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DESIGN YOUR FUTURE, THE ROLE OF ORGANISATION ARCHITECTURE

Dr Norman Chorn

Leaders have indirect roles

They shape the context.



What can leaders really do?

Can organisations influence their future? Can they shape their

operating environments? The answer is YES, if you believe in

the role of enterprise leadership.


But what leverage does the leader have on the enterprise? How

can they impact on its future?


The reality is that, except in the smallest of organisations,

leaders have only an indirect influence. Notwithstanding this,

this indirect influence can still be very powerful. This power is

wielded through the design of the ORGANISATION’S

ARCHITECTURE.


The organisation architecture

Like any building or structure, an organisation has a natural

architecture. Like the building’s architecture, the organisation’s

architecture is a response to the demands placed upon it.

In this case, the organisation’s architecture reflects its business

model and how it has decided to go to market.


In terms of this, we can identify four major spaces in the

organisation’s architecture - each with a number of important

building blocks.



Four important spaces

The four spaces that form the core of the organisation’s design

are:

a. The arenas in which the organisation has chosen to

be active


b. The capabilities the organisation has deployed in

order to operate effectively within these arenas


c. The relationships that are in place to enable the

organisation to operate effectively within the arenas


d. The financials that result from operating within these

arenas.


Our experience suggests that these four spaces - the core of the

organisation’s design - are the natural domain of enterprise

leadership. Not only CAN they influence these areas, they are

EXPECTED to show clear Thought Leadership in this

domain.



As we see on the following page, these four spaces have nine

building blocks - each with clear decisions to be made by

enterprise leaders.


Four key spaces

Nine building blocks

Arenas - space 1

The arenas define the various competitive spaces in

which the enterprise operates - see diagram below.

There are 4 key building blocks in this space:


1. How we segment our customers


2. What is our value proposition to meet the needs

of that segment


3. How we interface with our customers in that

segment


4. How our offer is differentiated from that of our

competitors.


The competitive position of the enterprise is shaped by

the way the customers are segmented and, therefore, the

way that the various strategic arenas are defined.



Capabilities - space 2

This space defines the ability the enterprise to

successfully deliver its value propositions to meet

customers’ needs. Two key building blocks make up this

space:


1. What are the key business processes and

activities that create the value propositions


2. How should we configure the key resources

and organise the reporting structures of the

enterprise.


The business processes and organisation structure are

best determined after we have defined the value

propositions. This is why defining the strategic arenas is

the obvious starting point for developing the

organisation architecture.




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Relationships - space 3

This building block defines the key partnerships that are

required to “create” the value propositions and “go to

market”. Accordingly, we can define the following

relationships:



a. go to market partners:

‣ alliance or joint venture partners

‣ channel partners

‣ key influencers of your customers

b. supply partners:

‣ suppliers and vendors

‣ license holders or technology partners


Financials - space 4

Two key building blocks make up this space:


1. Revenue streams derived from the value

propositions. This includes pricing, discounting

and volume incentives


2. The cost structure of the business, including the

make up of fixed and variable costs.


The Levers for change

Enterprise leaders have four key levers for making

change and shaping the enterprise’s effort. The

strategic arenas, capabilities, relationships and

costs spaces are key elements in the organisation’s

architecture - and they represent viable levers for

leaders to influence the future and shape the operating

environment.


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By Norman Chorn 27 Mar, 2023
In my previous article "Accelerate Performance with Strategic Alignment - Define the logic of your strategy", we demonstrated the alignment between the market and business strategy by matching the logic of the market with the logic of the strategy. The Explore logic emphasises a market where customers seek new solutions for emerging requirements. The strategy responds by exploring new opportunities and driving for growth. The Exploit logic occurs in a more stable market where customers seek lower costs and reliability of supply. The appropriate strategy focuses on operational efficiency and building close customer relationships. Culture is key to shaping the capabilities of the business to successfully implement strategy . It drives the way that people behave, decisions are made and actions are taken. It determines, therefore, the strategy that is actually realised in the market, as opposed to that which is merely intended. We make a key distinction between the desired culture and the appropriate culture. The desired culture is what people may choose because it sounds attractive and in vogue. However, the appropriate culture is the culture that is required to successfully implement the chosen strategy. Often, these can be different. For example, people might seek to develop a culture that is ‘innovative’, ‘flexible’ and ‘empowering’, but this may not be the appropriate culture needed to successfully implement the business strategy. DEVELOP THE APPROPRIATE CULTURE FOR YOUR STRATEGY Developing the appropriate culture requires a deliberate emphasis on certain cultural attributes and making trade-offs on others. As we will see, the attributes that are traded off are usually the opposites of those that are emphasised.
2 puzzle pieces
By Norman Chorn 27 Mar, 2023
In Part 1 "How to Accelerate Performance with Strategic Alignment - Understand the Logic of the Market" we outlined different market conditions and defined them in terms of two overarching logics — Exploring and Exploiting . To briefly recap, an Exploring logic is one where customers are seeking new solutions for emerging needs. It’s all about change and action. An Exploiting logic occurs in a more stable market in which the issues are about lowering costs and working collaboratively with customers. It’s a market that focuses on stability and cohesion. FORCES THAT SHAPE YOUR STRATEGY Clearly, it is one of these two logics — or a combination of both — that will shape your strategy as you operate in these markets. See figure 1 below that describes how these logics will form your business strategy:
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