1.0 Purpose
The enterprise design language is a set of design concepts and guidelines.  There is no specific modeling language specified.  The modeling languages used to describe the things here are used purely for convenience of expression.

1.1 Decomposing the Enterprise
In pulling apart the enterprise the starting place is the base materials or resources used to create any enterprise.  In broad terms there are sets of inactive resources.  In this there are two groups, inventory (raw goods, works in progress, finished goods) and facilities (machinery, factory floors, buildings, supplies).  Being inactive (inactive means that these resources do not initiate actions within the enterprise) from an enterprise perspective these are not the focus of enterprise design.  The active resources are the people, their processes and how efficiently the technology enables them to be brought together.  In more general terms the base materials represent the integration of people, processes, and technology needed to drive and enterprise forward. This can be viewed as connected resources across three interconnected planes.  Each plane can be viewed in isolation as in the example of technology licensing and managing insurance for the employees.

 

These can also be grouped together these three items by function, for example the accounting department, teams, and even firm divisions. Generically we can talk about the different modules where a module, like a component, has standardized interfaces, is essential to the firm, and non-trivial functionality – usually determined by the connection with the clients or customers.

1.2 Connecting parts of the Enterprise
These resources work together to enable the mission, objectives, strategies, and tactics, the MOST as they are generally called, of the organization.

If we organize them as resources they are the groupings of people that a department like human resources might manage, processes that define how supply chains work or connect cross-functionally across the organization, or an IT department, telecommunications areas, and infrastructure better automate.  When defined through organization charts and lifecycles this way of viewing the organization is a best fit for defining command and control structures, allocating budget (finances), and how the organization statically operates.

If we instead organize them as integrated groupings of people, processes, and technologies and take it above the formal organization structure the dynamic nature of the organization takes shape.

To connect the modules then requires a different way of looking at how the firm is constructed.  Instead of the division, department, team approach that is used in formal organizations the firm can be viewed as a collection of interacting modules to accomplish a particular  purpose (whether it be mission or task driven).  These interactions are contracts, both formal and informal, that represent the agreement between two module interfaces.  These can be externally governed, such as two parts of a manufacturing supply chain that are required to work together, or internally governed where both modules/parties reach an agreement on how they interact with each other.

 

There is a cost to these contracts.  The more formal the contract the better, however coming at significant cost. The less formal contract the more sustaining it is, however taking considerably more time to establish.  All transactions and transfers fall within these contracts.  The minute one says “I thought…” or “I was expecting…” they are acknowledging a contract.

In management driven organizations, the Visible Hand that Alfred Chandler describes in his book of the same name, governance of these contracts is in the form of top-down hierarchical structures, the type seen in an organization chart. This was in direct contradiction to Adam Smith and the Invisible Hand where all of the individuals would be guided by the market place. Richard Langlois defined yet another term, the vanishing hand, which describes this move back to the Smithian view as greater specialization (professionalism) takes hold. In enterprise driven organizations their is more balance between the visible hand of management and the move towards a vanishing hand as the tasks require more expertise and greater creative freedom to do correctly.

1.3 Planning the Enterprise

Enterprises are sometimes viewed as emergent like evolving entities where the whole hides the sum of its parts.  Externally within the framework of Porter’s five forces this makes sense. Organizations and even industries will emerge to fill gaps in a natural manner.  They will react to competitors, their customer and future customer’s needs, alternatives to their products and services, and the challenges of getting raw materials. These industries will react to the uncontrolled evolution that happens as a result through standardization of language, products, and services, and interoperability and componentization.  As Kim Clark and Carlyss Baldwin demonstrate in Modularity, this is not just a natural outgrowth of evolution within industries, but an organizational driver that is consistently used by firms to handle the complexity that is a natural part of an industries maturity.

Within firms this natural evolution happens as well, but to evolve requires allocation and commitment of resources to realize. Firms will make plans to capitalize these future changes. This is what is referred to as strategic planning.  Strategic planning connects the capital resources of the firm with its future evolution. In the management driven paradigm planning is all that is required to control this evolution.  A firm need only pick the correct programs and develop the right projects to fulfill this need. The budget gets applied in the appropriate weightings to ensure optimal success.

In practice there is a big gap between the idealized view of a strategic plan and how it turns into reality. Robert Kaplan and David Norton noted this in their book The Execution Premium.  They also push for their to be not just strategic planning, but a strategic architecture to guide this planning. In the enterprise driven paradigm architecture provides the environment, the sediment, that roots the programs and projects that come out of a strategic plan, into the evolving enterprise.

Connecting architecture to strategic planning consists of three elements or parts. The first is the representation of the people, process, and technology relationships that exist today.  The current state. Since the enterprise is constantly changing and evolving, in particular when there are programs and projects already in flight, the current state is an arbitrary point in time that we define as current.

 

 

 

1.4 Enteprise Maturity
Enterprises are in various stages of maturity when defining modules.

(1) Organizations develop silo’s of expertise naturally. Each silo considers itself separate.

(2) Standards force the organization to do things in a common way so that it can scale.

(3) Creating a shared core enables the economies of scope that save money and reduce friction.

(4) Modular organizations enable dynamic relationships between parts of the organization.

1.5 Enterprise and its relationship to the Organization
The enterprise connects strategy with the operational components that execute that strategy.  The foundation, core, and practices enable that interaction in a cost-effective way that maximizes the potential of the organization.

 

1.2 The Operators
There are six operators that describe the changes from one state of the enterprise to the next. They cover such things as moving from a distributed to a centralized facility (and back again), merging companies, divesting companies, spinning off new ventures and a host of other enterprise changes.

Each operator encapsulates the cost of the change as well as the opportunities that are enabled. The operators represent the changes and are not a static view of the enterprise. They are linked in sequences of enterprise changes although there might be multiple sequences that are happening in the enterprise at any given time.

The operators are:
1. Splitting
2. Augmenting
3. Inversion
4. Substitution
5. Exclusion

1.3 The Elements
There are four elements that the operators make changes to. The elements constrain or provide boundaries for the networks of people, processes, and technologies that make up the enterprise.

The elements are:
1. Modules
2. Components
3. Nodes
4. Dependencies

1.4. Quality Parameters
Since the focus of this design is on the transition and not a static state the quality parameters address the configuration of the elements rather than how they are implemented. Costs, for example, are viewed as the cost of change rather than the depreciation or valuation of assets. Opportunities, as well, are judged by their potential and not the actualization of revenue and profit streams.

These are grouped into six quality parameters:
1. Complexity
2. Connaisance
3. Cyclicness
4. Cohesion
5. Coupling
6. Reusability

1.5 Enterprise Options
During a sequence of options events happen that impact and change the vision. These create various options that the a designer must be conscious of and prepare for. Through “real” options the risk can also be calculated if there is enough information to measure the amount of uncertainty. These effect the total cost of ownership as well as any contingent future costs.

1.Option to wait to invest
2. Option to abandon
3. Optiojn to change scale to expand or contract
4.Option to switch
5. Option to grow
6. Compound Option

1.6.1 Virtual Distance
The perceived distance between people affects how these modules are formulated.

These are:
1.Physical Distance
2. Operational Distance
3. Affinity Distance

1.6.2 Behavioral
As a group there are various different behaviors in how things are accomplished given certain constraints.

These include:
1.Orchestration
2.Choreogrpahy
3.Standardization
4. Integration