C-Level Innovationas collaborative business transformation

An archestra notebook

© 2014 Malcolm Ryder / archestra research

In the following discussion, the statements and illustrations are descriptive representations based on extensive field observations. Their intent is to abstract

and categorize observations that were found to be broadly applicable across a wide-range of businesses,

by size and type.

The information offers logical summations, whether general or specific, for the purpose of encouraging

ongoing recognition in additional future cases, more commonly in a diagnostic manner. No assertion or

warranty of prescriptive validation is implied or intended. While aspects of the discussion may prove to be evident in given cases, the discussion itself may be

modified and reissued at any time.

Assumptions

• Executives are responsible for assuring that the current and future opportunities of the business make sense in timeframes needed to succeed.

• Due to technology and its enablement of innovations, the timeframe between what works now and what will work next seems to be ever-shrinking. Fewer businesses have substantially privileged information about market demands, and fewer businesses are able to catch high-speed leaders of applied new discoveries by acquiring their same capabilities.

• As a result, new capabilities, if acquired, are most likely to help if they power new distinctions differentiating the business presence in the market as another kind of "market leadership", which really means bringing a special kind of value into the market.

• Acquisition of capabilities is a basic responsibility of executives for supporting the realization of future opportunities based on creating that value.

Organizing Executive Attention

• Executive roles make the most sense when it is understood that the real-time accountability of certain issues is assured by a role. The assignment of the accountability becomes a "primary", not an exclusive, responsibility. The primary responsibility leverages relevant contributions made by other roles. Other roles, meanwhile, have different primary responsibilities.

• The interaction of the roles is essentially teamwork, but this "Team" concept makes sense only in the context of a designated actual pursuit. The basis of the team structure (organization) is a delegation of responsibilities to be coordinated.

• In contrast, what makes the “Work” a collaboration (execution) is the co-operation of the responsible parties.

• Creating and maintaining the necessary value of the business requires a way to assure that co-operation occurs in terms of the coordination needed to support the value.

CEO:business modeler

CFO:business resourcer

COO:business engineer

CIO/CSO:business processor

CMO:business driver

CTO:business designer

Knowledge Focus

Align implementation of model to opportunity within governance and agreements

Develop and manage capital for operationalinvestment or consumption

Build and deploy organizational structure with functional compliance to strategy

Automate and support applied systematizations of processes

Select, prioritize and navigate engagement with prospects in markets

Identify new technological modes of business enablement

Key Interest ROI Assets Resources Services Relationships Platforms

Supported effects

Agreements Agreements Methods Methods Interactions Interactions

Externalimpact areas

Positions Sources Partners Networks Channels Utilities

Internal impact areas

Risks Allocations Workgroups Systems Communications Infrastructure

Roles Modeling (typical)©

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C-team members have predisposed attentions that need to become synchronized contributions.

Coordinating Change

• A model of coordination provides the common reference allowing the executive team members to decide how to use their contributions. As the idea of a coordinating model applies generically to "strategy", the model in question here is strategic, while being more specially focused on the problem of exploiting ongoing change for value.

• Coordination supports a game plan that shows how actions and events drive conditions towards desired outcomes.

• A single model for driving value to market can be iterated in many ways. A major goal is to consistently associate executive roles with the need for and timing of those iterations.

The Portfolio Overview

• Executives are always involved in portfolio-type decisioning, where investments are being made in different ways for different kinds of opportunities to reach various desired future conditions.

• To make the investment decision, the general effort is to study the risks of not gaining the future state, the probability of being effective in supporting the pursuit, and the confidence in both of the above.

• As a result, the portfolio decision includes risk-based prioritization, ROI-based investment, and knowledge-based expertise. The portfolio is not about finance but about capability. The decision method is applied to all kinds of opportunities.

• Opportunities compete with each other to gain a permanent place within the boundary of overall available money during time. For example, in the I.T. world, the “opportunity” to keep the lights on must make it within the boundary, but the opportunity to transform for the competitive future must also make it within the boundary.

Deciding on Capabilities

The portfolio of commitments to capability must literally provide for a future-orientated iteration of the model for meeting conditions of future value, and likewise a present-orientated iteration of the model for current value management.

The key difference is that support of conditions for current value should expect to have an end-of-life, while support of future value should expect to have an assertively ready foundation. Meanwhile, the challenge is to make the co-existing support productive going forward, because businesses cannot run backwards through time…

A high-level capability assessment would compare the expectations that characterize the main scenarios of support for the conditions required for value. A portfolio addresses expected levels of risk, return and knowledge associated with the scenarios going forward.

In particular, innovations, whether created internally or procured externally, must become contributors to capability. Also, they should go through a portfolio analysis that weighs the difference between gaining a proprietary versus non-proprietary advantage in delivering the target value of the business to the market.

