Strategy Mapping - Object Management · PDF file• Strategy mapping is a business architecture discipline . ... (KPI) • Adaptation of Hoshin Kanri provides a simple way show how

Delivering Actionable Strategy through Business Architecture

William Ulrich - TSG, Inc. [email protected] www.tsgconsultinginc.com

www.businessarchitectureguild.org

1 Copyright © TSG, Inc. 2013

mailto:[email protected]

http://www.tsgconsultinginc.com/

http://www.businessarchitectureguild.org/

Overview

• Defining strategy and strategy mapping

• Strategy in the business ecosystem

• Mapping frameworks

• Leveraging business architecture to make strategies actionable

• Mapping strategy to initiatives

• Driving business strategy through IT solutions


What is Strategy & Why Map It?

• Strategy may be defined as:

– “the pattern or plan that integrates an organization’s major goals, policies and action sequences into a cohesive whole” *

• The strategy map represents various aspects of strategy in readily digestible ways

• Strategy mapping is a business architecture discipline


* J. B. Quinn, “Strategies for Change: Logical Incrementalism”, Academy of Management Review (Homewood, IL: Richard D. Irwin, Inc., 1980)

Breaking Down Strategy into Parts

• Aspects of strategy include some basic core concepts

– Goal: The end toward which effort or ambition is directed

– Objective: Specific, time-targeted, measurable, attainable target that an enterprise seeks to meet in order to achieve its goals

– Action Item (or Tactic): Decomposed aspects of a strategic plan that highlight what is to be done to deliver on a given objective


Business Strategy Challenges

• Businesses may not have a strategy

• Businesses may not share strategy with key stakeholders

• Strategy is not articulated in useful perspective to make it actionable

• Strategy is good, but does not translate into actionable results, projects, funding or solutions


Strategic Concepts in Business Ecosystem

Source: A Guide to the Business Architecture Body of Knowledge (BIZBOK™), Part 1

Copyright © TSG, Inc. 2013 6

Capabilities

Initiatives & Projects

Customers, Partners &

Competitors

Information

Products & Services

Value Streams

Vision, Strategies &

Tactics

Organization

Business Architecture

Metrics & Measures

Policies, Rules, Regulations

Who? & Where?

Why?

How?

How Well?

What?

When?

Why?

Decisions & Events

How?

Who? & Where?

What?

What?

Benefits of Strategy Mapping • Strategy Mapping Benefits*

1. Supports organizational alignment

2. Assists organizations in adapting rapidly to competition, market factors

3. Enables the rationalization of initiatives

4. Supports value and capability-centric investment

5. Provides ability to monitor an organization’s progress towards objectives

• Strategy maps provide common baseline on which to base actionable plans that result in defined, funded initiatives


*Source: A Guide to the Business Architecture Body of Knowledge (BIZBOK™), Section 2.1, Release 3.1

Various Strategy Mapping Options • Selected, commonly used strategy derivation and mapping

frameworks

– Business Model as input to Business Strategy

– Strengths, Weaknesses, Opportunities, Threats (SWOT) analysis

– Five Forces Model (Porter)

– Norton Kaplan “Strategy Map”

– Business Motivation Model (BMM)

– Hoshin Kanri

• Approaches range from providing input to strategy to offering a framework for representing strategy

Copyright © TSG, INC. 2013 8

Business Model Frameworks are Useful in Defining Input to Strategy

• Business Model: “A business model describes the rationale of how an organization creates, delivers, and captures value.”*

• Business models are gaining popularity with management

• Books such as Osterwalder’s Business Model Generation provide insights into modeling creativity

• Executives are creating their own business models to motivate their organizations

• Business models can coexist with business architecture and are not in competition or an alternative to business architecture


*Business Model Generation, Osterwalder, Alexander and Pigneur, Yves, Self-Published, 2010, Page 14

Sample Business Model Canvas for Insurance

• Canvas provides executives with a common framework of critical business focal points

• Each focal point or combination of focal points can trigger a set of objectives that would be incorporated into the overall strategy

