The Fractal Organization: From an Enterprise Architecture Point of View.

Enterprise Architecture

Patrick Hoverstadt started the lecture by saying that he had never heard of Enterprise Architecture before he ran into John Gotze but of what he has learned it is about making sense of the organization and creating a conceptual model for the enterprise.

Build Models

In Enterprise Architecture modeling is a corner stone and the models serve to create an idea on what we are trying to manage and how well to understand the model. The model has to be based on real life data and it has to represent reality in the best way possible. The models provide both a simplified version of reality but it does also provide a usable representation of reality. This representation gives the members of the enterprise an ability make decisions on how to design the various business processes.

our ability to manage an organization is based on how well we understand it, and our understanding depends on how useful & appropriate are the models we use” – Patrick Hoverstadt (2010)

When working with this approach it becomes clear that the Viable Systems Model in some form can be identified as a part of the school of enterprise engineering. The school of enterprise engineering is characterized by the idea that enterprises can be defined and designed by models and meta-models.

The Viable Systems Model

Usually the organization diagram has been the model that most enterprises relate two when they delegate blame and responsibility. However the viable systems model is slightly more complicated.

In the viable systems model operations and environment is linked. The first part that needs to be done is separating the primary activities. Through this process then the focus should be what activities provides value to the customers. The reason for this is that it is the customers who finance the activities of the enterprise (at least from cash flow perspective. For the public sector it is the tax payers who pay for the particular services through the tax bill).

 

When the first two processes have been taken into consideration then you would have to go up through the model. The primary assumption is that the various primary activities can be broken down into smaller steps in the process. This means that the enterprise works with an assumption that the sup processes can be reconstructed and create synergy.

 

The same approach can be used for the enterprise e.g., the operations that are organized around the concept of the co-ordination and the lines of co-ordination. However it is clear that most enterprises are products of randomly available components that likewise have been deployed randomly and one of these components is the management component. The management component is according to Patrick Hoverstadt that component that undermines the core of the enterprise, and that in some way undermines the enterprise’s ability to adapt, adopt and act according to the changes in its envirornment.

 

Most organizations are rubbish since most managers are promoted by putting fires out” – Patrick Hoverstadt (2010).

 

Management and especially delivery is an important task for the executives and the middle management to deal with. They work in particular to ensure that operations delivers what the management has specified what they should have done.

 

Likewise does it include decisions of what the management has been located in the delivery service. “This is the spine of the hierarchical organization” – Patrick Hoverstadt (2010).

 

The spine is building the conversational loops. The conversational loops deals with creating this focus on working with building the conversations on what we need to produce and when we should deliver it.

According to Hoverstadt this deals with specific (specifying), agreeing on performance, measuring performance, resource bargaining and fragmentation. In other words should the managers (including the executives) work with understanding on how the employees and the managers under them interact with the everyday demands and processes. In most cases will the various levels in the enterprise contribute to both a positive development and the negative cycle.

If management is aware of the problems in the hierarchy it can be assumed at least some of them will do something about it in order to optimize the enterprise or at least do an attempt to enable that the enterprise will survive both in the long and the short run. The usual problems with management and the subunits they manage are conflicts over resources, turf wars, conflicting orders and conflicting messages from the customers (internally and externally) of the enterprise and weak planning for the operational core of the enterprise.

A classic situation is that something changes in the operations section and that impacts the rest of the organization and in response to that is that the senior management demands more and more control over the operation. This is done through reporting (setting up a bureaucracy).

 

… they try to micro manage the local managers, and that turns into a vicious cycle” – Patrick Hoverstadt (2010).

 

When the vicious cycle has started then it becomes a problem dealing with problem solving, and instead it becomes a show for managers to exercise control. This will eventually turn into a disastrous path.

The turf wars for managerial control leads to sub-optimization and it becomes an anti-thesis to efficiency and it will eventually lead to trouble and act as resilient barrier for accomplishing the goals of the enterprise.

 

Another factor that is of great importance for any enterprise is that its executives (executives, managers etc.) are well informed on the environment (customers, competitors and government), and the organization. If it happens that the executives aren’t informed about the environment, or for that matter they don’t understand the activities or the structure of the organization then the executives will start to develop an assumption of how the enterprise and the environment works. This assumption can very well be very far from what really happens in the enterprise and therefore it becomes dangerous develop this form of groupthink (a state of which the executives continuously will put pressure on one another in order to take more extreme) in the top of the enterprise.

The enterprise’s decision makers needs the right information at the right time and at the right place; however it doesn’t enforce sanity and a sense of reality.

To make some sense of reality basic systems of allocation of resources and responsibility e.g., a basic but functioning management accounting system that is build upon activity based costing.

The Monitoring Loop

In management situations proof and trust are the two most important factors. Can the manager trust the information, and can use the information to guide any form of guiding principle?

If the information isn’t valid then it is very likely that the decisions made will not be in alignment with the continuous change in the environment that the enterprise works in.

