The New World of Public Self-Governance
If I had asked people what they wanted, they would have said faster horses.
— Attributed to Henry Ford
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The tendency to cling to the past when predicting the future is clear throughout history. This is as true today as it ever has been. Even in the future-defining world of technology, people still cling to anachronistic ideas.
To get the structure of the business right, a company must reorganise itself around empowered teams that can operate at speed. For technology architecture to play a pivotal role, it must leave the old workhorses of the past behind and move to modern transportation. Indeed, architecture must refocus on three core principles: (1) accelerated change, (2) decentralised decisions, and (3) public self-governance.
Why Does Any of This Matter?
Recall these three promising businesses that crashed and burned in the midst of major technological change?
- At its peak, telecoms giant Nortel had almost 100,000 staff members and celebrated over 100 years of success. In 2009, it filed for bankruptcy.
- In 1988, Kodak celebrated 100 years of existence, buying Sterling Drug for US $5.1 billion; in January 2012, it, too, filed for bankruptcy.
- In 2008, social network Friendster had more than 115 million registered users and was among the top 40 visited sites on the Internet. It shut down all operations on 14 June 2015.
All three businesses attempted to transform far too late. In each case, the company clearly saw a disruptive change emerging in its path. Early on, each business thought that the disruption was merely a fad and that size and history would offer protection from it. Ultimately, they all failed.
The world has not been slowing down since these companies found themselves in trouble; it has been speeding up dramatically. In his essay, “The Law of Accelerating Returns,” inventor and futurist Ray Kurzweil explains that “technological change is exponential, contrary to the common-sense ‘intuitive linear’ view. So, we won’t experience 100 years of progress in the 21st century — it will be more like 20,000 years of progress (at today’s rate)”’
Kurzweil uses multiple cases to show that the evolution of technology is increasing at an incredible pace.
The diagram above shows a good representative example, where computing power goes from the equivalent of an insect’s brain in the year 2000, up to a human brain’s in 2025, to all human brains by 2050. Supporting this type of exponential growth might be the single most important thing a company does for its survival. If a company can’t adjust quickly, it may have to shut its doors as new business strategies hand the advantage to competitors.
How Is EA Meeting This Challenge?
The answer to this question really depends on what “enterprise architecture” (EA) means. No single clear identity exists today for architecture in an enterprise. Indeed, the ISO/IEEE site lists 78 separate architecture groups with associated frameworks. These different groups aggressively defend their “one true answer,” recalling the poetic words of W.B. Yeats in “The Second Coming”:
The best lack all conviction, while the worst
Are full of passionate intensity.
While inside the architecture community an argument over the best framework rages, to outsiders it resembles crows fighting over scraps at the dump. The winner is important to the crows and a few bystanders but relatively unimportant to the rest.
More important than architectural identity is understanding the value architecture brings today. The value of a sales division is clear: to bring in revenue; the finance division’s value is to manage the company finances, and so forth. A typical department knows its value proposition thoroughly. A member of a well-run department can explain its contribution in an elevator and still have time to discuss last night’s game before reaching the desired floor. However, it is rare for an architect to speak about architecture’s value to the company in clear business terms.
In the quest to uncover the value of architecture, academic research fares no better, showing that despite all expended effort, framework-based architectures have failed to deliver. Complexity and the increased rate of change in technology have transformed the business landscape, but architecture hasn’t kept pace. The following quotes from academia and industry groups provide some insight:
- There exists no single comprehensive view of the ways an architectural practice might add value to an organisation. — Vasilis Boucharas et al.
- Measuring EA effectiveness is often deemed difficult by both practitioners and researchers. — Wendy Arianne Günther
- Useless at best, and harmful at worst. — Svyatoslav Kotusev
What Should Architecture Do?
Architecture should play a key role in creating the strategy for a digital business. But strategy alone is not enough. As famed organisational theorist Jeanne Ross notes:
“A great strategy is valuable only if a company is capable of executing that strategy. And whether or not a company can execute its strategy depends largely on whether it is designed to do so. In other words, it depends on business architecture — the way a company’s people, processes, systems, and data interact to deliver goods and services to customers.”
So, as we hinted to earlier, architecture must go deeper by focusing on three pillars: (1) accelerated change, (2) decentralised decisions, and (3) public self-governance.
The Three Pillars of Digital Architecture
1. Accelerated Change: Optimise for Speed
As we know, external change is happening at an exponential rate. This changes the speed of execution from a useful to a critical success factor. If companies aren’t readying themselves and getting their business architecture right today, they increase the chance of becoming irrelevant tomorrow.
