Friday, June 7, 2013

Three Characteristics of Digital Enterprise

Increasingly, enterprises find themselves enmeshed in "eco-systems."

Digital enterprise with organizational democracy is a way of designing organizations to amplify the possibilities of human potential and collective human capabilities for the organization as a whole. Enterprises of the future are increasingly exhibiting such characteristics in various shades and intensity. Architecting for and operating in such environments will demand a different level of architectural maturity.

Enterprise architecture and enterprise architects have a central role in defining the enterprise of the future. This is different from the current thinking where EAs largely try to fit in with the current enterprise. Current thinking aims to define the target architecture (within the contours of the existing enterprise), but EAs should define the target enterprise (not merely the target architecture). There are three characteristics of a target digital enterprise.

1. Nonlinear & Emergent Complexity

Complexity has increased exponentially. Imagine the complexity that comes in due to these characteristics (less structure, fewer rules and regulations, diversity, ambiguity, unpredictability, lack of linearity, and increased flux) working and impacting together.

  • The multitude of digital complexity: The emergent digital complexity includes hyper-connectivity, hyper-diversity, hyper-dynamism,  and the non-linear complexity such as less structure and multi-dimensional views, or design complexity such as highly-productive complexity, value/cost/risk ratio complexity; digital enterprise democracies are inherently and intensely complex. Moreover, these changes and more do not happen in isolation from each other in predictable ways. They act as a complex and unpredictable system, feeding, amplifying or ameliorating the effects of others and shaping enterprise architectures.  
  • Managing complexity is an EA imperative. Most obviously there is a need to define precisely what processes and decisions can be executed locally and which centrally and ensuring that operational systems support those definitions. The question is whether the way enterprise architecture is done today (primarily in a top-down linear approach) sufficient or do enterprise architects have to explore new archetypes - more democratized enterprises to deal with complexityEspecially for those legacy industries and enterprises, as Big 4: Cloud, Social, Mobile, and Big Data are all shaping some wind power as four pillars to such a digital business transformation, in fact, it requires stronger, better and super capable enterprise architects to do well in environments which are characterized by less structure, fewer rules and regulations, diversity, ambiguity, unpredictability, lack of linearity and increased flux.     
  • Globalization is another key driver that plays a role as including many other factors to consider: If enterprise architects have to influence how enterprises create long-term value for all stakeholders, they (EAs) better start to understand the process of democratization, the complexities it creates, and the role EAs can (and should) play given that this is an architecture issue. The bottom line is this; there are many rollups within EA and the enterprise architect, as ever, they must be the master planner of the new state to craft business artifact include: 
Leadership styles
Governance archetypes
Planning approaches
Customer engagements
Employee involvements
Product/service developments
Organization structures...

2. Organizational Democratization

Enterprise democratization could be at the tipping point for the biggest business shift, It means that the shift from being autocratic to democratic is transformational and profound (unparalleled in management history). Historically, autocratic enterprises are a result of natural organic evolution (not typically the outcome of architecture thinking). - It is hard to get democratization right - hence it will need to be thought through and "architected." 

Is complexity the cause of or the consequence of enterprise democratization? That democratization introduces complexity, and increasing complexity requires democratization (closed reinforcing loop), require enterprises to rethink their structures and behavior. In this scenario, what does the enterprise architect bring to the table?

