Monday, April 13, 2020

The “Nonlinear” Business Logic Behind Digital Organization

The nonlinear vertical business logic comes through different characteristics such as mixed structures, hyper-diversity, volatility, ambiguity, unpredictability, and increased flux. Business management.

Business logic is a blanket term that covers several very different types of components such as business rules, workflows, algorithms, and integration logic. The very natural attempt of humans to take powerful techniques such as linear mathematics or logic and apply it to the world very quickly comes up against insurmountable difficulties.

Logic is often nonlinear and multidimensional in today’s “VUCA” world. Here are a few perspectives on the multifaceted logic behind running the contemporary business.



Decision Logic: Running a business is fundamentally iterative decision-making and problem-solving continuum. Without strategic clarity, clear logic, and system reasoning, decision making is simply becoming serendipitous with a high-rate of failures -the shortcomings inherent in a current decision-making knowledge context. Overly static decision processes or lack of structures will also cause ineffective decision-making. There is nonlinear logic behind decision making because there are so many variables you just have to weigh, sometimes you have to sacrifice to save and other times you need to disable one thing to enable another. Effective resource allocation and utilization is an important factor for decision making. A dynamic decision-making scenario helps to both leverage a logical decision process as well as evolve the emergent business property.

Modern businesses are systems, the component parts of a system can best be understood in the context of relationships with each other and with other systems, rather than in isolation. The nonlinear business decision logic involves both internal factors, such as decision situation, context, relevant knowledge, resource, etc, as well as external factors such as technical factors, political and legal conditions, competition and consumer demands, etc. Good decision-makers are the great thinker with logical thinking. The logical mind is not equal to conventional thinking, the most important capability of cognitive mind with strong logic is the willingness and ability to seek out knowledge, gain an in-depth understanding, identify problem areas, dig into root causes, in order to make sound decisions and choose solutions and move forward.

Business Model design logic: At the strategic level, business logic is nothing but Business Model to make a profit. The business model is an entire frame of elements that describe the intents and constraints of an organization. The logic behind it is about “why” the business works,“what” the business is all about or what it will do for customers. It is an analytical model that lists all of the sources of value, cost, and risk, and contains formulas with strong logic to interconnect them and come out with a detailed business plan.

Business models describe, as a system, how the pieces of a business fit together. It usually contains numeric values representing one's assumptions about the market and costs, etc. With strong logic, the business model designers should methodologically review a list of levers for business model components, and systematically generate the list of potential business model options, and then, narrow choices based on their business core capabilities in order to maximize the multidimensional business value.

Integration Logic: Digital organizations are dynamic and ever-evolving. There is a shift from what a system IS to what it DOES to its context; also a shift from seeing a system as a set of interconnected components to seeing a system as a set of interwoven threads. It’s important to understand the coherent Business Logic of the whole enterprise, mostly not at the level of part of the organization. It involves multiple integration logics such as technical integration, operations integration, GRC integration or customer-centric integration, etc. Without that whole picture with cohesive integration logic, separate parts of the organization will care for their own part and maybe for interfaces and not more

Integration has a set of costs and benefits that are determined by the situation and what is integrated. Because each integration effort perhaps spins off into chain reactions that may not be recognized until the budget is gone. Integration can be very difficult and hard to justify ROI. Implementing integration logic combined with the process maturity to ensure ROI, security, data consistency, and interoperability remains the goal of business to accelerate business performance.

The traditional management based on linear logic and reductionist management disciplines is outdated, causing silo, frictions, and more business pains. The nonlinear vertical business logic comes through different characteristics such as mixed structures, hyper-diversity, volatility, ambiguity, unpredictability, and increased flux. Business management, especially at the senior management level, should take a holistic view, apply interdisciplinarity for planning, and practice integral digital management for improving organizational performance and maturity.


  




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