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Accelerating the Board of Directors Function

The Board of Directors serves as the governance function of the organization. Its directors act as the direct representatives of its shareholders, voting on their behalf as though all of the shareholders were in the room at the time. The Board is responsible for the long-term health and prosperity of the organization.

Over the years, many Boards have attempted to narrow their scope of responsibility to choosing senior executives, protecting the financial corpus of the organization, and approving mergers, acquisitions and high-level budgets along with a few other things. Directors’ exposure to poor decisions and lack of attention to other issues is mitigated by Directors and Officers Liability Insurance. While the Directors may be “safe” on a personal basis, they often leave the organization, and the interests of the shareholders they are elected to represent, exposed.

Here is a simple scenario that has played out in Board rooms across the world. The organization experiences a major shift in their marketplace, and the old way of doing business is not going to work anymore, but no one seems to be able to provide the Board with a risk-free assurance that changing course and changing their Business Architecture to meet the new way of doing business is going to prove profitable. The Board prefers to stand pat, meeting after meeting, as Borders, Blockbuster, TWA, Kodak, Polaroid, Tower Records, Palm, etc. falls behind its competitors.

In order to fulfill its legal mandate of ensuring the long-term health and prosperity of the organization, the Board’s primary function in today’s world must move beyond simply protecting capital and values to include being the organization’s harbinger of the future. It must “get it and demand it.” It must call in its own research, make sure senior management is on the right path, and be ready to approve investments on a much scale larger and more rapidly than ever before. It must do what it must each meeting to drive the organization forward into continued relevance and sustainable profitability.

Without this high-level of support from a very knowledgeable Board, opportunity will pass the organization by time-and-again until it becomes a write-off on its shareholder’s income tax statement.

Cisco Chairman and CEO John Chambers urges Business Architecture training

“Chairman and CEO John Chambers Tuesday urged solution providers to take the network business architecture high ground in the battle against competitors attempting to “commoditize” the network…

To hammer home its business architecture focus, Cisco is urging solution provider sales reps to get trained as business architects.”

Full article: http://www.crn.com/news/networking/229219602/cisco-ceo-urges-partners-to-take-network-business-architecture-high-ground.htm?itc=refresh

The Win/Lose Importance of Decision Context

Here is a great article illustrating how Yahoo’s executive management missed the boat in search phrase advertising due to their not having the necessary decision context within which to make a good decision.

http://techcrunch.com/2010/08/29/bubble-blinders-the-untold-story-of-the-search-business-model

Moral of the story, either educate yourself through your target customer’s eyes, which your Business Architect can provide to you, or defer the decision rights to someone within your organization who is closer to the problem/opportunity.

Perfection May be Holding Your Organization Back

Pursuit of perfection is one of the prime sources of failure within organizations today. It often creates a jeopardy-based workplace that replaces a nurturing environment, shifts employee evaluation criteria from performance-based to error-based, and causes employees to run for cover.

Politics

• Small groups of poorer performers often band together to protect each other and advance their interests, harboring agendas that often conflict with that of the organization.

• These groups will often prey upon top performers with whom they cannot compete, often discrediting and pushing them out of the organization.

Employee retention and performance

• Jeopardy-based environments cause top performers to seek employment elsewhere.

• Remaining employees focus on not making mistakes and avoiding personal culpability rather than driving success, leaving the organization to fend for itself.

Management

• Managers will tend to avoid making decisions and approving projects to avoid potential failure.

• Managers will tend to adopt senior leadership’s views without questioning them, requiring senior leadership to be perfect, though they lack access to the granular-level information available to the manager.

• They will focus their efforts on competing in the internal environment rather than the external marketplace, competing against each other rather than against the organization’s competitors.

Projects

• Managers will tend to avoid pursuing or taking responsibility for projects, since they expose the manager to failure and political attack should the projects not be successful.

• Managers will abandon good projects before they have sufficient time to mature, and fail to abandon nonperforming projects to avoid admitting failure and exposure to criticism.

