Assessing Stakeholder Salience through the view of Lean Enterprise Transformation. Gwendolyn Sisto SM 2010 Aero-Astro September 9, 2010

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1 Assessing Stakeholder Salience through the view of Lean Enterprise Transformation Gwendolyn Sisto SM 2010 Aero-Astro September 9, 2010

2 Thesis motivation 1. Desire to elucidate connections between stakeholder salience and Enterprise Architecture (EA). Specifically with respect to transformations (ie dynamic view of the enterprise) 2. Significant for practitioners to carry-out successful transformation Second Principle of Lean Enterprise Thinking: Identify relevant stakeholders and determine their value propositions (Nightingale 2009) Enterprises that are better at engaging the structural, and cultural aspects are more successful at Lean value creation (Roth 2006)

Key Definitions Three Lenses(Carroll 2002) Stakeholder -" any group or individual who can affect or is affected by the achievement of the organization's objectives (Freeman 1984).

with the firm, and (3) the urgency of the stakeholder's claim on the firm (Mitchell 1995) Saliency is dynamic- stakeholder influence is dependent on life cycle stage(jawahar 2001) Epochs and Era s

3 Key Definitions Three Lenses(Carroll 2002) Stakeholder -" any group or individual who can affect or is affected by the achievement of the organization's objectives (Freeman 1984). Salience - the degree to which managers give priority to competing stakeholder claims (Mitchell 1995) Power, Legitimacy, and Urgency- (1) power to influence the firm, (2) legitimacy of relationship with the firm, and (3) the urgency of the stakeholder's claim on the firm (Mitchell 1995) Saliency is dynamic- stakeholder influence is dependent on life cycle stage(jawahar 2001) Epochs and Era s context and time space (Rhodes, Ross, Nightingale 2009 Corporate Social Responsibility Core Ideology (Collins ad Porras 1996) Institutional and Resource dependency (Oliver 1991) Network versus dyadic behavior of stakeholders (Rowley 1997)

4 Literature Review Research Question Relevant Body of work Rationale How do the most salient enterprise stakeholders affect the Enterprise s Architecture (EA)? LAI Research Provides EA framework Enterprise thinking and industry challenges Context for research motivations Stakeholder Theory Provides stakeholder framework Enterprise Core Ideology Connects EA and Stakeholders How do these stakeholder relationships change as the enterprise transforms? Stakeholder Theory Provides stakeholder framework Stakeholder behavior and decision making Stakeholders and Corporate Social Responsibility Enterprise Core Ideology Provides theory for Stakeholder relationships Connects stakeholder dynamics to enterprise dynamics Connects stakeholder dynamics to enterprise dynamics

5 Enterprise Architecture Views Policy / External Factors Process Strategy Organization Products / Services A Knowledge Information Technology

Method Complete a Case study on fast clock speed enterprise- Risto Sports-- using the EA framework Determine stakeholders and values using EA & ESAT to determine affect on architecture Map

6 Method Complete a Case study on fast clock speed enterprise- Risto Sports-- using the EA framework Determine stakeholders and values using EA & ESAT to determine affect on architecture Map stakeholder in EA views over enterprise epochs Assess saliency with Normalized Stakeholder Saliency Index (NSSI) (Grossi 2003) Assess Network effects Design future state EA Interview Stakeholders to assess validity, reliability of Future EA Operations begin April 2008 Full production of Risto model February 2009 Risto website fully operational August 2009 B2B operations begin January 2010 Epoch 1 Epoch 2 Epoch 3 Epoch 4

7 Enterprise Background

Stronger:Promote and serve strength sports 2.

