Automated strategic alignment as a service
How to dashboard enterprise value exchange
Bottom Line Up Front
Use data science to create a strategic alignment dashboard as a service, or create it yourself, if you run business services for others. This is an opportunity for a tech titan that can afford to create the capability. It is also, possibly, an intelligence vulnerability for anyone who is being analysed without asking for the service.
Key points
Strategic alignment is a meta-goal
Value network mapping is a means to strategic alignment
Data science can create automated value mapping
Corpus holders can dashboard value network mapping in real time, to track strategic alignment for sizeable businesses
Point One: Strategic alignment is a meta-goal
Virtues and vices
The sin of inefficiency
It is possible for a business to be reasonably successful (for instance at achieving high shareholder value) while being woefully inefficient. In the real world of limited resources and unintended consequences, this is poor practice.
The sin of meaningless efficiency
It is possible for a business to seek and achieve some level of efficiency without strategic alignment, which makes the efficiency more or less pointless. Expending resources — human and material — on digging one hole to fill in another, is irresponsible even when it is profitable. It is meaningless efficiency.
The grail of alignment
For a business to achieve its potential, it needs to be aligned to strategy. Shareholder/stakeholder value can never be fully optimised, for instance, without sound strategy and optimal alignment to strategy.
The temptation of operational excellence
Operational concerns and weaknesses in converting resources to capabilities distract businesses’ strategic leadership from creating sound, authentic strategy and aligning the business to this strategy.
Alignment is not just a grail; it’s a holy grail
Without the basis of sound strategy and the goal of strategic alignment, every expenditure of resources and every creation of capability is potentially wasteful in its entirety. This waste of human potential and resource inputs is unethical, socially irresponsible and evidence of poor governance.
A business which optimises its strategy and aligns optimally to strategy, and which can evidence that optimisation and alignment, can make its very alignment and efficiency an authentic component of its social licence to operate.
Parable: the noisy motor
A farmer had a truck with a powerful diesel engine. She spent a great deal of money on diesel fuel, and when she pressed her foot down, the engine roared with power, which made her feel it was a good investment. The engine gave off a great deal of heat, and made a great deal of noise, but by the application of a rather expensive system of cooling and silencing it appeared to give off less heat and less noise. She lamented, however, that while some of the fuel she bought went to driving the car forward; some of the fuel she bought went to making noise and boiling coolant.
A motor which makes noise is inefficient. Expending inputs on producing unwanted sound or unneeded heat is a waste of those inputs. The motor may be capable of generating power — even immense power — with sufficient inputs, but the noise is an indication of potential unfulfilled rather than a signifier of power itself.
Prerequisite: sound strategy
Where there is no strategy, there cannot be strategic alignment. Where strategy is unsound or unstructured, strategic alignment is not especially useful. Those businesses which have sound strategies are a small but significant proportion of businesses. A sound strategy in this case consists of:
A structured process to horizon-scan or analyse scenarios in order to make strategies future-aware;
A process which iteratively envisions the business’s required future state in a relevant time frame, and makes it an aim/end/goal to achieve this state;
A process which creates and critiques pathways which combine ways (strategic and operational actions) and means (resources and capabilities) to achieve strategic ends; and
A continuous or iterative process of examining strategy in order to ensure that it remains relevant in all its particulars (futures, time frame, strategic pathways, capabilities).
Strategy can be communicated openly, though aspects of it could be judiciously concealed. Strategy artefacts (documents, graphics) can communicate strategy, but are not themseves strategy or evidence of strategy.
Prerequisite: capability orientation
For a business to take a mature approach to strategic alignment, it must take a mature view of its resources as part of creating capabilities. Human Resources are an input to capability; financial investment is an input to capability; physical plant is an input to capability.
A service, a platform, a programme, a business unit or an enterprise is built like a dry stone wall, with carefully aligned stones of different sizes and shapes, each one a capability.
Meta-goal: Alignment to strategy
Aligning business operations to strategy is a meta-goal; that is, it underlies all the organisations goals. Without alignment to strategy, all the organisation’s goals become meaningless.
Every expenditure of resource or application of capability should propel a business towards its strategic goals. The ideal form of a business is one in which strategy is sound and alignment to strategy is perfect.
Any expenditure of resource or application of capability which is not part of a pathway towards achieving strategic goals is wasted expenditure.
It has been suggested that alignment to brand is or ought to be the same as alignment to strategy. This may be true if brand is defined and maintained authentically and synergistically.
