For the purposes of this post I’m assuming you are lucky enough to work for a business unit that has a defined and published strategy. That’s a good start, but sometimes you need to kick the tyres a bit and dig underneath a bit to find out what that means for your job as an architect.
The technique I’m going to work through here is how to analyse that strategy to identify two things:
- Which elements of the strategy are mutually reinforcing; and
- Which elements of the strategy are conflicting.
Why is this important? Because there may be some elements of the strategy that reinforce multiple other elements of the strategy. Finding these elements and focusing on getting them right will give you a bigger bang for buck than developing an element that only reinforces a narrower element of the strategy. There may also be elements that are in conflict. Finding these elements and getting a steer from the top table will allow you (and them) to refine your understanding of the strategy and focus effort where it’s needed.
Joe’s Goods wants to increase their return on capital (ROC) to 15% and to penetrate the wholesale market. When asked how they plan to achieve the ROC target it turns out that a 15% reduction in debt and an reduced cost:revenue ratio of 25% will do the trick. When asked how they plan to reduce the cost:revenue ratio there are two elements. Area ABC is a cash cow that they think they can milk for more and use the proceeds to pay down debt. In addition, area XYZ has costs that the finance area believes are too high for the revenue they are bringing in. When asked about the penetration of the wholesale market, it turns out that this is almost exclusively XYZ products and they need to enhance their service offering.
The outcome of this analysis is shown in the picture below.
Two things to note from the above strategy map:
- Increasing revenue in the ABC area supports two of the other elements of the strategy – it’s very important!
- Reducing costs on the XYZ area supports the cost:revenue element but conflicts with penetrating the wholesale market by enhancing service.
This analysis has shown the architect (and the top table) where the real effort should be spent and highlighted the fact that there is a debate to be had by the finance and marketing teams about penetration of the wholesale market.
Good strategies will have a lot of mutually reinforcing elements (supports relationships); weaker strategies will have more conflicts (conflicts relationships).