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MARKET COHERENT ENTERPRISE
Guest Speaking @ Carnegie Mellon University
Enterprise Architecture Certification Program Denmark, May 28th 2010
Who Am I
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• 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
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Terminology
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EA Enterprise Architecture
MO Market Orientation
MDEA Market-Driven Enterprise Architecture
The Case -‐ Back to Basics
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For the full lemonade stand example see: http://marketcoherency.blogspot.com/2010/05/lemonade-stand-example.html
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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?
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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”
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Market OrientaCon
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“ 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
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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
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Why is MO Important
CorrelaCon comparisons
Source: MarketCulture Strategies © 2010
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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
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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
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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
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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?
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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.
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A Model: Market-‐Driven EA
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Market-‐Driven EA conCnued…
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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
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