8 Risto Goals and Core Values Strategic goals : 1. Grow market share 2. Gain Legitimacy 3. Grow profitability Core Values: 1. Stronger:Promote and serve strength sports 2.Greener: Sustainable, socially responsible products and services 3. Leaner: Aspire to be a Lean Thinking Enterprise 4. Better: Highest quality and exceptional value

9 Background- Growth Strategy Knowledge of weightlifting shoes People using free weights Potential customer conversion rate Website/process improvements Value relative to competitors Cool Factor Loop R&D/investment dollars Price profit Price Relative to Sales Fashion Trends competitors - Style Ease of ordering - improvements Cool Factor Potential - customers Satisfied Adoption Rate customers W.O.M. Loop Brand Legitimacy Word of Mouth Unique searches - production costs Order fullfillment costs returns - Unique offerings Website hits Search engine referencing Risto Website hits Distributor sites hits Institutional Affiliations Sponsorships Marketing Unique Loop

10 Background-Stakeholders Strategy View Policy View Information View Knowledge View Distributor 1 Domestic Shipper IT Contractor US Customs USAW Distributors Leadership Industrial Engineer Artisans Gym Affiliate Colombian Business Bureau Credit/ banking Instituti ons B2B customers US manufacturing policymakers Competitors Leadership B2B Industrial Engineer Artisans Distributor 1 Distributors USAW Colombian Business Bureau US manufacturing Policymakers Colombian Business Bureau Banking Institutions Artisans Leadership Gym Affiliate Leadership IT contractor Industrial Engineer Artisans Distributor 1 Distributors Process View Organization View Product View Leadership Industrial Engineer Distributors Distributor 1 B2B customers IT Contractor USAW Leadership B2B Industrial Engineer Distributors Distributor 1 Gym Affiliate Industrial engineer Distributors B2B Competitors USAW Artisans Leadership Industrial Engineer Artisans B2B Distributors Distributor 1 IT Contractor Colombian Business Bureau Services View Leadership Gym affiliate Stakeholder Network model, January 2010

11 Part I- Epochs & Evolution Risto website fully operational Operations begin Full production of Risto model B2B operations begin April 2008 February 2009 August 2009 January 2010 Epoch 1 Epoch 2 Epoch 3 Epoch 4

12 Part I- EA Space & Stakeholders Core Ideology Enterprise Architecture Capabilities Stakeholders

13 Part I- Business Strategy Space & Stakeholders Core Ideology Business model Saliency Stakeholders

14 Part I- Time Dependency & Constant Inputs Epoch (t) Core Ideology Business Model Enterprise Architecture Stakeholders

15 Results & Analysis Epoch 1 Epoch 2 Stakeholder Strategy IT Knowledge Product Policy Process Org Service Strategy IT Knowledge Product Policy Process Org Service USAW Low End High end B2B customers Distributors Distributor IT Contractor Artisans Industrial Engineer Leadership CB Bureau Gym Affiliate OEM Epoch 3 Epoch 4 Stakeholder Strategy IT Knowledge Product Policy Process Org Service Strategy IT Knowledge Product Policy Process Org Service USAW Low End High end B2B customers Distributors Distributor IT Contractor Artisans Industrial Engineer Leadership CB Bureau Gym Affiliate OEM View prescence None=0 Moderate= Strong=2 Normalized Stakeholder Salience with Enterprise Epoch USAW Low End High end B2B customers Distributors Distributor 1 IT Contractor Artisans Industrial Engineer Leadership 1 COL 2 Business Bureau 3 4 Gym Affiliate 5 OEM 1 Enterprise State 50 NSSI

16 Part 1- Conclusions Core mission and purpose will drive results Stakeholders must meet your needs dependent on the Epoch dependent on Epoch context Stakeholders trade value with respect to business model Stakeholders add capabilities to your enterprise (EA) dependent on Epoch context Salient stakeholders permeate each view Most salient stakeholders are ones that your architecture & Strategy is inextricably dependent

17 Part II- Network Effects Examine how stakeholders linked to each other, resource dependency and institutional power, how relationships evolve with EA & business model Per Part 1, define Core and Extended Enterprise on stakeholder saliency

18 Part II- Network Effects Epoch 4 USAW Distributors Distributor 1 Gym Affiliate Credit/ banking Instituti ons Domestic Shipper Leadership B2B customers Competitors IT Contractor US Customs Industrial Engineer Artisans Colombian Business Bureau US manufacturing policymakers

19 Epoch 4 USAW Distributors Distributor 1 Gym Affiliate Leadership B2B customers IT Contractor Industrial Engineer Artisans Colombian Business Bureau Extended enterprise Core Enterprise

