If you had a magic wand and you could radically modify the way corporate IT engages itself in organizations, what would you change?
That's the question we asked Mike Rosen, Chief Scientist at Wilton Consulting Group, and co-founder of the Business Architecture Guild.
In answering the question, Mike provides many provides loads of wisdom on:
Hello, this is R.M. Bastien, and welcome to another episode of the podcast series on radical change in Corporate IT. Today we have Mike Rosen, which is the Chief Scientist at Wilton Consulting Group. He provides senior advised to IT and business leaders, and also architects, on using architecture for digital transformation and improved decision making. He is also the founding member and Vice-President of the Business Architecture Guild, which has created the well known Business Architecture Body of Knowledge (BizBoK) which provides invaluable guidance for performing business architecture. He was, prior to that, Global Research Vice-President for Strategic Architecture at IDC, which is an IT research and advisory firm. He has work with over 100 enterprises from small to large in numerous industries in 10 different countries to help them devise transformation strategies, enterprise solutions and create or improve their architecture programs. Mike has been around the block... Fourty years now in IT. And he's had the privilege of having various roles, such as a CtO, chief architect, product architect, technical leader and even developer for commercial software products. Good morning, Mike Rosen.
Good morning, Mark. You make me sound very important.
Well, you are very important. First, I've been knowing in less than a year, but I've heard his wisdom. Mike, if you had a magic wand --leaving aside, you know, the change management of the challenges of getting to that-- and you could radically modify the way IT engages in organization, how would you redefine the roles, the skills, interactions, collaboration models, structures, incentives or anything worth changing, in your view, to significantly raise the value that IT, as we know it today, provides to the organization?
Quite a interesting question. The world of business and IT has changed drastically in the last few years. A lot of different people who have come up with a way to characterize that change is I like what Jeanne Ross and Cynthia Beath, Martin Mocker wrote in their recent book called Design for Digital, where they say the three drivers are availability of ubiquitous data, unlimited connectivity to the enterprise and the whole ecosystem, and the ability to apply massive automation to improving, understanding and efficiency and effectiveness. So the question is, how do we... what do we have to do in terms of this radical rethinking and shift to take advantage of these three drivers? And the challenges that those three drivers present run into challenges that we've had over the last couple of decades of the enterprise: this won't work if you have five different ways to connect into the enterprise; it won't work, if you have seven different views of your customer, right? To take advantage of these new drivers, you need consistency, interoperability and collaboration across the entire enterprise. But there's more than that. In order to take advantage of the automation and the ubiquitous data that is provided through this unlimited connectivity, you want to collect as much data from as many different sources as possible, combine it and then use the automation to evaluate that data to discover new relationships, to get new knowledge and new insight. The challenge is... a challenge is that the way most organizations have been structured are around independent lines of business, each with their own funding, achieving specific local, if you will, local to that line of business, goals rather than in order to achieve the larger enterprise goals. I think the fundamental shift has to be around accountability, The accountability for a project and for a business owner and for a line of business leader has to be twofold. They have to be able to achieve the goals for their line of business, and at the same time they have to be held accountable for helping to achieve the enterprise goals and helping to build up this cross-enterprise platform of information and automation capabilities that will enable that organization to move forward in this new economy.
Really interesting, Mike. So I'm trying to rephrase here and make sure that I did understand. One of the points you're making here is that the different lines of business today have budgets to do things for their lines of business. What you're saying is that something has to change so that whatever is done for each of those projects or portfolio for these lines of business, it also brings value to the hole enterprise. Is that what you're referring to in terms of responsibility or accountability?
