On the Edge with the Business Architecture

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The title of this article may cause one to think about the “edge” in a “bleeding edge” context in that the Business Architecture (BA) represents a new high risk initiative that will most likely consume vast amounts of corporate resources in order to succeed.  One might consider other similar contexts such as “cutting edge” or “leading edge,” but there is another context to consider as well.  In the 21st Century we live in the Information Age which is sometimes referred to as the Computer Age or Digital Age.  Apart from how one refers to this modern day “age,” there is one undeniable fact about this time in history.  In the Information Age, customers can be reached by anyone, anytime and anywhere.  And obviously, that means competitors can reach these very same customers, anytime and anywhere as well.  Think about it!  On the “edge” of the enterprise are its customers, resellers, partners, vendors, suppliers, financial institutions, regulators and more.  Just beyond the threshold of the enterprise are all of the external entities with their important and necessary relationships.  For example, the customers generate revenue, and the suppliers provide services and/or raw materials. The net result from all of these external relationships is profit for the enterprise.  Now consider this question: Is the enterprise focused on the “edge” or is the enterprise focused on its internals, behind the edge within its own boundaries?  

When an enterprise undertakes a BA initiative, the very next decision it will have to make is will it focus on the “edge” with its customers (resellers, partners and so on) or will it remain internally focused, stuck in an Industrial Age mindset.   Functional or internally focused thinking is a typical characteristic of the Industrial Age, but this behavior is so last century!  In today’s Information Age, the focus is on the customer.  Just consider a comment by Jeff Bezos, the CEO of Amazon.com, during a June 2010 interview with Fortune magazine.  He was asked the following question: “What do you expect people will say when asked about Amazon five years from now?”  His reply was “I would hope people would say that Amazon is earth's most customer-centric company, and that we work backwards from customers.  Many companies sort of look at what their skills are and they work forward from their skills. They say this is what we're good at, and this is what we'll do. It's a very different approach from saying here is what our customers need, and we will learn whatever skills we need.”[1]  And Steve Towers, author of Outside-In: The Secret Of The 21st Century Leading Companies in referring to Bezos’s comments stated:  “That really describes the difference between inside-out thinking (examine your capabilities and figure out how to optimize them) to Outside-In - figure out the Customer needs and align everything to deliver the Successful Customer Outcome.”[2]  If one agrees with the quotes by Jeff Bezos and Steve Towers, then what is the 21st Century imperative for developing into a prosperous enterprise in the Information Age?  

The highest priority imperative for a 21st Century enterprise is becoming “totally” customer centric; not just a little more customer centric, but “totally” customer centric.  If an enterprise fails to recognize this imperative, then the only logical reason is that the enterprise is in some sort of state of denial.  And this is an issue for executive leadership.  The C-level executives have to expand their view of the enterprise well beyond its corporate boundary or threshold.  For instance, the enterprise must ask and answer the question: “Does the corporate leadership team want to bring the extended enterprise environment – the ‘edge’ - to within its sphere of economic influence?”  The point is this; does the enterprise want to achieve marketplace leadership in its industry segment by introducing new/enhanced products and/or services ahead of their competition.  By doing so, the enterprise delights its customers and continuously disrupts the marketplace, forcing the struggling competitors to keep up or fall further behind.  As for a more specific example, does the enterprise want to become “Apple like?” 

This “sphere of economic influence” begins at the “edge” of the enterprise, specifically in how it determines its customers’ needs.  Starting the analysis with customer needs, then internally optimizing the enterprise along with its supporting external entities (e.g. suppliers and vendors), the enterprise must design and implement a complex string of business processes that when integrated will provide superior value to the customer that is hard for a competitor to imitate.[3]  This is the opportunity in the 21st Century and a most important strategic enterprise initiative.  

The best way to discover “a complex string of business processes” is by designing and building a Business Architecture organized around value streams.  By definition, value streams are customer centric and focused on the results delivered to customers.  For a moment, consider the value streams for a generic build-to-order manufacturer.  “Prospect to Customer,” “Order to Cash” and “Manufacturing to Distribution” are customer centric, and “Requisition to Payables” is supplier centric.  The purpose of “Prospect to Customer” is to find customers and to stimulate those customers to place orders in “Order to Cash.”  “Manufacturing to Distribution” builds the products ordered and consolidates the various products for delivery to the customer.  “Manufacturing to Distribution” is supported with “just in time” raw materials by the “Requisition to Payables” value stream.  In this example, one could say that all of these value streams are on the “edge,” representing a complex string of business processes that when integrated will provide superior value to the customer that is hard for a competitor to imitate.  How would one ever conceive of this “complex string” without having a “totally” customer centric focus?  The customer centric focus provides the rationale for the value stream design in this example and its implementation will lead the enterprise to prosperity. This success is achieved and enjoyed by living on the “edge” with the Business Architecture.      

References

1.    See http://tech.fortune.cnn.com/2010/06/29/jeff-bezos%E2%80%99s-mission-compelling-small-publishers-to-think-big/  Mangalindan, JP, CNN Money, June 29, 2010, “Jeff Bezos's mission: Compelling small publishers to think big”

2.    See http://www.successfulcustomeroutcomes.net/2011/07/great-illustraton-of-outside-in.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+SuccessfulOutcomes+%28Successful+Outcomes%29  Towers, Steve, “Successful Customer Outcomes.” 

Stalk, George, Philip Evans and Lawrence E. Shulman “Competing on Capabilities: The New Rules of Corporate Strategy.”  Harvard Business Review March-April 1992. http://jmbruton.com/images/Stalk_Competing_on_Capabilities.pdf

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