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Business Pillar

Introduction & Background

The modern economy is often characterized as an Information Economy or more specifically, Knowledge Economy, emphasizing the importance of knowledge as the key productivity lever and intellectual capital as the key differentiator of enterprises. Widespread digitalization over the last two decades has accelerated the scale, reach and impact of businesses in today’s knowledge economy. Seven of the top ten firms globally by market capitalization at the time of this writing ( Apple, Amazon, Microsoft, Alphabet, Facebook, Tencent, Alibaba), are representative of this characterization. This underscores the broad expectation that future competitiveness is increasingly focused on embedding and capitalizing knowledge in the design, delivery and eventual effectiveness of products, services and activities in business models of Enterprises.

What does a knowledge-based differentiated focus in products and services mean for enterprises? Prevalent characterization of some business models offers some clue:

Embedded Finance

The emphasis that convenience of financial products is increasingly determined by integrating them seamlessly into non-financial applications and processes. Embedded Finance offers a new, very large addressable market opportunity worth over $7 trillion in ten years' time, twice the combined value of the world’s top 30 banks today.

Subscription Services

The emphasis that experience of products and services is increasingly determined not from broad contours of use over time but by specific contexts of use at any given time. 78% of international adults in 2021 have subscription services (71% in 2018). And 75% believe that in the future, people will subscribe to more services and own less physical "stuff".

Platform Services

The emphasis that utility of services is increasingly determined not from clarity of individual service but through convenience of search and similarity of use across a range of related products and services. More than 30% of global economic activity---some $60 trillion---could be mediated by digital platforms

2019---When we exceeded 1 billion Knowledge Workers

...Where we’re going is a future of work with knowledge... being created at the pace only possible with one billion workers. What does empowering its knowledge workers and embedding knowledge in products and services mean for enterprises?

In the following sections, we explore a few illustrative capabilities that enable enterprises to leverage and embed knowledge in their propositions, products and services, planning and activities.

The Business Case for Explorative Execution

Business performance emphasising financial performance---typically, aspects of revenue, profit, growth and risk. Mechanisms such as Balanced Scorecards to their business performance, emphasising the causal chains coursing through organizational capability, operations and customer propositions, eventually landing into financial performance as an outcome. More recently, there has been an emphasis on key stakeholder metrics such as ESG adding further dimensions to responsible business performance.

The paradigm of business performance has largely hinged on organizations directly influencing their customer engagements with their products and services. Indeed, the prevalent use of the term "customer" is ingrained as a counterpart to the organizations’ products. Dramatic advances in the digital economy, especially in the area of mobile and sensor technology over the last 15 years, have highlighted the perception of value through insights into consumption/use. In other words, the presumed value in organizations’ products and services is increasingly validated through actual insights into consumption/use by consumers.

This shift in perspective of an organizations’ products and services as patterns (based on insights) of consumer use is where movements such as design thinking}, customer journey maps etc are increasingly considered as important tools for developing and validating propositions. The "aha" and "viola" moments from such exercises require further translation into realizing the propositions, which is where practices around agility, DevOps etc. are increasingly mainstream.

All these themes and mechanisms of strategy execution through communication, product/service propositions, development/deployment and its performance management largely depend on a human capital based on participation, expertise and intuition. Organizations wishing to amplify their human capital face a few key dichotomies to be addressed:

Customer vs Consumer

Mindset and capability shift from "Customer market share" to "share of (end) consumer value"

Enterprise vs Ecosystem

Mindset and capability shift from “Proprietary control of customer experiences” to “open collaboration on consumer experiences”

Human Machine Continuum

Mindset shift from human-scaled to machine-scaled (intelligent and autonomous) business capability

Each of the above dichotomies highlights the limitations enterprises face today in extending business capability beyond their organizational boundaries, be it in sourcing information beyond their own channels or collaborating on shared experiences.

