This paper describes an approach to perform a mapping from a business model design to an enterprise architecture which is manifested in a platform ecosystem that supports agile innovation. The paper will be of interest to executives and IT leadership seeking strategic insights for unlocking the creative potential of business model innovation. The paper also provides those interested in enterprise architecture, business model design and systems integration with a concrete roadmap and actionable guidance to execute on the vision.
2. Executive Overview
The constant tensionbetweenprofiting fromoperational excellence and searching for newways to deliver value neednot be
an unresolveddissonance for enterprise executives. Creative harmonybetweenthe two types of activities begins with an
understanding of how to designa solidfoundationfor anoperatingmodel andknowledge of platformcapabilities that serve to
support the underlying enterprise architecture. Using a systems thinkingapproach, it is possible to holisticallymapout th e
various facets of a business model into the components of anenterprise architecture whichcanthenbe implemented with
capabilities offered by ubiquitous andcloud computing, collaborationplatforms, as well as Big Data.
This paper willdescribe anapproachto perform the mappingfrom the businessmodel to an enterprise architecture whichis
manifestedina platform ecosystem. The BusinessModel Canvas willprovide a visual representation ofthe keycomponents of
the business modeland serve to anchor discussiononhow anenterprise creates, delivers andcaptures value. The next step in
the processis to identifyanOperating Model that is well-suited for the business model characteristics. Several types of
Operating Models will be introduced to present options inthe mapping process. Once the Operating Modelis selected, a Core
Diagram is produced that illustratesthe platform ecosystem which delivers the capabilitiesneeded to support the enterprise
architecture. The Core Diagram’s mainpurpose is to graphicallyrepresent the systems capabilities and connectivityin a single,
comprehensive reference. The focus of this part of the paper will be to provide a clear visionof how these platform capabilities
come together inthe ecosystemto implement a particular class of Operating Model.
The paper will endbydiscussing how the platform capabilities enable anunprecedentedlevel of business agilitywhichallows
an enterprise to maintaincore operations for profitabilitywhile experimentingon the edges of its OperatingModel to seek out
new value streams. Thisdynamic nature ofthe enterprise architecture willthen be shown to empower executives with
significant degreesof businesscreativityinadapting the businessmodel usingthe Business ModelCanvas inaniterative fashion
to respondto market feedbackandopportunitiesto maximize value creation.
3. Succeeding in the Global Connected Economy
Achievingsuccessinthe new global market environment requires modernenterprises to consider powerful trends and
dynamics in order to be able to adapt andrespond at velocities much more rapid than ever before inhistory. These market
events andforces are having aneffect of tearing apart the traditional enterprise that does not have the architecture to
withstand the constant flux of change, competition, andcustomer demands. Disruptioncanhappenat anytime, inany
industry, in anymarket and can threatenmarket leaders to sucha degree that theycanbe replacedina few years’ time. Inhis
book, The Business ModelInnovation Factory: How to StayRelevant When the World is Changing, Saul Kaplanuses the
disruptionBlockbuster experienceddue to Netflix’s businessmodel innovationto coina termto describe the phenomena:
Blockbuster was “netflixed”
1
. Kaplan offers other examplesof entire industries being netflixedbycompanies with innovative
business models suchas Apple, Google, and Amazon.
In this environment, there is increasingpressure for enterprise executives to developdual strategies to preserve the profitable
core business while innovatingwith newproducts andservices onprice, capabilities, andvalue for customers. The two types of
strategic development require distinct set of lenses withwhichto identifythe set ofchallengesandopportunitiesthat must be
addressed. One the one hand, robust analytical thinking is essentialfor optimizingthe core but onthe other, boldcreativityis
neededto generate additional market value to facilitate the reinvention andevolutionof the next generationenterprise.
Personalizationfor Mobile, EmpoweredConsumer
The exponential proliferation ofmobile devices and adoption byconsumers hasledto a phenomenal surge inthe levels of
interactivityon the Web. The interactivityenables newforms ofvalue creationandsocialconnectivity but alsochanges the
expectations for howenterprise platforms need to be designedto support these emergent behaviors. More thanever,
consumers gravitate to content andservices that are especiallysuitedto their needs inthe context theydesire. Preferences
and recommendations are commonplace but consumers’ demands for more social intelligence inservice offerings drive the
level of analytical sophisticationrequiredinenterprise capabilities evenhigher. Consumers are expecting service providers to
not onlyunderstandtheir individual identitybut also their social graphand the open world around them. Inthe open worldof
consumers, time is also ofthe essence for deliveryof those insights andcapabilities to help manage uncertaintyandmaximize
outcomes. Personalized content, capability, andcontext are allimportant to deliver if an enterprise seeks to gaincompetitive
advantage in the consumer market.
