leading the transformation: changing the dialogue

®

© 2007 GEAOEA Conference – BTELL Sydney – 14 August 2007

GEAO ®

Leading the Transformation: Changing the Dialogue

Ben Ponne, Executive Director GEAO, Enterprise Architect [email protected]

mailto:[email protected]

EA Conference – BTELL - 14 August 2007

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Overview

» Introduction» Enterprise Architecture context» Perspectives on Enterprises» Diagnosing Enterprises» Up the value chain» Why do you need to change the dialogue?» Business Perspectives

– Strategic Design perspective – overview– Political perspective – overview– Cultural perspective - overview

» Leadership» Leading Change


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Introduction

» The Global Enterprise Architecture Organisation – www.geao.org

– Independent, not-for-profit organisation for high-end professionals who work in the field of Enterprise Architecture

» EDS – www.eds.com– Global IT Services company– 135,000 employees in 64 countries– Deep relevant industry expertise– A proven approach to support

long-term business transformation

» INSEAD – www.insead.edu– Leading Business School– France / Singapore– Multicultural perspective on Global

management

http://www.geao.org/

http://www.eds.com/

http://www.insead.edu/


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GEAO – Purpose / Services

» Core Purpose:– To help Enterprise Architecture professionals

to be successful.» Publications – Journal/ Newsletter» Membership platform

– Collaboration / Communication» Participation in Conferences and forums

– BTELL (Sydney) / iCMG (Bangalore)– Flipside (Singapore) / Architecture Forums

» Chapters– India Chapter / New Zealand / Singapore / Beijing

» Workshops on EA– Enterprise Architecture / Strategic Planning

» Certification» Business Services


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GEAO – Target audience

» MBA / eMBA level Enterprise Architects

» High-end Business oriented mindset


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Enterprise Architecture Context

Scope

» “The essence of a visionary company comes in the translation of its core ideology and its own unique driver for progress into the very fabric of the organisation – into goals, strategies, tactics, policies, processes, cultural practices, management behaviors, building layouts, pay systems, accounting systems, job design – into everything that the company does.”

(Source: Collins & Porras in “Built to Last”)

» Enterprise Architecture = the Architecture of the Enterprise(Source: Zachman)


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Enterprise Architecture Definition

GEAO Definition of Enterprise Architecture:

Enterprise Architecture refers to the way in which an enterprise vision is expressed in the structure and dynamics of an Enterprise.

Enterprise Architecture provides, on various architecture abstraction levels, a coherent set of models, principles, guidelines, and policies, used for the translation, alignment, and evolution of everything that exist within the scope and context of the Enterprise.


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Restriction of Design Freedom

» Conceptually, Enterprise Architecture creates a restriction of design freedom for the Enterprise at various architecture abstraction levels.

Vision ModelsPrinciplesGuidelinesPolicies

Top level restriction

ModelsPrinciplesGuidelinesPolicies

Alignment

Source: GEAO


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Alignment starts with understanding

» We need to make the enterprise intellectually manageable– Simplify complexity

» If the concepts in the mind of one person are very different from those in the mind of the other, there is no common model of the topic and no communication (Taylor, 1975)– One model will not do the job– Many stakeholders, many models– Need to distil what is significant


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Perspectives

» Perspectives (metaphors, lenses, schemas) are cognitive structures that represent people’s construction of reality – They simplify reality and determine: – What is important and what can be ignored– What questions you ask and where your attention lies

» Powerful– They make complex realities manageable

» They guide processing of new information

» They are resistant to change

» They become universal rules


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Enterprises: Micro level

» Organisations are tools that permit groups of human beings to aim at and achieve goals that would be far beyond the reach of their powers as individuals.

Herbert Simon (1916-2001) - Nobel Laureate in Economics 1978

Society

Organization

Team/department

You

Source: INSEAD


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Enterprises: Macro level

Strategic DesignEnterprises are machines

A mechanical system crafted to achieve a defined goal. Parts must fit well together

and match the demands of the environment.

Action comes through planning. You are an Architect.

PoliticalEnterprises are contests

A social system encompassing diverse, and sometimes contradictory, interests and

goals. Competition for resources is expected.

Action comes through power. You are a Politician.

