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Anatomy of Agile Enterprise

Janne J. Korhonen

Out-of-Box Requires Lesser Mind

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"The first matrix I designed was quite naturally perfect, it was a work of art, flawless, sublime..." -- The Architect, The Matrix Reloaded

A metaphor of such a flawless and sublime organization is mechanical machinery. With logical certainty, the assumption goes, one can contrive how the organization should be, assemble it of its requisite constituents and then tune it into a rational, high-performance system. The key factor of such a system is reliability. The machinery needs to work predictably and consistently. Variance is reduced and human error is removed from the production process through established work practices, quality standards and policies that regulate discretion. Internal controls are established to ensure that work is conducted "by the book".

The behavior of such an organization is treated as a "black box". In this view, it is irrelevant what resources the business has and what is its internal design. The organization aims at optimizing its operations by one-dimensional economic indicators. Corporate governance is geared to address the "agency problem"; it focuses on compliance, internal control and risk management to mitigate conflicts of interest between the shareholders and the management.

As per this view, Enterprise Architecture is seen as "the glue between business and IT" [1]. Focusing on enterprise IT assets, it aims at business-IT alignment, operational efficiency and IT cost reduction. It is based on the tenet that IT planning is a rational, deterministic and economic process. Likewise, the role of the enterprise architect is seen as the master planner/designer of the architecture.

"...A triumph equaled only by its monumental failure."

As Frank Lloyd Wright has famously put it: "Mechanization best serves mediocrity." The machine metaphor entails a functional and teleological perspective that results in defensive, imitative and reactive behavior that emphasizes short-term operational efficiency. Due to the diffusion of operations management best practices, further streamlining of discrete skills and procedures is unlikely to provide sustainable competitive advantage, especially in the increasingly turbulent business environment.

In the attempt to achieve objectivity and reliability, the intrinsic ingenuity, discretion and judgment of human work is discarded. Employees are seen as interchangeable parts in the big machine, expected to perform within clearly defined parameters. Business leaders resort to military style command-and-control to maximize the efficiency and productivity of their subordinates.

In a similar vein, the underlying assumption in governance is that people's behavior needs to be reined in through control and compliance frameworks. This is only conducive to mistrust, restrictive supervision and a punitive atmosphere. Furthermore, top-down predict-and-control measures resist the natural, self-organizing dynamics in the organization and hinder organizational steering.

The traditional notion of enterprise architecture assumes information systems as underlying operative resources rather than as core value assets and true business enablers. Business-IT alignment actually exacerbates the business-IT divide. IT is seen as a separate, value-adding function, relegated to a subordinate role of a mere service and cost center, whose focus is on operational quality and reliability -- on producing predictable outcomes on a consistent basis.

To remain viable in the face of the changing business environment, the enterprise must transcend the short-term focus on streamlining its existing operations. It must be able to innovate valid new products and services and to create new capabilities and reengineer its systems and processes, accordingly.

"I redesigned it based on your history to more accurately reflect the varying grotesqueries of your nature..."

In changing and unpredictable environments that call for innovation and change, a more pertinent view is to conceive organizations as living and changing organisms. The organization is conceptualized as an open system that interacts with its environment in terms of information, energy, or material permeation through the system boundary. The focus on reliability is balanced with focus on validity to create value, not only today, but also in the unfolding near future.

When viewing the organization as an open and adaptive socio-technical system, knowledge about its internal operation and construction is of essence. The organization is seen as a "white box". Intentional design of work and the organization helps enable organizational change.

In this view, leadership is based on "enlightened self-interest" that aims at a win-win outcome. The leaders help employees self-actualize through investing both their emotions and their minds for the sake of their own and for that of the organization.

Enterprise governance, in this view, addresses not only the conformance aspect but also the performance aspect of governance and highlights strategic considerations such as value creation and resource utilization. Requisite roles, accountabilities and policies are defined to help maneuver the enterprise in continually shifting contexts. The meaning of "steering" is returned to governance.

As per this view, enterprise architecture is seen as the link between strategy and execution [1]. EA addresses all facets of the enterprise in order to coherently execute the strategy. The environment is seen both as a generator of forces the enterprise is subject to and something that can be managed. Enterprise architect is a facilitator, whose challenge is to enhance understanding and collaboration throughout the business.

