Webinar of the Week Recap: Operating Models

As I mentioned in my last Webinar Recap, at my company, Millsapps, Ballinger & Associates we consider continuing education and training to be a non-negotiable necessity, both within our company, and as a service to our clients. So our training division; MB&A Academy, was born. One of my favorite offering through MB&A Academy is our free Webinar of the Week. Every week we feature industry leaders and experts giving a peek into the full length courses we offer to leading government officials and corporate executives.  I gave our last Webinar in 2012 on a topic I consider to be essential to success in any organization. Defining and communicating your Operating Model. While we specifically offer these Webinar over the lunch hour on a Friday to make it easier for our audience of busy executives to attend, I know it’s not always possible to pull yourself away from work for an hour a week. So I’ve decided to make the Webinar Recaps a regular thing on my blog. While you won’t get all the benefits of attending live, you can get an idea of what you missed. And as always, if these discussions spark a question in your mind feel free to contact me.

For companies to succeed, they must understand their operating model: in other words, the degree to which they must standardize business processes and/or integrate data to produce optimized business outcomes. I feature real world examples from both the public and private sector of how to understand your operating model, allowing business and technology to support each other in meeting the mission and vision of the company by embracing a shared vision for how they should operate the company. In my Webinar, I spoke about the four basic Operating Models, as designated by Ross, Weill, and Robertson in their excellent book, Enterprise Architecture as Strategy (If you’ve not read it I recommend picking it up).   These are the Diversification model, the Coordination model, the Replication model and the Unification model. To hear a bit more about these models, check out the clip from my Webinar below.

We finished off 2012 with an overview of choosing your Operating Model, for our first Webinar of 2013, MB&A Academy guest Instructor Bob Daniel’s course Here Comes the Next Big Thing: Adopting new technologies is inevitable. Doing so successfully isn’t.  He will discuss the motivations driving the adoption of new technologies, the factors that disrupt adoption, and what you really need to do to be successful.  You’ll leave with a framework and set of tools you can use to build success into your technology adoption programs. The Webinar will be January 11that 12:00 pm EST. To register, click here.

Thanks as always for reading my blog, I hope you will join the conversation by commenting on this post.

If you liked this post, please consider subscribing to this blog and following me on twitter @jmillsapps. I regularly give talks via webinar and speak at events and other engagements. If you are interested in finding out where to see me next please look at the my events page on this blog. If you would interested in having me speak at your event please contact me at events@joshmillsapps.com.

If you are interested in consulting services please go to MB&A Online to learn more.

It all starts with the operating model

It all starts with the operating model, at least that is my belief. Since reading Enterprise Architecture As Strategy: Creating a Foundation for Business Execution by Jeanne W. Ross, Peter Weill and David Robertson I have really focused on understanding one of the foundational statements early in the text regarding the role of the operating model which includes, “The degree to which successful businesses must standardize business processes and/or integrate data to produce optimized business outcomes.” Viewed as a four square chart, this produces a range of possible states for the organization along these two lines as shown below:

It all starts with the opearting model

Loosely grouped these essentially can be defined as follows:

  • Diversification model: low standardization, low integration
  • Coordination model: low standardization, high integration
  • Replication model: high standardization, low integration
  • Unification model: high standardization, high integration

One of the reasons why this is so important in the process of understanding how you should be looking at your organization is that it keeps you from falling into the trap of thinking that more standardized and more integrated is always good. I have heard many, many very smart and well-respected executives talk about EA as though the entire point of it was to develop a consistent mechanism for becoming more standardized and integrated. This overly simplistic viewpoint can be a value killer for many organizations. The fact is that there are numerous reasons to opt for less standardization and integration. I am going to focus on those in this post because the case for standardization and integration is so stunningly obvious and uncontested.

Specifically, process orientation and integration is the enemy of agility. I know that by saying this I will have people tell me that I just haven’t seen it implemented correctly. This misses the point. The fact that you have a standard way of doing something means almost by default that the person engaged in the process does not generally have the full freedom to do the process however they see fit. Hence, it is less agile. I’m not going to debate whether or not you can have an agile, standards-based set of processes—I’m sure you can. I’m just saying they aren’t as agile as no process almost by definition. The real world situations where less process may be good are many but may not be obvious, so I’ll share a few examples.

The first is an organization that is rapidly acquiring other organizations or has a heavy focus on M&A activity. These organizations are probably better suited to focus on less process orientation and integration, as the process of moving acquired organizations onto a specific set of processes and ensuring a tight integration of data will necessarily slow the acquisition process and may slow the time to a return on investment. If this organization is a highly diversified conglomerate, it may be that its business and technology executives should be focused on the diversification model.