Copyright © TSG, INC. 2013

Key Partnerships - Agents - Advertisers - Resellers

Key Activities - Building

Reseller Relationships

- Building Agent Relationships

- Regulatory Management

Value Propositions - Customer

Service - One Stop

Shopping - 24 Hour Access - Personalized

Service

Customer Relationships - Source for All

Insurance Needs

- Investor Confidence

- Continuous Renewal

Customer Segments - Commercial - Residential - Specialty

Needs

Revenue Streams - Initial Sale Revenue - Annual Policy Renewal - Special Fees

Cost Structures - Personnel Costs - Outsourcing Costs - Reseller Fees - Agent Royalties

Key Resources - Reinvestment

Capital - Agent Network - Product Catalog

Channels - Internet - Direct Sales - Agent Sales - Reseller Sales

*Business Model Generation, Osterwalder, Alexander and Pigneur, Yves, Self-Published, 2010, Page 14

10

http://blogs-images.forbes.com/tedgreenwald/files/2012/01/business_model_canvas_poster-02.jpg



SWOT Analysis • SWOT analysis assesses a business’s Strengths, Weaknesses,

Opportunities and Threats

• Basic approach involves listing factors in each category and

using these to formulate strategy • For example:

– Strength: Technological skills – Weakness: Poor distribution channel availability – Opportunity: Changing customer tastes – Threat: Closing geographic markets


Helpful Harmful

Internal Strengths Weaknesses

External

Opportunities Threats

11

Porter’s Five Forces Model*

• Five Forces Model provides insights into pricing, costs and profitability** • Five Forces Model provides a finer grain analysis of competitive scenarios as input

to strategy


*Source: “The Five Competitive Forces That Shape Strategy”, Harvard Business Review, Jan. 2008 **Source: Understanding Michael Porter, Margretta, Joan, HBR Press, 2012, Chapter 2

12

SWOT & Five Forces Model Drive Strategy Formulation

• SWOT and Porter’s Five Forces Model enable strategy formulation

• Other strategy mapping frameworks further strategy formulation and articulation


Norton Kaplan Strategy Map*


*Source: R. S. Kaplan and D. P. Norton, Strategy Maps: Converting Intangible Assets into Tangible Outcomes (Boston: Harvard Business School Press, 2004)

Long-term Shareholder Value

Enhance Customer

Value

Improve Cost Structure

Increase Asset Utilization

Expand Revenue

Opportunities

Financial Perspective

Customer Perspective

Productivity Strategy

Growth Strategy

Customer Value Proposition

Internal Perspective

Learning & Growth

Perspective

Strategy Map

Price Brand Selection Function-ality Service Partnership Availability Quality

Operations Management Processes -Supply, Production, Distribution, Risk Mgmt

Customer Management Processes

-Selection, Acquisition, Retention, Growth

Innovation Processes -Opportunity ID, R&D Portfolio, Design/ Develop, Launch

Regulatory & Social Processes

-Environment, Safety, Employment, Community

Technical Capital

Human Capital

Organization Capital Culture Leadership Alignment Teamwork

Product/Service Attributes Relationship Image

14

Norton Kaplan Strategy Maps

• Consider the difference between Porter’s Five Forces Model and the Norton Kaplan (N/K) Strategy Maps (per Robert Kaplan):

– “Porter's work helps managers formulate their strategy. Our [N/K] work provides the discipline to ensure that the formulated strategy has specific objectives for shareholders and customers, an explicit customer value proposition, the critical internal processes for creating and delivering the value proposition, and aligned human resources, information technology, and organization culture.”

Source: Mapping Your Corporate Strategy, HBR Working Knowledge Interview with Robert Kaplan

• Strategy map offers a framework for articulating strategy in a variety of contexts

• Strategy maps, in some cases, try to frame implied solutions by introducing processes into the framework (e.g. Norton Kaplan Strategy Map)

• Introduction of implied solutions must be tempered when mapping strategy to business architecture (which is not process-centric)


Defining Objectives within the Strategy Map • Can begin at top defining high-level strategies

– Expand Revenue Opportunities, Enhance Customer Value, etc.