Long Tail on the Demand Side
The long tail onthe demandside illustratesthe need for evenfurther personalizationin not onlythe product deliverybut also
marketing. Consumer segments must be targetedwithspecialized messagingto drive demandfor niche products andservices
to capitalize onadditional opportunities. However, the challenge for developingmarketing campaigns for these segments is
centeredoncost. Enterprisesneed to buildout analyticalcapabilities to execute these highlytailored marketing initiatives fo r
each consumer segment inan efficient manner. The days of broadcast advertisingto the mass market are historyand new
marketing models basedonparticipatoryengagement and social advocacymust be identified inorder to enhance innovation
possibilities in the longtail. Businessesalso needto understandhow to cultivate niche markets to gaingreater tractionin
segments that are adjacent or lagging to the target. Transitioning across this chasmis keyfor enterprises that want to achieve
significantlygreater market share for their products and services.
4. Collaborative Real-Time Context for DistributedEnterprise
The massive influence the consumer feedback loopis having onenterprise information technologyis evident inthe increasing
velocities withwhichdata insights need to be delivered. Inthe digital supplychain, events processedfrom the consumers’
open world must be handled collaborativelyacrossdepartments, business units, andevenpartners at a speedapproaching
real-time. The collaborative groupmust observe the context and data associatedwith the event, become oriented to the
situation, decide upona course ofaction, and thenexecute the response. The collaborative entitiesmayconsist of knowledge
workers, informationsystems, or a combinationof both – andinsome scenarios, ubiquitous smart devices. To enable thistype
of high-speed collaborationand event processing, enterprises needto consider business process standardizationand
integrationintheir operating model. The degree of standardizationandintegrationdepends onthe architecture that best
aligns with the business model. The pathto this desired state involves anevolutionaryprocessthat builds out anecosystem
which satisfies keyarchitectural principles to realize the necessarycharacteristics andcapabilities to enable the collaborative,
event-driven, real-time distributedenterprise.
Disruptive Economics onthe Supply Side
Another major force that everyenterprise must contendwithis disruptive innovationwithintheir market segments. Using
open source technologies andplatforms, smaller and, often stealth, startups achieve significant efficienciesand time-to-market
accelerationto deliver their innovative products andservicesthat are faster, cheaper, or better than those producedbythe
market leader. The important economic factor with openinnovationis the fact that those technologiescanbe acquired and
integratedat no cost to the startup or enterprise. These disruptive economics leadto the realitythat enterprisesmust be able
to adapt their supplychain to counter threats presented bymore agile and fast-movingcompetitors. The most immediate
capabilitythat can be leveragedto respondto these potential disruptors is cloudcomputing. Cloud computing enablesthe
supplychain to integrate external capabilities into the enterprise core to achieve increasedagility, velocity, andefficiencies with
reducedcapitalexpenditures typicallyassociatedwithsuch initiatives.
Sustainability
Sustainabilityis the corporate responsibilityof everymodernenterprise to seekways to minimize the environmental footprint
and cost of doing business. Regulations related to sustainabilityimpact the decision-making enterprise executives must
undertake on a globalbasisandoftenleadto necessarychangesinthe businessmodel as well. Executives mayinitiallyconsider
these changesas overhead but whenviewed withopportunistic lenses the business modelcanbe adaptedsothat overall
energycosts are reduced thus contributingto longer-term profitability. Business model innovation to achieve greater
sustainabilityprovides the enterprise with manybenefits including enhancedconsumer perception, more efficient supplychain,
and more valuable products andservices. Consumers are veryinformed about sustainabilitywhenmaking buying decisions so
enterprises’ topline are improvedwith greener products and services.
5. Innovation Process and Design Thinking
The process andorganization neededto take on a business modelinnovationinitiative must be consideredon a holistic,
strategic level. Ad-hoc exercises donot yield the potentiallytransformative results that are achievable usinga design thinking
approach. Design thinking leverages a set of design practices within aninforming over-arching frameworkthat considers the
linkagesandinteractions of the various components of the organizational and information technology structures. Design
thinking is especiallysuited to addressthe context-driven, user-centric nature of the challenges posedto succeedinthe
connectedglobal economy. These skillsets are critical to developinga robust foundational operating enterprise core that can
be extendedor specializedat the edges to support iterative innovationcycles with acceleratedcadences. Designthinkingcan
also empower creativityat the edges of the operating model as well as provide a mechanism to validate hypothesis to ensure
the new businessmodel designis achievingthe desiredoutcomes.
Execution versus Search Paradigms
Business model innovation shouldfollowa searchparadigmthat creativelyexperiments andtests hypothesis inthe elements of
the new designto determine whether a newproduct or service is commerciallyviable. The search paradigm is inherently
riskier andmore feedback-oriented comparedto the execution mindset necessarywhen optimizing anestablished business
model. Modern enterprises needto excel at not onlyimproving existing elements of its current businessmodel but inventing
entirelynew businessmodels whose exact structure and dynamics are emergent. The businessmodel innovationinitiatives
maybe organizedas a set ofventures that operate outside of existing businessunits but leverage their resources. The
management of shared resources across the portfolio introduces new requirements in the organizational and information
technologyarchitecture. The successful new business ventures mayeventuallybecome integratedintothe core operating
model so that theycanbe scaledandoptimized to maximize value generation.
