Values-architecture 101

There’s been a fairly lengthy argument on the LinkedIn business-architecture list about the role and meaning of ‘value’ in business-architecture. As usual, most of the US contingent leapt off onto the red-herring of ‘shareholder-value’, which to me is almost completely irrelevant to the actual design and structure of a business-architecture – it’s an outcome, not an input as such.

After much back-and-forth – and a constant struggle to detach the discussion from the US obsession with ‘shareholder-value’ – I finally managed to get at least some of the contributors to understand that values are some of the key inputs to an architecture. At this point, one of contributors tossed in what I can only describe as a lame attempt at a justification for architectural incompetence:

In my work I usually don’t create the many-layered value model that you do. I go right to the heart and relate tactical decisions to tangible value.

I’d have to say that I was shocked but not surprised. Three instant comments:

  • it’s talking about price, not value;
  • it’s going to the head (analysis), not to the heart (value); and
  • it’s describing business-strategy and/or business-tactics, not business-architecture.

What’s still needed is a solid focus on the actual topic, namely value in business-architecture – in other words, the values-architecture that underpins the business-architecture itself.

To illustrate this, consider that statement “I usually don’t create the many-layered value model that you do”. A simple question: would you trust a purported architect who said “I’m going to use metal and glass in your building”, without any explanation or analysis as to why those materials would be used? Or what calculations underpin the choice of properties for the metal, or solar and other characteristics of the glass? Would you be concerned that there’s no ‘many-layered model’ behind the design, for example no apparent awareness of the need for resilience against earthquake or severe-storm, because though those are relatively rare in the short-term, they are highly likely in the medium to longer term? Would you trust an architect who regarded a many-layered, multi-faceted model of the building as irrelevant to the architecture-development and subsequent design and implementation? Would you trust an ‘architect’ whose only concern was price? I would hope that the answer would be ‘No’…

Which is why, like any real architect, I do insist on models that demonstrably assess all of the key factors in play in an architecture design.

So: some suggestions towards a Values Architecture 101:

#1. Values are subjective, not objective; they are feelings, not things.

#2. Values are the literal drivers for a business-architecture: they are the winds that blow across it, the rivers that flow through it, the forces that shake the ground beneath it. Values are the actual links in any value-chain or value-web. As with a physical building, the business-architecture cannot ignore those forces – it must be designed around them.

#3. Values are primarily qualitative, not quantitative. Where it is necessary to describe values in quantitative terms, it is usually best to use simple 1-5 scales or the like; anything else is likely to introduce ‘spurious precision’, which is both misleading and dangerous.

#4. Any attempt to ‘objectivise’ values – such as by ‘valuation’ into a price – will always be based on hidden assumptions. Because of those hidden-assumptions, transforms to price etc are non-reversible, making it impracticable or impossible to derive the underlying value-factors by reverse-engineering from the valuation itself. Hence in architecture it is always best to model the values as values, in order to surface those hidden-assumptions.

#5. An enterprise (or extended-enterprise, reaching far beyond the ‘enterprise’ of the business itself) coalesces around a core value (the ‘vision’) and a cluster of related values and derived principles. These values represent the choices – conscious and unconscious – of the stakeholders in the enterprise, and are context-dependent. These enterprise-choices describe and define the ecosystem within which the business will operate. Amongst many other possible stakeholder-roles, a business will typically place itself in a ‘supplier’ role within that enterprise.

#6. The core of the business’s relationship with other stakeholders is its set of ‘value-propositions’ – which, by definition, incorporate key concepts of value to and with the respective stakeholders. The business-model, operating-model, organisation-model etc are artefacts that are derived architecturally from the value-propositions and their underlying values.

#7. A business has a value-relationship with every stakeholder in the enterprise, whether or not this is made explicit via a value-proposition. It is extremely dangerous – especially in the longer-term – to ignore the implied relationships with enterprise-stakeholders not explicitly referenced in value-propositions.

