Does Business Strategy Change Demand a Change to Enterprise Architecture?
Over the last several years, I have gotten to read several books on business strategy and enterprise architecture. What I found most interesting was just how well Paul Leinwand’s book “The Essential Advantage” fit with Jeanne Ross’s “Enterprise Architecture as Strategy”. Both propose a resources/capabilities based approach to strategy.
However, as I was finishing a new book on strategy, “Winning the Long Game” by Steven Krupp, I came across an updated perspective to a capabilities approach to strategy. The perspective amazingly was hidden in the appendix of the book. Here Krupp reviewed strategic thinking starting with Michael Porter. And in this process, Krupp effectively updated resources/capabilities thinking. He stressed the importance of creating organizations that can adapt to “continual changing environments through processes of mutation and natural selection…Successful firms need a set of meta-capabilities—which operate at a higher level than their standard operational capabilities—to integrate, build, and reconfigure competencies in order to succeed in rapidly changing environments.” (Winning the Long Game, Steven Krupp, page 268).
Leaders are needed that can drive dynamic capabilities
Krupp suggests that businesses need to develop leaders who have the skill to evolve dynamic capabilities and to connect deeply with their firm’s organizational processes. “This means becoming more strategic, beyond the confines of narrow mindsets, fixed game plans, or rigid solutions” (Winning the Long Game, Steven Krupp, page 268). In talking with a good friend who has been a chief enterprise architect, these thoughts need to impact the thinking of enterprise architects. Historically, enterprise architecture has been application or process centric. In most cases, they have assumed relative homeostasis for organizational capabilities, processes, and applications.
However, this assumption does not work as enterprise strategies become shorter and processes and capabilities need to evolve, change, or be added to in order to handle a continually changing business environment and the threat of shorter and shorter corporate lives. Increasingly, this puts data front and center. Enterprises need data to drive digital transformation whether it is about changing customer experience, changing operational processes, acting as one company, or even morphing business models. This requirement means that enterprise architects need to move from application or process centric architecture to “data centric architecture”. It also means that an up-to-date Information Model needs to be created and actively managed.
In a world where strategy changes can cause a change in business model, data can no longer be an afterthought of application design. It needs to be a fore thought and as important, it needs to be forward facing versus backward facing. Data governance and experimentation is needed as well to enable changing business models. This means that enterprise data needs to be flexible enough to support new processes and continual process improvements at the same time.
Changing strategic thinking clearly demands big change in how we think about enterprise architecture. It puts data front and center. At the same time, enterprise architects have an increasingly important role in enabling changes to enterprise architecture and to the access and use of data. Central to this is moving from “application centric architecture” to “data centric architecture”. In many cases, this journey should start with application consolidation. It is the time to start. The clock is ticking for your enterprise and the leaders that drive it’s strategy. According to Fortune magazine, the average life of a Fortune 500 firm has moved from 56 years to 20 years and it is even starting to even shorten from this. Those with responsive business strategies and responsive architectures will clearly win in the future.