In this installment of StraightTalk, we’ll take another look at business architecture in action. This time, we’ll focus on how it can be used as a framework for better decision-making.
The intention here is to give you some examples of how you can use business architecture to support different types of decision-making within your organization. We’re confident these will inspire many more ideas of your own.
What does it mean to use business architecture as a framework for decision-making?
We actually use business architecture in a couple of different ways:
- (One) Within the Flow from Strategy to Execution – This is where business architecture informs, shapes and translates business direction into a set of actionable initiatives framed by architecture changes. P.S. StraightTalk Posts No. 3 and No. 50 have you covered on the role of business architecture in strategy execution and No. 9 discusses a bit more on how to do that translation.
- (Two) As a Framework – This is where we use the business architecture structure (very often the capability map or value streams) as an overlay, or lens for organizing, analyzing and communicating information and insights. For example, we can organize just about any set of information using an organization’s capability map to get new insights like: What are all the initiatives planned for each capability over the next horizon and how do the proposed changes harmonize? What is the current health of each capability across the organization? What is the aggregate risk assessment for each capability across the organization?
How can business architecture facilitate better decisions?
As a framework, business architecture (like an organization’s capability map) definitely brings some unique things to the party, considering that it is:
- A high-level enterprise view that crosses all business units and allows us to see the forest for the trees
- A pure business view, completely independent from technology
- An agreed-upon view, created by a respected group of cross-functional business experts
- An objective view without any organizational bias or otherwise
- An accessible view to everyone in the organization (provided it has been published)
Give me some examples.
Here are just a few. This is by no means a complete list, but rather a starter list of ideas to get you thinking. It uses capabilities as the main framework for analysis, though other domains like value streams may be used as well.
Business architecture can be used to categorize, organize, analyze and communicate…
Investments – For example, think:
- What is the aggregate planned spend for each capability during the next investment cycle – within each portfolio and across portfolios?
- What is the strategic importance of each capability?
- What is the current health of each capability across the organization?
- How does the planned spend align with the health and strategic importance of each capability?
- Can stakeholders consume the aggregate amount of change planned for each capability?
Risks & Compliance – For example, think:
- What is the aggregate risk assessment for each capability across the organization?
- Or within various risk categories (e.g., security risks, retirement-eligible resource risks, etc.)?
- Which capabilities have the greatest potential compliance issues?
Cost Allocations – For example, think:
- What is the total cost per capability (at any level of granularity or for any point in time)?
- Or within various cost categories (e.g., personnel, technology, outsourcing, etc.)?
Organization – For example, think:
- Which capabilities is each business unit responsible for? Are there areas of overlap?
- Which business units and capabilities will change as a result of an organizational change or merger/acquisition, and to what extent?
Partners/Supply Chain – For example, think:
- Which capabilities are performed in-house but can be outsourced?
- Which capabilities are outsourced but should be brought back in-house?
- Which partners perform which capabilities for the organization?
- Are there opportunities to coordinate on partner contracts?
- Are there opportunities to streamline partners by capability?
- How well are partners performing the capabilities they are responsible for?
Simplification – For example, think:
Using a capability lens for analysis, are there opportunities to streamline…
- Strategies?
- Customer experience?
- Business units?
- Products?
- Channels?
- Locations?
- Processes?
- Assets?
- System applications?
Applications – For example, think:
- What is the level of automation for each capability?
- What is the level of technical debt or risk for each capability?
- What is the level of business / IT architecture alignment by capability?
- Are there opportunities to streamline applications or software services by capability?
And many, many more….
Check out the handy diagram below for a summary of these ideas and the stakeholders who might find them useful.
Okay, so how do we do it?
Here are a few key steps to follow for any of these scenarios.
Step 1: Define the Scope and Goals for Your Analysis – Define exactly what you want to achieve, for whom, and for what scope of the business.
Step 2: Create or Leverage the Minimum Business Architecture Baseline Content – If it does not already exist, create your baseline business architecture. A wide range of analysis can be done with just a capability map, but ideally, an organization should always have a minimum baseline which includes:
- Capability map (one that encompasses the whole enterprise scope)
- Value streams (a core set of value streams, typically customer-facing, created at the enterprise level without business unit or product specificity)
- Capabilities cross-mapped to value stream stages
Step 3: Capture Additional Content Needed for Analysis – Capture any additional content and relate it to the business architecture. The additional information will depend on what you are trying to achieve in Step 1. For example, if you are analyzing investments, you’ll need to capture information about objectives and initiatives. If you are analyzing risks, you’ll need to capture information about them too.
Step 4: Perform Your Analysis – Analyze the information you have collected for insights, such as areas of overlaps, gaps, conflicts, misalignment, concern, etc.
Step 5: Visualize the Results, Share Insights and Take Action – Create visuals, summarize insights and recommendations, and share with leaders. Work with the leaders and their teams to take action on the results.
Where should we start?
Start where you can start. First make sure you have your business architecture ready, per Step 2 above. Then, select one scenario like those we’ve explored here (or multiple if you have the resources and buy-in) – ideally where you know there is a recognized need (maybe even some pain currently) and the openness to try something new.
As always, establishing business architecture within an organization requires taking chances and proving its value through results (not explanations), so start where you can and just keep taking more steps forward with new scenarios over time.
More Good Stuff…
More from StraightTalk: Check out other StraightTalk installments for more on how to leverage business architecture to help with specific types of decision-making:
The Value of Business Architecture: New Mindset, New Results (S2E white paper): Just in case you haven’t read it, check out this overview of the value of business architecture and how it can be applied.
Examples of Using Business Architecture for Decision-Making: Learn from your friends. Here is just a handful of examples from previous Business Architecture Guild® Summits where business architects have shared how their organizations have used business architecture for various types of decision-making.
- Addressing Product Management Needs For the Fastest Growing Brand in Europe (VF Corporation 2016)
- Using Business Capabilities to Make IT Metrics Meaningful (United Airlines 2018)
- Transitioning from Business Capabilities to IT Strategy (Consumers Energy 2016)
- Adopting a Systems Thinking Approach for Managing Business Architecture Risks (European Commission 2017)
- CADM Business Architecture (ABN AMRO 2017)
Mental Models: The Best Way to Make Intelligent Decisions (109 Models Explained) (Farnam Street): Speaking of decisions, here’s an amazing compilation of mental models you can use for making better ones.
39 Books to Improve Your Decision-Making Skills (Farnam Street): A compilation of books to help you improve decision-making. Enjoy!
Brain Food (Farnam Street): Thinking about thinking. The Farnam Street blog is a gold mine of a resource. Explore it all and subscribe to the weekly newsletter.
Thinking, Fast and Slow (book by Daniel Kahneman): An excellent read on the two systems that drive the way we think and how to leverage them.
How to Make Hard Choices (TED Talk): A fantastic TED Talk by Ruth Chang on why some choices are so hard and what it means for the human condition. “Hard choices are not a curse but a godsend.” It’s worth the listen to find out why.