• Project leaders will tend to over-document projects, taking time away from project implementation.

Manufacturing

• An over-pursuit of perfection in manufacturing often results in processes and machinery that are expensive, specialized and inflexible. They are optimal as long as they remain relevant long enough for their cost to be amortized across enough sales to show strong profitability. However, if market conditions change demand or advances in technology enable new competitors, they become liabilities. The natural tendency is to hold on too long, blocking funds from being used to develop new capabilities that will allow the company to compete successfully.

Marketing

• Marketing managers will tend to distrust their research, instead promoting data that supports the views of senior leadership whose views are unconditioned by research data.

• Analysis paralysis often sets in, with teams continuing to split hairs beyond the point of relevancy to avoid public scrutiny.

Senior leadership that foments fear of failure and fails to provide a protected environment in which to pilot test new ideas will lead its organization to suboptimal operations and reduced profitability.

This is easily corrected. Let’s talk.

Getting a Business Architecture Team Started

I am often asked, “What is the best way for my company to get a Business Architecture Program started?” Though each company has its own unique features, here is a good guide a CEO can follow:

1. Carefully read the Bodine-Hilty paper, “Business Architecture: An Emerging Profession,” which can be found on the www.businessarchitects.org website.

2. Discuss the idea with your Board of Directors. Gain their support and approval to proceed.

3. Announce to your company that you will be introducing a Business Architecture Program, asking everyone at every level in the company to help this team in any way possible and provide them with whatever information they may request.

4. Designate a leader for the effort – your most trusted and competent direct report.

5. Ask each department of your organization to designate one person who will be their Business Architect. It should be someone with the right attributes, which you can find listed on the BAA™ website. Several departments may need to hire from the outside or contract consultants. This person may work on a part-time or full-time basis depending on the needs of the team.

6. Send the entire team for BAA™ endorsed training. (It is important that each team member completes their Certified Business Architect (CBA™)® certificate, ideally prior to beginning work. A little knowledge can be a very dangerous thing in Business Architecture.)

7. Ask the team to perform a global scan of the company and present their findings to you personally in 30 days.

8. Brainstorm with the Business Architecture Team on the best way to present the findings to the Board and senior managers, and then have the Business Architecture Team present to them.

9. Brainstorm with the Board and senior managers as to how to best implement necessary changes, with the Business Architecture Team sitting in and asking clarification questions as needed.

10. Charge the Business Architecture Team with crafting your company’s vision story based on your company’s available market analysis and strategy information. The vision story should illustrate what the marketplace will look like in five years, who the major players will be, what role your company will play, how your company will function and how it will achieve sustained profitability. Ask them to describe how the vision story will be realized, identifying what in your company will need to change—capabilities, personnel, culture, rules of the game, incentives, etc. Tell them budget is not an issue at this stage. Give them 30 days. Send your senior managers for Business Architecture training during this time.

11. Have the Business Architecture Team present again to you, work with them to make adjustments, and then present to your Board and senior managers, prefacing these presentations with the fact that this is a visioning exercise, which will be followed up with a methodical, practical, phased analysis and gameplan for accomplishing the work outlined, which will take into account revenue streams and costs, cashflow, cost of capital and constrained resources.

12. Charge the Business Architecture Team with the responsibility of creating the gameplan. Give them 45 days.

13. Have them present to senior management and the strategy team, take notes, update their gameplan adding additional detail and financial projections, and present to senior leadership again in 20 days. Repeat this step two more times.

14. Have the Business Architecture Team make a final presentation to you, make any additional tweaks, present to senior management for vote to adopt, and then to the Board for approval of budgets.

At this point you have established a Business Architecture Team, made the Board and senior management aware of who they are, where they report and what they are able to do for the company, demonstrated the value they bring and introduced their first round of findings into the norms of the company. Momentum, and your continued sponsorship, should ensure ongoing success.

Have You Defined your Social Architecture?