Addressing these challenges requires enterprises to adopt an exploratory style in executing their strategy1 which specifically focuses on sensing and understanding the consumer ecosystem better before taking decisions and acting (to be aligned to hyper-personalization, both in retail and business consumer scenarios)

To put this “Explorative Execution” into perspective, a useful mental model is SUDA (Sense, Understand, Decide, Act, a slight variant of John Boyd’s OODA loop), specifically focused on responding/acting in a dynamic evolving environment. The choice of the mental model is to bring out its contrast with the imperative style mental model of Plan, Do, Check, Act (PDCA), usually used for acting in an environment of more certainty and predictability.

SENSE

Accessing actual contents of need and use by consumers easily overwhelms most organizations for a variety of reasons, chief amongst which is the sheer volume of context-unique interactions which must be checked for links to an organization’s business interests and intents. Most of this is practiced subjectively and accorded to human expertise and intuition.

UNDERSTAND

Unlike the carefully curated lens of its products and services, inputs of interest for an organization are generally ambiguous requiring significant efforts to disambiguate and synthesize. (John Boyd’s Orientation isn’t just a state you’re in; it’s a process. You’re always orienting.)

DECIDE

Disambiguated information still isn’t directly actionable as there is a significant element of hypothesis embedded within. This is especially challenging with high prevalence of conflicting hypotheses in many cases.

ACT

Filtered sensing, hypothesis-based understanding and scenario-driven decision-making finally create an actionable context, which the organizational operations can execute.

A deeper analysis of the SUDA-loop of “Explorative Execution” brings into focus the following requirements of capability:

Identity

How can sensing be practiced in a subject domain of multiple identities? How can a shift from form-based to a function-based identity be enabled?

Self-describing

How can understanding be practiced in a subject domain with multiple descriptions? How can a shift from structure-based description to a behavior-based description be enabled?

Open world ambiguity

How can decision-making be practiced in scenarios which require constant revalidation and conflict resolution, as new facts become known?

An EKG is a key organizational capability to enable Explorative Execution using a SUDA mental model, through the following core features:

SENSE
  • Co-existence of multiple identifications based on context and interpretation instead of the prevalent content based identification
  • How do retail consumers and business consumers use products and services?
UNDERSTAND
  • Emphasis on meaning through association rather than static descriptions
  • Enhanced collaboration with ecosystem partners through standards on context sharing rather than lengthy negotiations on content specifics
  • How do the products and services address needs of consumers?
DECIDE
  • Significant scale in knowledge driven operations through autonomous reasoning
  • Leverage of existing (diverse and federated) content sources instead of separate curated content repositories
  • How can products and services add more value through effective use?
  • What changes can be made to make products and services more relevant for (retail and business) consumers?

Business Identity

Business Identity is a statement of a company's unique innovation, service, and/or product based value proposition. A business identity, published to the world via business identifier unique Enterprise Knowledge Graphs, may transparently use a data infrastructure that can support many distinct business activities.

An enterprise could have multiple Business Identities based on the value propositions underlying its products and services---it is imperative that each must be perceived (as having differentiators) and consumed (as unique offerings) by its customers and stakeholders.

  • The Sense imperative is addressed by using the Business Identity as an “attractor” amidst the voluminous stream of interactions. This is especially important in a privacy conscious environment where interest in and intent of using information is clearly understood and agreed upon upfront.
  • The Understand imperative is addressed by using the Business Identity as a common link between the complementary mechanisms of (a) fulfilment within an enterprise and (b) the collaboration contexts with the partners.
  • The Decide imperative is addressed by using the Business Identity as an enterprise persona for scenario planning and evaluation --- rather than viewing an enterprise as a structural entity.

Business Identity enables an (EKG powered) enterprise to constantly assess and align its value propositions to a) the needs and use-contexts of consumers and b) the collaboration mechanisms with business partners for effective fulfilment.

Examples of prominent brand statements:

Apple Watch

It’s the ultimate device for a healthy life. Apple Watch can do what your other devices can't because it's on your wrist. When you wear it, you get a fitness partner that measures all the ways you move, meaningful health insights, and a connection to the people and things you care about most. And it's always just a glance away.

