A part of the guilt should be placed on ourselves and our entrenched “cultural backgrounds” when it comes to IT and business alignment. I will discuss two extremes of the cultural underpinning spectrum that we all inhabit, knowing well that the distribution is probably normal and most of us fall in between. However, understanding the boundaries may help observe the interactions within, and consequently allow for better “smoothing” of the targeted profile. To the extent that sometimes well mashed up extremes may actually be the best proposition. Let me introduce the two poles of the cultural spectrum (and not in any particular order).

Rebels – perennial change seekers, who see change as an opportunity for departure from a dreaded status quo. Rebels often know deeply what does not work and why, and are on a constant look for an opportunity to alter the root causes, even on the expense of not completely knowing to what direction the change may lead. In other words, changing the status quo is a good thing even under the risk that the new state may be suboptimal. Thus, rebels have high tolerance for risk and low tolerance for justifying the old ways.

The problem with rebels is that they often harbor unfulfilled ideas from the past that keep lingering in the back of their minds making it difficult to align approaches with others. That often causes their potentially brilliant ideas to be seen with skepticism even within the circles of their own tribe.

Puritans – agree that the change is inevitable, but see it more like a challenge than as an opportunity. They frown on every possible unanswered risk involved in transformation, often very knowledgeable of the potential breakdowns lurking behind the scenes remembering (and frequently rehearsing) every imperfection ever exhibited within the company. Puritans will magnify all possible root causes of any risk and will seek complete proof of concept of any new idea to the point that it may be impossible to convince them without actually finalizing the entire transformation. Thus puritans have low tolerance of any risk, and will gladly accept the status quo if their criteria of a perfect transformation cannot be committed to upfront.

Main problem with puritans is that they appear retrograde and focused more on the form and procedure than on the idea itself, what makes them “good to avoid” when the initial “selling” of new ideas happen. Thus, their potentially best contribution is skipped when it is most important and then brought into the picture where it actually may be detrimental. Puritans are often unjustifiably understood as skeptics, even though they are just trying to make sure that the efforts are successful.

The difference between rebels and puritans is primarily based on their different approaches to change, not an underlying psychological underpinning that distinguishes enthusiasts from skeptics, or optimists from pessimists. I believe that the difference is more result of the individual experiences with previous attempts, and not by personal inclinations to different thresholds of acceptability of risks and rewards.

Here are some comparative characteristics between the two types that may provide a quick orientation within teams:

1. Rebels
1. See every change as welcome and an opportunity to reinvigorate their still unsatisfied agenda
2. Accelerate transformation with passion and drive (particularly if “their ideas” are involved)
3. Quick to withdraw support when they feel their ideas are passed on by the “official approach”
4. Detail oriented and very specialized in their knowledge (sometimes not even interested in big picture)
2. Puritans
1. Resent change unless proven that it will be managed according to the “best practice” (usually what they endorse as the best practice)
2. Slow down transformation to give it a chance to follow their endorsed approach
3. Steady and consistent support for as long as the transformation is going on according to an official approach
4. Tend to shun particulars and look at all transformation efforts as part of a more universal methodology

Interestingly enough, the two share some traits, other than both endorsing change. One important common trait may even be deceiving – it is ready acceptance of advanced tools and methods, even from very different motivations. Rebels endorse new methods as an opportunity to do promote new ways of doing things, puritans as a way to reinforce common rules that will promote “right ways”.

So why does this matter? It does, because in every transformation effort we need to maximize use of all available resources, knowledge and ideas. And why we often experience a mix of more moderate behaviors in between, all of us act sometimes as rebels and sometimes as puritans. It is the role of the business process transformation office (BPTO) program management to harness the best in every contributor. Allocating resources to the tasks they are best equipped to perform is critical and must be done with due diligence and respect for individual preferences in respect to the approach and philosophy.

Many existing frameworks however tend to over-simplify behavioral component, and provide neutralized (dry) methods and tools, as if everyone has the same inclination when it comes to thinking process. Averaging the individual energy inputs leads to averaging the results. Instead, distributing the work according to maximized energy usage can lead to much better results and a more motivating environment for creative collaboration and mutual respect.

Thus for example, when it comes to early planning of transformations – involving dominantly rebel characters in setting the directions and then involving the dominantly puritan characters to assess feasibility may lead to very different results than the other way around. In the first case, we can expect more fundamentally new ideas (more potential for different outcomes), yet with early assessment of potential risks to overcome we will have much better balance of acceptable risk and novelty.

In the opposite case, asking puritans to consider new approaches and rebels to validate them will lead to relatively trivial change ideas (less potential to make an impact) and no comprehensive risk assessment at all.

