A year or so ago I read an excellent book by “Jeanne W.Ross, Peter Weill & David C.Robertson” called “Enterprise Architecture As Strategy: Creating a Foundation for Business Execution” and it got me thinking. How do the business models discussed in the book align to the wider macro and micro environments? How does Enterprise Architecture stack up in the world around us?

Before I go into this, let me just provide a quick summary of my understanding of the book. Enterprise Architecture as Strategy classifies four different business operating models. None is perfect for every organisation, however certain industries or business types align better to certain business operating models. Over an organisations lifetime it evolves and matures and organisations that are able to adapt and understand which operating model best works for them are able to build a strong foundation of execution.

The book talks about 4 business operating models for Organisations. (How you define an organisation is a topic for another day…)

• Unification – In this business model you’ll find organisations where business units operate with similar or overlapping processes as well as operational process that are also highly standardized. Customers are global or local and shared across the enterprise. Decisions on Processes and Technology are usually managed centrally and most of the organisations work on a common, usually centralised, set of technology. This business model is usually suited to organisations that are looking to maximize efficiencies and deliver cost reductions. An example of this might be a Global manufacturer that needs to maintain a strict supply chains.

• Diversification – This model actually sits almost at the complete opposite of the unification model and you’ll normally find organisations with very few shared customers. They usually offer different products to different customers. These are business that operate as unique entities, have little or no standards across business and allow IT decisions to usually be made by the various business units. These organisations usually share some synergies and need to have some shared services to realize economies of scale. An example of this might be a Global Consumer Goods Group with businesses in Food, Beverage, Cleaning and Personal Healthcare.

Before I discuss the next two, I wanted to just highlight some points for clarity and difference in these two models.
1.  Firstly, you should realise that in one organisation you may have the Global organisation operating in the diversification space, however the individual business units operating in the unification space. This will obviously be driven by the strategy and drivers of the business and could result in some challenges or work seamlessly for them.
2.  Secondly, another subtly points that these raise is the impact of these models on a business’s ability to innovate and change. Some may argue that organisations operating in the unification space will find it difficult to develop new ideas and innovate because everyone is operating in a standardised way. Others that organisations operating as Diversified entities are able to be more agile and more innovative. As I’ve mentioned before it depends on the organisations and no model is always correct.

• Co-ordination – This model sits between the previous models however its more focused on integration of business process data than standardization of the processes themselves. In this model organisations usually share customers, products or suppliers however operate as unique business units with autonomous management. Transitions with one business unit usually impact others. In this model, organisations look to build new innovations and products, and push these out to existing customers. An example of this could be a Financial services organisation that works in Insurance, Retail Baking, Reinsurance and retirements markets.

• Replication – This model sits opposite co-ordination in that they have few, if any, shared customers. The transactions of the organisations are largely independents however in this model, the processes are highly standardised. Although each business unit might be operationally similar, they are largely autonomous. Data is usually locally owned however IT services are usually mandated centrally. An example of this could be a Global Food Franchise type business where each business is a copy of another.

As mentioned before, an organisation can exist in more than one of these area and different parts of the organisation can operate in others. This raises the interesting question as to how is it that organisations working effectively using different business models (obviously with different strategies) can clearly communicate and align their strategies? Can they actually succeed? Once again, possibly a topic for a future post.

For this post I wanted to focus in my observations of this in the wider world and see if the same assumptions and benefits still stack up?

Let’s look at something on the macro level, such as the government of a country. As an ‘organisation’ the government is responsible for running the country and ensuring the growth and advancement of its residents. At a macro level, I would consider the government would benefit by running in the unification space. This would imply that its strategy should be to centralise and standardise their processes. Centralised data is critical to their ability to execute and technology should largely be linked up. This would allow them to benefit from cost reductions through process efficiencies and better serve their customers. If we look at successful government initiatives, does this hold true?

I would argue yes, the UK’s Gov.UK is widely praised for its clarity and simplicity and it’s been making huge strides in consolidating hundreds of diverse government websites. Most other governments are probably still operating in the Co-ordination business model and should be looking to transform towards a Unification model.

Next let’s look at a more Micro level, a team of people working together on a project. As a business model, I would guess that today most poorly performing teams probably are operating in the Diversification space. Team members operate as autonomous, unique ‘business units’ with very few shared standards.
However, is this a good way to operate? I would argue that to become a high performing team, teams should probably be sitting in the co-coordinative space where although team members are still able to operate uniquely, they have consensus on processes and are highly integrated in their communication. We know today that high performing teams benefit from collaboration, communication and trust.

As you can see, the models discussed in the book certainly open the discussion to a much wider audience than just technical audiences and enterprise architects. Now this could just be as a result that the authors actually took this from a wider model that I’m not aware of and specialised it for enterprise architecture, or that in terms of theory it’s just not normally applied in that same scope. Whatever the case, I certainly found it interesting to compare it to the wider environment and still do daily. I look forward to hearing others views and areas where they see this applied.