Working as an enterprise architect comes with the recurring need to justify architec-tural decisions. For this purpose, it is very helpful to have accepted architecture principles to rely on. Taking this further, it would actually be most promising to be able to connect any element of the overall architecture with the basics of the enterprise itself, as any substantial principle would have its roots there anyway. To get a holistic view of the fundamental aspects that drive an enterprise, this book’s business architecture framework suggests looking into the business motivation, which aggregates all aspects an enterprise’s decisions should be founded on.
Most companies do have a strategy document and maybe this also covers the aspects of mission, values, and external drivers, for example. Nevertheless, one should be aware that even if there are explicitly formulated strategy statements it may be necessary to look for implicit add-ons or even contradictory statements from major stakeholders you have to consider.
So the basic question is how to extract the architecture-relevant facts out of the explicitly and/or implicitly given business motivation. Several tools can be used for this purpose; the following subsection describes one of these tools, including its role for the “justification” of the overall architecture. The findings from applying the tool can be used in different contexts:
• Identification of overall strategies or principles
• Creation of a consistent design of the business model
• Support of linking business execution to the business model
• Identification of gaps between the actual business model and the business motivation
4.2.1 Value Disciplines
To build a consistent architecture, it is important to identify what is most important for an enterprise. This should be a key part of its strategy statements. According to Treacy and Wiersema (1993), there are threevalue disciplines an enterprise can pursue (see Table4.1).2All three disciplines need to be developed to a certain level
2The value disciplines do not necessarily cover all aspects within the business motivation.
Nevertheless, they represent one tool to start with, and the results can be combined with findings from additional analyses.
to make the enterprise fit for competition, but there is one to focus on to differentiate.
Only a few companies have succeeded to excel in two of these disciplines, as there are obvious trade-offs. Cost leadership does not fit the offering of a broad, customized product portfolio, while extensive process automation usually does not come with high flexibility. Therefore, one important task for business architects is to identify the company’s core value discipline and align the architectural decisions accordingly. For sure this means that from time to time the conflict between upcoming business ideas and their alignment to the existing business has to be managed.
Table 4.1 Value disciplines (Treacy and Wiersema1993) Customer
intimacy
Summary of value discipline
– Do everything to identify the customer’s need and make a profound decision of how to fulfil them
– Deliver a full range of services
– Focus on the long-term profitability of a customer
Impact on the architecture
– Implement variety of distribution channels (online, on-site, self-service, etc.)
– Implement processes to identify and classify the customer, create systems and collect information to support these processes
– Develop capability to update product portfolio according to customer’s needs
Operational excellence
Summary of value discipline
– Leadership in price and convenience for the customer – Manage transactions efficiently
– Measure quality and cost of transactions – Concentrate on standard products
Impact on the architecture
– Reduce overhead costs by focusing production on demand – High level of process automation to improve cost, quality, and
performance Product
leadership
Summary of value discipline
– Produce continuous stream of state-of-the-art products and services – Concentrate on speed
– Pursue new ideas (also from outside the company), do not be afraid to make your own products obsolete
– Present the benefits of new products
Impact on the architecture
– Maintain and improve capabilities to develop and deliver products – Foster creativity
– Support fast decision making, avoid bureaucracy – Be able to manage risks of failure
4.2.2 Example: Apple
How does this apply to Apple? At first instance, several people may consider Apple a customer intimate company. If you look into this in more detail, it becomes pretty obvious that Apple is not primarily driven by customer intimacy though. For each product group, Apple basically has a streamlined product portfolio without many variations. Back in 2007 there was only one iPhone. For some time it nearly seemed that Apple adopted a quote from Henry Ford: “You can have an iPhone in every color as long as it is black.” Still, in 2013, with several iPhones in the market (5s and 5c in different colors), you would not consider it as a move to customer intimacy. Nokia and Samsung offer smartphones in every size and cover the prize range from low to high end. So if it is not customer intimacy that drives Apple, what is it then?