Balanced approach has to be bound by flexible methodology, best facilitated by using common metrics to communicate between the groups. For example, as ideas for change should be measured by the rate of potential impact, they have to be bound by the rate of novelty associated with the ideas and corresponding variance due to the risks involved (e.g. departure from the current practice may provide significant impact, but it has real potential to blow through budgets and schedule because of certain very real technical and organizational challenges). Iterative adjustments between the two teams can lead to an acceptable balance between business impact and risk, what ultimately leads to more predictable execution path. Having a portfolio of initiatives with well balanced impacts and risks, and all within predictable variance is a much better deal than having a mix of high impact high risk and low impact low risk projects.

It is important to capture and facilitate discussions during transformation planning stages. In BPTF methodology, we provide a continual planning method based on properly simplified process models that are sufficient to capture and communicate both impacts, as well as rate of change and risk associated. That way, each participant in planning can excel within his/her own approach, yet all together can achieve a more balanced plan that has a higher chance of succeeding during execution. BPTF instruments of change requirements (PACOM tables), Priority Dimensions and Value Cards are planning tools that are simple and easy to use to provide for fast and focused design workshops involving both rebels and puritans. In several cases, we were able to reach a consensus change roadmap with detailed project chapters for execution even within just for or five joint design sessions.

To find out more about applying BPTF transformation planning methodology check the following page on our website : http://www.value-chain.org/bptf/continuousimprovement/icim/.

A number of standard bodies have undertaken initiatives to improve communications between business and information technology experts. As the two worlds (that is, business and IT) drifted apart during the “application explosion” of the nineties and “complexity explosion” of the Y2Ks, the communication gap between them became too apparent to neglect. Key dilemma arises: Should we close the distance by tugging “the intercontinental business cargo ship” to the “free-spirited technology cruise ship”, or the other way around? Or perhaps start thrusting both into each other. Either way, a large amount of energy must be spent and that effort has to be coordinated, since the distance is immense and growing, while inertias of both ships that must be overcome are large and difficult to control. All efforts that we pursue without an overarching common agreement on principles (today, there is a large number of disturbingly disconnected initiatives) may not suffice because we may be applying forces to the opposite directions.

It appears that some (at the point of inception well-conceived) efforts are now causing the distance to increase as if tugging the two ships apart in perfectly opposite directions. And that is because these efforts either stop evolving (often staying stale for many years as they shift their original success with transformative direction into a self-glorifying marketing route), or they do not even start with reconciliatory coordinates, often perpetuating superfluous command supremacy of one ship over the other. Case in point, APQC effort is an example of the former and OMG VDML effort is an example of the latter.

APQC (and SCC to some extent) made enormous steps in the right direction(s) by categorizing repetitive and well defined business activities into a comprehensive taxonomy, thus putting significant brakes onto a “runaway train of business semantics”. But, they failed to provide specific directions on how to immerse that taxonomy into business architecture frameworks where such mature and precise content can be (re)used to steer transformations by utilizing (often grossly underutilized) advanced information systems functionality. On the other hand, OMG VDML perpetuates (using otherwise successful OMG paradigm of use cases) further trivialization of the business world by promoting yet another meta-schema for relational modeling (this time of <Value>) that only programmers understand.

This “leap of faith” business modeling standard posits that business value will (magically) arise by “value conscious business roles” that are oriented well enough to apply technology assets the way they have been actually meant to be applied (“by the way of the creator”). Long live UML! Who wants to argue that the global economy would have not been better off had governments invested $100 billion into tens-of-millions of man-months of “best of breed” software development, instead of bailing out shrewdly controlled greed pyramids? One pessimistic argument is that it would take us much too long to determine what to develop (even if we used social networks to facilitate a truly democratic selection process).

Interestingly enough, most of the efforts conducted independently try to relate to the concept of business value and value in general (value to society, and even value to the future of mankind). That is encouraging, except that too often other than using the same five letters to define the word “value” itself, little else resembles a concerted effort to explore value as a reconciliation mechanism between our knowledge of business practices and our knowledge of advanced technology capabilities.

Business transformation is mostly about innovation and agility, and that requires deep understanding of value, combined with precision and velocity of change. Corporate business process transformation offices need comprehensive frameworks that tie together business and technology terms and definitions in a reconciliatory, rather than confusing manner. I had a chance to review results of several companies taking years (and investing many millions of dollars) to put together such transformation frameworks, and then perhaps just as long to actually populate them with content, all while still lacking the insight, speed and precision required by modern business transformation needs. Practitioners need access to advanced practices, but they also need frameworks within which they can swiftly apply better processes starting with strategic considerations, precise definitions of change requirements and fully aligned technology deployment blueprints.