20 Epoch 3 USAW Distributors Distributor 1 Leadership B2B customers IT Contractor Industrial Engineer Artisans Colombian Business Bureau

21 Epoch 2 USAW Distributors Distributor 1 Leadership B2B customers Industrial Engineer Artisans Colombian Business Bureau

22 Epoch 1 USAW Leadership B2B Industrial Engineer

23 Insights on Network Most salient stakeholders are Core enterprise Extended enterprise comprised of less salient stakeholders, saw most delta in NSSI across states Core stakeholders high centrality Control decision making and information flow Control via resource dependency through cluster linkages Most dense where learning and information flow needed to occur quickly Harnessing customer W.O.M., or communicating with shop Network appropriate for organization seeking higher legitimacy & institutional power

Part III- Designing Future Epoch Strategy View Grow market share Gain Legitimacy Become more profitable Process View More codified Assess process compliance and maturity Policy View Return policies

24 Part III- Designing Future Epoch Strategy View Grow market share Gain Legitimacy Become more profitable Process View More codified Assess process compliance and maturity Policy View Return policies in sync with market Manufacture where Policy s stable Knowledge View More Efficient & standardized extractions and retention Harness B2B, B2C knowledge Organization View Improve reflection of Risto values in Distributor to consumer interactions Extract more value from Resource rich stakeholders Products/Services View Standardize offerings Agile and adaptable Sophistication IT View Centralize information flow and collection Fewer hand-offs and easier accessibility Enable feedbacks

25 Part III- Value Delivery Gaps EA Gap Analysis by Stakeholder and View Epoch 4 - B2B Operations Begin Stakeholder Strategy IT Knowledge Product Policy Process Organization Service USAW Low End High end B2B Distributors Distributor IT Artisans IE Leadership COL BB Gym Affiliate

26 Mapping Future State Stakeholder Value Delivery High Artisans Artisans High End B2B Industrial engineer High End B2B Leadership Current Performance Low End Distributors Distributors Distributor 1 Low End Gym Affiliate Colombian Business Bureau Leadership Gym Affiliate Colombian Business Bureau USAW Distributor 1 USAW Key: Present State, EA State 4 Future State, EA State 5 Low Relative Importance to Enterprise High EVSMA For LAI Member Use Only Massachusetts Institute of Technology 2005

27 Part IV- Accuracy of Management s perceptions Interviewed lowest and highest salience stakeholders, perceptions of management and other stakeholders Shows Risto Sports living-up to Core Ideology Confirms Gap Analysis Reveals context

Part IV-Excerpts Artisans Improved living standards, work/ wage predictability Pride in sending products to USA Insensitive to deadlines Gringo from Miami we have to ship shoes for the Gringo IE Able

28 Part IV-Excerpts Artisans Improved living standards, work/ wage predictability Pride in sending products to USA Insensitive to deadlines Gringo from Miami we have to ship shoes for the Gringo IE Able to buy a house Growth of product design quality is better than China. always looking for new, better quality materials Checking on Artisans Uses local materials COL BB USA is the first commercial ally of Colombia Conscious of China Controlling of small business & hard currency D1 Doing Risto a favor Not core market USAW Need 10-15[companies like] Ristos Can contribute more to Risto

29 Conclusions Core enterprise stakeholders are most salient and present in each view, they define Core Ideology Extended enterprise stakeholders may not be salient in every view, tied to the enterprise by the values and capabilities they add EA and business Model determine the stakeholders endogenously Core enterprise less affected by context/epochs, only constant in the Enterprise system is Core Ideology On Corp. Social Responsibility, the enterprise must possess core values that management truly believes-in and abides consistent with well being of society Benevolence IS possible, it all depends on how the enterprise constructs its values and relationships and defines externalities Much of an enterprise s work is invisible work (Daniels 1987), employing human relationships in political and cultural context (Carroll 2002)

30 Questions?

Exchange is he underlying theory of marketing, and explains why we need to work in order to get the things we want.

Exchange: Def n : Exchange: The act of obtaining a desired object from someone by offering something in return Exchange is he underlying theory of marketing, and explains why we need to work in order to