Companies slow to change have always been at a disadvantage. My first-person experience of this comes from my time working at a small telecoms company in Ireland in the late 1990s, leading a team of three. Telecoms consumers began to ask for additional content, such as recommended listings, sports scores, and local weather. Providing this content meant that operators could charge more and increase revenue.
We spent five months building a new workstation platform that offered these new services and then flew to Nortel in Rochester, New York, USA, hoping to sell it. It turned out that a team of 50 people in Nortel had been working for two years to build the same platform and were nowhere near completion when we showed up. The key difference was that Nortel’s organisational structure slowed them down, while ours allowed us to move as fast as we could.
In the end, Nortel took so long in deciding whether to buy our software, we approached a telco directly and won the deal ourselves, in effect becoming a competitor. The world outside Nortel started to move faster than the world inside, but they didn’t notice until it was too late, contributing to the downfall of this once great institution.
Today, companies must reorganise quickly so that they can move faster, keep up with the external rates of change, and avoid becoming the new Nortel. Optimising for speed means shortening the time from idea to implementation — from lightbulb to lights on.
2. Decentralised Decisions: Power to the Teams
Hurricane Katrina hit the US in 2006 causing fatalities, lost homes, and devastation in many towns and cities, including New Orleans, Louisiana. The agency with overall responsibility for disaster management was the Federal Emergency Management Agency (FEMA). Most agencies tasked with providing relief, FEMA in particular, did not do so adequately. The top-down chain of command was mostly useless when those on the ground needed to make immediate decisions. People felt disempowered and stifled by bureaucracy.
One notable exception was Walmart. Walmart shipped almost 2,500 truckloads of merchandise and medication to New Orleans before FEMA even began any relief efforts and provided trucks and drivers to community organisations. How was Walmart able to act almost immediately after the hurricane when the government agencies responsible for providing relief took days (sometimes weeks) to get to affected areas?
A key reason is Walmart’s decentralised decision-making. The company gives both regional and store managers authority to make decisions based on local information and immediate needs. As Hurricane Katrina approached, Walmart CEO Lee Scott sent a message directly to his senior staff and told them to pass it down to regional, district, and store managers:
“A lot of you are going to have to make decisions above your level. Make the best decision that you can with the information that’s available to you at the time, and, above all, do the right thing”.
On the ground, Walmart staff turned stores into emergency sleeping quarters, set up temporary police headquarters, and, in one case, ran a bulldozer through a store to collect undamaged supplies and give them to those in need. People could make life-saving decisions because they didn’t need to wait for permission. They already had permission as part of their job.
Today, in a world of accelerating change, companies must empower teams like Walmart did. To achieve this, decentralising the decision-making process is vital – it empowers individuals and reverses bureaucracy, which is toxic to innovation. As world- renowned business thinker Gary Hamel and his coauthor Michele Zanini note in Harvard Business Review,
“Bureaucracy is the enemy of speed … bureaucracy is a significant drag on the pace of decision-making in their organization”.
So, how does architecture enable decentralised decision-making, reduce bureaucracy, and accelerate work? Public self-governance helps answer this question.
3. Public Self-Governance: From Governance Blockades to Buffet-Style Decisions
Traditional technology governance resembles theatre, where various stakeholders play parts in a process that makes the actors feel satisfied. The decided lack of applause from the enterprise is telling.
Governance committees decide centrally, causing delays in work and frustration to parties awaiting an outcome. They rarely have the same level of information as the team on the ground. Of course, the committees can request more details, but this only increases delays. Occasionally, they assume knowledge and rule on matters in semi-ignorance, acting like an unaccountable early European monarchs.
The book Accelerate discusses highly sophisticated and complex technology projects. In considering the usefulness of a change advisory board (CAB) or central approval process, the authors found that:
“External approvals were negatively correlated with lead time, deployment frequency, and restore time, and had no correlation with change fail rate. In short, approval by an external body (such as a manager or CAB) simply doesn’t work to increase the stability of production systems, measured by the time to restore service and change fail rate. However, it certainly slows things down. It is, in fact, worse than having no change approval process at all”.
A central approval process is akin to a restaurant with only one server. The server can handle a few tables. As the company grows, the number of tables also grows. The order queue gets bigger and diners face a longer wait. Eventually, diners are upset, the food gets cold, the server is exhausted, and ultimately quits. We need instead to move to a buffet model, where diners can serve themselves, the food is hot, and a smiling server is on hand in case anything additional is needed.