We cannot afford any more disconnected business and technology transformation frameworks haphazardly crossed by a dreaded “leap of faith” that often results in a straight plunge into the twilight zone between business and technology. Value (as a concept) in general, and business value more specifically, with its pervasive, multi-tiered and practical meaning is a great starting point of reconciliation, but not if explored as a “claim of entitlement” of one view of the world over another. It deserves much deeper structural exploration as a communication glue between the taxonomies of business transformation planning (why and what) and business transformation execution (how, who, where and when).

Today, corporations spend tens of billions of dollars annually funding transformation efforts. The speed and precision (and therefore the resulting benefits) are not nearly sufficient to leave a mark on economic turnaround. At the same time, this investment money is funding a large consulting industry where many contributors, as a result of such inefficiency, are hard pressed to further reduce costs. Grossly inefficient transformation efforts create a negatively reinforcing loop whereby corporations do not get their expected return on investment, further reduce their new investments, and in turn they receive even less benefit. New emphasis must be placed on enabling transformations with speed and precision required despite the rising complexity of business processes and constant advances in new technologies. Reinventing the wheel will not help. Taking too long to put together effective frameworks and transformation acceleration content (best practices) is not helping either. We urgently need a well- rounded comprehensive and affordable framework to explore value driven transformations with required precision of insight and laser focused change plans that can take advantage of advanced technology capabilities.

An example of such framework is the Value Chain Group’s Business Process Transformation Framework (BPTF), a result of many years of business and IT reconciliation efforts. It explores value as a cornerstone concept of reconciliation between business and technology. BPTF is a complete, non-proprietary framework, ready to use within a fraction of time compared to building a comparable architectural framework from scratch, whereby advanced practices definitions (both openly distributed and licensed), as well as system functions definitions are used as “plug-and-play” extensions to facilitate fast and precise transformation planning, tying strategy to the precise process changes supported by creative use of assets and technology capabilities.

What history teaches us is the best defense is considered to be the one that takes advantage of the landscape. Thus, in day of old, most coveted fortification spots were the ones surrounded by water from at least two sides (three was the best choice), and preferably on elevated ground (so it cannot be easily leveled by catapults). Later on, when overseas colonies were formed, the approach changed completely. Best spots were bays surrounded by marshes or flat grounds, because threat was considered coming from the sea, not so much from the land. What we learn here is that if we confuse the boundary between land and water, we can make a very wrong choice, a potentially catastrophic one. Thus the main decision is to understand what boundary you have to consider as more threatening – the water or the land. When we have to decide what competitors to focus on, we face similar critical thinking. Not understanding where to draw a boundary will bring defeat in the long run.

Based on value chain thinking, we can devise a simple three step technique to assess who the competitors are that you have to differentiate from. First, consider how customers use your product. Any alternative means providing the same utilization to the customer should be considered within the boundary of interest. Any other ones, as much as they claim to be, should be placed outside the boundary. At that step we already eliminate some potential entries. Second selection is to assess what acquisition cost your customer must consider to obtain the solution from the entries left within the boundary of interest. Any entry that clearly exceeds the acquisition cost of your own solution should be placed outside the boundary. The last step is to evaluate any long term relationship values, such as accessibility, service levels, regional or cultural fit, brand experience, etc. Any entry that still remains within the boundary is the competitor worth differentiating from.

After such examination, we can come out with three outcomes. First let’s consider the situation that several entries remain after the elimination steps. I’d say three is perhaps OK, four is one too many. The question at that point is: should we be swimming in such a pond at all? And if we should (still some differentiation left for a good enough margin), how can we as soon as possible eliminate at least one of the entries from the chart.

Let’s consider another extreme next. There are no entries. We are alone in the pond. We are our only competitor, that is, we can work on either enlarging the pond, or taking the maximum out of it. We could also look at entries that remained outside of the boundary and consider which one is too close to the pond for comfort. Interestingly enough, at least one of the entries watching us swim in the pond is interested in coming in, and at least one of them is a willing partner that could help us reduce others’ appetite.

Most common (and desired) outcome is when there are just few entries left within the boundary. That means we have to share the pond, but at the same time, the entire pond will be much easier to take care of because it serves more than one swimmer. This is what most advanced competitive analysis methods are actually designed for. Applying these methods in the situation with too many entries confuses the picture and provides more noise than clarity. Applying them in the situation where there is only one entry – us, makes it even worse, because it is waste of time – we should just focus on execution through education, accelerated positioning, brand establishment, etc.

In either way, before using advanced techniques and methods for planning portfolio and innovation, I highly recommend that you first do simple value based assessment of your true competitive boundary. It will start very broad, because you will have to consider all the alternative ways your customers can satisfy their needs that you are addressing. But then, it will reduce swiftly, because you will scrutinize the value that you provide to your customers relative to the competitors in each meaningful category. Every elimination from the boundary establishes a set of differentiating statements that you can use in positioning with the prospects.

