Yellow is the new black. 40 is the new 20. Ecosystem is the new organization.
Remember all that business over the last two installments about business objects as the glue for business architecture (Post. No. 52) and the importance of creating capability maps in the same way (Post No. 51)? This is where it becomes important: so that we can use value streams and capabilities to connect everything and unlock value in new ways we could never have imagined.
In this StraightTalk installment, we will explore how business architecture can help to architect ecosystems. The idea of business ecosystems is a huge topic unto itself, so we’ll highlight a few key ideas here in our usual StraightTalk style and then let you dream big.
What is an ecosystem?
In this context, we’re talking about business ecosystems (though we could learn much from the design of biological ecosystems). Here are just a few definitions for consideration.
The BIZBOK® Guide defines a business ecosystem as, “One or more entities, in whole or in part, that exist as an integrated community of individuals and assets, or aggregations thereof, interacting as a cohesive whole towards a common mission or purpose.”
Futurist Frank Diana defines an ecosystem as, “A complex network of connected stakeholders that depend on and feed each other to create and capture value for all ecosystem participants.”1
From an overall systems-thinking perspective, Donella H. Meadows describes that “a system must consist of three kinds of things: elements, interconnections, and a function or purpose….a system is an interconnected set of elements that is coherently organized in a way that achieves something.” 2
Regardless of the exact definition of ecosystem we choose (and how futuristic we think about it), we have three very important considerations:
- The elements (entities, stakeholders or otherwise)
- The dynamic interconnections and interactions between those elements
- A function or purpose for the ecosystem that is oriented around value
What’s the big deal?
In our increasingly global, connected and digital world, opportunities abound and organizations are finding new ways to reinvent their business models and how they create value – thinking beyond the boundaries of their own organization. Indeed, the concept of boundaries is dissolving in many ways, including industries and countries.
Organizations are acting on opportunity, maybe a bit of FOMO (Fear Of Missing Out), and necessity. Disrupt or be disrupted.
What might be most exciting is that a shift to ecosystems represents a shift in how we think about the role of a firm and how value is defined by society and to society.
So what are we really talking about here?
We’re talking about shifting from orienting around value chains to ecosystems.
To keep it simple, let’s think about this in a progression.
- From Organizations – This has been the traditional model where organizations seek to maximize their self-interests, evolving products and services and collaborating differently. The primary value here is shareholder value. (In a for-profit context anyway.)
- To Collaborative Networks – This is a model where specific organizations seek to co-create or join a collaborative network, around a shared vision of value. The primary value here is stakeholder value.
- And Then To Ecosystems – This is a model where “value creation, delivery and capture are shared activities among economic agents, with established peer-to-peer relationships allowing value to accrue to all ecosystem participants.”3 It could even lead to fully decentralized, autonomous cooperative networks. The primary value here is society value.
P.S. Shout out to Frank Diana, whose thought leadership inspired and informed the framing above.
Got it. So how can business architecture help?
Creating, managing and participating in ecosystems (at any stage of progression) requires a new mindset, good architecting and good end-to-end execution of direction. Business architecture and business architects are perfectly suited to help with all three. (Of course, the concept of ecosystems requires many other things too, like culture change and organizational change management.)
Business architecture inherently drives a new mindset such as thinking big picture, connecting the dots and facilitating cross-collaboration, and applying a value lens to everything. This mindset is at the heart of the discipline and its strategic intent.
This one is probably obvious, but business architecture helps with architecting each aspect of an ecosystem. For example, business architecture can help:
- Define and represent the elements (think business units, stakeholders, capabilities, value streams and products)
- Define and represent the interconnections and interactions between those elements (think value streams for the entire ecosystem, capabilities that define who does what, information that flows between the elements, customer and partner experience journeys, a defined value network and policies)
- Define and represent the function or purpose for the ecosystem (think business objectives, business outcomes, metrics and value streams)
- Put all the pieces together to design and represent the entire ecosystem (think ecosystem canvas and the business model canvas(es) and supporting it all with a shared vocabulary and mental model)
Finally, business architecture (and business architects) serves as the bridge between strategy and execution. Working in partnership with many other teams across the strategy execution life cycle, it plays an important role to enable end-to-end execution of direction, to make sure that we can move all of these brilliant ideas into action, quickly, and most effectively with our finite set of resources. (More in Post No. 3 and Post No. 50 on this topic.)
How can business architecture help architect at the organization level?
This just requires architecting at the organization level (and its ecosystem from its own perspective), but we know there is a lot to this. We still have much work to do here from a business architecture perspective globally, and in many cases, we’ve only just begun.
One key focus area for business architecture is to help an organization think and work across silos. This certainly includes business units, but depending on the structure of the organization, it may include other structures that may not readily work together, like brands or operating companies. Another key focus area is to help the organization work with other organizations, such as in cases of joint ventures or acquisitions.
Business architecture can help to:
- Provide a high-level business lens to view information (e.g., investments, costs, risks) across silos at any level for new insights
- Identify new ways to standardize and streamline across silos at any level (e.g., streamlining how product management is performed)
- Support due diligence for acquisitions or joint ventures (e.g., assess alignment and risk)
- Accelerate end-to-end strategy execution
- And more…
Business architecture can also help bring together an organization’s needs with innovations and solutions from within its own structure and ecosystem. This is often a lost opportunity because organizations have no way to connect the pieces. One business unit or brand may have found a great solution that applies broadly, but others are not aware of it. An organization’s innovation catalog may be full of great ideas, but it’s hard to identify when they are applicable to the current needs being addressed. Capabilities and value streams allow us to connect everything.
How exactly do capabilities and value streams connect things?