Intrapreneurs
Enterprise executives must consider that the management philosophynecessaryto run these venturesis considerablydifferent
than what is expectedfor existingbusiness units. Insteadof applying a discipline for optimizing executionof operations, the
team running a business modelinnovationventure is highlyentrepreneurial, comfortable withrisk, challenges the established
modus operandi, andcreativelypivots basedonfindings from market feedback. These intrapreneurs are essentiallyleading
startups onthe edges ofthe enterpriseto findnew market opportunities for value creation. Intrapreneurs applydesign
thinking to realize innovationfor customers.
Enterprise Architects
The teamsettingout to develop the new enterprise architecture consists of individualsknowledgeable with a systems thinking
approachfor design. Enterprise architects applydesignthinking to deliver transformational capabilitiesto executive
management. The team establishesa clear vision that enterprise architecture is the organizing logic for businessprocesses and
IT infrastructure reflecting the standardizationandintegration requirements ofthe core operating modelas wellas the new
venture entities. The designers must work closelywithboth management teams inthe established business and newventures
to identifythe architecture elements that canbe sharedandextendedto support innovationbeyondthe operatingcore. The
enterprise architecture team excels at creating the standardizationandintegration necessaryto exploit resources to provide
management withthe capabilities for optimallyrunning their businessunit or venture while supporting innovationprocesses.
The design team must alsobe able to communicate the benefits of enterprise architecture which include:
reducedIT costs
increasedIT responsiveness
improvedrisk management
increasedmanagement satisfaction, and
enhancedstrategic outcomes.
6. Business Model Design
Business model designsets out to define howanenterprise creates, delivers andcapturesmarket value. The interrelationship
betweenthose three facets is keyto understanding how a business model canbe inventedto define a new venture.
Intrapreneurs exercise the ideation component to produce novel products or services to potentiallycreate a new market witha
compelling value propositionfor target customer segments. The activities andprocessesthat need to be executed together
with partners andsuppliers to shipthe product or service to customers define the value fulfillment mechanism. Lastly, the
enterprise capturesvalue whencustomers payfor the product or service contributing to the revenue stream. Implementing
this value generation cycle is the essence of businessmodel design.
Business Model Canvas
A valuable tool to use for prototyping a business model is the BusinessModel Canvas. The Business ModelCanvas is a strategic
management asset to describe, design, andinvent businessmodels using anontologydeveloped byAlexander Osterwalder
2
.
The Business Model Canvas provides a visual representationfor the mainaspects that define how an enterprise creates,
delivers andcaptures value.
The canvas can be developed usingpaper prototyping techniqueswhere each of the elements are represented byn ote cards
and modified easilyduring the designprocess
3
. The tactilenature ofthis technique induces collaborationandintense feedback
to establisha shared vision for the innovation inbusiness model design. Alternatively, the BusinessModel Toolbox i s aniPad
applicationavailable inthe Apple AppStore to developthe aspects of the Business Model Canvas indigital form.
Business Model Canvas (Business Model Generation, Osterwalder et al, 2010)
7. Value Propositions
On the Business ModelCanvas, Value Propositions are the product or service that will offer value to customers basedon
novelty, performance, risk reduction, cost efficiencies, customization, or other desiredoutcomes. Essentially, these are the
reasons customers will payfor anenterprise’s offering that solves a problem or satisfies a particular need and serve as the basis
for Revenue Streams.
Customer Segments
Customer Segments identifythe target market which realize benefits fromValue Propositions that are specificallydesignedthat
intendedaudience. Each segment will have a corresponding level of profitabilityso it is important to understandhowthis
impacts the business modeldesign.
Customer Relationships
Customer Relationships define the nature of the ongoing engagement betweenthe enterprise andcustomers. Theydefine the
frequencyof interactionas well as the mechanisms bywhichcustomers will derive value from doing businesswith the
enterprise.
Channels
Channels are the distribution modesbywhichdemandfor products and services is generatedin target Customer Segments as
well as howfulfillment is delivered.
Revenue Streams
Revenue Streams capture the options and mechanisms bywhich Customer Segments payfor products andservices. Options
mayinclude flat fees, subscriptionmodels or auctions. Payment mechanisms mayinvolve online portals, mobile applications,
or retail locations.
Key Activities
KeyActivities are the business processes and operations required to support the business model. These processes mayinvolve
partners, suppliers andalliances to deliver the value to customers. Operations include platform capabilitiesrequiredto support
the data andinterfaces to enable the collaborationbetweenthese organizations as well as customer-facing channels.
Key Resources
KeyResources are the physical and digitalassets usedto provide capabilityfor the various components inthe business model.
Resources neededto fulfill demands inKeyActivities, Channels, Customer Relationships andRevenue Streams shouldbe
consideredto ensure value is created, delivered, and capturedefficiently. The resources mayinvolve intellectualproperty,
financial instruments, and human capital.
Key Partners
KeyPartners indicate suppliers, service providers, and alliancesthat support KeyActivities and KeyResources to deliver on the
Value Proposition to Customer Segments.
8. Cost Structure
The Cost Structure describesthe fixedandvariable expenditures requiredto support KeyActivitiesand KeyResources. It is
important to consider whether the businessmodel is cost or value driven. A cost-driven business model is more concerned
with efficiencies suchas automationandprice-basedvalue proposition. A value-drivenbusinessmodel is focusedon maximum
value creationofferedbya premiumvalue proposition.