 The second is the organization that leverages internal competition as part of its business strategy. An example may be a real estate office where there is fairly heavy process orientation, but less of a focus on integration. The reason is quite simple. The law demands that transactions be processed a certain way.  However, due to how many of the industry’s largest players are organized with individual agents vying for business against both their own organization and other organizations, most of these organizations do not place a heavy emphasis on internal data sharing because it works against this competitive dynamic. The technology and business leaders in this type of organization might want to focus on a replication model as opposed to the unification model.

For the third I think I’ll veer away from the private sector and provide a public sector example. Many public sector organizations, particularly at the cabinet level have very diversified missions. If one were to look at the Department of Agriculture closely, you will find a highly diverse set of missions served by its agencies including banking and financial, emergency response, natural resource management, etc. spread across 150,000 employees. This level of complexity almost invariably means that process standardization across these agencies (business units) will be exceptionally difficult. However, the nature of government and the impact of recent legislation is that the central organization must able to understand and share data across these units. Therefore a focus by the business and technology executives on data integration and standardization is appropriate.  Many public sector organizations, particularly at the cabinet level, would be well served to look at the Coordination model and see if it wouldn’t provide a more relevant scope for EA efforts.

No matter where your organization falls in this, it is important simply to have the conversation across your business and technology stakeholders. Having run operating model workshops with clients it amazes me how divergent the viewpoints can be within just the technology organization or within just the business, let alone across both groups. A lot of the power of the operating model can be gained simply by having the conversation.  There is enormous untapped value in understanding how your organizations operating model can drive how you do strategic planning and technology implementation. Simply asking these types of questions with all of the relevant stakeholders in the room will drive incredibly valuable conversation across the organization. Has your organization had the operating model discussion?

Thanks as always for reading my blog, I hope you will join the conversation by commenting on this post.

If you liked this post, please consider subscribing to this blog and following me on twitter @jmillsapps. I regularly give talks via webinar and speak at events and other engagements. If you are interested in finding out where to see me next please look at the my events page on this blog. If you would interested in having me speak at your event please contact me at events@joshmillsapps.com.

If you are interested in consulting services please go to MB&A Online to learn more.

Operating Models: Understanding Complex Organizations

Operating Model Diagram

Standardization and Integration of Operating Models

I’ll be giving a Webinar today for MB&A Academy’s Webinar of the Week Series. Every week we feature industry leaders and experts giving a peak into the full length course we teach to leading government officials and corporate executives. My talk today will be on Operating Models. The idea of an “organizational operating model” is the central concept discussed by Dr. Jeanne Ross, Peter Weill, and David C. Robertson in their seminal work, Enterprise Architecture as Strategy: Creating a Foundation for Business Execution. They contend that for companies to succeed, they must understand their operating model: in other words, the degree to which they must standardize business processes and/or integrate data to produce optimized business outcomes.

Higher standardization of processes is typically required where efficiency and predictability are the primary factors in delivery of the organization’s products or services.  If an organization wants to present the same face to customers in diverse locations, or capitalize on efficiencies of scale in purchasing, for instance, a high degree of standardization is required. The higher the level of standardization, however, the greater the cost to the overall organization in terms of flexibility and innovation.

Data integration effectively links the efforts of various organizational units through information sharing.  Higher levels of integration encourage close working relationships between various areas of a business or agency, and more centralized decision-making. Also, the more integration, the more agreement is required on definitions, and this comes at the cost of local control and autonomous management of information resources.

Clearly, each organization will have different needs; even different divisions of the same company may have quite different objectives.  As such, different operating models can maximize their individual potential.  Once the Operating Model is determined, the Enterprise Architecture can be designed to meet the critical process standardization and integration requirements for delivery of the company’s products or services.

Ross, Weill, and Robertson specifically define four models that exist depending on standardization and integration requirements of each organization. To learn more about these models, and how we work with our clients to identify to most productive To-Be model for their organization, check out my Webinar today at 12:00pm EST. Register here.

Thanks as always for reading my blog, I hope you will join the conversation by commenting on this post.

If you liked this post, please consider subscribing to this blog and following me on twitter @jmillsapps. I regularly give talks via webinar and speak at events and other engagements. If you are interested in finding out where to see me next please look at the my events page on this blog. If you would interested in having me speak at your event please contact me at events@joshmillsapps.com.

If you are interested in consulting services please go to MB&A Online to learn more.