– And then define lower level customer, internal and supporting objectives to feed these high-level strategies

• Or begin at lower levels – “Recognize customer at any point in lifecycle, regardless of how

customer contacted company”

– And then abstract these into higher level perspectives

• Objectives must then have corresponding action items, which become strategic directives


Business Motivation Model (BMM) – Representing Strategy

Copyright © TSG, INC. 2013 Source: Business Motivation Model (BMM), www.omg.org/spec/BMM

17

http://www.omg.org/spec/BMM

Hoshin Kanri – Interpreting Strategy


• Begins with mission and strategy

• Ties strategy to objectives

• Aligns objectives with measurable goals

• Goals are then mapped to action items

• Hoshin Kanri provides transitional perspective moving from Mission/Strategy through Goals/Action items

• Enables simple decomposition through management layers

Source: http://www.hoshinkanripro.com

Source: http://www.hoshinkanripro.com 18

http://www.hoshinkanripro.com/




Actionable Results

Enables

Using Business Architecture to Turn Strategy into Actionable Results


Articulated Via

• Organizational Alignment • Business Capabilities • Information Concepts • Value Streams

• Well articulated business priorities

• Business-driven roadmaps & funding

• Collaborative projects / initiatives

• Business-driven IT architecture transformation strategy

• Mission and Vision • Policy, Rules and Regulations • Goals and Objectives • Executive Priorities • Customer Requirements • Strategy and Tactics

• Business uses business architecture to assess issues, visualize impacts of vision and strategy, and drive transformation strategy and solutions

Business Strategy

Most organizations bypass the second stage – Business Architecture


Business Architecture Can be Used to Influence Strategy • Strategy enrichment and derivation can result from having a well-

defined business architecture as input

• Heat mapped value stream stages serve as basis for deriving objectives and action items

• Value stream stage / capability mapping highlights problematic capabilities that require action

• Capability and value stream heat map and impact ratings provide useful insights to business objectives and action items based on need

• Tying capabilities and value streams back to business units further highlights scope of strategic impact


Business Strategy, Objective, Business Architecture Mapping Example


• Strategy and objective mapped and aligned to a summary of the challenge that needs to be addressed

• Provides executives and planning teams a shared perspective on what aspects of the business are affected by this issue

• Value steam and capability focal points provide basis for next level of analysis

Business Objective Business Challenge Business Architecture Impact

Loan officer is notified of any loan activity for an assgined loan

Loan defaults processed without knowledge of loan officer refinancing the loan

Value Streams:- Manage Loan Change Request- Process Loan DefaultCapabilities:- Case File Management- Pipeline Management- Notification

Strategy:Achieve complete transparency of a Loan for all internal and external stakeholders

Account Pipeline

ManagementCustomer

Information Management

Account Payments

ManagementAccount


Work Queue, Routing

Management

Account Structuring

Account Information

Management

Notification

Account Structuring

Account Information

Management

Work Queue, Routing

Management

Work Queue, Routing

Management

Notification

Account Structuring

Work Queue, Routing

Management

Notification Account Information

Management

Work Queue, Routing

Management

Notification

Process Loan DefaultReceive Notice

Process Default

Review Default

Notify Applicant

Recover Assets

Validate Notification

Account Information

Management

Recovered Asset

Management

Account Default Management


Case File Management


Case File Management Case File

Management Case File ManagementCase File

Management

NotificationNotification

Value Stream / Capability Cross-Mapping Enables Targeting Impacted Capabilities

• Value stream / capability cross-mapping identifies all capabilities enabling that value stream

• Highlighted capabilities are linked directly to business strategic objective

Sam

ple

Leve

l 2-3

Cap

abili

ties


Sam

ple

Leve

l 2-3

Cap

abili

ties

Business Strategy, Objective, Business Architecture and Initiative Drilldown Example


• Previous version of this mapping view has been extended to incorporate initiative and KPI (key performance indicator)

• “Loan Handling Modernization” initiative business scope involves two value streams and three capabilities

• Value stream / capability mapping to IT architecture provides context and scope for business / IT transformation planning and related project definition

Business Objective Business ChallengeBusiness Architecture Impact Tactic / Action to be Taken

