Empowering the Retailer through Business Architecture

Dec 03, 2019

The National Retail Federation is expecting a strong holiday season for 2019.  That’s good news for retailers who have for years struggled with profound changes to their industry.  Yet, underlying the cycle of good and bad news, the modern retailer faces a variety of common, perennial challenges, such as:

  • maintaining relevance and competitiveness in the face of the migration to ecommerce;
  • overcoming a silo-ed organizational structure when implementing initiatives;
  • managing inventory across disparate geographies and demographics;
  • grappling with a returns-oriented customer base; and
  • instilling loyalty and repeat purchase through the adept use of ‘clienteling’.

Common to addressing each of these and other challenges is a requirement that the business be able to see clearly its own deep structure and essential dynamic using a language that is shared across the C-suite, the operations crew, the store floor associate and the IT developer.  If a business cannot describe its current state in a way that can be understood and acted upon across the entire business, how can it identify and carry out actions necessary to a future state?

This – the connection of strategy to effective action – is the core insight of an emerging and empowering practice known as “Business Architecture.”  Just as a building architect’s schematic shows a common picture of the basic elements of a large and complex edifice, a business architecture enables a business to picture itself to itself.  When everyone can agree on what the business is and does, the likelihood of getting people to understand their own role in a strategic initiative increases many-fold.

The way that Business Architecture describes a business is in terms of its: 1) Capabilities, 2) Value Streams, 3) Organization and 4) Information.  Capabilities are fundamental abilities, powers and potencies that the business possesses or uses, which enable it to produce Value for customers and other Stakeholders.[1] Value Streams are the way the business organizes those Capabilities to produce Value.  The way that Business Units assemble themselves and work together to supply Capabilities is its (real) Organization.  And, finally, Information is the definitive lexicon representing both the data used by Capabilities and the semantics used by all Business Units within the Organization.[2]

So how does the Business Architecture view of the world relate to the retailer’s challenges?  What makes it a powerful instrument for change?  The answer lies in the way the abstract “blueprint” supplied by the architecture lays out concretely in terms of the business’s actual operations; its people, processes, technologies, structure, governance and ways of working.  Having an architecture is like having a map into any and all levels and domains in the business, which can be further mapped into low-level descriptions of resources and assets.

Take, for example, the challenge of changing your business to blend in-store and online sales strategies. The analysis begins by identifying new value propositions that are attractive to your target customers and associating those value propositions with specific outcomes, such as staging stock for orders placed online to be picked up in stores. The next step is defining the value streams that will produce the value propositions, focusing on the creation of value as perceived by the customer; e.g. what negative value results when the customer arrives to pick up the item and it is not available or is deemed unsuitable?  Business architecture recommends keeping the focus on value to define specific value objectives prior to performing the operational analysis. The next step is to identify capabilities that are critical to producing the outcomes that meet the value objectives of the value streams; e.g. stock-keeping, inventory transport and in-store inventory management. These capabilities are assessed according to how well they are producing the desired outcomes. Are the capabilities well-funded? Do they have the right set of skills? Is the information they need to produce the outcomes available and of good quality?

If this all sounds rather abstract, be assured that we will – in a follow-on article and in a future Thematix Retail at Speed Webinar – work our way through a concrete and specific example of a challenge facing a Health & Wellness retailer.  Keep watching this space and sign-up for the webinar – we will let you know when the Webinar is scheduled.  You can also click here to join our mail list.  Finally, keep track of Retail tech at our blog, Retail at Speed.

About Thematix

Thematix has assembled a special team to help you the retailer innovate to satisfy your customers and develop new capabilities by using the framework of Business Architecture. Our team includes Richard Halter, who offers extensive knowledge on the data, process and message models from the OMG Association of Retail Standards (ARTS). In addition, our teammates at SDLC Partners will provide software, hardware, systems development and engineering services.

[1] So, for example, Capabilities might include such abstract descriptions as Order Management, Partner Management, Asset Management, Campaign Management and a host of similar, decomposable abilities and potencies. 

[2] We use capital letters on nouns that are terms of art within the practice of Business Architecture.  “Business Architecture” is used here as a proper noun for the practice; a business may build a “business architecture.” 

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