  • Digital Enterprise Democratization is to enforce Culture of Innovation: Is democratization the management innovation we have been looking for, Enterprise Democratization is, in the first instance, NOT an EA issue, it is a question of understanding and changing Enterprise Culture. It is a cultural issue. Then we can use EA as changes in enterprise culture may require changes in business processes and their supporting information technologies.  There are many good reasons EA needs to be involved in designing the social domain and the drivers are everywhere including the challenge of attracting new young talent such as the Millennial generation especially are driving changes in “how we work” (requiring work shifting design) and they expect to work from anywhere at any time. An observation of human nature, as it applies to organizational “management models”, is that it is not universal. For the most part, organizational human nature is a reflection of the underlying national culture. This is a challenge for multi-national organizations that can excel in performance in the different regions and grow to be a truly global enterprise.  
  • Enterprise Digital/Social Architecture (ESA) is one of the most exciting focus areas for EA. The people construct social domain of the enterprise has always been neglected or ignored when practicing EA discipline and the shift from push power (autocratic) to pull power (democratic) is profound indeed. People and cultures are inherently complex and intentional design in this area will have a positive benefit for any organization. Change from capital centered structures to knowledge-centered structures,  dissolution of rigid organizational hierarchies into self-managed relatively autonomous units that use local knowledge to address the unique market dynamism  
  • Enterprise Democratization (ED) is a Governance Issue (that influences and gets influenced by culture). EAs today are extremely inward-looking - not attempting to understand the system their enterprises operate in, let alone create it. Enterprise democratization requires understanding and changing organizational culture and then changing governance mechanisms, processes, and the IT support of those processes and mechanisms. How do current day EA frameworks stack up depends on the degree to which they effectively support enterprise governance; and the degree to which an EA framework addresses Enterprise/Organizational culture.

3 Enterprise Enmeshed in an “Eco-System”

Increasingly, enterprises find themselves enmeshed in "eco-systems," whether they like it or not. For the most part, while they can influence and get influenced by these "ecosystems," they have limited "control" over these eco-systems. Autocratic enterprises are limited by their DNA to take benefit of such ecosystems - after all such systems are most likely to have a lattice-based architecture, rather than a hierarchy. So we now have architectural mismatch wherein enterprises that are internally hierarchical, have to operate in an environment where the external structure is a lattice.

  • Enterprises have always been parts of simple or complex eco-systems. That is the fundamental nature of the marketplace and the environment within which the enterprise functions. In order to function, an enterprise has to be linked to the many and varied ‘touchpoints’ between itself and the marketplace environment of which it is a part. Why should it matter if the internal organization is hierarchical and the eco-system is lattice? The enterprise is nothing more than a ‘switch’ in the network lattice of the eco-system. The aspect which matters is ensuring that the enterprise is connected to all the appropriate eco-system, lattice, or otherwise, touchpoints.      
  • The optimal internal structure – autocratic <-> democratic – of the enterprise is the one which provides the greatest effectiveness and efficiency, and depends, in large measure, on the nature and purpose of the enterprise. Business change is hyper-accelerating, especially as it relates to the people and value creation dimensions and it is more important than ever to engage sharp thought leaders to help the enterprise chart the course and set a better sail. It is critical that EA diligently focuses on the people construct and through deliberate design, craft a more socially connected and dynamic people-centered eco-system, taking full advantage of the massive shift from push to pull power.  
  • EA is not only a mechanism; it's also a philosophy and methodology to enable such a best scenario. In the digital enterprise, it is not necessarily the case that a less structured and more dynamic enterprise means a diminished role for EA. Such an organization essentially needs strong, viable DNA to sustain its operation and ongoing flexibility and agility. EA will assist it in determining what it needs to focus on and strengthen in order to attain this state. As long as the interfaces are provided and remain, why it should matter what happens. In contrast, (1) individual enterprises and the eco-systems they operate in are both complex adaptive systems. Such systems do not operate in a linear, predictable way as the whole notion of the "master-slave" relationship does not work and (2) such systems also have the added complexity of not just dynamic relationships but also dynamic nodes. 
It probably comes to the conclusion that if one wishes to pursue enterprise democratization, then EA provides a philosophy, methodology, and mechanism for making it more visible what is being decided about and therefore will become a valuable tool. Digital enterprise with organizational democracy is the means to the end, it means people enjoy sharing knowledge, values, and wisdom, then divergent thoughts can be converted into more objective and effective decision making by wise leaders, execute the strategy and create values for all shareholders in long run. 



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