Yes. So if I have a line of business and in order to achieve some goal for my line of business, I make a decision which optimizes my line of business but sub-optimizes the enterprise, then maybe I've met my my goals as a line of business leader, but the enterprises is worse off for it. So what we need to do is change the way projects are funded in line of businesses are held accountable so that when they do something, it has to meet their goals and the enterprise goals at the same time. So you asked the question about how it would roles and skills and things need to change, along with this sort of shift in accountability and focus. And so I think there's quite a few different aspects there. In terms of the roles, I think a program management office or project management office that manages the portfolio of projects, the role that they play expands a little bit and that they have to have more of an enterprise perspective of how those projects fit into into the enterprise, how they help achieve some strategic direction and perhaps more authority in terms of influencing the direction that individual projects take to make sure that they're aligned with the enterprise goals, the technology strategies, the enterprise strategies, achieving objectives as well as the specific project objectives. I think we also have to be better in terms of how we specify what objectives of the specific projects are and add to the role of the business owner of that project, the requirement to implement, as part of that project, metrics and KPIs that measure achievement of those objectives. So I think there's an again and project management office has to make sure that that's part of what that project is achieving. In terms of skills. I think there's a couple of different aspects. It's, you know, I've been in IT, as you mentioned, 40 years and it's always been, you know, that the IT has to learn to speak the language of the business. And, yes, that's true. But it's also true and more true now than it used to be. That business must also learn to understand some aspects of technology, right? They don't need to be programmers. They don't need to understand how to migrate to the cloud. But what they do have to understand is their role and responsibility in acquiring and using technology across the enterprise, right. And it's the lack of understanding of the business' role in technology that's led to their being seven different customer databases instead of one. In today's world, where everything is driven by technology and its digital, it's it's no longer sufficient to to have business people who don't understand at least a little bit about technology and their role in it. One of the interesting statistics that that IDC came up with over the last couple of years is that a much higher percentage, I think the percentage now is around 30%, of new CEOs (Chief Executive Officers) have had technology leadership role somewhere in their resume. But it's not just the business that needs to learn to do things differently. It's both technology, and I think, especially the technology architecture. One of the challenges that I've seen over the last 20 years is that most architectural programs are focused on creating architecture. So they understand, I mean, what's the current "as is" situation in the enterprise, what's the "to be" where we want to go over 2, 3, 5 years. And then they do a gap analysis and they come up with a plan to get there and they create maybe a fantastic reference architecture for where the organization ought to go. And then they give it to people and expect them to follow it. Well, guess what? That's that's never worked right. Because the value of architecture doesn't come from creating architecture. The value of architecture's only realized when we actually use the architecture to make better business decisions. If we think about that, what we need to do is focus our architectural team in architectural programs, on helping business stakeholders use that architecture to make better decisions. And that fundamentally changes the way we structure our architecture team and architectural program. If we focus on one of the key enterprise decisions that need to be affected to achieve this digital future, where architecture got an opportunity to help make better decisions, who makes those decisions, and how could architecture provide some kind of information to that person that would allow them to make better decisions. And what would that information look like in the perspective of the person who we're trying to influence? If you answer all those questions than what you should be doing and producing as an architecture team becomes obvious. Usually we create architecture without thinking about what we're trying to achieve, or who were trying have use it. So I think that's a major shift that we have to see in terms of technology and especially technology leadership and architecture.
Does it mean that you would see enterprise architects or business architects as the key roles to really connect with the business, allowing them to better, well make their business in genera. And like you said (I really like that) better business decisions. Am I seeing this right?
I think that architecture, whichever shape it is business, technology, data, whatever is responsible for understanding the big picture across the enterprise. And so if we think about business, if we have a business architect working with a business owner in the line of business, they can help that business owner through some set of more rigorous and formal analytical and evaluation and design decisions, and that's a great role for them. In addition to that, though, their role is also to be the bridge between the limited context of that line of business and their project and the larger context of the enterprise. So I think the architect has two roles, but a primary role is to be the bridge between an individual whose job is not the enterprise, how to help that person understand what they're doing and how it fits into that larger picture. So again that accountability toward individual goals and enterprise goals is met. Again, architecture, you know, is a formal discipline where we apply critical thinking and abstractions, conceptualization and visualization to help understand problems and suggest solutions, evaluate their solutions and then document them. That's a skill that can be used in that architects can help other stakeholders with.
At the beginning of the talk, you talked about a knowledge gap where there's a language gap or vocabulary gap between IT people and business people and at some point, business people should be closer to technology by -and I like that because you said-- by at "least understanding what their role is within the organization". But at some point, at some point, it stops there and they need to rely on someone else to explain to them what is technology, what it's used for and so on. Would you see the architect as the person having that responsibility, to translate the understanding of the business to the more technical people that will have to implement something more technical and but the other way around to explain to them, in layman's words, or with a vocabulary that can be understood by business people, what it's all about and what they should know.
I see that an architect has a role in that and certainly at sort of the higher level at the strategy level, at a program or initiative level, where we're talking about a fairly broad set of concepts and the level of detail is probably above the specific technologies. But it's at the technology opportunities that we want to take advantage of putting that strategy together or creating program or initiative. So I think the architect has a role in having that conversation with the business and helping them understand what the opportunities are. In some organizations, we'll have a business architect working specifically at a project level, and so there they're going to carry on that discussion at the next level of detail. There's somewhere, there's a crossover between what we expect business architect to do and what we expect the business analysts to do. I think there's a lot of overlap between them. Traditionally, that role of translating between business speak and technology speak has sort of fallen on the business analyst. I think that they've done a good job of that and we still want to engage business analysts in project, development, design. I think where the architects have an opportunity to help carry that conversation up is in terms of the higher level strategic development, big picture of you, and the opportunities that are presented to the organization at that level.
