In an earlier blog post, we introduced the notion of the “Business Architecture Triangle” as a frame of reference for navigating through the diverse body of business architecture concepts. In what follows, we are going to revisit the triangle and take a closer look at what the constituent pieces are about and how they are interrelated.
The Business Architecture Triangle represents a high-level structure of the business architecture as embodied by three fundamental domains: business motivation, business model, and business execution. These domains represent distinct perspectives on the architecture of a business.
The business motivation is much about the “why” of what a business does and how it operates. It deals with questions such as:
- Why do we exist?
- What do we stand for?
- What do we want to achieve?
- What is our course ahead to get there?
Accordingly, it encompasses concepts such as mission, values, vision, goals, strategies, and directives (i.e., principles or policies).
The business model then describes the fundamental logic of a business in terms of where and how to play in the market, as represented by questions like:
- What value do we offer to whom?
- How do we create and deliver value?
- How do we capture and disseminate value?
- How do we sustain our value capture?
It is thus about value proposition, products, channels, stakeholders (customers, suppliers, etc.), value streams, revenue model, and more.
Finally, the business execution domain deals with what the business is able to do and why so. Core to this are capabilities (What are we able to do?), one the one hand, and their realization (How do we do things? How do we operate?) in the form of, e.g., processes, organizational structures, people, and culture, on the other hand.
The three chunks are interrelated with one another in various ways. Therefore, using the triangle will typically guide us back and forth in the business architecture and thus make sure that fundamental facets are not left unconsidered. Here is what this may mean and how the triangle may help frame business architecture design:
Business model and execution inform motivation choices
Strategy choices do not come out of the blue, they are made within the context of a certain business model (portfolio) that is already in place (unless the business is a startup). They represent deliberate courses of action to, e.g., improve, further, complement, sustain, or better enable one’s business model(s) in some way. Specifically, they may need to address issues as to, e.g., returns and risks unveiled by business model analysis. The business model (portfolio) thus sets the context for any strategy work.
Another consideration that plays a major role in the strategy crafting process is the ability to execute. That is, strategy choices need to accommodate current strengths and weaknesses. A capability map provides a solid foundation for that sort of analysis, the results of which may drive or constrain particular choices. Current state business execution analysis thus provides crucial input for strategy development.
Business motivation shapes business model
It’s strategy that essentially determines the business model: it establishes a startup’s business model, and causes changes to existing business models. An expansion strategy may, for example, result in new customer segments to be served. In a similar vein, strategy may cause changes in the business model as to, e.g., new products, additional channels, and redefined value propositions (and streams).
Before being chosen, strategies should thus be thoroughly evaluated for any impacts on the business model in terms of what will or needs to be changed and how this all fits together; once chosen, these courses of action determine how the future business model will look like. Or put the other way around: a given business model basically reflects the strategy choices made previously.
Business model imposes requirements on business execution
The business model guides business execution design. For a product to be created and a value proposition to be delivered, it needs certain capabilities. This, in turn, might require processes to be specified, people to be acquired or upskilled, technology resources to be deployed, and so on.
In other words, business execution design is essentially about business model enablement (i.e., what is being needed to run a business model). Therefore, the business model determines the capabilities that the business requires. When business model changes are on the table, potential impacts on the business execution part (e.g., capabilities that need to be built or matured) should thus receive first-order attention.
Business motivation defines and governs business execution
Changing the way the business operates does not necessarily have to be driven by business model shifts. Strategy crafting might produce courses of action that redefine business execution aspects, while leaving the business model untouched. This may be the case, for example, when realizing that the business does not really live up to and deliver on its business model (see below) and is not equipped to perform as required. Then strategies will be needed that define changes to better enable business model realization. This may include, e.g., reorganizations, cultural shifts, and upskilling programs. Another example are capability improvement measures that are defined to respond to competitive forces or protect against threats.
In addition, business execution is typically influenced by values and directives. In fact, they may be considered main determinants of culture. Incorporated into incentives and controls, they may have a fundamental impact on how people behave and collaborate.
Business execution enables business model
Capabilities empower enterprises to do business as set out by their business models. Specifically, they enable the value streams that a business model comes with to deliver value to stakeholders. From time to time, or triggered by specific questions at hand, we might want to review to what extent business execution is actually aligned with the business model (and hence meets the requirements imposed by it). This may involve different sorts of capability analysis.
As illustrated above, the Business Architecture Triangle allows you to join the dots between business motivation, business model, and business execution. It helps navigate back and forth between the different pieces and examine cause-and-effect relationships between what you aspire to, where and how you play, and how you operate as a business.
Please don’t hesitate to get in touch if you’d like to learn more about the Business Architecture Triangle or if you are interested in our business architecture master class, which provides a comprehensive look into business architecture concepts as framed by the triangle.