Key Performance Indicators Initiative

Loan officer is notified of any loan activity for an assigned loan

Loan defaults processed without knowledge of loan officer refinancing the loan

Value Streams:- Manage Loan Change Request- Process Loan DefaultCapabilities:- Case File Management- Pipeline Management- Notification

Resolve loan information redundancyFormalize state management Correct capability weaknessesDeploy capabilities consistently across value stream stages

Reduce unintentional loan defaults to zero

Loan Handling Modernization

Strategy:Achieve complete transparency of a Loan for all internal and external stakeholders

Account Pipeline

ManagementCustomer


Account Payments

ManagementAccount


Work Queue, Routing

Management

Account Structuring

Account Information

Management

Notification

Account Structuring

Account Information

Management

Work Queue, Routing

Management

Work Queue, Routing

Management

Notification

Account Structuring

Work Queue, Routing

Management

Notification Account Information

Management

Work Queue, Routing

Management

Notification

Process Loan DefaultReceive Notice

Process Default

Review Default

Notify Applicant

Recover Assets

Validate Notification

Account Information

Management

Recovered Asset

Management





Case File Management Case File

Management Case File ManagementCase File

Management

NotificationNotification

Initiative Task Analysis and Estimates Based on Targeted Capabilities, Value Streams

• Initiative focuses on first stage of value stream and specific capability within this stage – Tasks necessary to address both stage level and capability related issues

define scope of project

– Estimates for this work are based on business changes required and automation level improvements requires

Initiative Delivers Value Stream Changes

Initiative Improves or Creates New Capabilities


Using Hoshin Kanri to Map Initiatives to Strategic Objectives & Key Performance Indicators (KPI)

• Adaptation of Hoshin Kanri provides a simple way show how initiatives map to strategic objectives and KPIs, and how strategies map to those same objectives and KPIs

25 Copyright © TSG, INC. 2013

Objectives

Measures

Strategies Initi

ativ

es

List

of I

nitia

tives

List of Strategies

List of Objectives

Key Performance Indicators

Intersection of Strategies & Objectives

Intersection of Objectives & Initiatives

Intersection of Initiatives & KPIs

Intersection of KPIs & Strategies X

X

X X

X

X

X X

X

X

X X

X

X

X X

Source: IAG Consulting

X X

X X

X

X X

X

X

X

X

X

Driving Strategy into IT Solutions: “Business / IT Architecture Transformation Framework”™

As-Is Business Architecture Business Architecture

Positioned Vision

As-Is IT Architecture To-Be IT Architecture

IT Transformation

Business / IT As-Is

Architecture Mapping

Synchronization of To-Be Business

Architecture & To-Be IT

Architecture

Business Transformation

Synchronization of Business / IT

Transformation

Monthly

Process

ing

Cycle

26 Copyright © TSG, INC. 2013

Information Map

Capability Map

Acquire Product

Assess Risk /

Eligibility

Approve

Request

Establish

Account / Policy

Process

Payment

Onboard

Applicant

Validate

Application

Notify

Customer

Capabilities

Initiatives& Projects

Customers,Partners &

Competitors

Information

Products & Services

Value Streams

Vision, Strategies &

Tactics

Organization


Metrics & Measures

Policies, Rules, Regulations

Decisions & Events

Sample Business-Driven Transformation Roadmap


Summary Discussion • It is not enough to have a strategy or vision if it is not

actionable

• Strategy becomes actionable when the impacts can be assessed against concrete aspects of the business

• Business architecture provides the means for tying strategy to business perspective, funded initiatives and IT architecture impacts

• Deployment roadmaps should tie back to strategy


Delivering Actionable Strategy through Business Architecture

William Ulrich - TSG, Inc. [email protected] www.tsgconsultinginc.com

www.businessarchitectureguild.org


mailto:[email protected]

http://www.tsgconsultinginc.com/

http://www.businessarchitectureguild.org/

Documents

Strategy Mapping - Object Management · PDF file• Strategy mapping is a business architecture discipline . ... (KPI) • Adaptation of Hoshin Kanri provides a simple way show how