So it means Mike that then the architects will really need to learn new things on business opportunities.That would change... that would change the type of work that architects are doing today, wouldn't it?
Absolutely. The opportunities that the digital economy, digital transformation present to many different roles, you know. So there's lots of opportunities for new strategies at the enterprise level. But it's also a real opportunity for architecture to step up to a more strategic role within an organization by again making those digital opportunities more clear to the people who are developing the strategies and by putting together an architecture that creates a platform where those opportunities could be exploited. So I wanted to wrap up question one with... So I wanted to, in terms of this fundamental shift in radical rethinking, I wanted to tie in some thinking that I've been doing with IDC around what I might call the "economies of competition". I think we're all familiar with the economies of scale. Economies of scale tell us that the cost per unit of production decreases, the more we can produce so that we can amortize the cost of the infrastructure across more units. So we're all familiar with that. And then over time, as manufacturers improved and things got more sophisticated, we shifted to what's called the economies of scope. And what the economies of scope say are that we can gain advantage by producing more than one product over the same set of infrastructure. If we can produce two products for less than twice the cost of producing one, now we've got some economies of scope. And so we've seen many companies compete in terms of the variety of products that produce. And this sort of lead into the world of what we might think of today as mass customization where, you know, we can order the products specifically, exactly the way we want it. And the cost of the company's that ships 5000 variants of the same product in a way where it doesn't cost them any more to produce a variant than it does to produce a standard thing. Most people are familiar with the economies of scale and scope. Today we're entering a new era, which some people call the economies of learning. What the economies of learning say is that the thing that's going to make us more competitive is our ability to learn and then to use that learning to improve efficiency, effectiveness, our ecosystem, our customer satisfaction. And so the structure of our organization, both technology and business, needs to start focusing on how do we collect all the information from all these different sources, use technology to learn from that information, and then use automation to capitalize on that learning so that we do a better job of efficiency and effectiveness and interaction and engagement and competition. It's It's not just like okay, we need to learn more about our customers, so we have better customer engagement and we have, you know, analytics about the customer experience, and we can predict needs, we could do curated products, we can optimize our fulfillment channels, we can do marketing, sales, service, brand management. We can have a digital trust management, you know, all that's important. But also, we need to understand how we improve our manufacturing; how we do just in time manufacturing; how we optimize our supply chain; how we optimize supply chain accountability; how we do intelligent sourcing; how we create connected assets and how we learn from that; how we do smart manufacturing; how we automate our logistics; maybe how we improve our planning and simulation through digital twins; or have predicted inventory or improved risk management or quality management; or better contracting or third party negotiations or, you know, competitive analysis. There so many different ways that we can learn and use that learning to improve our performance as an organization. And the companies who are going to be the most competitive are going to be the ones that learn across that entire spectrum --and I just mentioned a few-- learn across that entire spectrum and that are continuously learning and improving for their engagement with their ecosystem, their efficiency, effectiveness their set of products, their customer satisfaction and their competitive agility. So I wanted to sort of leave with that thought. I think not many people have given proper amount of attention to where economic advantage might be moving.
If I can rephrase, you say Okay, organizations need to move to learning organizations. And most of the literature or the visibility these days are about learning more about your customer, which is more learning about the external part. But also internally. And you went on with many examples of things that are maybe less publicized these days, but I really important for competition, which are more "internal" is that right away to see it?
Absolutely. The learning should be across the board. And again,the companies that only learn how to interact with their ecosystem, their partners, employees, customers, whatever better, that's going to be great. But some predictions are that organizations that apply this learning to production will see up to a 40% increase in efficiency and effectiveness. If they've got just as good of a customer engagement as you are almost as good. But they're 40% more efficient. You know, you're not you're not gonna be competing very well. So it's It's both the ecosystem engagement and the internal operating model as well as the planet that you have to apply this learning, too.
You started this thread here talking about economies of competition, so I'm having a hard time making a link with that expression (Economies of Competition) with learning organization, economy scale, economies of scope.
Yeah, so I categorized these three different competitive strategies. One is the economies of scale --that's that's a competitive strategy. That gave way to a different competitive strategy --which is economies of scope. And now we're seeing that giving way or, you know, being supplemented with a a new competitive strategy, which is economies of learning. So I sort of grouped those three different strategies, as as "economies of competition".
I see OK now I understand. Okay, that's cool.
It's my it's my term. I don't know if anyone else is ever used it.
The first time I hear it. To talk about this economies of learning. Do you see any impact of that on the way IT engages into the organization in it to come back to the original question? How should I interpret that in terms of the engagement model of IT within organizations?
