Tag Archives: Business Model Generation

Cannes Conference Day 1: Communication Key for Business Transformation, According to Open Group Speakers

By The Open Group Conference Team

Video recap by Dave Lounsbury, CTO of The Open Group

Much like the wind that blows through the Côte d’Azur, talk of business transformation swept through Cannes like a warm breeze yesterday as Day 1 of The Open Group Cannes Conference concluded. The underlying theme of the day was communication and shared languages – a common concept for all enterprise architects, but this time with a slight twist.

Innovator Dr. Alex Osterwalder presented the first session of the day entitled “Business Models, IT and Enterprise Transformation,” which discussed concepts from his well-known book “Business Model Generation.” As Dr. Osterwalder explained, often times there’s a language gap between IT and strategy when it comes to business models, which is why long meetings are largely unproductive.

Dr. Alex Osterwalder explaining the business model canvas

Dr. Osterwalder stressed the importance of simplicity in models, meaning that business models should be created in such a way that anyone in the company can understand them upon first glance. This is the basis for a concept Osterwalder calls the business model canvas, a literal illustration of an organization’s business model using the following key assets – key partners, key activities, key resources, value propositions, customer relationship, channels, customer segments, cost structure and revenue streams.

The audience was then encouraged to work in pairs and use the business model canvas to break down the business model of one participant. Each group had eight minutes to map out the nine components on a large sheet of paper representing the business model canvas using post-its. The audience enjoyed this exercise, which demonstrated that creating a business model does not have to be a laborious process, and that simple is often times best.

Dr. Osterwalder went on to discuss real-life examples such as Apple’s iPod and Nestle Nespresso, dissecting each company’s business model utilizing the business model canvas to learn why both endeavors were so successful. Apple was disruptive because as Steve Jobs said when the first iPod was released, “It’s a thousand songs in your pocket.” The iPod created a dependency on the product and the iTunes service, and one of the unknown factors of the customer relationships was that iTunes made it so easy to upload and manage your music that the barrier to transfer services was too high for most consumers. Nespresso’s business model was built on the creation of the single drink aluminum cans, the product’s key resource, which are only made by Nespresso.

Companies of all sizes have used the business model canvas to adjust their business models, including Fortune 500 companies and government organizations, and Dr. Osterwalder thought that enterprise architects can act as a bridge between strategy and IT facilitating communication between all facets of the business and overseeing the management of business models.

BNP Paribas saves 1.5B Euro through Careful Business Transformation

In the next plenary session, Eric Boulay, CEO of Arismore, and Hervé Gouezel, Advisor to the CEO of BNP Paribas, looked at how enterprise architects can do a better job of presenting CEOs with Enterprise Architecture’s value proposition. Conversely, Boulay stated that the CEOs also need to outline what expectations need to be met by enterprise architects in order to enable business transformation via enterprise architects.

Boulay argued that a director of transformation is now needed within organizations to manage and develop transformation capability. The results of Enterprise Architecture must be merchandised at the C-level in order to communicate business value, and the director of transformation would be enable architects to continue to invent through this new role.

In the same session, Hervé Gouezel discussed the 2009 merger of BNP Paribas and Fortis Bank and the strategy that went into creating a somewhat seamless transition. The original plan had three phases: phase 1 – take six days to pick new management and six weeks to define taskforces, workgroup organizations and stabilization measures; phase 2 – take six months to plan and synergize; and phase 3 – implement projects and programs over a three year period.

Needless to say, this was a huge undertaking, and the goal of the three-phase process was to save the company 500 million Euros. With careful planning and implementation and by following the three-phased approach, BNP Paribas saved over 1.5 billion Euros – three times the targeted amount! This goes to show that careful planning and implementation can lead to true business transformation.

The Semantics of Enterprise Architecture

Len Fehskens, VP of skills and capabilities at The Open Group, presented the final plenary of the day. Fehskens revisited Enterprise Architecture’s most basic, yet seemingly impossible question: How do you define Enterprise Architecture?

Bewildered by the fact that so many different opinions exist around a discipline that nominally has one name, Fehskens went on to discuss the danger of assumptions and the fact that assumptions are rarely made explicit. He also exposed the biggest assumption of all: We’re all sharing the same assumptions about Enterprise Architecture (EA).

Fehskens urged architects to remain open-minded and be aware of the differing perspectives regarding what EA is. The definition of Enterprise Architecture at this point encompasses a variety of opinions, and even if your definition is “correct,” it’s necessary for architects to understand that logical arguments do not change strongly held beliefs. Fehskens ended the session by presenting the teachings St. Augustine, “Let us, on both sides, lay aside all arrogance. Let us not, on either side, claim that we have already discovered the truth. Let us seek it together as something which is known to neither of us. For then only may we seek it, lovingly and tranquilly, if there be no bold presumption that it is already discovered and possessed.”

In other words, Fehskens said, before Enterprise Architecture can move forward as a discipline and fulfill its potential within the enterprise, architects must first learn to agree to disagree regarding the definition of EA. Communication must first be established before true business transformation (and the value of EA) can be realized.

Day 2 of the conference looks to be equally exciting, continuing the theme of enterprise transformation. To view the sessions for the remainder of the conference, please visit: http://www3.opengroup.org/cannes2012

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