"However, I was again frustrated by failure."

The open system model serves well in describing and modeling homeostatic systems that seek dynamic stability through internal adjustments. However, an organization that controls variance to ensure stability runs the risk of stagnation and decline. A viable organization cannot remain in its stable comfort zone forever, but needs to "change to stay the same" -- to undergo a full system transformation and enter a new order of complexity. However, the white box is still a box, and it is hard if not impossible to see the organization from outside of the proverbial box: to conceive an entirely new system altogether.

The vast complexity of today's "wicked problems" far exceeds the comprehension of any single individual or the capabilities of a single organization. Informal collaborative relationships, value-based practices and normative controls are required to bring people and organizations together to solve these problems together.

In a similar vein, enterprise architecture must transcend a single-organization view and address the organization's long-term resilience and viability in its evolving ecology.

"I have since come to understand that the answer eluded me because it required a lesser mind, or perhaps a mind less bound by the parameters of perfection."

In this view, organizations are seen as co-evolving organisms. The perspective shifts from the relatively stable, closed and controllable system of a self-sufficient enterprise to the relatively fluid, open and transformational system-of-systems of networked, co-evolving and co-specialized entities. The focal organization is objectified from the outside, as a co-evolutionary constituent within the broader business ecosystem.

Transformation is more pertinently seen from this external perspective of holonic system-of-systems self-similarity. This view acknowledges the reality of multiple equilibria (potential alternative states) and embraces resilience. At some point, the organization or logic of a system that has worked well in the past turns out inadequate in the face of changing environmental circumstances. The inherent limits of system resilience -- the ability of the system to absorb perturbations in its stability domain -- are reached and the system must transform to survive. The organization even seeks this "edge of chaos" far from its equilibrium and endogenously self-organizes towards ever-higher orders of complexity and coherence.

Leadership focus shifts from wealth creation for shareholders to wealth creation for all stakeholders -- including shareholders, employees, customers, society, environment, and future generations. Leadership relies on a common purpose and value-systems. People are recognized as the principal assets of wealth-creation. Sharing and participating are seen as better than competing. Profitability is epiphenomenal to real stakeholder value, not an end in itself.

In this view, governance is seen as networked, collaborative and loosely-coupled. "Governance as process" is about coordinating inter-organizational forms such as inter-organizational networks, alliances and public-private partnerships around a shared purpose.

Enterprise architecture is seen as the means for organizational innovation and sustainability [1]. In this view, the enterprise and its environment are enmeshed and coevolving; the boundaries are blurred and more permeable. The enterprise architect faces the challenge of fostering pertinent sense-making in the organization and facilitating transformation as needed.

The Matrix

As depicted in Table 1, there are three paradigmatic perspectives from which to see an organization, three focal concerns of each perspective, three respective ways to lead and govern it, and three approaches to enterprise architecture that each perspective entails. None of these perspectives is wrong, per se. Each perspective has validity in its respective order of complexity. Increasingly complex business environments require and result in progressively sophisticated perspectives at all scales. Mechanistic conceptualizations of organizations as technically rational machines are increasingly being challenged by more adaptive and organic views that emphasize valid provision and resilient renewal.

The out-of-box perspective requires suspension of the illusion of perfection and surrender of the belief in omnipotence of any single individual or organization. It calls for the humble recognition of imperfection and impermanence, the need for cooperation and co-evolution, and the embrace of transparency and transformation. It requires a lesser mind.

Table 1. The Matrix.

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[1] James Lapalme, "3 Schools of Enterprise Architecture," IT Professional, 14 Dec. 2011. IEEE computer Society Digital Library. IEEE Computer Society, <http://doi.ieeecomputersociety.org/10.1109/MITP.2011.109>

Janne J. Korhonen provides insights into how information technology can be applied strategically to catalyze organizational change and responsiveness. Drawing from both theory and practice, he discusses agile enterprise and its governance.

Janne J. Korhonen

Janne J. Korhonen is an independent business and IT consultant,specializing in enterprise architecture, business process management,service-oriented architecture and pertinent governance models. He has over ten years of experience as an architect and consultant in a variety of extensive and mission-critical IT projects. With strong theoretical underpinnings, his consulting encompasses systemic co-development of business, organization and information technology.

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