MARKET  COHERENT    ENTERPRISE  

Guest Speaking @ Carnegie Mellon University

Enterprise Architecture Certification Program Denmark, May 28th 2010

Who  Am  I  

2  

•   Hjalte  Hojsgaard  

•   M.Sc.  Business  AdministraCon  &  InformaCon  Systems          Copenhagen  Business  School  –  I’m  finalizing    a  thesis  on  today’s  topic  

•   MBA,  Monterey  InsCtute  of  InternaConal  Studies,  CA,  USA  

•   Engagement  Manager,  MarketCulture  Strategies  Inc.  

•   Blog:  marketcoherency.blogspot.com  •   LinkedIn:  http://www.linkedin.com/in/hjalte •   TwiRer:  hRp://twiRer.com/hhojsga

Agenda  

•  Back  to  Basics:  The  Lemonade  Stand  •  Thinking  Outside-­‐In  •  The  Central  Customer  –  Market  OrientaCon  •  Why  is  this  important?  Performance  linkages  •  OperaConal  and  Cultural  Challenges  •  Expanding  EA  to  accommodate  MO  •  A  model:  Market  Coherent  Enterprise  /  Market-­‐Driven  Enterprise  Architecture  

3  

Terminology  

4  

EA Enterprise Architecture

MO Market Orientation

MDEA Market-Driven Enterprise Architecture

The  Case  -­‐  Back  to  Basics  

5  

For the full lemonade stand example see: http://marketcoherency.blogspot.com/2010/05/lemonade-stand-example.html

6  

How can we sustain the simple value chain and feedback loop of the lemonade stand when our business environment and operations become more complex…..

MO and EA address two important aspects of the value equation: maintaining customer focus and internal coordination, efficiency and effectiveness.

What  is  the  Purpose?  

7  

A company can outperform rivals only if it can establish a difference it can preserve. It must deliver greater value to customers or create comparable value at a lower cost , or do both (emphasis added). The arithmetic of superior profitability then follows: creating greater value allows a company to charge higher average unit prices; greater efficiency results in lower average unit costs

– Michael Porter 1996 – What is Strategy?

“ The quote illustrates a fundamental need and a place for MO and EA. MO and EA supports the equation from two ends, making clear the case for their separate existence but also their reconciliation.

The  Need  to  Think  “Outside  In”  

8  

Market  OrientaCon  

9  

“ A market orientation is a business culture in which all employees are committed to the continuous creation of superior value for customers.” – Narver & Slater 1998

… a market orientation refers to the organization-wide generation, dissemination, and responsiveness to market intelligence” - Jaworski & Kohli 1990 “

Customer-­‐Centricity  

10  

Why  is  MO  Important  

•  Market  OrientaCon  has  been  proven  to  strongly  correlate  with  a  variety  of  performance  metrics,  i.e.:  

 Profitability,  Profit  Growth,  Sales  Revenue  Growth,  Customer  Sa9sfac9on,  New  Product  Success,  Innova9on,  Overall  Performance  

11  

Why  is  MO  Important  

CorrelaCon  comparisons  

Source:  MarketCulture  Strategies  ©  2010  

12  

Why  is  EA  Important  

•  IT  Savvy  Firms  have  20  percent  higher  margins  than  their  compeCtors  –  Genera9ng  Premium  Returns  on  Your  IT  investments,  Sloan  Management  Review  47,  no.  2  (2006):  39,  IT  Savvy  p.  18  

•  IT  Savvy  ch.  2  p.  40  :  –  17  percent  of  IT  Savvy  firms  have  greater  (strategic)  alignment…  A  metric  posiCvely  correlated  with  business  performance.  They  also  report:  

•  31  %  higher  operaConal  efficiency  •  33%  higher  customer  inCmacy  •  34%  higher  product  leadership  •  29%  higher  strategic  agility  

13  

The  Need  to  Architect:  OperaConal  Challenges  

•  Tangled  IT  systems  translates  into  tangled  business  processes  -­‐  the  processes  that  we  use  to  deliver  goods  and  services  to  customers  and  to  create  a  good  customer  experience  -­‐  or  vice  versa    

•  Employees  have  to  work  around  disjoined  systems  

•  IT  becomes  a  liability  instead  of  an  asset  

14  

The  Need  to  Architect:  Cultural  Challenges  

•  Do  what  I  say  don’t  do  what  I  do…  Espoused  values….  We  have  a  wriRen  value  set  but  they’re  not  the  values  we  live  by  

•  Internal  Conflict  and  CompeCCon  

•  Subcultures  creaCng  misalignment  

•  Customer  value  is  not  the  end  to  the  acCviCes  performed,  internal  as  well  as  external  

15  

Do  We  Automate  It  All?  

•  IT  Savvy:  Without  such  a    (digiCzed)  plamorm,  every  customer-­‐oriented  business  process  is  dependent  on  insCncts,  judgment  and  aRenCon  of  the  person  compleCng  it….    

Yes,  but:  –  Can  we  ever  escape  this?  What  is  our  view  on  the  employee:  Is  the  employee  so  helpless  that  we  do  not  trust  him  with  any  decision  power,  and  we  automate  everything  to  eliminate  the  risk  of  human  involvement?  

–  There  will  always  be  employee  involvement.  Besides,  who’s  designing  and  deciding  the  processes  we  automate?    

16  

The  “Expanded”  EA  view  

•  The  current  EA  taxonomy  and  framework  can  be  expanded  to  explicitly  encompass  social  systems  –  people  dimensions  alongside  techno  dimensions  –  Similar  to  informaCon  systems  we  need  to  manage  and  opCmize  the  ins9ncts,  judgment  and  aTen9on  that  goes  into  decision  making.  We  can  mold  a  culture.  We  can  architect  desired  behaviors.  

17  

A  Model:  Market-­‐Driven  EA  

18  

Market-­‐Driven  EA  conCnued…  

19  

InvitaCon  to  parCcipate  

•  I’m  seeking  professionals  who  are  willing  to  contribute  with  field  experience  in  this  area.  Any  feedback  /    insights  are  welcomed.  – Connect  with  me  on  LinkedIn:  hRp://www.linkedin.com/in/hjalte  

20