CulturalEnterprises are institutions

A symbolic system of meanings, artifacts, values, and routines. Informal norms and traditions exert

a strong influence on behavior.Action comes through habit. You

are an Anthropologist.Source: INSEAD


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Up the value chain

Procurement CTO CIO COO CEO

CostAgenda

Infrastructure

IT Systems Architecture

DomainExpertise

BusinessExpertise

Enterprise wide Architecture

Scope


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Change the dialogue: Why?

Stakeholder Messaging priorityResponse to technology-

oriented messaging

Business Executive 1. Better2. More3. Cheaper

Strongly negative(---)

Finance/procurementexecutive

1. Cheaper2. Better Strongly negative

(---)

Line-of-businessmanager

1. Better2. Cheaper3. More

Negative(---)

IT Executive 1. Cheaper2. Better3. More

Accepting(+-)

IT Manager 1. Cheaper2. Better3. More

Receptive(+)

Source: Forrester Research, March 2007


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Business Perspectives

Leading the Transformation

Strategic Design PerspectiveRewards & incentive systems Formal organizational structuresInformal organizational structures

Political PerspectivePower & politics in organizations Managing with power

Cultural PerspectiveOrganizational cultureManaging across cultures

Corporate GovernanceLeading Change

Source: INSEAD


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Strategic Design Perspective Example:EDS Industry Frameworks

HealthcareHealthcare ManufacturingManufacturing

Financial ServicesFinancial Services

CommunicationsCommunications Consumer Industries & Retail

Consumer Industries & Retail

GovernmentGovernment TransportationTransportation

Energy

Enterprise and industry specific knowledge to rethink and reshape your organisation.EDS captured industry experience over more than four decades.

Source: EDS


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EDS Example

Oil & Gas Industry Framework – Oil Refining Sub-Segment

Source: EDS


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EDS Industry FrameworkExample – Oil Refining

• Overview

• Industry Trends and Impacts

• Possibilities and Solutions

• Industry Insight

• Regional Perspectives

• EDS’ Point Of View

• Desired future

• Business Processes

Source: EDS


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• Increased regulatory & environmental requirements – e.g. increasing plant efficiency and thereby reducing carbon footprint

• Young workers not attracted by the image of the industry – workforce is ageing

• Mismatch between crude supply and product demand – e.g. increasing demand for gasoline requires light crude oils which are in shorter supply

• Mergers and acquisitions have reduced the numbers of industry players

• Investment in new plant is required to improve efficiency and reduce costs

• Globalization necessitates regional/global client management & relationship

Breakaway Points• Improved Labor Relations• Next-Level Cost Performance•Infrastructure/Legacy Modernization

Change

Operational Perspective

• Focus on attracting new entrants to the job market to combat ageing workforce

•Invest in new technology – to streamline operations and reduce costs

•Realize IT benefits

Global Market Dynamics

•Changing global consumption patterns due to changes in fuel specifications caused by legislation

•Replacement of ageing assets – e.g. cat cracker reactor replacement in older plants

•Increased need to improve energy efficiency of refining process due to increasing cost of energy

•Declining supplies of light, sweet crude increase reliance on sour crudes which require more complex refining to remove impurities

The oil/gas industry has undergone tremendous change in the last decade from a globalization perspective with changes in regional importance in terms of supply and consumption.

Developed, industrialized societies depend on energy for growth and changes in the economics of energy impact virtually all other industries in some direct or indirect aspect.

Refineries must keep pace with changing consumption patterns and demand for new fuel specifications

Oil Refining Point of View

Source: EDS


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Oil Refining Regional Perspectives

Many trends in the upstream oil/gas industry are common globally such as consolidation and pressure on costs.

However, there are key differences in the regions that require unique business propositions such as the changing economic viability of certain reserves and the change in gas logistics.

North America• Diminishing supplies of light, sweet crude, with

new deepwater reserves in Gulf of Mexico producing sour crudes (need more refining)

• More flexible refining methods are needed as a large array of new crudes with different yields become available

• North America has 153 of the world’s 717 refineries (132 in US) but still imports refined products from overseas to meet demand

• Exposure on the Gulf Coast due to high preponderance of refining capacity which is vulnerable to hurricane damage and which is currently already running at high levels of capacity

EMEA• Declining North Sea supplies of low

sulphur oil are being replaced with oils with more impurities which require more refining

• Legislation demanding reduced sulphur levels in motor fuel – diesel & petrol – require major investment in new and existing refineries

Asia/Pacific• Enormous pressure on supply with

rapidly increasing demand from China/India

• New avenues of supply enablement with LNG (Japan)

