Sunday, April 26, 2020

Business Model, Business Strategy, and Business Architecture

Dealing with dynamic business reality is a strategy’s job from “Why Business Models Matter” to “How to leverage Business Architecture as a facilitation tool” for implementing strategy, driving change, and orchestrating digital transformation.

Today, “business model,” “business strategy,” and “business architecture” are among the most sloppily used terms in business; they are often stretched to mean everything and end up meaning nothing.

Business models describe, as a system, how the pieces of a business fit together. The business strategy articulates what you intend to do or accomplish in terms of managing both resources and constraints to having the critical success factors in place and achieve the set of strategic priorities. Business Architecture contains the organizational context and is strategic in that it gives direction to the business design and transformation.

Business Model is a simulation of different strategy scenarios; Business Architecture helps to leverage multi-choices of strategy: A strategy is an architecture for change. A real strategy is a complex scenario, and it is supported by a model - an analytical business model. People want to see how things add up. That is the difference between a business model and a business strategy. There is a process of considering different strategy scenarios. Each scenario is backed by a business model. The strategy scenarios are then compared based on their expected value. A business strategy is conceptual and usually consists of a set of choices about what to do. The business model is then the simulation of business strategy, and it is a numerical discrete event simulation. The real value of Business Architecture is about keeping the priority in balance and visualizing business improvement efforts.

A business model is a description of the way in which an enterprise intends to make money. A business strategy diagnosis problems; makes choices and takes actions. Business Architecture designs the fundamental organization of a business system: A business model describes what a business will do to make money. A strategy describes how a group of people should change their behavior to help either improve the ability of the business to perform as its model predicts or to change the model to behave differently. Business Architecture is the fundamental system of the business embodied in its components such as structure and processes, their relationships to each other for streamlining business flows, and to the value system environment, and the principles guiding the business design and evolution to realize the vision and implement business strategy.

The business model is usually a quantitative and analytical model for how the strategy will work. Business Architecture can bring together purpose, use, aesthetics, and more to create an environment to suit the purpose: The way that the business plans to make money is a strategy for making a profit. The business model is how they plan to do that. A business model's strength is that it focuses attention on how all the elements of the system fit into a working whole to implement the strategy. Business Architecture brings a systematic understanding of how relationships, ecosystems, market dynamics, and the connections between related business functions. The essence of a business model is that it defines the manner by which the business enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit.

In today's digital dynamic and unstable business circumstances, sooner or later, and it is usually sooner, every enterprise runs into competitors. The evidence points to strategy emerging rather than being prescribed. Dealing with dynamic business reality is a strategy’s job from “Why Business Models Matter” to “How to leverage Business Architecture as a facilitation tool” for implementing strategy, driving change, and orchestrating digital transformation.

12 comments:

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