Netflix

Unlimited films, TV programmes and more. Watch anywhere. Cancel at any time. Netflix is a subscription-based streaming service that allows our members to watch TV shows and movies without commercials on an internet-connected device.

A Business Identity can link brand statements such as the above with the wider contexts of an Enterprise’s corporate values, vision etc and the specifics of the product/service features and integration with other products/services of the enterprise/wider ecosystem.

Aligning Business Identity with Activities in an Enterprise

Enterprises use a variety of mechanisms today to organize “inventories” of their activities. The artifacts take a variety of forms ranging from free-form documentation of manuals, data and process models along different methodologies to data records and programming repositories. Business Capability Models, Business Canvas, Business Reference Architectures etc have been some of the outputs used to serve as organization-wide references of activities.

The objectives guiding such management are mostly around efficiency of categorizing, storing and retrieval, focused around “what is done” and “who does it”. The key challenge in efficiency oriented approaches is that the perception can be quite subjective based on the needs of the departments or teams --- which leads to a variety of approaches across the length and breadth of any enterprise. There are several implications of using such a variety of approaches --- chief amongst which is the reconciliation effect expended every time a deviation has to be managed, exceptions have to be handled or a change introduced in any activity. Targeting efficiency of reconciliations through techniques such as focus-groups, standardization of documentation etc. is a typical response of most organizations.

Taking the intuitive notion of a Business Identity (as a conceptual anchor for an organization’s engagement with its stakeholders) forward, enterprises can benefit from using a simple, organization-wide concept anchor focused around “why is it done” for its activities. This anchor need not be prescriptive to change the way an organization manages its activities but descriptive to enhance the ability to more effectively leverage information within the artifacts.

One candidate for such an intuitive anchor is the contract. In fact, a contract may initially take the form of a memorandum of understanding (MOU), an agreement outlined in a formal document that may later become a legal contract. If we take the Business Identity as a basis for viewing an organization’s product and services, a contract can be seen as a specific engagement around which the activities of various departments and teams are organized. More specifically, a contract can be seen as a collection of related commitments, potentially spread over time, which provide the necessary context for any activity in an organization. Interestingly, while it's well-understood that a contract is a definitive source of specifics around any agreement with stakeholders, it's currently referred to only in the extreme case of legal recourse in handling disagreements. Another perception of contracts is that they do not cover all collaboration contexts which guide activities in an organization.

Contracts have several features which help align the Business Identity with the activities within an enterprise --- and the wider ecosystem, for that matter.

  • Together with the legal system and societal norms, contracts provide a contextual basis for belief/trust between an enterprise and its stakeholders in the ecosystem
  • Contracts are specific to the parties involved and provide an ideal contextual basis for (hyper)personalisation of products and services --- through bounded simulation of contract performance
  • Measures of performance in organizational activities, such as cost, operational efficiencies and innovation effectiveness can be aligned to contractual performance contexts

We now look at two key elements of organizational activity (enabled by EKG) aimed at orienting and realizing business strategy, through the lens of Business Identity and Contracts:

  • Business Strategy Actuation is a business identity oriented process that senses, understands and communicates business outcome-based assessment data to focus energy and resources on strategic objectives. Actuation measurement values are used to assess whether strategic objectives and associated business goals are being fulfilled.
  • Business Model Elaboration is the process of providing further detail of business strategy. It may include decision rationale that explains how the business identity data infrastructure and algorithms enable the how and why planned actions would create, deliver, and capture value.
  • Business Enablers utilizes Business Identity to scope the EKG facts and facets that are needed to have a single source of truth about each of their Suppliers, Partners and Consumers. For example, when a Business Identity point to point relationship with the Identities of all their Customers is enabled, implementors have much greater clarity about what must be governed, collected, analyzed, and securely stored.

  1. See Business Strategy ↩

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