DesignProcess
Startinga newventure within the enterprise for business model innovation begins with a mobilizationof team consistingof
intrapreneurs, enterprise architects and executives fromexistingbusiness units. Executives from these business units work
together withenterprise architects to identifysharedservices anddata that wouldsupport the new ventures. Intrapreneurs
initiate the ideationactivitiesto identifypossibilities for new value propositions for Customer Segments.
The teamnext seeks to understandthe viabilityof the value propositions byconductingmarket research andidentifying how
theycan take shape with newproducts andservices. These activities require the teamto analyze customer contexts and
feedback to gain a deep understanding of the needs andproblems that present an opportunity.
In the design phase, the elements ofthe business modelare discussed and defined withthe innovationteam. Businessmodel
prototyping is the keyactivityto experiment with various designs onthe Business ModelCanvas. The teamcanuse post-it
notes on a wall inthe designroom to rapidlychange the elements inthe Business Model Canvas. Different versions of
proposedbusiness model prototypes can be evaluated to determine best fit and optimal viabilityfor the target Customer
Segments. Other factors suchas KeyResources andKeyActivities can be assessedto support Channels, Customer
Relationships, andRevenue Streams. The deliverable from thisdesign phaseis a Business Model Canvas that hasbeen selected
with the highest evaluationdeterminedbythe innovation team. In fact, it is inthe design phase that enterprise architects
beginthe process of mapping the business model to anoperating model. Enterprise architects collaborate withintrapreneurs
to identifythe data andprocesses to enable the elements inthe business model. The mappingprocessis described further in
IdentifyinganOperating Model andMapping the Business Model to anOperating Model.
A plan to deploythe selectedBusiness Model Canvas is then developed to begin deliveringthe Value Propositions inthe
market. The planshouldinclude a roadmapto keepKeyPartners synchronizedwiththe deployment timeline and to ensure
dependencies will be met. Enterprise architects workwith KeyPartners to facilitate the integrationof servicesand data to
enable the processes in the newbusiness model design. Intrapreneurs also beginworkingwith Channels to drive demandfor
the offerings inthe target Customer Segments.
After the businessmodel is deployed, a programto manage the adaptations in response to market feedback shouldbe
operationalized. The program shouldinclude tracking the validityof business model hypotheses and measuring performance.
The components ofthis program are discussedin greater detailinEvaluatingBusiness ModelPerformance.
9. Identifying an Operating Model
An operatingmodel is the first layer in the foundation for executionin an enterprise architecture. The operating modelis the
business process standardizationand integrationnecessaryto deliver value to Customer Segments. It is the conceptual
component inthe organizinglogic that defines anenterprise architecture. In this sense, the operating model is the initial
manifestationof the business model when it is deployedas it indicateshowvalue is created, deliveredandcaptured bythe
business units inthe enterprise. Researchconducted byMIT’s Center for Information Systems Researchfound that enterprises
implementing an operating modelreportedthe following:
17% greater strategic effectiveness,
31% higher operational efficiencies,
33% more customer intimacy,
34% higher product leadership, and
29% greater strategic agilitythanthose companies that didnot.
4
Basedon surveyandcase studyresearch at more than200 companies in the UnitedStates andEurope, MIT’s CISR developed a
quadrant based onthe two dimensions of businessprocessstandardizationandintegration in whichhighperforming
enterprises that hadimplementedanoperating model couldbe classified.
Operating Model Quadrant (Enterprise Architecture as Strategy, Ross et al, 2006)
10. Coordination Operating Model
The Coordination OperatingModel is characterized bysharedcustomer, product or supplier data but operationallyunique
business units that canimpact eachother’s transactions. These autonomous businessunits have a high degree of control over
business process designto adapt to its specific operations. Visuallya CoordinationOperating Modelis representedinthe
following diagram.
Coordination Operating Model
11. Unification Operating Model
The UnificationOperating Model is basedon a globallyintegratedset of business processeswhere customers and suppliers are
distributed geographically. Businessunits have similar operations where process anddata are designed centrallysotheycan be
shared. Centralizedmanagement of these processes typically leverages a matrix approachto keep track ofthe business unit
composition. Although the business units have distinct operations, high-level business process owners work to standardize
business processesacross the businessunits. Essentially, Unification is based ona canonicalset ofprocesses anddata that can
be dynamicallyconfiguredto execute withineach businessunit’s operations.
Unification Operating Model
12. Diversification Operating Model
Diversificationis based onthe fact that business units have few, if any, shared customers or suppliers. These business units also
are operationallyunique andhave transactions that are independent. There is minimal business process standardization and
integrationina DiversificationOperatingModel. Most IT decisions andbusinessprocessdesign are made at eachbusinessunit.
However, these business units doleverage a commonset of sharedservices that canbe integratedintotheir specific
environment.
Diversification Operating Model
13. Replication Operating Model
The ReplicationOperating Modelalso has few, if any, sharedcustomers or suppliers. The autonomous business units ina
Replication OperatingModel leverage a federatedapproachto business processintegrationandstandardization. Business
process design is centrallymanagedas are IT services. The informationarchitecture is standardizedwith canonical data
definitions but the actual data is locallyownedwith some aggregation to the enterprise. From an operations perspective, the
business units are verysimilar inexecution.