Latin America• Increasing demand for oil/gas• Logistics changes with LNG; opening

of non-North American markets

Source: EDS


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Oil Refining – Core Business Processes (L0)

Assess Current Capacity

Provide Capital Project Support

Manage Construction

Plan for Capital Investment

Assess Future Demand

Requirements

Manage Maintenance

Inventory (MRO)

Schedule Maintenance

Activities

Address Break / Fix Events

Plan Maintenance / Inspection

Work

Monitor Facility & Refining Process

Execute Refinery Process

Configure Facility

Perform Start-up & Shut-down

Execute Maintenance /

Inspection Work

Manage Design / Engineering

Confirm Capital Project

Manage Engineering Changes (EC)

Plan Production

Plan & Schedule Operations

Manage Real Estate

Develop Maintenance

Programs

Provide General Support Services

Manage Vehicle Fleets

Schedule Hydrocarbons

Manage Corporate Security

Provide Legal Support

Manage Public Affairs

Manage Process Improvement

Establish & Monitor Business Direction

Perform Nominations

Manage Oil Movements

Support Health, Safety, Environment

Compliance

Provide Regulatory Reporting

Manage Commercial Activities

Provide Laboratory Services

Evaluate Current Impact Scenarios

Project Future Facility

Requirements

Develop Optimized Portfolio

Plan Facility Utilization

Manage Feedstock

Perform Medium-term Production

Planning

Manage Tank Inventories

Perform Blending

Manage Vessel Operations

Manage Dock Operations

Manage Harbor Operations

Account for Hydrocarbons

7 Provide Other Business Services

6 Provide Support Services

5 Manage Refinery Logistics

& Hydrocarbon Management

4 Maintain Assets

3 Operate Refinery /

Plant

2 Perform Refining System

Capacity Planning

1 Manage Design,

Engineering & Construction

Analyze Operational Performance

Evaluate Outages

L0

Monitor Emissions


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Strategic Design: Incentive systems

» Some myths about pay– Low labour costs are a competitive strategy– Individual incentive compensation to increase individual’s productivity– Labour rates and labour costs

» Why do incentive plans not work– Undermine the process they are intended to enhance– Rewards only buy temporary compliance– Individual rewards create competition, which destroy cooperation– No correlation between pay and performance …

» Culturally shaped

Source: HBR


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Empirical Evidence

Better43%

Same41%

Worse16%

Terminated Plans (12%)

Main Reasons for Termination•Missed targets/ Demoralizing 46%•Business Slump/ Hi Inventory 30%•Lack of employee acceptance 29%

Business Performance Relative to Market

Source: 1993 Survey of 663 performance-rewards plans. Consortium for Alternative Reward Strategies Research

Better45%

Same47%

Worse8%

Kept Plans (88%)


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Strategic Design: Formal Organisational Structures

» Functional, divisional, matrix (and combinations)– Each has strengths and weaknesses

» Example: Functional Design– Activities are grouped together by common function from top to bottom of the

organisation - E.g., production; sales & marketing; accounting & finance » Strengths

– efficiency within departments– economy of scale– knowledge and skill development – best with a stable environment and few products/services

» Weaknesses– slow response to external change– weak horizontal coordination, leading to overload in decisions at the top– less innovation– restricted view of overall organizational goals Source: INSEAD


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Strategic Design:Informal Organisational Structures

SOCIAL CAPITALHUMAN CAPITAL

Use your own

knowledge and

expertise

Coordinate other

people’s knowledge

and expertise

Individual contributors Managers and leaders

Source: INSEAD


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What can you do?Evaluating your Social Capital

Source: INSEAD

Team Members

Supervisors

Outside Partners

OtherFunctions

Mentor

Social Support

BREADTHDoes the network allow access to diverse groups?

» Seniority» Nationalities » Places of work

DEPTHDoes the network allow for effective use of your time and energy?

» Duration of the relationship» Frequency of interaction» Strength of the relationships

LEVERAGEDoes the network allow you to influence key individuals and to maintain autonomy?

» Number of contacts» Density of ties among contacts» Centralization


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Political Perspective

» Power – the ability to get people to do things they wouldn’t otherwise do

» Politics is the use of power to either– Gain more power– Exert influence

(other than formal, legitimate authority)

The fundamental concept in social science is Power, in the samesense in which Energy is the fundamental concept in physics.