#8. Pseudo-values such as ‘shareholder-value’ may be derived from the architecture, but usually play no direct part in the architecture.

Enough to start with, I hope?

5 Comments on “Values-architecture 101

  1. Great piece Tom!

    I so often miss values like these underpinning an EA at a customer. Nowadays “standards” and “interoperability” not to mention “future” seem to be able to be used as an excuse to justify any “architectural decision (ahem)”

    My enterprise (me myself) has happiness as a vision and goal. Tough to qualify let alone quantify, or objectify. But it’s been my core value ever since I felt the need to declaim one, and it hasn’t changed. The means to this goal change over the years, as does the ecosystem around me and thus the stakeholders, models needed and used. But never That One Value that is essential to the enterprise, which is as intangible as can be

    Holding up so far…

  2. We’ve had this discussion before. I’ve not followed the linked in thread and don’t profess to be an expert however my current view on the ‘value’ is this.

    Its providing business with enough information to assist it make a decision at the time. Wait there’s more. The information must be presented in a structured repeatable form so that when the information changes the business can quickly understand and decide again. One more and my favourite bit. Consultants don’t like the repeatable bit and if companies maintain the information (aka knowledge) they use fewer consultants and can decide with their current staff! Examples. Strategy against capability, Project change request against process model, Project as built documentation updating capability and being verified against strategy, Sales material catalogued and versioned against market model, Company acquisition targets against Strategy/Capability & Process and many, many more.
    PS – I’m a consultant too…

  3. USA USA USA Not ALL US BizArch see value as shareholder value. (sorry, I had to tease a little)

    Perceived value is important. It helps define the potential success of the business. It is an input on the value a customer, business partner, or shareholder sees and values. Why do people want to own an ipod…what does it give him/her? How does it make him/her feel. Different stakeholders, even in the same classification, have a different perceived value that affects the corporation and impacts the enterprise architecture (which is more than a corporation).

  4. I love it ‘Perceived value’ is correct. Perception is reality and we’ve found business asking us for views and insight we never even considered to be part of business archiecture. BTW 1. 🙂 Us Poms and Ozzies love picking on USA :)))) and BTW 2 – “Different stakeholders, even in the same classification, have a different perceived” Just ask the marketers. BTW3. Another way of considering ‘Perceived value’ is – what ever sells.

  5. Pat, Peter – this isn’t ‘US-bashing’, I promise – what I’ve described above as the “US obsession with ‘shareholder-value'” is a direct artefact of the constraints imposed by US corporate law. US law requires listed corporations – and hence their architects – to focus on maximising shareholder-return in the short-term (3-month cycle). Compare that with UK corporate law, which used to focus only on shareholders, though in the medium- to long-term (equiv. of Supreme Court ruled that this had to include all shareholders in the future as well as the present), but since 2007 also requires formal acknowledgement of needs of other stakeholders; or compare with Germany and other Rhineland countries, which require acknowledgement of other stakeholders, particularly employees and immediate community.

    It should be obvious that corporations need to pay attention to the medium- to long-term if they are to deliver sustainable results. Hence in world terms US corporate law is unusual in that in effect it _demands_ behaviours that are demonstrably dysfunctional and destructive to the sustainability of the corporations (quite apart from the impact on anyone else). As a result, US business-architects are amongst the most skilled in the world in inventing new ways to minimise the damage! 🙂

    ‘Perception is reality’ – yes it is, especially in the attention/respect and reputation/trust economies. And much of the perception is not rational – hence the reason why dismissing complaints on the assumptions that they’re wrong because they seem ‘wrong’ or ‘unfair’ from the companies’ perspective is never going to work. Likewise, yes, “another way of considering ‘perceived value’ is ‘whatever sells'”. So we need to work with the value _as_ value – the _feeling_, not the nominally rational ‘truth’. Hence the reason why I push for a properly-structured values-architecture – particularly one that describes the key intersections between the transaction/money economy, attention/respect economy and reputation/trust economy – as a central part of any whole-of-enterprise architecture.

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