As enterprise architects, it is too easy to be led by business demand that is not aligned with strategic business imperatives. Sometimes these imperatives are not explicitly identified in the strategic documents that circulate.
Where are the value opportunities?
The start point for understanding value opportunities is the value chain. We generalise the original model to accept any type of resources, for example, physical, intellectual or virtual. These resources are converted into outputs that customers value.
The first step is to understand how your organisation creates value for it customers and stakeholders.
A diagram of 5 to 10 “blobs” should be sufficient for this analysis, for example, a pharma organisation might be represented as:
Once we understand how value is created, we can identify pain points that destroy value and unexploited opportunities to create new value.
To identify the pain points and opportunities, we need to look in 5 places:
- Inside each activity – What is not working well, what is slow, what is expensive, where is there poor quality, where is morale low, where is there high attrition, what improvements are constrained?
- Upstream / downstream collaboration – How well do collaborative activities with upstream and downstream functions work, is the right information shared, is it accurate and timely, are there joint planning activities, are there joint performance reviews, are there ongoing activities to improve joint working, do senior staff work together effectively to resolve shared issues?
- Partner collaboration – Are you working well with your partners? Is partnership one sided? Is it partnership in name only? Is sufficient value being realised by the partnership? Is cost of administering the partnership disproportionately high compared to the value being realised?
- Support collaboration – Are commercial, legal, procurement, HR, IT, compliance and other support processes supportive of partner acquisition, contracting, onboarding and operations? Are they supportive of core operations? Are they supportive of upstream and downstream collaboration?
Create an inventory of value opportunities where we itemise the following:
- Activity – specific business activity where the pain or potential gain is
- Challenge – what is the the pain or potential gain?
- Objective – what do we want to achieve, what does success look like?
- Value Opportunity – if this was addressed, what would the strategic impact be, what corporate level KPIs would change?
When creating the initial inventory, it best to keep the descriptions at a high level and just capture the gist of the value opportunity. Focus on the the areas with the biggest impact. Consider whether there will be political support. The inventory does not have to be complete, the inventory should evolve. New items and greater detail can be added later.
Worked example…
| Activity | Challenge | Objective | Value Opportunity |
|---|---|---|---|
| Product Research – Wet labs & intensive data research | High failure rate of candidates, long timelines, pipeline uncertainty | Reduce time to drug candidate from years to months | Reduced research time at much lower cost |
| Clinical trial recruitment | Long delays finding participants, small populations create approval and patient risk | Reduce need for human participants, find new populations of participants | Reduced clinical trials timescale at much lower cost |
| Regulatory documentation | Manual writing and cross referencing is slow increasing time to market and error prone adding compliance risk | Reduce time, increase accuracy, improve compliance | Faster approvals allowing earlier market entry |
| Managing complex quality issues | After action manual root cause analysis, potential for partial diagnosis of causes and incomplete corrective and preventive actions | Reduce problem resolution time, prevent future issues, increase diagnosis accuracy, improved corrective and preventive actions | Lower waste, increased uptime, improved quality |
| Educating health care professionals (HCPs) | CRM driven content not well targeted and ignored | High relevance, individually tailored content creates high value relationships | Improved and increased health care professional interactions |
Ideally, this inventory will have been co-created with the business or with strategic functions. That will will give immediate credibility.
Note from practice…
We were working with the head of transformation for a global organisation. He was frustrated by the number of “digital transformation” projects that were not delivering value. They were not moving corporate KPIs (e.g. revenue, margin, CSAT, share price). The head of transformation asked a simple question – what are the company’s top 5 biggest problems and are they being addressed? We quickly enumerated them and concluded that they were not even being talked about.
We decided to hold a set of workshops with key leaders (1 or 2 levels below CxO) from each business unit to get them to “discover” the major business problems and missed opportunities so they could course correct their programmes.
The head of transformation engaged expert external facilitation. However, the group of leaders focused on concerns within their business units rather than on what would make the company more successful. The external facilitators were not close enough to the business to steer the discussion into the right areas or to counter the directions and incentives given by the CxO level to their reports over previous months.
We concluded that we needed to work at the CxO level which would require a different approach.
We put together a workshop with the business strategy, transformation and enterprise architecture teams to identify pain points and opportunities in the value chain. We identified the potential impacts of addressing these issues. We prepared a summary of the strategic impact of current initiatives compared with what could be achieved with a more strategic focus.
The business strategy team used their access to the executive board to uncover the real progress of the digital transformation. Over the next year there were major changes to programmes and people.
However the inventory was created it will need validation and prioritisation by the strategic functions in the business. This endorsed artefact is now a key directional statement for giving direction to enterprise architecture activity.
It’s second major use is to identify use cases when a new technology arrives on the market. With each major technology “breakthrough”, there is a wave of hype which creates pressure on business and technology management not to be left behind. This often triggers a frenzied search for use cases to prove the value of the new technology. A better approach is to follow these steps:
- Research and identify the capabilities of the new technology
- Review the value opportunity inventory to identify value opportunities where the new technology’s capabilities may provide a “breakthrough” that has potential to materially improve a strategic KPI
- Frame a hypothesis that the new technology will deliver specific business value through using its capabilities
- Devise tests and business simulations to prove or disprove this hypothesis
- Create a “business case” and gain business endorsement (and funding) for the experiment
- Carry out the experiment drawing appropriate conclusions for the business and the technology
This measured approach ensures focused effort on real opportunities which have a good likelihood of success. Suppliers are likely to be committed to supporting this type of approach because they will get strong case studies. It avoids the “deploy and hope” approaches that typically do not deliver value.
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