Replication Operating Model
14. Mapping Business Model toOperating Model
The next stepinthe process is to identifyan OperatingModel that is well-suitedfor the business modelcharacteristics. The
process is definedbyevaluatingstandardizationandintegrationnecessaryincertainelements inthe businessmodel. Elements
in the business model that playa significant role in determine the operatingmodel include Customer Segments, KeyActivities,
KeyResources andKeyPartners. The mapping presentedhere provides insight intothe rational for selecting anoperating
model as well as a structuredmatrix for organizing the logic in the process.
The mapping activityshouldbe conductedina session including the intrapreneurs andenterprise architects. The intrapreneurs
can provide data and characteristics fromthe business modelto the mapping matrix. Enterprise architects cananalyze the
business processes, system linkages, and data necessaryto support that aspect of the businessmodel to lead to a choice for the
operatingmodel. The mapping process andcriteriacanbe adaptedto suit the enterprise’s particular business model
innovationparameters.
Business ModelElement MappingCriteria Operating Model
Customer Segments Small number ofsegments, sharedacross
business units
Coordination
Large number of segments, not shared across
business units
Unification, Diversification, or Replication
KeyActivities Sharedprocesses between business units Coordination
Sharedprocesses between partners Coordination
Centralizedmanagement of business process
and data
Unification
Business unit control of processes anddata Diversification
Transactions aggregatedat enterprise level Replication
KeyResources Globallyshared process and data Unification, Coordination
Business unit specific processes anddata Diversification
Federatedprocesses and standardized data
schema
Replication
KeyPartners Small number ofpartners, shared across
business units
Coordination
Large number of partners, not sharedacross
business units
Unification, Diversificationor Replication
Mapping Matrix
15. Designing an Ecosystem to Support the Operating Model
In order to begin implementing anenterprise architecture to support a foundationfor execution, it is important to consider the
composition ofthe types of architectural practices, standardizedtechnologies, andplatforms inthe ecosystem. Technology
standardizationis part of the evolution ofthe enterprise system landscape towardanoptimized, agile ecosystem that provides
the responsivenessneededto enable strategic initiatives to be implementedat higher velocities. Identifyingthe set of services
and platform capabilitiesina holistic manner allows a systems thinking approach to support designinitiatives for the enterprise
architecture. The cost benefits are alsosignificant as it gives enterprise architects a roadmap to perform technologyand
platform evaluations that are compliant with the ecosystemgovernance model to avoidredundant deployments and wasted
resources.
Architecture Principles
Enterprise architecture principlesthat inform program portfolios relatedto the core operating modelandnew ventures can
serve as valuable guides to buildingout the ecosystemina cohesive, consistent manner. These principles alsofacilitate
increasingorganizationcapabilityto design, develop, test, anddeploysolutions with higher qualityand highvelocities.
Establishing a set ofarchitecturalprinciples for enterprise architecture development underscores the important consideration
that process is just as important as technologyfor creatingworldclass solutions. Besidesagility, economies of scale and scope
can be achievedbyleveraging or extendingexisting architecturalcomponents andsubsystems to deliver new solutions required
to support a newventure. These architecturalprinciples specificallyhelpaddress the challenges neededto succeedinthe
global connected economy.
Architecture Principle Objectives
Responsive Mobile First Design Responsive Mobile First Designis the principle to designinterfacesas if theywere
targetinga mobile audience that maybe using various types of devices suchas
smart phones or tablets. The objectives of thisprinciple are:
Personalizedcontent, capabilities, context delivery
Enhancedcustomer relationships
Support for ambient awareness
Optimizedchannel distributionfor demandgenerationor service delivery
OODA Loop
5
The Observe-Orient-Decide-Act Loopprinciple is a paradigm that informs
designinganalyticaland event-processing capabilitiesintothe operatingcore as
well as new ventures. The OODA Loop includes components for decision
modeling. Some ofthe objectives driving this architectural principle include:
Open worlddecision support for consumers
Real-time data insights
Complex event processing
Distributed enterprise collaborationanddecisionsupport
Service-OrientedCloudFirst Design Service-OrientedCloudFirst Designis the principle to designall services with
business modularityandcloudcomputing capabilityto maximize utilityof
network effects. The principles helps to achieve these objectives:
Globalclass integration
Partner and supplier plug-n-play
Supplychain agility
Ecosystem Architecture Principles
16. Ecosystem Architecture
Technology and PlatformCapabilities
In addition to standardizing the process for designing the ecosystem, the technologyinfrastructure and platform capabilities
also needto be classifiedto facilitate deployment decisions. These categories are essentiallythe toolbox for the enterprise
architect to use to create solutions to power newventures launchedfrom businessmodel innovationinitiatives. The categories
have been defined as theyhelpaddress specific aspects of the types of capabilitiesneededto succeedinthe globalconnected
economy. It shouldbe noted, however, that the ontologypresentedinthe table belowis not exhaustive. Enterprise architects
should developa more comprehensive catalogof the technologyandplatformcapabilities needed to support the operating
model andanyextensions for new ventures.
