The Architecture of Change – Part 2
Business architecture and the meaning of Digital Transformation
Figure 1: Subway Abstract. Copyright 1972 Massimo Vignelli[This is Part 2 of a three-part article describing digital transformation and its illumination using a discipline known as business architecture. In Part 2, we explore the power of abstraction to render insight and mobilize thought.]
The Story So Far
In Part 1 of this article, I inquired concerning the meaning of “digital transformation” – a term very much in vogue among technology consultants and one that seems to have as many definitions as it does authors. The authors, in many cases, stand to benefit from the term’s very ambiguity, like a doctor offering treatment for “discomfort.” To the degree that it has a consensus meaning, we determined that digital transformation entailed deep changes to ordinary assumptions underlying the conduct of business, culture and personal life.
Uber, Netflix, Airbnb and a host of other new companies nevertheless provide an existence proof of digital transformation. They have profoundly altered the basic business models upon with their respective industries operate and in so doing have threatened (and in some cases accomplished) extinction for incumbent market players. So it is clear that digital transformation is not mere marketing hype, but is instead an upending of the basic everyday assumptions on which a business operates.
I concluded part 1 by asking the question: what about a business is transformed when its essential nature nevertheless stays the same? In the case of Uber, for example, what allows us to recognize it as a taxi company, despite the radical reshaping of an entire industry? What is transformed and what persists? This is not mere philosophical theorizing concerning “quiddity” or “essence” – it is of greatest pragmatic significance for business in the 21st Century. The fortunes of entire industries hinge on the answer, as does technology assessment and policymaking.
It is my intent in this exploration to not only describe the phenomenon of digital transformation at a structural level, but to arrive at a prescription for purposefully set about making it happen. I am looking to enact digital transformation rather than merely observe it. I am seeking, if not a recipe, then a method for deliberate digital transformation.
The Power of Abstraction
It will do no good to observe that “software is eating the world,” to recite “disruption” and “disintermediation” mantras, or to say that the secret is in owning the “customer interface.” For the clothing retailer, the consumer goods manufacturer or distributor, the insurance company or the financial institution seeking a strategic response to technological change, these incantations and catch-phrases are of little use. They are so much chest-pounding by Silicon Valley digirati and do little to provide positive instruction or criticism.
Nor will it help to collect instances and adduce from them a common digital transformation ‘signature.’ The businesses and industries involved, their dynamics and imperatives, are simply too diverse to arrive at a technique or an instrument by induction. What would it mean to “uber” the retail clothing industry, for example? To end-run Macy’s or Nordstrom’s by matching the consumer with the clothing manufacturer in China or Bangladesh? The consumer looks to these retailers precisely because they perform the services of selection and distribution on her behalf. The simple-minded transplantation of exemplars will only accidently provide us the principles we are seeking.
To set about transforming a business in a principled and deliberate way, we need to understand what “the business” is, apart from its particular people, offices, automations, and tangible and intangible assets. We need to dissociate from particulars, so that we can speak of taxi companies per se, broadcasters per se, movie houses per se — without regard to any particular business. To do so is to abstract from specific instances and to identify those features shared by whole classes of businesses.
Abstraction is fundamental to the innovation necessary for digital transformation:
In the innovator’s tool box, abstraction is one of the most powerful tools. For the creative mind, it offers a way to step away from the mundane to find fresh ways to conceptualize… The power to abstract is fundamental to innovation. When ideas are scarce, a fresh viewpoint makes all the difference. Abstraction is also a hierarchical process, and that perfectly fits the needs of the innovator facing complex problems requiring system solutions.
– Charles Owen
Figure 2: Abstracting a house, from Owen
In moving from the particular to the general, we can focus on those features of a thing that are essential to its function, which might be implemented in new ways, or that might share common potential solutions with other things. In figure 2 (perhaps a trite example), we see that a plant might serve better than a wall for dividing space, but providing light and color. If we contract with a company for utility maintenance, we might inquire whether they provide cooling systems work in addition to heating. Abstraction enables the creative re-assembly of concepts and their subsequent realization in specific, particular things: “[r]eleased from the mental restrictions of conventional names and imagery, the innovator can speculate freely upon what a house might be with a new approach to surfaces, storages and the rest of the necessities of home living.”