Point Two: Value network mapping is a means to strategic alignment
Every business consists of exchanges of value. These are sometimes simplified as a ‘value chain’, which represents a schematic expression of a business model in terms of these value exchanges. A value chain is in effect a representation of value exchange in one dimension.
Complex businesses have value networks, not just value chains, with value exchanges between operating units, and between operating units and external actors such as suppliers, clients and customers; but also other external actors such as government, education and the charitable sector.
Because value networks are complex, they are often difficult to understand. A large and complex business will have unknown bonanzas of value, and value graveyards in which value goes to die. Creating value network maps is a process which enables leaders to understand their businesses, optimise their capabilities, and align operations to strategy.
Right now, value network analysis can be a programme of workshops and interviews, or it can be a high-value Board away-day with participants doing the mapping with markers and string. It’s intense, and it’s eye-opening. It’s a great way to involve internal and external stakeholders in the execution of strategy, and to do so in a way that ensures they understand the level of their involvement.
Value network mapping has positive effects for the organisation: participants gain insights into their own operations and processes, participants beome active participants in achieving strategic aims, and those closest to processes can take useful initiatives to optimise them.
Point Three: Network analysis can create automated value network mapping
Network analysis by data scientists of the mass of internal emails from Enron, called the Enron Corpus,1 shows that the communications around business operations, particularly at a large scale, can reveal patterns which tell significant things about the business. These patterns are a source of management information.
Nobody at Enron actually wrote emails suggesting illegal actions, but network analysis of the Enron Corpus shows patterns of emails written and emails not written which surround unlawful activity which was discovered by other means. Because unlawful activity is compartively easily understood (in the context of law), and because the lawbreaking that was carefully assessed in the case of Enron, network analysis of the 150 or so Enron users has in recent years formed the basic activity of a data science approach to management information.
This source of management information will certainly, in years to come, be used poorly and crudely; and, very likely, dangerously.
One way of using this source of management information is to create a value map of an entire organisation. That is, rather than conduct workshops and interviews in order to understand value exchange, it is possible to analyse business artefacts to map a value network, and make observations of that value network.
A sufficiently refined real-time analysis of business artefacts such as email exchanges, instant-messenger exchanges and diary entries, would yield real-time value network mapping which could be represented in a more or less sophisticated fashion on a dashboard.
Point Four: Corpus holders can dashboard value network mapping in real time, to track strategic alignment for sizeable businesses
The holder of a corpus of business artefacts could, using data science methodology, track relevant patterns and dashboard them, in order to dashboard strategic alignment in real time, and to guide optimisation programmes which could ensure that business operations are aligned to strategy and are thus meaningfully efficient.
For a large organisation, such as a large-scale enterpris or a government, which holds its own corpus of data and metadata on its own servers (for certain values of ‘own’), this means that the business could construct or contract for its own strategic alignment tracking in whatever rhythm seemed appropriate to them. An annual, quarterly or weekly analysis of value exchange, expressed with indicators of alignment to strategy, could give units of any size a score against strategic alignment. This analysis could guide resource allocation and capability optimisation within the organisation, and by definition an enterprise operating at a large scale would reap correspondingly large-scale benefits in efficiency.
The bigger the business, the bigger the corpus of artefacts, and the more relevant patterns could be observed and used. Also, the bigger the business, the bigger the payoff.
There is, of course, a dark side to this. It is invaluable to understand one’s own value network and level of alignment to strategy, but it is also invaluable to understand competitors’ value network and level of alignment to strategy.
Two of the greatest obstacles to achieving the alignment payoff would be the requirements of creating this capability: vision and capital investment. The third would be scale: a business operating at a smaller scale might not be able to create the requisite capability.
Do you know who could create this capability, though? A tech titan which sells enterprise capabilities. Regardless of whether it was selling email and scheduling services (for example), desktop apps, virtual server space or virtual processing, the tech titan already has this information for every business that buys these services. All they need to do is analyse it meaningfully, package it up and sell it as a new service to existing customers.
Action
In the new year, let us have a safe, in-person sit-down to discuss this: Use data science to create a strategic alignment dashboard as a service; create it yourself, if you run your own business services. This is, in particular, an opportunity for a tech titan that can afford to create the capability. It is also, possibly, an intelligence vulnerability to be risk-managed for anyone who is being analysed without asking for the service.
https://www.zlti.com/blog/enron-corpus-data-management-laboratory/
Another excellent piece 👏