Technology/Platform Objectives/Candidates
Mobile Mobile platforms produce responsive interfaces for consumers usingsmart
phones or tablets. Platforms should facilitate deployingcontext-aware,
personalizedcontent andcapabilities inthe various relationships, channels, and
revenue streams the consumer is engaged.
Candidate platforms include:
Apple iOS
Google Android
Windows Phone
Ubiquitous Computing Ubiquitous computing is drivenbyneedto capture more openworldcontextual
data via sensors to developenhanced situational awarenessto empower the
decisionmodeling inthe enterprise.
Candidate platforms include:
RFID
iBeacon
Arduino
RaspberryPi
Big Data and Machine Learning Big Data is the collectionof large volumesof data fromdiverse sources at high
velocities. BigData can enable business context insights to move withhigh
velocities acrossbusiness units and/or partners in the operating models as well
serve as the source for shared data.
Candidate platforms include:
Windows Azure HDInsight
Amazon Elastic MapReduce
Apache Hadoop
To unlockvalue from vast amounts of data over large numbers of dimensions,
machine learningplatforms canprovide the numericalanalysisto develop
insights basedonclassification, regression, andpredictive analytics. As such,
these platforms canalsodrive personalizationfor products andservices and
facilitate openworlddecisionmodelinginthe consumer customer segments.
17. Technology/Platform Objectives/Candidates
Cloud Computing Cloud computingprovides elastic computing resources for scalabilityand also
relaymechanisms for enabling linkages betweenbusinessunits andenterprises.
This platform capabilityis especiallyvaluable for business model innovation since
these servicescanbe usedinanon-demandbasis andcanbe disconnectedif the
new businessmodel does not performwell. These connections canbe made as
part of a new venture or inresponse to market feedbackor competition.
Candidate platforms include:
Windows Azure
Amazon Elastic Compute Cloud (EC2)
OpenStack
Complex Event Processing Complex event processing is necessaryto capture richcontext informationin
real-time. Events occurring in the consumer’s openworldor inthe collaborative
distributed enterprise contains contextual data that shouldbe incorporatedinto
decisionmodeling for determining how to respond.
Candidate technologiesinclude:
Microsoft .NET Reactive Extensions
Microsoft StreamInsight
TIBCO StreamBase CEP
Enterprise Service Bus In modern enterprise architectures that have successfullyevolvedto support
composite services and applications, anenterprise service bus is oftena key
enabler for reaching the data velocities required for business agility. An
enterprise service bus provides keycapabilities to support high data velocityat
the operatingcore such as message routing, service brokering, mediation, and
message processing including transformation and enrichment, operations
management, as well as qualityof service.
Candidate platforms include:
Neudesic NeuronESB
MuleSoft Mule ESB
Microsoft BizTalk Server
Enterprise CollaborationPortals Enterprise collaboration portalsare the interface for groupcollaboration within
and across businessunits inthe enterprise. These platforms include social
network andvirtual teaming capabilitiesto support standardizedbusiness
processes andaccessing shared data.
Candidate platforms include:
Neudesic Pulse
Microsoft SharePoint
Ecosystem Technology and Platforms
20. In this operating modelmobile-first responsive design can playa major role inthe implementationof the enterprise
architecture capabilities. It is important for the shared customer segments to have a consistent yet context-drivenpresentation
as theyengage acrossthe various interfaces ofeachbusiness unit andchannel usingeither a Windows Phone, Apple iOS or
Google Androiddevice.
Big Data platforms, such as Windows Azure HDInsight or AmazonElastic MapReduce, are also keyinthis modelsince the
volume, varietyand velocity of sharedcustomer-relateddata that is generated acrossbusiness units and channelscanbe very
significant. Developing sophisticated analytical capabilitiessuch as machine learning algorithms canyielddata insights over a
large number ofdimensions that can be capitalizedon an enterprise-wide basis.
Beinghighonthe integrationscale, the operating model willhave to make effective use of platforms that cancreate system
linkageswhile enabling businessprocesscustomization. Eachbusiness unit mayexecute a variant versionof a business process
that must be supported withagile and flexible integration platforms that candeliver data at highvelocity. Some of the
integrationplatformenablers include NeuronESB, Microsoft BizTalkServer andWindows Azure Service Bus.
New Venture in Coordination Operating Model
The core diagramfacilitates the envisioning process for how the newventure will be able to exploit the enterprise architecture
to deliver on the businessmodel innovation. Executive management canuse the core diagramproduced bythe enterprise
architects as a means to build shared vision withthe intrapreneurs for how the venture will operate. The core diagram informs
the innovationteamhowthe venture would leverage shared customer data while creating the linkages via ecosystem
integrationplatforms into enterprise resourcesand services, suchas Big Data analytics.
22. Shareddata in this operating model, as inthe Coordinationmodel, alsointroduces anemphasis onBig Data technologyand
platforms due to the volume, varietyandvelocitybywhich the data canbe generatedandcollectedthroughout the enterprise.
