Disruption, Innovation and the Art of Business Architecture

Over the past decade, the Business Architecture community of practice has built a firm foundation of methods, practices and tools that allow organizations to map their place in the business world, assess the viability of their capabilities, and chart a course towards their future. And yet, Business Architecture still has a long way to go to permeate the public consciousness. In fact, while concepts such as change, disruption, and innovation have fired up the imagination of entire industries, Business Architecture’s public brand as a game-changer has drawn more muted reactions, as the Google Trends diagram below starkly demonstrates.

Figure 1: Google Trends graph (dated 9/16/2017), keywords: disruption, innovation, Business Architecture

The Complex Organization

This article posits that the traditional methods comprising the standard Business Architecture canon assume an orderly, slow-changing and relatively predictable business environment. An environment devoid of any major external or internal upheavals; an environment that can “wait” for the Business Architect to, well, architect. In other words – it assumes an environment which doesn’t exist in real life.

In real life, business organizations are subject to continuous change which occurs not linearly, but rather in fits and spurts, as a result of external events and stimuli which impact the organization in various ways, and in turn trigger internal reactions and responses of lower or higher intensity. Thermodynamics (the branch of physics that deals with the relationship between heat, work, temperature, and energy in a system) stipulates that in a closed system, the level of disorder can only increase as such systems tend to move from ordered behavior to more random behavior. The measure of disorder in a closed system is called entropy (from the Greek entropia – “changing” or “transformation”). While a business organization is an open system rather than a closed one – since it exchanges information (energy) and physical resources (matter) with its environment – the concept of entropy still applies albeit in a modified form, as a measurement of the system’s probability to change.

In fact, the concept of entropy is highly applicable in explaining the evolution of business organizations. Much like a coral reef, an ant colony, or a slum in Kolkata, studies have shown that a business organization is a complex, adaptive, social system composed of hierarchically organized components – such as the Board of Directors, the executive management, business units, Finance, HR, project teams and so on. The organizational units that make up the business are interdependent, in constant and non-simple interaction with each other, have distinct functional, spatial and temporal boundaries, and are influenced by their surrounding environment. The enterprise as a whole and within its parts has organizational self-awareness and, through its many components, organizes itself for survival and growth. As the environment in which it functions becomes increasingly complex – whether as a result of globalization, political changes, resource shortages, or shifts in consumer preferences, to name a few examples – the enterprise and its many components must also change and adapt. The adaptive decisions and actions made by the organization in response to such external stimuli yield internal responses that can take a variety of forms – organizational realignments, functional realignments, right-sizing, introducing new technologies, adopting new processes, or hiring the kind of people who ‘can make things happen’ – in other words, disruptors. Such disruptors create friction, friction increases the level of entropy in the organization, and the rising entropy generates the conditions under which new behaviors can arise. These new and unexpected behaviors are referred to as ‘emergent properties’, and they can be of different types – new business strategies, novel governance models, cutting-edge technologies and skills, or innovative processes such as co-creation.

New Vistas for Business Architecture

The complexity inherent in business organizations is ripe with possibilities for architects to build on the existing Business Architecture body of knowledge to create new, innovative offshoots of the discipline that can more flexibly support the nonlinear, rapidly-changing nature of business. Correlating the business concepts described so far into an enterprise-level view (below) makes it easier to spot the areas where Business Architecture practices have already caught and are yielding valuable insights to organizations, as well as the areas still off the beaten path for Business Architects.

This article recommends that Business Architects familiarize themselves with methods from adjacent domains such as strategic planning, management consulting and system engineering, and complement their traditional repertoire with practices and techniques suitable for the study of complex systems. A summary of recommended practices (and reading materials) grouped by the supported business concept is provided below.

1. Frameworks, practices and tools supporting the analysis of external, environmental stimuli

With the exception of the Strengths-Weaknesses-Opportunities-Threats (SWOT) analysis method and the occasional foray into Business Model analysis, the methods suggested may not yet be adopted by mainstream Business Architects. Leveraging such methods is essential in recognizing that a business system is an open system, constantly exchanging information and resources with its surrounding environment, and that actions and reactions within the business are driven to a large extent by its interaction with its immediate environment.

2. Frameworks, practices and tools supporting the analysis of adaptive decisions and actions

In order to adapt and grow, business enterprises contend with a wide array of decisions – from long-term, strategy-setting decisions, to immediate-term pivoting, investment or divestment decisions. Such a broad spectrum of decisions requires a correspondingly varied repertoire of methods and tools to support sound, informed decision-making, ranging in complexity and level of abstraction from the traditional capability mapping and planning to the innovative use of predictive modeling.

3. Frameworks, practices and tools supporting the analysis of the organization’s assets, controls and operational capabilities

Architecting the assets, controls and operational capabilities[i] of an enterprise has been the bread-and-butter of Business Architects and Enterprise Architects for some time now, and there is a substantial body of literature describing the relevant practices, methods and tools – one of the best exemplars being the Business Architecture Body of Knowledge® (BIZBOK® Guide) developed by the Business Architecture Guild. This article recommends complementing Business Architecture methods with elements of Enterprise Architecture and decision modeling practices.