Looking at the products Apple released for the last decade, it appears that the intention has always been to be the market leader with respect to design, user experience, technology, and product integration. So even if there was no product leadership statement in Apple’s strategy, one would most likely identify it as the value discipline by which it is predominantly driven (Fig. 4.1). There is another element from Apple’s history that is typical for a “product leader.” Obviously, the success of iPhones and iPads dramatically affected the turnover of iPods. Apple was not afraid of replacing one successful product of its own with a new one, as any other company could have come up with a similar device.
How ambitious Apple is to keep its product leadership is recognizable in its latest decisions. Due to the fact that hardware components are available for other players in the industry as well, it becomes increasingly difficult to build an outstanding smartphone, tablet, or notebook. Obviously, Apple noticed that and today concentrates not only on the hardware but sells the whole package with its iLife applications (and other software services) for free on all platforms. By doing
Fig. 4.1 Value discipline for Apple
this, it still has an add-on for its products that others cannot copy easily, for the prize of losing around $400 million in software revenue.
Furthermore, there is another important element of product leadership in the smartphone/tablet market—the ecosystem. The user value of a device does not only depend on hardware specifications but also on network effects within the platform.
Imagine there would be no WhatsApp available for iPhones. It would not be relevant if you had another “perfect” messenger app, as the value of such apps is related to the number of connected users. This means that in order to maintain product leadership, it is essential to care about the ecosystem. Later in this chapter it is shown which measures Apple has in place for this; for now, such consideration of the ecosystem is meant to indicate that Apple puts product leadership in focus of its activities.
The pure need for being the best was pointed out by Tim Cook (CEO of Apple Inc.) in a recent interview (Grobart2013): “There’s a segment of the market that really wants a product that does a lot for them, and I want to compete like crazy for those customers.” Therefore, they are in need to innovate to give customers the extra benefits they can expect for the higher price.
4.2.2.1 Is Apple Excellent in Operations?
Is that all? Perhaps not, as you may find Apple also succeeds in operational excellence. There may be two indications for that:
– First, it managed to develop its supply chain in a way that allows a flexible production with outsourced capacities at very low costs. Although this might be typical for operationally excellent companies in particular, you would probably not consider this a main strategic target for Apple. It is a pure necessity to work with external capacities and technology for building electronic devices.
– Second, with the web-based Apple store as well as the iTunes- and AppStore, it makes use of very convenient, highly efficient solutions to sell products.
Although this would also fit for a company driven by operational excellence, for Apple the main driver seems different. It is part of its product leadership approach to have these platforms in place as they are used to support the ecosystem of Apple products.
As pointed out earlier, in every company you will find a certain degree of each discipline, as you can neither leave costs unconsidered nor ignore customer needs and product quality; in fact, the minimum level for each is defined by the competition.
4.2.2.2 Further Strategic Observations on Apple
Focusing on product leadership and caring about the ecosystem is not only impor-tant to be attractive for customers. Strategically, it has another value because a well-developed, feature-complete ecosystem is hard to copy for competitors. Consider Microsoft’s Windows Phone; although Microsoft tried hard for several years now, Windows Phone is still behind. At the hardware/operating system level it was kind of easy to deliver “nice” products. However, you still do not get all apps and
contents that are available for iOS devices, as it is difficult to attract a large community of external developers for the platform.
Furthermore, a strong ecosystem comes with a lock-in effect for users. Once a user has stored his profiles and data in one ecosystem, it costs some effort to move to another one, even if it offers the same features. In fact, Steve Jobs recognized this lock-in as a primary goal of Apple with its cloud services, thus making sure that existing customers choose more Apple products in the future (Chen2014).
Therefore, you can assume that, from a strategic point of view, Apple also has the iOS ecosystem in focus. Product leadership is connected to that as it means to develop the ecosystem to be best-in-class. Such an ecosystem should be hard to copy and makes it convenient for customers to buy more and more Apple products.