Portfolio Decision

1. Prioritization2. Investment3. Expertize

RiskROIKM

Current conditions

Future conditions

Future support

Current support

1. Medium2. Medium3. High

1. High2. High3. Medium

1. High2. Medium3. Medium

1. TBD2. TBD3. TBD

© 2014 Malcolm Ryder / archestra

ISSUE GOAL PURSUIT

JUSTIFY in: OFFER via: PRODUCE with:

WHAT/WHY: Distinction Usage Profile

Promotion Development

HOW/WHEN: Capacity Catalog Provision Logistics

The Basic Value Model

The model of the business value, simplified into a framework, explains what the business will use to achieve the distinction and capacity needed to take and hold a competitively successful position vis-à-vis the market demand.

The high-level framework identifies six areas where executives should decide and align their intentions, means, and plans. The collective decisions make up the C-level view of how it matters that the business is in the markets.

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The C-Team:CEO, COO, CMO

In one scenario (among many possible combinations), the C-team co-operates by taking responsibilities as follows:

• CEO: the Business Modeler -- sets and approves a definition to be realized for implementing each of the six areas

• COO: the Business Engineer -- builds the instance of the model as specified under CEO direction

• CMO: the Business Driver -- navigates the business in real time through the demand conditions of the market

As a result, in this scenario the CMO is in a position to feed back opportunity assessments (viability) to the CEO and effectiveness assessments (feasibility) to the COO.

Problem: making and keeping an advantage in ability to meet market preferences…

Changes occurring within any of the six main elements of the business model can alter the available connections between demand and supply. These changes may be intentional or unintentional…

Depending on changes, prior established connections, even if still necessary in certain cases, may be insufficient to satisfy the required overall strength of competitiveness throughout unintentional changes.

© 2014 Malcolm Ryder / archestra

Re-Modeling for Business Value

In this discussion’s form of the business value model, any of the six main elements may change, as either a re-envisioning or a refinement of the overall model. By definition, these changes are systemically important – like variables in a formula.

The possibility of making changes intentionally is therefore weighed against some corresponding measures of high-level outcome. These high-level "measures" are a specifically defined concept of the business’s “value in the Market".

In this concept’s definition:

• "value" means "the significance of the difference",

• the difference is the combined distinction and capacity maintained in the market,

• and the significance is the impact that the difference has, NOT primarily defined as financial results but instead as advantaged competitive opportunity.

The business must strategize and execute this value in the market(s).

Value of the modeled business in the marketThere are three high-level measures qualifying the decisions to make intentional changes in the value model. We will refer to this group of high-level measures as “Value Support” Measures. These measures require the influence of additional stakeholders on the team.

In our scenario, addressing the measures pairs the CEO, COO and CMO each with working partners, responsible for addressing designated measures.

ROLE Responsibility “Value Support” Measure PARTNER

CEO Business “modeler” Cost of the strategy (validated competitive position and ROI) CFO

COO Business “engineer” Quality of effort (business processes) CIO/CSO

CMO Business “driver” Priority of market engagement (market relationships portfolio) CTO

In these C-level pairings, the primary challenge to managing the business behaviors is usually the volatility of numerous influencers on the market. Influencers are both external and internal to the business. Less-volatile influencers make markets more predictable. More specifically, the challenge is: to avoid behavioral rigidity that fails to accommodate necessary changes, while at the same time to sustain enough consistency to allow business functions to rationally achieve goals. The C-team needs the ability to continually resynchronize.

© 2014 Malcolm Ryder / archestra

Producers focus on reliably meeting demand within the conditions of the market environment. The strategy for continually leveraging those conditions has conventionally been cast in terms of

planned campaigns such as "hunting" or "farming" -- or in terms of planned procurement such as by "engineering" or "programming“ a proprietary link to an existing supply. However, all of those terms presume a manageable level of impact that the environment's complexity will have on the

probability of desired outcomes. More complexity and less predictability weaken the strategy.

Proprietary Past (Control)

Open Future (Agility)

Current market environments exceed the conventional assumptions about controlling complexity – primarily due to the unprecedented levels of information access and of technology innovation affecting expectations, products and production.

The resulting variability of influences in the market environment creates the need to focus on continually regenerating connections between discoverable current sources of demand and discoverable current sources of supply.

The effect is that markets are not persistently proprietary, but instead are increasingly open.

This problem of needing real-time dynamic connectivity is almost always referred to as the problem of Agility.

The proven terms of operation for this challenge call for Brokers and Agents to work together. Relying on mutual discoverability, Brokers bring or hypothesize the requirements for acceptance in the market, and Agents bring the availability of relevant fulfillments.

Agility & Collaborative ExecutionBrokers bring or hypothesize the requirements for acceptance in the market, and Agents bring the availability of relevant fulfillments. Together the brokers and agents make agreements on aligning their interests over meaningful periods of time. This dynamic structuring of business is the effective go-to-market capability; it features a persistent and timely presence as a facilitator in significant opportunities – fortified by research and relationships.

