From Canvas to Blueprint: Aligning Business Models with Business Architecture Steve DuPont, Associate Technical Fellow Enterprise Architecture March 19, 2013

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Global Boeing Engineering, Operations & Technology | Information Technology

Enterprise Architecture

 Customers and customer support in 150 countries  Total revenue in 2012: $81.7 billion  70 percent of commercial airplane revenue historically from customers outside the United States  Manufacturing, service, and technology partnerships with companies around the world  Contracts with 26,500 suppliers and partners globally  Research, design, and technology-development centers and programs in multiple countries  More than 170,000 Boeing employees in 70 countries  More than 170,000 Boeing employees in 50 states and 70 countries Copyright © 2013 Boeing. All rights reserved.

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Agenda Engineering, Operations & Technology | Information Technology

Enterprise Architecture

 Business Model Overview  Business Model/Business Architecture Alignment  Recommendations  Future Considerations

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What is a Business Model? Engineering, Operations & Technology | Information Technology

Enterprise Architecture

“A business model describes the rationale of how an organization creates, delivers, and captures value.” Osterwalder and Pigneur, 2010. Financial Aspects Value Proposition

Customer Interface

Infrastructure Management

*Based on Alexander Osterwalder’s Four Pillars, 2004. Copyright © 2013 Boeing. All rights reserved.

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Why All the Attention on Business Models? Engineering, Operations & Technology | Information Technology

Enterprise Architecture

 Focus on business model innovation  Accelerating change drivers such as cloud, mobile, social, green  The need to describe business complexities  The need to decrease time to market  Shrinking business model life cycles  Maturing business model frameworks  Accessible methods and tools

Source: Alexander Osterwalder and Yves Pigneur, “Business Model Generation,” 2012. Copyright © 2013 Boeing. All rights reserved.

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Business Model Frameworks Engineering, Operations & Technology | Information Technology

Enterprise Architecture

 A business model framework is a conceptual structure for organizing the elements, relationships, representations, and classifications of one or more business models  Recent frameworks include

Business Model Canvas, Alexander Osterwalder et al., 2010

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Business Model Cube, Peter Lindgren and the EU NEFFICS project, 2012

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State of the Practice Engineering, Operations & Technology | Information Technology

Enterprise Architecture

“Many managers do not really know what a business model is, let alone have an explicit model of their own business.” “…in spite of the intensive research carried out in this field in the past 15 years, the concept still remains very fuzzy in its definition, purpose and operationalization.” Yariv Taran, “Rethinking It All: Overcoming Obstacles to Business Model Innovation,” Center for Industrial Production, Aalborg University, 2011.

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Business Model Canvas Engineering, Operations & Technology | Information Technology

Key Partners

Key Activities

Value Proposition

Key Resources

Cost Structure

Enterprise Architecture

Customer Relationships

Customer Segments

Channels

Revenue Streams

Source: Alexander Osterwalder and Yves Pigneur, “Business Model Generation,” 2012. Copyright © 2013 Boeing. All rights reserved.

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Sample Canvas Formats Engineering, Operations & Technology | Information Technology

http://www.businessmodelgeneration.com

Style:

Free form “dynamic” “creative”

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Enterprise Architecture

http://www.businessmodelgeneration.com

Structured “stable” “analyzable”

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Business Model - What Kind and How Many? Engineering, Operations & Technology | Information Technology

Enterprise Architecture

Business Model Type

Abstract Business Model Type

Business Model

Concrete

Proposal 2

Business Model Proposal 1

Scenario

Business Model Deployed

Operating

*Based on: Alexander Osterwalder, “The Business Model Ontology, A Proposition in a Design Science Approach,” 2004. Copyright © 2013 Boeing. All rights reserved.

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Business Model as Unifying Concept Engineering, Operations & Technology | Information Technology

Enterprise Architecture

Business Innovation “What’s possible?”

Business Strategy “What will we do?”

Business Model “What does it look like?”

Business Architecture “What’s the blueprint?”

Business models are a unifying concept for Business Innovation, Strategy, and Architecture Copyright © 2013 Boeing. All rights reserved.

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Business Models and Strategy Engineering, Operations & Technology | Information Technology

Business Model

Strategy Map

Enterprise Architecture

Kaplan and Norton, “Strategy Maps,” HBR, 2004

Business model canvases and strategy maps address the same level of the Strategy Continuum with similar perspectives Copyright © 2013 Boeing. All rights reserved.

