“Your present circumstances don’t determine where you can go; they merely determine where you start” – Nido Qubein
Strategic planning is about positioning a business to be more profitable in the long term. It has to decide whether to grow the company or, to optimize the business. Growing the company implies an external focus on expanding the business model, which in turn would affect changes to its operating and resource models. On the other hand, Optimizing the business means an internal focus to realign, simplify, redefine/modernize, and refocus the business, operating, and resource models.
It should be natural for organizations to cycle through these two options, as continued growth and natural operational evolution would disturb the natural symbiosis in its internal environment. Also, the alignment between organizations and their external environments is constantly under pressure from the fast-changing digital era we live in.
How then do we choose the most fitting strategic approach – knowing that the wrong strategic approach will be disruptive to the organization and may even result in long-term harm? Also, how can we motivate the chosen strategy to shareholders and employees in a logical manner?
The answer to both these questions lies in our ability to assemble and analyze knowledge about the enterprise’s operational capability. Historically organizations mainly collected financial and functionally related information. If we could use this information as performance indicators, it was as “lag” indicators – meaning that they only provided a view on past/historical performance. Although this type of intelligence is beneficial, it could not provide information about the adequacy of operations to support different strategic scenarios.
The advent of the data science profession has enabled us to predict future performance – based on trend analysis and the like. However, these are still primarily knowledge created for chosen silos within the business and, we need a more holistic view for strategic planning exercises. Since there are many different components at play in an organization, we need to predict how changes to a single component would affect the components related to or dependent on that component.
Zeta proposes that the following types of Operational Knowledge should be constructed and analyzed to inform strategic planning exercises.
- HORIZONTAL ANALYSIS is a trend analysis focusing not only on how the organization’s internal and external environments have changed over the past x years but also how the resulting strategic and tactical tactics have benefited the company’s performance.It, therefore, analyses change TRIGGERS –> TACTICS –> IMPACTS –> EFFECTS. This type of analysis identifies the internal change patterns found to have the best impact on performance within a specific external environment.
- COMPLEXITY ANALYSIS to identify inhibitors to strategic achievement. As per the “Cynefin Framework” of Dave Snowden, increases in complexity can move an organization through the following states: SIMPLE –> COMPLICATED –> COMPLEX –> CHAOS.It is challenging to plan future changes for an organization in a complex condition, as it will not be possible to predict the outcome of any planned change. For organizations in a chaotic state, the situation is even worse as it is unstable, and any change may ultimately disrupt the internal capabilities.
Therefore, this type of analysis aims to identify duplicated or isolated elements and unnecessary relationships between elements in any of the organization’s architectures.
- VERTICAL ANALYSIS is a point-in-time analysis to identify the organization’s Strengths, Weaknesses, Opportunities, and Threats (SWOT).Opportunities and threats are detected in an analysis of the environment external to the organization. Metrics such as customer satisfaction, market share, barriers-to-entry, to name but a few, should be considered.
In the internal environment, operational contributors and their interdependencies are measured for their capability, capacity, and alignment to perform required functions in a manner that will achieve predefined goals. This analysis will identify the strengths and weaknesses of the organization.
Strategic scenarios should aim to enhance operational strengths, overcome weaknesses, exploit opportunities, and mitigate threats.
Fortunately, technology has advanced to developing a new information storage repository called the “Knowledge Graph,” where we can store nodes and their related relationships to help us do the analyses mentioned above. Furthermore, we can store attributes for each node and its relationships. For example, attributes such as “business fit” and “technology fit” would be helpful knowledge about applications used to support critical business processes.
The diagram below presents an example of such a knowledge graph.
Also, knowledge graph technology solutions, such as neo4j (https://neo4j.com); and the Abacus enterprise architecture tool (https://www.avolutionsoftware.com/abacus/), have great visual presentation interfaces allowing the Enterprise Architect to present created models and required knowledge queries in a graphic format to business users. (For more information about knowledge graphs, please refer to the excellent book – “The Rise of the Knowledge Graph” written by Sean Martin, Ben Szekely, and Dean Allemang, and published by O’Reilly – https://www.oreilly.com/library/view/the-rise-of/9781098100407/)
“If you know the enemy and know yourself, you need not fear a hundred battles. If you know yourself and not the enemy, for every victory gained, you will also suffer defeat. If you know neither yourself nor the enemy, you will succumb in every battle.”
Lizette Robbertze (LRobbertze@ze-ta.co.za) is an Organization Optimization Architect and Digital Strategist. Her LinkedIn is: https://www.linkedin.com/in/lizette-robbertze-4842134/