The C-level team is a broker for its business with awareness of market requirements, and it is also the agent of its business fulfillment capability. In this cooperation, the team is able to pursue the distinction and capacity that is the basis of the business’s (industrial) success in the market.

In allocating responsibilities, the business brokers are most often (but not exclusively) the CEO, COO and CMO; the business agents are most often (but not exclusively) the CFO, CIO/CSO, and CTO.

BROKER Responsibility AGENT Responsibility

CEO Business “modeler” CFO Business “resourcer”

COO Business “engineer” CIO/CSO Business “processor”

CMO Business “driver” CTO Business “designer”© 2014 Malcolm Ryder / archestra

An especially radical transformation has occurred due to the unprecedented availability of powerful, ubiquitous tools and services for information search and data analysis. The combination of search and analysis has immediately meant that new profiles of meaningful demand (product usage) and new sources of relevant supply (production logistics) can rapidly, if not spontaneously, find each other (and customers) independently of prescribed interventions by the business.

When the demand-side discoveries converge with the supply side discoveries, they interactively create options that may lie outside of the business’s current offerings and are not yet appearing in its catalog nor in its development queue.

Problem: the imperative for Open Market Agility

© 2014 Malcolm Ryder / archestra

As brokers and agents themselves, the C-team wants to proactively master search and analysis to sense emerging influences and

impending opportunities that should affect the business value model

Model Elements

New “ordinary” scenarios Influencers Related Resources

Usage Profiles through easy exposure to vast amounts of information, consumers can self-discover capabilities, options and preferences that they may not even have previously acknowledged and that also appear to be viable

self-discovery social networking

Promotion having exemplary “preview” experiences is more common than ever due to rich media and 24x7 connectivity to media channels

freemiums mobile apps, html5

Development "sourcing" and feature sets are both dramatically diverse and rapidly supplied through current toolsets and more precision about functional scopes

mashups open source, PaaS, agile

Catalog electronic storefronts with search engines glue together a tremendously wide range and volume of choices in a virtual product category for which all category members have the same delivery service level

aggregation e-payments, auto-recommendations

Provision consumers can have provision largely auto-attended by non-invasive monitoring that intelligently decides when and how to offer and/or supply something

digital streaming GPS, sensors

Logistics the mechanics of the supply process are largely engineered to move the least amount of material necessary through make-and-ship over the least required distance in the least necessary time, effectively giving higher just-on-demand availability without significant errors

robotics Nano, 3D printing, internet of things

Key lasting transformations can also occur within each of the six areas of the business model, creating more new elements of possible interactions that become available for facilitation by brokers and agents.

Current market realities are recognizable in numerous related applied innovations that are quickly becoming "ordinary" while also enabling entirely new interactive combinations. Interactive combinations of innovations

across the business model elements effectively offer new specific interpretations of the generic model.

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Lasting Observations

• Markets change whether businesses change or not

• Changes, including innovations, have meaning in terms of how they affect important capabilities to execute the model the business uses to stake its value in the market

• Innovations occur in many forms and can change various elements of the model asynchronously, requiring a collaborative effort by managers to adapt

• Multiple innovations may combine inside and outside of the business, to create, sometimes abruptly and/or definitively, new reasons to execute business differently

CEO:business modeler

CFO:business resourcer

COO:business engineer

CIO/CSO:business processor

CMO:business driver

CTO:business designer

JUSTIFY:

Usage Profiles What/Why What/Why What/Why What/Why What/Why What/Why

Catalog How/When How/When How/When How/When How/When How/When

OFFER:

Promotion What/Why What/Why What/Why What/Why What/Why What/Why

Provision How/When How/When How/When How/When How/When How/When

PRODUCE:

Development What/Why What/Why What/Why What/Why What/Why What/Why

Logistics How/When How/When How/When How/When How/When How/When

C-Team Innovation Heat MapSensitiveInfluentialAssertive

Mapping expectations is a method of communicating how the C-team will probably pursue their continual re-synchronization as changes occur and become opportunities or risks in the business value model.

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Moderately

CEO:business modeler

CFO:business resourcer

COO:business engineer

CIO/CSO:business processor

CMO:business driver

CTO:business designer

JUSTIFY:

Usage Profiles X

Catalog X

OFFER:

Promotion X

Provision X

PRODUCE:

Development X

Logistics X

Connecting The Dots

C-team cooperation is constrained by both the ability to express the overall importance of possible changes to the current implementations of the model, and by the relationships of team members as stakeholders in the model.

Iterating the business value model includes understanding how innovations fit into generating distinction and capacity.

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Recaps

• A currently active business model is a collaborative iteration of a system• The business model is subject to changes originating both internally and

externally• Changes such as innovations systemically affect the potential value of the

current model of the business in the market• C-team members are distinct stakeholders differentiated by knowledge,

expectations and sensitivity• C-level decisions about different elements of the model, including

innovations of them, need to align with an overall game-plan derived for supporting the value of the model or for modifying the model

• Internal synchronization of the model requires the C-team’s motivation to support the external market impact of the model