Mind the Gap

Change

Businesses are experiencing rapid disruptive change, driven by such shifts as internet-enabled businesses; collapsing time; globalisation of markets and business configurations; social and economic imperatives; financial uncertainty, and changes in industry boundaries and structure.

This is leading to new business styles such as on-demand, value ecosystems, collaborative networks, and the globally integrated enterprise; which in turn place very different demands on operations and IT.

As Wytenburg states "the greater the degree of complexity in an environment, the more various, dynamic, and unpredictable are those situations“. We have moved away from a known single future, away from even from a range of possible futures, to a truly ambiguous future. There are too many permutations of possible architectures for such an uncertain future.

Significance

As with all uncertainty we need to focus on the "architecturally significant" elements - in this situation it refers to those elements of an organisation that will enable success in a future where the pace of change is accelerating.

Osterwalder's Business Model Ontology provides a good solution context for considering what is significant. I would add an additional component though that I will call "The Core".

The Core

The Core extends the ontology proposed by Osterwalder by adding an additional Core element associated to Core Capabilities. The Core that refers to that differentiating aspect of an organisation that transcend products and services, as is traditionally defined as “core business”. It is not an idealised construct but the tangible essence of an organisation that includes the key people, their vision and values.

In this context the Core combines (a) Vision with (b) People. Initially the people are those that formulated the vision for the organisation. These people lead the organisation and are the solid aspect thereof. The core (of the organisation) can, and probably should, be extended during the life of an organisation.

Key Capabilities

Within this construct, the key capabilities of the Core are those that position an organisation architecturally for an uncertain future:

• Manage core values and value streams: At the heart of what allows an organisation to adapt while maintaining some consistency in the eyes of its key stakeholders (customers, partners, investors, employees). They are internal beliefs which guide the decision-making and behaviour of the organisation.
  
• Shed and Attract: Agility is a key attribute of future business which has resulted in a marked shift from a 'loyalty/purpose' based business context to an 'opportunity' based context. As this trend continues, businesses who have a core competence to shed and attract will be able to maintain their competitive position over those who are less able to do so.
  
• Communicate: There is a requirement for richer communication with all stakeholders, from employees to customers. The ability to establish trust through one's actions and communicate that and a vision for the future will differentiate the winners from the losers.
  
• Sense and Respond: This is the ability to detect change and respond rapidly to it. Included in this capability is the ability to manage "future uncertain" through scenario planning and management.
  
• Manage Information: Managing master data and information is critical to the decision-process and is a core ability, without which organisations will flounder.
  

The Gap

It is important for organisations to "mind the gap" when they shed components of their businesses that are better delivered by a supplier or through the network. This gap exists between the formal contracts between components, which is often covered by the good nature, professionalism or natural instincts of people within a business.

As business components become increasingly logically and physically seperated it will become increasingly important to understand whether the sum of the contracts equals the whole; and whether the whole still delivers what people are accustomed to. Managing that difference will be crucial.