 

The loop needs to bypass at least one level of management. It has to ensure performance reports are accurate and the monitoring loop should ensure the manager’s understanding of operations.” – Patrick Hoverstadt (2010)

 

The monitoring loops should be generating qualitative data that the managers (delivery) can trust. According to Hoverstadt the only way to measure the conflicts among the managers and the various units dealing with operations have to be qualitative due to you can’t measure the conflicts in a management group through quantitative data.

Usually do middle managers co-ordinate with one another in secrecy to avoid the micro-management-syndrome.

It becomes a necessity to link operations to decisions and agreeing and measuring performance, and agreeing to the resource allocation.

Intelligence

The intelligence section in the management framework is doing surveys for technical, competitive and market developments that occurs in the environment of which the organization (enterprise) operates. The intelligence section is one of the most important sections in the enterprise, if the enterprise hasn’t access to accurate and sufficient information then the enterprise will experience problems with qualified decision making. Nonetheless most enterprises are not particular good in dealing with this important segment of the enterprise.

Usually organizations are catastrophically bad at this” – Patrick Hoverstadt (2010).

Thereto does the intelligence deals with identifying the R&D potentially and planning how the enterprise should overcome the obstacles in its way.

Governance

This is the section of the Viable Systems Model that handles the governance and makes the balance between the external and internal social systems in the enterprise and likewise does it handles the AS – IS and the TO – BE state of the enterprise.

According to Hoverstadt then the performance measures have to be designed as inputs to strategy not seen as outputs.

Likewise does the governance and decision making have to be articulated throughout the organization.

Decision making can’t really be set into a particular process and can’t be organized around a linear path since there would be a need to be able to adjust to changes over time.

Enterprise Architecture and VSM

Doucet et al (2009) argues that all enterprises have an enterprise architecture regardless of how the enterprise approach it. Enterprise Architecture has in reality three levels that depends on how the enterprise acts according to Enterprise Architecture and what it can gain from Enterprise Architecture. According to Bernard (2005) Enterprise Architecture deals with both the documentation of the enterprise but it also works as a form of management (what is later defined as integrated governance which Enterprise Architecture is an important part of).

Enterprise Architecture with bringing the information to the decision makers at the right time and the right place. Op’t Land et al (2009) argues that Enterprise Architecture is giving the decision makers the proper information to executive and adopt to the changes in the environment in the enterprise.

There are many different views on what Enterprise Architecture is and the various views have been crystallized into various different frameworks that tries to catch the complexity of the enterprise into a so called meta model that can be communicated to the individuals of the enterprise.

There are many communities that practice Enterprise Architecture sees the foundation for enterprise architecture differently e.g., is Enterprise Architecture as a process (or set of processes) or is it enterprise engineering or something in between. If Enterprise Architecture is seen as a set of processes then the viable systems model can be applied in order to achieve an understanding of how each of the teams, groups and devisions of the enterprise architecture works. If the chief architect sees the concept of enterprise architecture as enterprise engineering then it is likely that the viable systems model can be used as a blue print that the organization can be designed upon.

The ideals of the VSM is to create a resilient organization, and it can be enabled through the implementation of Enterprise Architecture since it enables the executives to audit how the enterprise operates. The Viable Systems model and the concept of Enterprise Architecture has something in common in addressing the problems that the enterprise faces and attempting to establish a resilient organization that should enable the enterprise with achieving competitive advantages. From this point of view should the chief architect at least think on applying the Viable Systems Model when he or she designs the Enterprise Architecture approach.

 

Bibliography

Bernard 2005, An Introduction To Enterprise Architecture, AuthorHouse

Doucet, G. et al., 2009. Coherency Management: Architecting the Enterprise for Alignment, Agility and Assurance, International Enterprise Architecture Institute.

Patrick Hoverstadt, Fractal Organization: Creating Sustainable Organizations with the Viable System Model (John Wiley & Sons, 2008).

Martin Op’t Land et al., Enterprise Architecture: Creating Value by Informed Governance (Springer, 2008).

3 thoughts on “The Fractal Organization: From an Enterprise Architecture Point of View.

  1. If you’re interested in how VSM can be used in enterprise-architecture, perhaps take a look at my book ‘The Service-Oriented Enterprise’ http://tetradianbooks.com/2008/12/services/ . The main theme is that each of the VSM ‘systems’ can also be reconceived as services (in the most generic sense of ‘service’ – i.e. not IT-only!). Applying this to a whole organisation requires something of a rethink of system-3*, from Stafford Beer’s ‘verify and audit’ to a more whole class of what I described as ‘pervasive services’, services that tackle every type of qualitative concern (security, quality, safety, efficiency, probity – all the so-called ‘non-functional requirements) across the whole of the enterprise.

    Perhaps also take a look at my most recent book ‘Mapping the Enterprise’, http://tetradianbooks.com/2010/11/ecanvas/ . This focuses more on a VSM system-1 view (because ultimately every service is a system-1, delivering something), but also includes links to all the other VSM systems as ‘guidance services’ that help integration of the respective service into the whole.

    Hope this helps, anyway?

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