The centralized data aspect to the Unificationmodel prioritizes the needto create a solidfoundationfor advancedanalytics
such as classification, regressionandpredictionto support integrated decisionmodeling. Apache HadoopandWindows Azure
HD Insight are two platforms that serve as viable candidates for thesecapabilities inthe operating model to support BigData.
The table belowillustrates the ecosystemtechnologyandplatform emphasis mapping for each aspect inthe Unification
operatingmodel.
Core Diagram Component Ecosystem Technology/Platforms
KeyCustomers Apple iOS
Google Android
Windows Phone
LinkedandStandard (Core) Processes Neudesic Pulse
Microsoft SharePoint
SharedData Windows Azure HDInsight
Amazon Elastic MapReduce
Microsoft .NET Reactive Extensions (CEP)
Microsoft StreamInsight (CEP)
TIBCO StreamBase CEP
LinkingandAutomating Technologies Neuron ESB
MuleSoft Mule ESB
Microsoft BizTalk Server
Windows Azure Service Bus
RFID, iBeacon, Arduino, RaspberryPi
Unification Operating Model Ecosystem
A new venture canfullyexploit the scalabilityoffered bythe UnificationModel byincorporating the standardized processes and
integrationinterfaces intoits business model. Enterprise architects use the Core Diagram to illustrate the business agilityto
intrapreneurs as well as executive management andto create a sharedvisionof the specializedprocesses and integration
neededto support the innovation at the edge of the enterprise.
New Venture in Unification Operating Model
24. The table belowshows the ecosystememphasis mappingto eachaspect in the DiversificationOperating Model. The Core
Diagram is designedto illustrate how thismapping is manifested inthe enterprise architecture.
Core Diagram Component Ecosystem Technology/Platform
SharedTechnologies Neuron ESB
MuleSoft Mule ESB
Microsoft BizTalk Server
Windows Azure Service Bus
SharedProcesses Neudesic Pulse
Microsoft SharePoint
Business Unit-Specific Data Windows Azure HDInsight
Amazon Elastic MapReduce
Microsoft .NET Reactive Extensions (CEP)
Microsoft StreamInsight (CEP)
TIBCO StreamBase CEP
Business Unit-Specific Customers Apple iOS
Google Android
Windows Phone
Diversification Operating Model Ecosystem
In the Diversificationoperating model, the shared services are exploitedbythe new venture in business model innovation. The
new venture can be acceleratedbydeveloping specializedbusinessprocesses to deliver value to its specific customer segments
using the foundational technologystack. The new venture can focus on provingout is businessmodel without the needto
deploythe pre-requisite technologyinfrastructure. In fact, inthisoperatingmodel, usinga commoncollaborationplatform can
facilitate the mobilization ofinformationworker resources fromestablishedbusiness units into the newventure. Information
workers familiar with the user interface canmore readilyexecute the specific activities involved in the newprocesses.
New Venture in Diversification Operating Model
26. The table belowindicates the ecosystemtechnologyandplatform emphasismapping to the Replicationoperating model design
aspects. Note that the ecosystemcomponents that are directedat the business unit level are alsomappedinthe ta ble to
illustrate the relationship inthe enterprise architecture.
Core Diagram Component Ecosystem Technology/Platform
StandardizedProcesses Neudesic Pulse
Microsoft SharePoint
Automating and Linking Technologies Neuron ESB
MuleSoft Mule ESB
Microsoft BizTalk Server
Windows Azure Service Bus
RFID, iBeacon, Arduino, RaspberryPi
Business Unit-Specific Data Windows Azure HDInsight
Amazon Elastic MapReduce
Microsoft .NET Reactive Extensions (CEP)
Microsoft StreamInsight (CEP)
TIBCO StreamBase CEP
Business Unit-Specific Customers Apple iOS
Google Android
Windows Phone
Replication Operating Model Ecosystem
New ventures in the ReplicationOperating Model can be deployedgloballyinaccelerated fashionbyexploitingthe business
process modularityand turnkeysolutions usedfor automation and integration. Inthis scenario, enterprise executives are
adapting a successful andprofitable business model to capitalize onopportunitiesinnew markets usinga verysimilar value
proposition, or product-service market fit. Intrapreneurs inbusinessmodel innovationcanalsoanalyze howthese solutions
can be adaptedto ensure success withinthe specific context or regionthe businessunit will be operating. Enterprise architects
can thenwork together withthe intrapreneurs to identifylinkages acrossbusiness units that maybe necessaryto coordinate
federatedbusiness processes.
New Venture in Replication Operating Model
27. Evaluating Business Model Performance
Verifying Model Hypothesis
With the businessmodel deployed, the verification process can beginto collect data and feedback to determine if the elements
of the model are performing as expected. The hypothesis forming the basis for the Value Propositions can be verifiedwith
feedback from paying customers. This type of checkcanbe conducted for other elements suchas KeyPartners, Channels, and
KeyActivities. All the interactions and interdependencies betweenelements of the business model canalsobe verified.
Tracking Metrics
Metrics shouldbe identifiedto quantifythe verificationprocess for the elements of the business model. This tracking makes
the task of improving the business model more concrete leverage real data basedon customer feedback or market conditions.