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Business Models and Business Architecture Engineering, Operations & Technology | Information Technology

Enterprise Architecture

 Business model Products & Services

 Used to drive growth

Customers

 Articulates key elements of strategy  Incorporated into business plans

 Business architecture

Partners, Competitors Value Streams

Motivation

Capabilities Information

Measures Organization Business Rules

Business Model

Business Architecture

 Used to “align strategic objectives and tactical demands”*  Enables interpretation of business models into concrete business concepts that can be targeted for improvement** *Source: OMG Business Architecture Special Interest Group, http://bawg.omg.org, and Business Architecture Institute, www.businessarchitectureinstitute.org. ** Source: TSG, Inc. Copyright © 2013 Boeing. All rights reserved.

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Business Model/Business Architecture Alignment Engineering, Operations & Technology | Information Technology

Enterprise Architecture

 Alignment brings BM/BA frameworks and practice closer together  Key aspects

Products & Services

Partners, Competitors

Customers

 Framework alignment

Value Streams

Motivation

Capabilities

– Methods

Information Measures

– Artifacts – Meta-model

 Concept mapping

Organization Business Rules

Business Model

Business Architecture

– How do business model concepts influence business architecture concepts? – How do these concept mappings affect business model analysis and BM/BA translation? – Mapping guidelines can be useful Copyright © 2013 Boeing. All rights reserved.

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Benefits of BM/BA Alignment Engineering, Operations & Technology | Information Technology

Enterprise Architecture

 Earlier and faster analysis of proposed business models  Improved accuracy and completeness of business models  Better understanding of key drivers for business transformation  More responsive business architecture practices  Better solution reuse for incremental innovation Products & Services Customers Motivation

Partners, Competitors Value Streams Capabilities Information

Measures Organization Business Rules

Business Model

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Business Architecture

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Framework Alignment Approach Engineering, Operations & Technology | Information Technology

Enterprise Architecture

 Define goals and objectives for alignment  Align BM/BA framework concepts  Establish BM/BA frameworks  Tailor and/or extend frameworks for alignment  Align business model design process with BA development method  Map business model building blocks and elements to business architecture meta-model

 Prove out  Improve

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Aligning Development Methods Engineering, Operations & Technology | Information Technology

Business Model Design Process (Osterwalder)*

Mobilize

Understand, Design

Target Business Model

Business Architecture Development Method (Generic)

Initiating

Vision

Enterprise Architecture

Implement

Manage

Target Business Architecture Business Architecture Design

Implementation Planning

Deployment

Change Management

* http://www.businessmodelgeneration.com. Copyright © 2013 Boeing. All rights reserved.

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Aligning Concepts Engineering, Operations & Technology | Information Technology

Business Model Concept

Aligns and Maps to…

Enterprise Architecture

Business Architecture Concept

Value Proposition

Aligns with… Maps to…

Customer Segment

Aligns with… Maps to…

• Strategy, Value Item, Product/Service • Initiative* • Strategy, Customer, Stakeholder • Objective*, Capability*

Channel

Aligns with… Maps to…

• Strategy, Partner, Resource • Value Stream*

Customer Relationship

Aligns with… Maps to…

• Strategy, Customer • Value Stream*, Capability*

Key Activity

Aligns with… Maps to… Aligns with… Maps to… Aligns with… Maps to… Aligns with… Maps to… Aligns with… Maps to…

• Strategy, Value Stream • Capability* • Strategy, Organization, Resource • Business Unit*, Capability* • Strategy, Partner/Stakeholder • Objective • Strategy • Value Stream, Capability • Strategy • Capability*, Business Unit*

Key Resource Key Partner Revenue Stream Cost Structure

*Source: Business Architecture Guild, “A Guide to the Business Architecture Body of Knowledge (BIZBOK™).” Copyright © 2013 Boeing. All rights reserved.

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Architecture-Supported Business Model Analysis Engineering, Operations & Technology | Information Technology

Enterprise Architecture

 How well does the business model support the strategy?  Does it fit within the intended environments?  Does it integrate as intended with other business models?  Is the integration consistent with the company’s operating model?  What key infrastructure elements are affected (e.g., capabilities, value streams, information, resources)?  What are the risks (e.g., tax, legal)?  How well does the organization align with the business model? http://www.businessmodelgeneration.com.

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Recommendations Engineering, Operations & Technology | Information Technology

Enterprise Architecture

 Work toward a common definition of business models and architecture  Tailor business model formats to use  Infuse as much structure as possible into business models (judgment required)  Create reusable business model building blocks  Introduce business architecture concepts early (e.g., capabilities)

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Future Considerations Engineering, Operations & Technology | Information Technology

Enterprise Architecture

 Comprehensive, open business model frameworks  Modeling languages and BM/BA interoperability  Simulation  Increased tool support  Business architecture subsuming business models?

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Engineering, Operations & Technology | Information Technology

Enterprise Architecture

Discussion

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