—Bertrand Russell


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Sources of Power

» What you are (personal capital)– Power derived from your ability and expertise

» Where you sit (positional capital)– Power derived from the role you play in the organization

» Who you know (relational/social capital)– Power derived from your networks

Source: INSEAD


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Cultural Perspective

Symbols, stories, lingo, rituals, dressArtifacts are repositories of meaning. A change in artifacts can, with time and consistency, produce a change in basic assumptions.

Artifacts

The values we talk about or think we haveEspoused values are starting points, and some can become assumptions, but once we get to know a culture, sometimes we will see espoused values do no support the artifacts

Espoused Values

The fundamental premises that we hold about our world but that are not

commonly articulated.Basic

Assumptions

Source: INSEAD


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Managing across cultures Case:The Bull market» Saturday morning

– Grafft arrives at the restaurant where he was to meet Senor Vasquez. He finds Mario, who is very gracious and informal (asks to be called by his first name). They are briefly joined for the meal by Mario’s family. No business is discussed all morning.

» High noon– Now alone, and over several drinks, they start discussing business. Grafft is

feeling a little “tipsy.” He describes the next several hours as a “bullfight,” although friendly.

» Later that afternoon...– Talks slow down as the first dinner guests arrive for cocktails. Mario suggests a

change in environment and recommends a local inn.– Grafft had already been forced to phone friends and change plans three times. He

now had a headache. He also felt that the discussion had reached a bit of an impasse, but he felt that the relationship was developing…

» Gored!» …but it was worth it…Vasquez writes a contract on a paper napkin and

a check that leads to $3 million in sales of printers


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What predicts success?

» Sense of humor, tolerance, and curiosity

» Language skills

» Spouse and family issues

» Previous international exposure

Ref. Schneider and Barsoux, Managing Across Cultures, Prentice Hall 1997.


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Leadership

It’s about people …

Making enterprise architecture effective involves the substantial issue of attempting to affect the behavior of staff not under direct control, which brings with it serious political difficulties that can undermine the best of efforts.

-Forrester


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Scott AdamsScott Adams

Dilbert

http://www.amazon.fr/gp/product/images/2876919257/ref=dp_image_0/402-3014601-9780156?ie=UTF8&n=301061&s=books

http://www.amazon.de/gp/product/images/3636013025/ref=dp_image_0/302-3916152-7194469?ie=UTF8&n=299956&s=books

http://www.amazon.com/gp/product/images/8475776159/ref=dp_image_0/105-9884524-3542016?ie=UTF8&n=283155&s=books


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Leadership Development: Basic Methods

Learning by the bookAcademic content, such as cases, books, articles

Learning from living examples and forumsListening to others tell their story, watching, even copying, but usually at arms-length

Learning from interactive coaching experiencesSharing and analyzing your own behaviour, and then working on an action plan to improve

Broad Insights &

Frameworks & Ideas

Custom-fitting & Depth &

Active work


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Our Ancient Emotions

References: - LeDoux, J. (1998) The Emotional Brain

- Loch, Galunic, & Schneider (2006) “Balancing Cooperation and Competition in Human Groups: The Role of Emotional Algorithms and Evolution.” Journal of Managerial and Decision Economics.

Source: Prof. Charles Galunic, INSEAD


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Emotional Intelligence

» Emotional Intelligence (EI) – sets apart leaders from others– IQ and technical skills are threshold capabilities

» EI has a genetic component but can be learned

» EI components are:– Self-awareness– Self-regulation– Self-motivation– Empathy– Social Skills

References:

Daniel Goleman,“What makes a leader?” HBR 1998Emotional Intelligence 1995 (book)

Salovey, Brackett and Mayer (2004)Emotional Intelligence: Key Readings on the Mayer and Salovey model.


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Leading Change: Nissan Case

» “Nissan has its back to the wall”

» First week action– Made possible by homework and setting the conditions for success (taking a

trusted team with him; gaining promise of full control)

» Homework: asking questions for 2 months


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Summary

» Enterprise Architecture is more than IT» Without a good understanding of the business everything underneath

is at risk» IT services companies and departments want to move up the value

chain» This needs a different conversation » Leading the transformation has many aspects» Many leaders don’t overcome the Dilbert principle» Emotional intelligence sets leaders apart from others» Leading transformation is about implementation

leading the transformation: changing the dialogue

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