – Business Architecture
Copyright © TSG, Inc. 2013
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Business Architecture Can be Used
to Influence Strategy
• Strategy enrichment and derivation can result from having a welldefined business architecture as input
• Heat mapped value stream stages serve as basis for deriving objectives
and action items
• Value stream stage / capability mapping highlights problematic capabilities
that require action
• Capability and value stream heat map and impact ratings provide useful
insights to business objectives and action items based on need
• Tying capabilities and value streams back to business units further
highlights scope of strategic impact
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Business Strategy, Objective, Business
Architecture Mapping Example
Strategy:
Achieve complete transparency of a Loan for all internal and external stakeholders
Business Objective
Loan officer is notified
of any loan activity for
an assgined loan
Business Challenge
Loan defaults processed
without knowledge of
loan officer refinancing
the loan
Business Architecture Impact
Value Streams:
- Manage Loan Change Request
- Process Loan Default
Capabilities:
- Case File Management
- Pipeline Management
- Notification
• Strategy and objective mapped and aligned to a summary of the challenge that
needs to be addressed
• Provides executives and planning teams a shared perspective on what aspects
of the business are affected by this issue
• Value steam and capability focal points provide basis for next level of analysis
Copyright © TSG, INC. 2013
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Value Stream / Capability Cross-Mapping
Enables Targeting Impacted Capabilities
Receive
Notice
Validate
Notification
Review
Default
Process
Default
Notify
Applicant
Recover
Assets
Account
Pipeline
Management
Customer
Information
Management
Account
Information
Management
Case File
Management
Account
Payments
Management
Account
Information
Management
Work Queue,
Routing
Management
Case File
Management
Account
Structuring
Account
Structuring
Account
Structuring
Account
Information
Management
Notification
Notification
Work Queue,
Routing
Management
Work Queue,
Routing
Management
Account Default
Management
Work Queue,
Routing
Management
Account
Information
Management
Recovered
Asset
Management
Account
Information
Management
Notification
Notification
Account Default
Management
Case File
Management
Notification
Case File
Management
Case File
Management
Notification
Work Queue,
Routing
Management
Case File
Management
•
Value stream / capability cross-mapping identifies all capabilities enabling that
value stream
•
Highlighted capabilities are linked directly to business strategic objective
Copyright © TSG, Inc. 2013
Sample Level 2-3 Capabilities
Sample Level 2-3 Capabilities
Process Loan Default
22
Business Strategy, Objective, Business
Architecture and Initiative Drilldown Example
Strategy:
Achieve complete transparency of a Loan for all internal and external stakeholders
Business Architecture
Impact
Business Objective
Business Challenge
Tactic / Action to be Taken
Loan officer is notified Loan defaults processed Value Streams:
Resolve loan information
of any loan activity for without knowledge of
- Manage Loan Change
redundancy
an assigned loan
loan officer refinancing Request
Formalize state management
the loan
- Process Loan Default
Correct capability weaknesses
Capabilities:
Deploy capabilities consistently
- Case File Management across value stream stages
- Pipeline Management
- Notification
Key Performance
Indicators
Initiative
Reduce unintentional Loan Handling
loan defaults to zero Modernization
•
Previous version of this mapping view has been extended to incorporate initiative
and KPI (key performance indicator)
•
“Loan Handling Modernization” initiative business scope involves two value
streams and three capabilities
•
Value stream / capability mapping to IT architecture provides context and scope for
business / IT transformation planning and related project definition
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Initiative Task Analysis and Estimates Based
on Targeted Capabilities, Value Streams
• Initiative focuses on first stage of value stream and specific
capability within this stage
– Tasks necessary to address both stage level and capability related issues
define scope of project
– Estimates for this work are based on business changes required and
automation level improvements requires
Initiative Improves or
Creates New Capabilities
Initiative Delivers Value Stream Changes
Process Loan Default
Receive
Notice
Validate
Notification
Review
Default
Process
Default
Notify
Applicant
Recover
Assets
Account
Pipeline
Management
Customer
Information
Management
Account
Information
Management
Case File
Management
Account
Payments
Management
Account
Information
Management
Work Queue,
Routing
Management
Case File
Management
Account
Structuring
Account
Structuring
Account
Structuring
Recovered
Asset
Management
Account
Information
Management
Work Queue,
Routing
Management
Account Default
Management
Notification
Notification
Account Default
Management
Case File
Management
Account
Information
Management
Notification
Case File
Management
Copyright © TSG, INC. 2013
Notification
Notification
Work Queue,
Routing
Management
Work Queue,
Routing
Management
Account
Information
Management
Case File
Management
Notification
Work Queue,
Routing
Management
Case File
Management
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Using Hoshin Kanri to Map Initiatives to Strategic
Objectives & Key Performance Indicators (KPI)
X
X
Intersection of KPIs &
Strategies
X
X
X
X
X
Measures
X
X
X
Intersection of
Objectives & Initiatives
X
Strategies
List of Strategies
X
List of Objectives
X
X
List of Initiatives
X
X
X
X
X
Initiatives
Intersection of
Strategies & Objectives
X
Objectives
X
X
Key Performance
Indicators
X
X
X
X
X
Intersection of
Initiatives & KPIs
X
Source: IAG Consulting
• Adaptation of Hoshin Kanri provides a simple way show how initiatives
map to strategic objectives and KPIs, and how strategies map to those
same objectives and KPIs
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Driving Strategy into IT Solutions: “Business / IT
Architecture Transformation Framework”™
Business Architecture
Positioned Vision
As-Is Business Architecture
ard t
bo
On plican
Ap
e
idat n
Val licatio
p
Ap
Customers,
Partners &
Competitors
pro t
Ap ues
Req
ct
du
Pro
ire
ve
qu
Ac
k/
Ris
ess ility
Ass ligib
E
Business Transformation
Policies, Rules,
Regulations
Capabilities
Vision,
Strategies &
Tactics
cess t
Pro men
Pay
lish y
ab olic
Est nt / P
ou
Acc
Organization
Information
tify
No omer
st
Cu
Capability Map
Information Map
Business / IT
As-Is
Architecture
Mapping
Value
Streams
Products &
Services
Synchronization of
Business / IT
Transformation
Metrics &
Measures
Initiatives
& Projects
Decisions &
Events
Business Architecture
Synchronization
of To-Be Business
Architecture &
To-Be IT
Architecture
ing
ss le
ce Cyc
ly
Pro
nth
Mo
IT Transformation
As-Is IT Architecture
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To-Be IT Architecture
26
Sample Business-Driven Transformation Roadmap
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Summary Discussion
• It is not enough to have a strategy or vision if it is not
actionable
• Strategy becomes actionable when the impacts can
be assessed against concrete aspects of the business
• Business architecture provides the means for tying
strategy to business perspective, funded initiatives
and IT architecture impacts
• Deployment roadmaps should tie back to strategy
Copyright © TSG, INC. 2013
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Delivering Actionable Strategy
through Business Architecture
William Ulrich - TSG, Inc.
[email protected]
www.tsgconsultinginc.com
www.businessarchitectureguild.org
Copyright © TSG, Inc. 2013
29