The world of business discovered social media in 2009. Business professionals are setting up professional Facebook pages, groups and fan pages for themselves and their companies in a way they never did with LinkedIn, MySpace or Plaxo. Those with public profiles are Twittering, and all are experimenting to understand how these highly engaging methods work and the role they will play in a well-structured personal/professional communication program alongside the more traditional video conferences, phone calls, letters, emails, meetings, dinners, events, etc.

Each is a superb game-changing tool that promises to enable the business professional to maintain many more quality relationships than was ever previously possible. Overuse can cause distress among those who receive excessive or wrong communications, while leaving little time for work, especially as more and more tools become available.

A balance must be struck and an architecture must be adopted that identifies which of these social methods to use when, with what audience, with what frequency, in combination with which other methods, using which interface, etc.

Those who master this Social Architecture will enjoy great efficiencies of effort and outdistance their competitors.

Does Your Organization Eat its Young?

There is an expression used in corporate governance called “eating their young.” It defines the practice of hiring high-functioning candidates from the best schools into entry-level positions, working them hard for several years and then firing them when they become ready to move into managerial roles, offering promotions to weaker candidates instead.

Managers do this to have access to a strong pool of talented people to do their work, while reducing competition for their own jobs by promoting less capable employees.

This practice weakens your organization by reducing the quality of leadership and overall performance as the talented persons at the bottom are either let go or leave due to the frustration of being passed over for promotion. Employing consultants to fill the talent gap only exacerbates the problem.

Is this happening in your organization?

These practices are easily corrected.

Let’s talk

The Hidden (High) Cost of Corporate Announcements

Corporate announcements provide the market with the information needed to properly assess the corporation’s stock price.

Some of these announcements include information that may indicate a change in the organization itself, like a reorganization, merger, pursuit of a new strategy or technology, right-sizing, or investment in CRM or SAP.

These “Change Announcements” are sometimes issued with the intention of improving the stock price. Many receive lukewarm receptions from the market, and often no more than an “Oh well, nothing ventured, nothing gained” from an executive suite unaware of the costly shop-floor effect of Change Announcements, which can be large enough to offset even the benefits of announcements that do result in increases in stock price.

Change Announcements scare employees.

All employees become concerned for their jobs, even though announced changes often result in job changes for fewer than 5% of employees. This concern results in a significant drop in productivity, especially among knowledge workers, at the time workload increases as employees continue to do their old jobs while also helping to implement changes.

This shop-floor effect puts unnecessary pressure on successive levels of managers, creating a “crack-the-whip” effect – a minute announcement at the top, results in a small response among those with the most seniority at the next level and magnifies as the information works its way down the chain-of-command to the lowest-paid employees who are most vulnerable.

This loss in real productivity makes managers’ and employees’ jobs harder, and puts long-term downward pressure on stock price that outweighs the benefits of all but the most successful short-term increases.

There are several ways to resolve this.

Let’s talk.

Who is the Business Architect in your Organization?

Every organization has at least one Business Architect, though they are not often referred to as such.

The CEO often acts in the role of Business Architect when the issues facing the organization do not become too complex.

However, when the CEO is time-constrained and more complex issues arise that must be addressed, the person(s) to whom the CEO offloads the issues for deeper analysis is/are the organization’s Business Architect(s).

Good Ideas Rarely Rise to the Top (In Your Company)

Many corporate Boards of Directors operate under the belief that “good ideas rise to the top.” This is important because these Boards are directly responsible for the long-term health and growth of the company, to which good ideas contribute greatly.

This is a false belief. You will remember times throughout your career when people you know had very good ideas to which they could not get anyone to listen.

A good example occurred at Xerox, who invented the computer mouse and GUI in their PARC labs. Though they could not get senior management to listen, others did. Steve Jobs took a tour of the labs and went on to found Apple based on this technology. Bill Gates took the same tour and launched Windows soon afterward. Xerox received no benefits from these innovations; these good ideas did not rise to the top.

How to guard against this in your organization? Let’s talk.