So I think there's there's a couple of aspects. One is from a pure technology perspective, IT has to build the platform that enables the Learning Organization. All right, so it has to have the platform that collects the data that needs to be collected that combines it together that allows for for that data to be analysed and for insights to be exposed. And then they have the opportunity to help and interact with the business around using that platform to create new learnings. So again, I think there's at least two parts. One is we need to build the capabilities to learn across that broad spectrum of opportunities, but then we need to help the business understand how to use that platform, to learn the things that each of those different parts of the organization need to be continuously improving on.
Great. Thanks, Mike. Okay, so, is there any other topic related to the first question that you think is important?
Um, no, I think I think I covered my full page of notes here!
Haha, cool... Okay, so the next question is, you had your magic wand, but we all know it doesn't exist. So if you had to provide your advice to non-IT business leaders about the first question, where do you think they should start getting involved?I think there's two places. So, uh, one is, I think around the question of accountability and maybe starting at the program management office to give that office more authority around selection of projects that meet enterprise goals. Over time, I think the accountability at the senior leadership level needs to change. But to start with, I think they could be much more tactical at starting at the program management office. But at the same time, I think that they want to start thinking about what are our opportunities for learning and how can we start to put a strategy in place, which is going to allow us to evolve over time into a learning organization. I think immediately they can start by starting to provide consistency and interoperability and a collaboration sort of at the enterprise level between lines of business through tactical program management, portfolio management decisions, and then begin to again address the accountability and the ability to learn over time.
And that's interesting, Mike. It means also that more accountability or more authority to let's say PMO --although it might change names-- would also, I believe, it would probably pull or force the organization as a whole to start checking for things they weren't checking before or measuring things they weren't so that they can better provide feedback to the... each of the business units on their projects and how they fit well within the overall goals of the organization.
There's two aspects to that. There's one. Is there's some simple, simple things that the program management office might not already be collecting? Like how well did you actually meet your target's of on time on budget, costs, return on investment predictions? And, of course, a program management offices should be should be doing that. And they should be comparing projects and lines of business and implementation, teams against each other to come up with, you know, sort of a benchmark and an average, and they should be able to say projects that did it this way, let's say that had a business architect working with them come out better. So let's start involving our our development processes and our decision making to the ones that are working better. But there's also the question of how do we define design, instrument and measure business objectives that these projects are intended to achieve, and that's a difficult area. But I think that's an area that organizations start need to start doing because that's one of the things we want to be able to learn about in this learning organization is how effective are we at achieving our outcomes. And how can we use what we learned in achieving outcomes A, B and C in terms of how we design, what we want to do in X, Y and Z.
There are lots of organizations, that... for which it it is difficult for any IT related endeavor to measure more than the basic things that have been measured for the last 30 years in my case and that aren't providing that much of insights are you can't really learn from these these measures.
But... but it's important as organizations are shifting so many things and they're trying to become more agile and they're looking at agile processes and DevOps processes and, you know, are they actually comparing whether they're agile processes are delivering better results. I hope they are of course....
I do not have any statistics on that, but my observation is that they don't know. They can feel it, I mean, they have obvious anecdotal evidence of the benefits of it. But really thorough measurement where they can compare and provide numbers. Most organizations do not.
Yeah, there's lots of benchmark data that shows how, when agile has done well, what the benefits of that are right. There's lots of bench want data around when you do DevOps well, what the advantages of that are. But many organizations adopt these things, you know, I like to call it scrum-but. I'm doing scrum... but I'm not doing pair programming. I doing scrum... but I'm not keeping track of velocity. Doing scrum... but we don't have a daily stand up, you know... So it's you're not really doing it. And is that implementation of scrum actually achieving results? And if you'd measured it, would you would you adopt those things that best practices have demonstrated deliver value? But I think we've diverged from our question of radical rethink.
My takeaway from that is that you say, oh, we should start with accountability and and learning. And one of the takeaways is that indeed, it will drive more, measurements internally at least. For some organizations, starting to measure things that will challenge the way they work more than what they've been used to is, is and of itself is radical. It's difficult. Yes, it is. It is difficult. Okay, so any closing comment, question anything?
Well, it's been a pleasure chatting with you about this. Yeah, I hope it helps people who listen to the podcast to start thinking about this idea of a learning organization and the competitive advantages.
I hope too! And I can confirm it's been a shared pleasure to have you today, Mike. And hopefully I'll have other questions at some other point in time where I can again pull your ideas out of this long experience, you have, an acute observation of what's going on out there, so thank you! thank you again, Mike Rosen. Have a great day.
Okay, you too.
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