The Business as System
Abstraction is not merely a method for innovative thinking, it can also provide the ability to model a business as a system. A system is a collection of components that relate to one another according to principles that govern their behavior and interaction. I would go so far as to claim that it is only when rendered as a system that a business can be rigorously described, analyzed, assessed, measured and understood.
If we looked only at individual instances of things, we would not only be unable to group them under larger and more general categories, we would be unable to say what properties or principles govern their interactions with other things. We would have no way of discerning the accidental from the essential. Today, the order taking department collected name, birthday and hair color from customers. Yesterday, they additionally collected address. Is this adequate to fulfill an “order processing” role in the business? Is it like other order processing roles in this and other businesses? Is the information adequate to process an order? Is it adequate for another party to fulfill the order? There is no way of saying, until we establish a general set of categories and principles appropriate to processing orders.
A systematic view of business requires not only that we abstract away from particulars and identify those features that hold true of all instances (e.g., in the above diagram, lamps, windows and skylights are “lighting”), but that our abstractions endure over time – that they have enough permanence for us to say that they are the self-same entities exhibiting the self-same properties at time T0 as they do at time Tn. An order processing department that today receives orders and tomorrow refers them on is not “the same” department, and we are therefore unable to make any stable generalizations about it.
In the end, treating the business as a system enables human beings to share a common picture of the business – it makes any discussion about the business possible by virtue of the fact that we use the same words to describe the same things. It allows us to say what the business does, how it does it, who does it, why they do it and when it gets done. It allows us to say what about the business is working and how well. Conversely, it allows us to say what is failing and why.
Most importantly for the discussion of digital transformation, viewing the business as a system enables us to envision and model alternate configurations for implementing strategy and for delivering value by using technology. The abstract and enduring components of the business system become variables that can be modified, replaced and augmented by means of mobile communications, data analytics and even artificial intelligence. By conceptualize the business as a system, the ‘art of innovation’ is aided by a fair degree of analytical rationality; transformation can be explored in a systematic way using a common language. It is for this reason that analysts say that “digital transformation isn’t really about technology.” Digital transformation is business transformation, caused or enabled by information technology.
Modeling the Transformation
Insofar as business can be described as a system, it is amenable to a system architecture. A system architecture is a conceptual model that defines the structure, behavior, and more views of a system. The system architecture that describes the structure and behavior of a business is business architecture. Business architecture, according to the Business Architecture Guild, is “a blueprint of the enterprise that provides a common understanding of the organization and is used to align strategic objectives and tactical demands.”
In the last and final part of this paper, we will use business architecture to model digital transformation, arguing that it is through business architecture that we can understand what digital transformation means, and that by using business architecture, strategy and business models, we can set about intentionally to effectuate a digital transformation in even the most staid and prosaic of businesses – in this case, an ordinary dry cleaning business fighting to stay in business.
 TechCrunch, March 2, 2015, The Battle Is For The Customer Interface, https://techcrunch.com/2015/03/03/in-the-age-of-disintermediation-the-battle-is-all-for-the-customer-interface/
 “The Power of Abstraction” 2009, The Business Process Management Institute. https://www.id.iit.edu/artifacts/the-power-of-abstraction/
 Hayakawa, S. I. (2016-06-14). Language in Action: A Guide to Accurate Thinking, Readng and Writing (Kindle Locations 1849-1850). Barvas Books.
 Kane et al., Research Report Strategy, Not Technology, Drives Digital Transformation, MIT Sloan Management Review, Summer 2015.
 Business Architecture Guild, A Guide to the Business Architecture Body of Knowledge, version 5.0, 2016.