Tracking metrics enable a program of continuous innovationwhere the newbusiness modelis calibratedwithminor
adaptations to gaingreater market traction. Whena certain trajectoryof profitabilityor customer adoption is observed, then
the venture changes focus from verification to scalability. Insustainabilityinnovation, metrics relatedto energysavings canbe
tracked to determine if the businessmodel is makingthe desiredimpact. Leveraging the full capabilitiesof the operating
model, the new venture canreadilyincorporate resources andservices to begin the scalingprocess.
Performance Measurement Architecture
A performance measurement architecture is neededto support verificationandtracking of metrics associated withbusiness
model hypothesis. The architecture canleverage platform analytics present inthe enterprise architecture while providing
interfacesspecializedfor business model performance evaluationandmonitoring.
Customer Development andPivoting
Part of the task ofevaluating performance relates to the process of customer development. Whena new venture launches,
several keyquestions shouldbe considered:
Who are the paying customers?
Are theythe customers we targetedinour business modeldesign?
The answers to these questions mayleadto a change inthe new venture’s offerings to those customers to identifyan optimal
market fit. At some point in customer development process, the metrics mayindicate the needto adapt the business model,
or pivot, in order to enhance the viabilityof the business model. The innovatingteam canrevisit the designusing the Business
Model Canvas to produce an adaptedversionto reflect customer development analysis andfindings.
Scaling and Operationalizing
If the metrics are indicating satisfactoryperformance andanalysis projects growth in market share, the new venture needs to
consider scalingthe components of the business model so that the venture cangraduallybe shiftedintothe operatingcore. In
this scenario the outcome hasbeen a successful business model innovationventure that is producing the desiredimpact on
profitabilityor sustainability.
28. The Creative Power of Business Model Innovation
The creative power of businessmodel innovationcan boost enterprises to new levels of growthand value generation. With an
enterprise architecture that enables executive management to strategicallyand creativelyadvance business modelinnovation,
the potential to unlocksignificant market value increasesdramatically. Executives andintrapreneurs can collaborate to identify
new markets, partners, resources, channels, andvalue propositions to deliver new experiences or solutions to customers.
For instance, in2003, Apple unleashed the tremendous disruptive potentialof business model innovation whenit introduced
the iPod digitalmusic player along witha novel distributionchannel for the music industryanda convenient mechanismfor
consumers to legallydiscover and downloadmusic. Moreover, Apple introduced newmobile products, the iPhone andiPad,
that addedto network effects of the newbusiness model. In three years, Apple’s business model innovation became worth
almost $10 billion representing approximately 50% of the company’s total revenue. Apple’s market capitalization increased
from around $1 billioninearly2003 to over $150 billionbylate 2007. Clayton Christensenmade the important observation
that Apple was not the first companyto bring a portable digitalmusic player to market. Another companycalled Diamond
Multimediahad introducedits player, the Rio, in1998. So what didApple dobetter? Accordingto Christensen, Apple made
the product its business model enabledbythe technology.
6
Business model innovation was the force that unlocked the value.
Apple’s Performance, Before and After Business Model Innovation
7
(Amit and Zott, MIT Sloan Management Review)
Business outcomes driven bybusiness model innovationare increasinglybeing recognizedbyexecutive management. A recent
global surveybythe Economic Intelligence Unit foundthat a majorityof the 4,000 executives polled preferred business model
innovationover other means to create competitive advantage.
7
Reinforcingthis finding is IBM’s 2012 Global CEO Report which
determined that 33% of the more than1,700 chief executive officers in64 countriesinterviewedconsider business model
innovationas a keysource ofsustainedeconomic value.
8
Infact, the report foundthat outperformers were more bolder in their
approachto business model innovation. Withallthe challengesCEOs face inthe current environment, there is not a moment
to lose for setting out to buildanenterprise architecture that will harness the creative power of business modelinnovation to
succeedina global connectedeconomy.
29. References
1. The Business Model InnovationFactory:How to StayRelevant When the World is Changing, Saul Kaplan, WileyPress, 2012
2. Alexander Osterwalder (2004). The BusinessModel Ontology - A PropositionInA DesignScience Approach. PhDthesis
Universityof Lausanne.
3. Business ModelGeneration, Alexander Osterwalder, Yves Pigneur, WileyPress, 2010.
4. Enterprise Architecture as Strategy:Creatinga Foundationfor Business Execution, J. Ross, P. Weill, D. Robertson, Harvard
Business School Press, 2006.
5. USAF Colonel John Boyd, briefings onmilitarystrategy. (http://en.wikipedia.org/wiki/OODA_loop)
6. Reinventing Your Business Model, ClaytonM. Christensen, Mark W. Johnson, Henning Kagermann, Harvard Business
Review, December 2008.
7. Creating Value ThroughBusiness Model Innovation, RaphaelAmit, ChristophZott, MIT SloanManagement Review, Spring
2012 Vol. 53 No. 3.
8. 2012 IBMCEO Study, Leading ThroughConnections, IBMCorporation.
The author can be reachedonLinkedInat http://www.linkedin.com/in/sergiocompean/.