The article “Don’t Let Growth Muddle Your Company’s Strategy” published in the HBR recently was an interesting read. It discusses the importance to businesses of understanding the “core” and “peripheral” features of their strategy and working to always support these. Having a clear understanding of when a decision, often to promote growth, has been taken that can dilute the strategy is crucial.
What are Core and Peripheral features and why are they important?
The authors describe the core as the ‘who-what-how’, basically, who is the audience for the offering, what are you offering that audience and how are you delivering that offering, i.e. where you differentiate. The peripheral are the things that support in delivering the core
One of the points raised is that dilution is often not the result of a single decision, “it is rarely one big decision that leads to dilution. More often than not, it is a series of many small decisions, taken over a long period, that cumulatively lead to dilution.”. Also that “Not only are the incentives in any firm focused on short-term results — thus encouraging managers to undertake an investment even if they fear that it might lead to some long-term dilution — but even worse, these same managers may feel that by the time the dilution effect becomes apparent, they may no longer be employed by the firm to be held accountable!”.
How can enterprise Architecture help?
Enterprise Architecture has an important role to play here. The Business Capability Model can be used to make the distinction between core and peripheral capabilities visible. This knowledge can then be used to support the business in ensuring dilution of the strategy is minimised. Enterprise Architects can help through:
- Prioritisation of Core Features: By clearly identifying the key elements of the business strategy that allow the organisation to differentiate, investment in IT systems and operational processes can be focused to enhance these features
- Establishing Guardrails: Developing decision-making principles to prevent initiatives that misallocate resources or misalign with strategic priorities. For instance, any new IT project should be evaluated against its contribution to core features and overall business goals.
- Monitoring and Adjustment: Regularly reviewing and communicating the alignment of IT and operations with the business strategy. As market conditions and priorities evolve, ensuring that the distinction between core and peripheral features remains understood and relevant.
For enterprise architects, understanding the core and peripheral features of the business is not just an intellectual exercise, it should be an inherent part of their day job. By recognising what differentiates the organisation, and the elements that help deliver that differentiation, the Enterprise Architecture provides a framework to support decision-making that aligns IT and operations with strategic goals and ensures dilution is minimised.
Useful Links
Don’t Let Growth Muddle Your Company’s Strategy
How Enterprise Architecture relates to Business Strategy
Why Enterprise Architects need to get to grips with Business Strategy