Coherence between the levels - The Enterprise Coherence Framework

6 The Enterprise Coherence Framework

6.4 Coherence between the levels

In addition to horizontal coherence on one level of contemplation, we also distin- guished vertical coherence between two adjacent levels of coherence. With refer- ence to the strategic fit, as proposed in Hendersson & Venkatraman’s [36], strategic alignment model, we correlated the cohesive elements defined on the purpose

Culture Finance Employees _Customer Org. governance Information provision Services Processes Acquisition Knowledge

We acquire only organizations with cutting edge knowledge appropriate spearheads of our services

We innovate our knowledge concepts in line with our service priorities by knowledge INTEGRATION We innovate our knowledge concepts

in line with our service priorities by knowledge CREATION Mission Vision Core Values Goals Strategy

Figure 19. Metaphor for the derivation of cohesive elements at design level

6.3.6 Experiences

The presence of a well-documented enterprise mission, vision, core values, goals and strategy are preconditions for determining the content of the cohesive elements at the design level of an enterprise and they are the essential resources for this de- termination. Case studies carried out within our research programme, as discussed in chapters 10-12, showed that we need to make the relationships between different perspectives of an enterprise explicit in such a way that it becomes possible to de- velop integral solutions for important business issues. New and adjusted guiding statements within a perspective will affect other perspectives within an enterprise through the relevant relationships. The insight into the enterprise coherence gained from an understanding of the relevant relationships contributes to the governance of an enterprise, since the impact of a change in one perspective can be translated into possible effects in other perspectives.

As an example, consider the situation depicted in Figure 20. In this example, ac- quisition, as part of the growth strategy, is a new and important perspective. The main guiding statement in this perspective is: We acquire only enterprises with cutting edge knowledge appropriate to the spearheads of our services. This state- ment has implications for other perspectives, primarily for the perspective knowl-

Perspectives Principles

2. Distillation 1. Filtering & solving

Objectives Policy statements Relevant relationships Core concepts •Vision notes •Policy plans •Business plan •Management reports •Information plan •Annual reports •Business strategy •Etc. Core models 79 edge. In this perspective, due to the new relevant relationship acquisi- tion/knowledge, the existing guiding statement: We innovate our knowledge con- cepts in line with our service priorities by knowledge CREATION is adjusted to the guiding statement: We innovate our knowledge concepts in line with our service priorities by knowledge INTEGRATION.

The relevant relationship responsible for this adjustment is formulated as: innova- tion by buying service concepts. The change of this guiding statement in the per- spective knowledge, will subsequently invoke a causal series of first order and even second and higher order changes to guiding statements in other perspectives.

Figure 20. Example of the working of a relevant relationship

In a workshop, the core team of our research program assessed the extent to which the identification, in a specific enterprise, of the five cohesive elements of the design level, might already meet the requirements of the programme. It was estab- lished that these cohesive elements contribute to, and substantiate, requirements 1, 2, 8 and 13 of Table 5, requirements 1, 2, 3 and 4 of Table 6, requirements 1, 3 and 4 of Table 7 and requirements 1, 2 and 6 of Table 8.

6.4 Coherence between the levels

Culture Finance Employees _Customer Org. governance Information provision Services Processes Acquisition Knowledge

We acquire only organizations with cutting edge knowledge appropriate spearheads of our services

We innovate our knowledge concepts in line with our service priorities by knowledge INTEGRATION We innovate our knowledge concepts

in line with our service priorities by knowledge CREATION Mission Vision Core Values Goals Strategy

Innovation by buying service concepts

81 knowledge. In this perspective, due to the new relevant relationship acquisi- tion/knowledge, the existing guiding statement: We innovate our knowledge con- cepts in line with our service priorities by knowledge CREATION is adjusted to the guiding statement: We innovate our knowledge concepts in line with our service priorities by knowledge INTEGRATION.

Figure 20. Example of the working of a relevant relationship

6.4 Coherence between the levels

Culture Finance Employees _Customer Org. governance Information provision Services Processes Acquisition Knowledge

We acquire only organizations with cutting edge knowledge appropriate spearheads of our services

We innovate our knowledge concepts in line with our service priorities by knowledge INTEGRATION We innovate our knowledge concepts

in line with our service priorities by knowledge CREATION Mission Vision Core Values Goals Strategy

Innovation by buying service concepts

level with the cohesive elements defined on the design level. This is illustrated in Figure 21.

Figure 21. Correlation between the cohesive elements on two interrelated lev- els of coherence

The fundamental, transcendent, nature of the mission of an enterprise gives a high level understanding of the core activities an enterprise wishes to excel in, and the desired behaviour to achieve this excellence. Therefore an enterprise’s mission harbours information on relevant perspectives and principles. The guiding statements of an enterprise should therefore also be motivated in terms of its mission. As soon as guiding statements are allocated to different perspectives, enterprise coherence is made explicit by coupling them using the relevant relationships. In its vision, an enterprise elaborates on its envisioned position in the future. Vision statements indicate new candidate perspectives and/or new core concepts, they may also underpin and/or confirm the role of the already identified perspectives and core concepts. Furthermore the envisioned position of the enterprise in the future is translated into principles and policy statements. Core values diffuse to the design level by way of principles. These values may also indicate major and minor focus areas to govern, respectively referred to as the perspectives and core concepts. Ob- jectives on the design level, defined as a more concrete formulation of an enterprise’s goal, are derived from the goals on the purpose level, goals may also indicate major or minor focus areas to govern. Finally the enterprise’s strategy, seen as the strategic execution path to achieve its goals, supplies the content to major focus

Intensity of coupling Strong ++ Weak + Per sp ec tiv es Co re c on cep ts Pr in cip le s O bj ec tiv es Po lic y s ta tem en ts Co re m od el s Rel ev an t r el ati on sh ip s Mission ++ ++ ++ Vision ++ + ++ ++ ++ Core values + + ++ ++ Goals + + ++ ++ Strategy ++ ++ ++ ++ ++ ++

Core factors on design level

Co re fa cto rs on th e lev el o f m ea ni ng Guiding statemts

areas, the perspectives, minor focus areas, core concepts, and directional information, guiding statements.

In practice there will be many internal and external sources available from which to gather definitions of the cohesive elements on both the purpose and the design level. As part of the overall governance of enterprise coherence, it is important to guard continuously the consistency between these sources and the definitions of the cohesive elements obtained to date. Collectively, the formal definitions of the cohesive elements provide the steering instrument, which allows senior management to influence enterprise coherence. Different source/documents that deal with the strategy, design, and operations of the enterprise should be consistent to the definitions.

In the course of time, several factors may lead to disturbances in already achieved coherence. In such a case, an adjustment in the coherence must be made. An example of such adjustment to deal with a disturbance in the relationship between the level of purpose and the level of design, can be taken from Philips. During the ini- tial stages of the market for mobile phones, Philips was one of manufacturers of such devices. After some time the dynamics of the selected product/market combination intensified in such a way, that this combination no longer fitted to the defini- tion of Philips’ level of purpose. Philips’ overall strategy was to operate in slowly circulating markets, however, due to the intensifying dynamics of the mobile phone market, Philips would either have to make fundamental changes at its level of purpose, or make a change to its design level: Philips decided to do the latter and withdraw from the mobile phone market.

6.5 Coherence between several layers on design level by re-

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