Archive for March, 2011

Understanding the what, how and why of the business


Organizations grow, and overtime become very dependent on the technology teams that support them. In their bid to develop the business the number and complexity of projects requiring technology solutions grow and as a result the technology team grows to support it. The “fresh blood” joins and is immediately put to work on solving a specific problem. Over time they being to get a bigger understanding of what it is the business is trying to achieve and their knowledge of the business domain begins to catch up to their more senior and tenured peers. As they start to reflect back on their earlier efforts a not too uncommon response is…

“man, if I’d known then what I do now, I’d have done that differently”

What was missing ? To get there, we need to understand that technologists have a propensity to be more geeky, and in turn believe they are less stimulated by the world of business, there just there to code right! As careers develop some have an itch in their curiosity, and as they scratch the itch they begin to develop a better business sense. These are the folks that often move into ever-increasing customer and client facing roles and often end up on the business end of technology, or in the business itself pulling technology along behind them. This role transition brings a new focus, to the point of contributing technology to the business direction, rather than technology being a response, proactive engagement rather than reactive, whilst also having the aptitude to understand the technical implications of any direction made and communicating back in geek-ease to those developers who just code! Given their background they see the need to define a degree of rigor, that pure business folks never had, in defining what the organization is doing and where it’s going. This rigor, and in using techniques that the business minds can relate to, provides a mechanism to develop a map of the vision and direction of the organization denoting where it is, where it’s heading and why.

Whoa there you say…

“if we document the business we’re writing down the recipe to the secret sauce, we can’t do that!”

Well you can, as there is a difference between an idea and its execution. After all that’s what NDA’s are for right, you have to trust the members of the organization, partners and vendors as the people who are realizing the business strategy, and let’s not get into key man risk!

This mapping can then be used as a tool for providing context to the new technologists and educate the enterprise as-a-whole. This in turn will help align technology with the business direction to everyone’s benefit. A win-win ?

So you say…

“what are these mapping tools if which you speak ?”

Well, before we get there, lets talk about a classic way that business direction is communicated today: Evey year usually, beginning at the end of one year and running into the first month or so of the next, there is a regular activity of mapping out KPI’s across the organization, based of a set of vision dictates that come from the top. These are often trickled down with the applicable department spin added that meet the needs of that level of management all the way to the individual contributor.

The rest of the year is spent trying to achieve goal based on this. I’m not going to get into a discussion of the merits of the approach; only to say that this does not lead to alignment as the big picture has been muddied and there is no context, and after a few months the direction changes anyway as a result of external influencing factors. This is but an example, but its not the tool we’re looking for.

In this article I’ll introduce a tool that I’d discovered a year or so ago and recently got to understand and practice more by attending a Business Model Gameferece event organized by the Innovation Management Institute at The Hub in San Francisco.

Business Model Canvas

Every organization has a business model whether is The Long Tail, Multi-Sided Platform, Free, or Open, or a combination of the same. Mapping out and evolving this model provides a mechanism for communication and understanding. The challenge is how do you document your organization’s business model, or even un-bundle each of its business models, in the hopes that you can then analyze and evolve that model.

Alex Osterwalder led a cohort of innovation leaders in the development of the Business Model Canvas as a mechanism for the documentation and development and evolution of Business Model Generation. The canvas provides a framework that captures what makes up Customer Segments, Customer Relationships, Channels, Value Propositions,  Revenue Streams, Key Activities, Key Resources, Key Partners and Cost Structures, along with the relationships between them.

The visual paradigm encouraged by this approach provides a framework that readily allows the business model story to be told, not only as an education vehicle, but as a mean to pitch ideas or engage business discussion both internally or externally, up and down the organization, and with partners and vendors.

This model can be overlaid with a SWOT Analysis to identify areas of the business model that need developing, and inspire ideation and a means to test new business ideas with scenarios in a common framework. Additionally aspects of the business environment can be included in the analysis and evaluation of new ideas to include external forces and trends. Business Strategies and the resultant technology direction can be discovered and defined.

The canvas becomes a working document and an essential tool for communicating the business strategy across the enterprise. This is something that with a little study and practice can be used today, or by finding a facilitator.

So if you’re a technologist, find a business advocate, if you a business advocate promote this approach in your own organization and your own management, and if its new to you find someone to help you facilitate a trial. Practice makes perfect, or at least the chance to make a difference. Business aware technologies often make good facilitators. The other ingredient, if you want to really make this work is to bring in a graphic artist to take you canvas and visualize it, as picture speak a thousand words:

Artistic canvas images courtesy of Business Models Inc.

The canvas is available for use for FREE under the Creative Commons in your organization. Alex, and specifically www.businessmodelgeneration.com of course require the accreditation for its use.

Those with an iPad, there is also an application prototype under development.

In future articles I’ll introduce some more tools to help close the gap between business and technology, and even help the business itself.

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