For example, let’s use Twitter as an analogy with its simple use of hashtags (i.e., pound sign or hash mark (#) that precedes content). We can add a hashtag to an idea or theme, which is automatically cataloged with other themes that have the same content. And you can view it all together in Twitter. Boom.
Capabilities (and value streams because they put the capabilities in context) work the same way. Except of course we don’t add hashtags to business architecture content for the capability it relates to (e.g., picture hashtags for #CustomerInformationManagement or #PaymentManagement as part of the analogy), we simply just connect a strategy, an initiative, a business unit, a system application, and so on to the applicable capability in the business architecture knowledgebase. And, you can view all those things which apply to a certain capability together in the knowledgebase to gain intelligence and inform decisions. Boom.
But, feel free to think about the concept in this simple (and much more fun) way of using capability “hashtags” to aggregate all related content for a capability.
The diagram below illustrates how capabilities (and value streams) can be connectors for organizations and ecosystems. This particular view is more organization-centered just to show the concept, but it can be applied for collaborative networks and ecosystems as well.
Here’s what it says.
An organization’s comprehensive set of needs for a certain capability (Customer Information Management in our example) may come from:
- The collection of an organization’s strategies, which may require changes to the capability (or more likely changes to how it is implemented through people, process and technology – the capability just frames it)
- The collection of other business direction like transformations, acquisitions or regulatory changes, which also may require changes to the same capability
- Any improvements we’ve identified for the capability, such as to increase its effectiveness or level of automation (throwback to Post No. 28)
An organization’s comprehensive set of solution options for addressing the needs for a certain capability (Customer Information Management in our example) may come from:
- Current or potential business and technology solutions – within or outside of the organization
- The organization’s internal innovation catalog or potential solutions from startups
- Potential solutions through partnership with other organizations, including corporations, non-profits or government organizations
All of the needs and solutions can then be aggregated and matched for optimal results.
And, we can also consult our business architecture knowledgebase to find what else is hashtagged to Customer Information Management so that we can consider things like business units and stakeholders involved, related initiatives, products impacted, or policies that we need to be mindful of as business architects.
With capability and value stream “hashtags,” we can connect anything. Inside or outside of the organization.
How can business architecture help architect at the collaborative network and ecosystem levels?
Collaborative networks require architecting collaborative business models across organizations. Ecosystems require architecting and integrating both ecosystems and value. But, it still back to the same concept of how business architecture can help to define and represent the elements, the interconnections and interactions, the function or purpose, and the entire ecosystem itself – and accelerate how ideas move into reality.
Allow yourself to ponder: What If?
Even if we just focused on better collaboration within our organizations and building collaborative networks as next steps for now, What If?
- What if an organization could maximize their outcomes by drawing upon the full range of options available to them from within their own ecosystem right now?
- What if multiple organizations could work together to reimagine an extended value stream and experience that delivers more value for customers, seamlessly from end-to-end across their organizations? (For example, if real estate, mortgage, and retail companies come together to define an end-to-end Acquire Home value stream for customers.)
- What if micro-ecosystems for integrated solutions like smart homes, smart cities, the connected vehicle, or 3D printing were deliberately designed and enabled by business architecture?
- What if a government could create a thriving innovation ecosystem for a country?
- What if government, for-profit and non-profit organizations could come together in a collaborative network or ecosystem to target a key area of need like education or health for an emerging nation(s)?
What If, What If, What If?
Never stop asking! We hope the social media hashtag analogy resonates with you and helps to expand your way of thinking about business ecosystems. What can we do as architects, leaders, and change agents to leverage the unprecedented opportunity we have to serve customers better, design societies we want to live in, and in the process, lift up our fellow humans? #CarpeDiem!
More Good Stuff.
The Emerging Art of Ecosystem Management (BCG): A solid piece on creating and managing ecosystems.
Ecosystem Readiness (Frank Diana): An excellent blog by futurist and thought leader, Frank Diana. Start with this article on ecosystem readiness and keep exploring the rest.
The Ecosystem is the New Organization (Sogeti Labs): A brief overview of some key concepts.
The Next Big Business Buzzword: Ecosystem (Forbes): Some lighthearted points along with a very real one. “The word ecosystem is important because its growing usage points to a profound shift in how society thinks of economic value. It says that individuals matter. That their actions can transform industries, even the entire world. That little things can make a big difference. This is not just fuzzy talk. It’s actually true, because every great company or product started with two people sitting in a coffee shop scratching on a napkin. Or some variation of that.”
Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You (book by Geoffrey G. Parker, Marshall W. Van Alstyne and Sangeet Paul Choudary): Just a classic. A must read.
ON Innovation (book by Terry Jones): An amazing innovator and future thinker to learn from.
Thinking in Systems: A Primer (book by Donella H. Meadows): Brilliant work by a brilliant human here. “The systems-thinking lens allows us to reclaim our intuition about whole systems and hone our abilities to understand parts, see interconnections, ask “what-if ” questions about possible future behaviors, and be creative and courageous about system redesign.”
BIZBOK® Guide (Business Architecture Guild®): Get it from the source. Make sure to check out Section 2.2 on capabilities, Section 2.4 on value streams and Appendix B.6 on value networks. (Business Architecture Guild® membership required.)
A Healthy Economy Should Be Designed to Thrive, Not Grow (TED Talk): A TED Talk by Kate Raworth that makes us think differently about a higher ambition: to meet the needs of all people through regenerative and distributive design of our economies.
¹ Diana, Frank. The Rise of Ecosystems, January 2018.
² Meadows, Donella H. Thinking in Systems: A Primer. Chelsea Green Publishing, White River Junction, VT. 2008.
³ Diana, Frank. Ecosystem Readiness. March 2019.