This approach is fast and simple enough to provide immediate focus and open critical questions that must be answered first. Remember, choosing the value boundary is the most important step in any defensive strategy. Wrong choice often means sure demise and painful defeat. Following this method you can easily gauge what immediate portfolio priorities are, as well as what longer term possibilities exist to entice some not so immediate competitors to change their potential position relative to your boundary.

VCG Methodologist Vasco Drecun and I provided this answer relative to a typical global customer case:

1)      For a company to do business process analysis and business needs assessment for Integrated Business Planning the right way, each company must pay at least $100K to firms like Oliver Wight, Delloitte, Accenture, etc.

2)     To capture the business process needs and a complete list of changes required is another $100K (a recent 5 value chain engagement done by VCG was in $250K range and is at a minimum).

3)     To then blueprint the needs and changes required for the ERP or PLM implementation is then another $300K. To this point we are $500K invested and still have not started any (execution) roll-out.

4)     Now is the critical part. To configure, code, test, deploy and roll-out IBP may now take $1.5M in a company that wants it to the highest level of maturity, and that will only work if the previous steps are done properly. The feedback from the field is that only 30% of all implementations achieve to implement what the business really wants, thus they have to repeat and extend the costs to at least 50-60% over budget to get the results required.

5)     Thus the cost of technology implementation to yield results is on average over $2M.

With the product that a large technology provider can develop based on fully captured best practices in a flexible structure like VRM/XRM/SFD, this entire IBP implementation can be cut down to just below $1M without reducing licensing fees and with probability of success at least double the 30%, because all needs, changes required, process designs have been captured in the ready to configure templates down to each customization. Reuse and avoidance of repetitions thus saves each company at least $1M. With over 5000 manufacturing companies in need for such a best practice based rollout we arrive at $5B cost avoidance across the manufacturing world only. Add energy, utilities, retail, etc.

The key here is reuse and reliability of the results. This savings goes out of the pockets of the Systems Integration firms, but in fact accelerate licensing procurement of high level technology tools, because companies can absorb more
features faster.

First, let’s discuss few critical activities that must be done to maintain and enhance value of any enterprise to society and stakeholders:

1. Someone within the organization must be able to clearly describe how business processes (connecting people and information) enable value creation. That someone should do it in a manner that clearly communicates a complete and accurate description of business processes. These descriptions often must serve multiple purposes and consequently   have to be presented in multiple views of the “same thing”: organizational design, information flow, metrics and governance, issues and gaps, performance benchmarks, practices being followed, applications and infrastructure being used, etc.
2. Someone in the organization must be capable to determine what features of the current processes stand in the way of desired outcomes, clearly articulate improvement needs and develop organizational consensus on the priorities and desired roadmap for satisfying these needs.
3. Someone must be capable to quickly and precisely define a set of changes required to accomplish any improvement need – from strategic and more drastic needs to continual performance tuning needs. These change requirements have to be crisp and defined in a manner enabling direct planning of actions to accomplish them. “We need to raise revenue by 10% from newly released products” will not suffice here, that is more of a need than change requirement. “We need to enable and train all our account executives to check their customers’ quote and order status and contract profitability from anywhere, anytime” sounds more like a change requirement that I am talking about here.
4. Someone within the corporation must be capable to precisely point out what are all feasible alternative options to implement given set of change requirements and to estimate (using a very comprehensive method) what will it take to address requirements in terms of time and investment, outlining all risks associated with the undertaking.

There are other activities required to accomplish any business process transformation, but I am going to stop with these four. As one can see, there is a clear architectural thread within these four activities – from understanding of the needs, then defining more technical requirements to satisfy the needs, to outlining possible solutions and their pros and cons. In some companies that I have worked with, what is called Enterprise Architecture covers at best a portion of the activity described under A above. But what is the purpose of A, if it does not serve the intelligence and speed of B, C and D? I am not saying that what we call “Enterprise Architecture” should be in charge of all A-D, but if it is not - it must have excellent methods and tools for communicating and collaborating with whoever is doing A-D. Increasingly, corporations are realizing that the skills required for A-D should in fact be combined into a single point of resource, capable of translating business needs to actionable transformation projects swiftly and with precision. Is that what we should expect Enterprise Architects to do?

No, if we are not ready to enable them, both with skills, and then with methods and tools. But, it would sure be nice if we had people capable of navigating this activity span with precision, agility and elegance we expect from any other “architects” entrusted with transformation of human society aspirations into reality of everyday life.

This value chain blog will provide all those who follow it with information about value chain thinking, business process transformation framework management, real examples of how it all works and tips on how and why it will bring value to business. VCG will do all it can to support all those who support value chain thinking and business transformation.