Enterprises must move away from the old model of centralised decision-making to a model of public self-governance. Away from monarchy and toward democracy, giving teams the knowledge and authority to make decisions in the open.
What Is Public Self-Governance?
Public self-governance is a simple process, where teams ask themselves three questions after first stating the purpose of the proposal:
- Is there a positive return?
- Is this a Type 2 decision?
- Is this easily reversible?
If all three answers are yes, then the team makes the answers available internally and begins work immediately. This process increases the speed of decision-making, increases autonomy within teams, and creates a culture for innovative ideas to blossom. Team members are more engaged, and both they and the company reap any rewards that materialise. Let’s break these questions down.
A. Is There a Positive Return?
This question concerns the business case and is merely asking whether the ROI is greater than the cost. This simple question, however, has a deep impact, helping people at every level of an organisation consider ROI as they dream up new proposals.
B. Is This a Type 2 Decision?
This question considers scope and comes from Amazon. Jeff Bezos, in his 2015 letter to shareholders, explained the two types of decisions within Amazon: Type 1 are high-impact choices, while Type 2 are lower-stakes choices that can be more easily reversed. Amazon leaves Type 2 decisions to its teams.
With public self-governance, an individual at any level can make a Type 2 decision, which provides autonomy and allows immediate action. Type 1 decisions are made by senior stakeholders with consideration of a wider set of factors (e.g., risk, business environment, company performance, alignment with strategic goals). Training individuals to distinguish Type 1 from Type 2 decisions is part of an enterprise’s learning journey.
C. Is This Easily Reversible?
This question concerns complexity. If a proposal needs integration into existing systems, or requires new data, complexity increases. The higher the level of complexity, the greater the work needed to reverse the action. To answer this question, one must break it down further and consider the following three categories:
- Data. Is the data protected? Can it be retrieved and/or deleted?
- Integration. Are integrations or custom development required? Is this work easily reversed?
- Users. How does removing the feature impact its users?
The answers to all public self-governance questions should be openly available within the company, and the architecture group should perform continuous retrospective reviews. If any issue arises, or if any of the three answers is no, the architecture group then becomes a partner, helping to generate a business case and thoroughly work through the proposal. This proactive approach allows other teams without issues to move forward with no delays.
Public self-governance requires a culture that encourages experimentation and is tolerant of failure. If something is easily reversible, then it is low risk. If it doesn’t deliver as expected (i.e., less value, higher cost, more complexity), it can be halted, with lessons noted, and everybody can then move on to the next decision.
Financial Purse Strings
“Negotiating budget exceptions — often necessary when a company has to move quickly — was also impeded by bureaucracy” — Hamel and Zanini
In most companies, costs will also need finance approval. Bureaucracy costs money; therefore, it is cost effective to give blanket approval to all proposals below a set maximum amount.
Danger: Technologists in Control!
A word of warning: it is important to review answers to the public self-governance questions, continue an open dialogue, and support a learning culture. There is a difference between giving increased autonomy to technologists and abdicating any responsibility as a firm. The cautionary tale of Netscape should serve as a stark reminder of too much free rein given to technologists.
To the technologists in the firm, this was an obvious choice: rewrite the entire browser (i.e., the entire business) from scratch, removing old code and old bugs. It was just a matter of cleaning out the cobwebs to prepare for a new paradigm shift.
The full rewrite took two years — two years without new features, without meeting new customer needs, or dealing with competitive threats. By the time Netscape released its new Netscape Communicator browser, Microsoft Internet Explorer was everywhere, and Windows was the desktop platform of choice. Meanwhile, Netscape’s market share slid irreversibly, from close to 90% in 1995, dropping to 5% by the end of 2001. Netscape went from total dominance to a vague footnote. Plus, in an ironic twist, the new browser was buggy and slow compared to the old version.
AOL ended up purchasing Netscape in early 1999, and, by 2003, the company disbanded altogether, an ignominious end to what had looked like a brilliant future only eight years earlier. Here, Andreessen made a major decision solely on a technology basis. Referring to the public self-governance form, this was a Type 1 decision made as if it were Type 2. Netscape should have considered an array of factors, including risks, business strategy, and competitive threats. Ignoring these factors ultimately caused its demise.
As we see in the Netscape example, judgment is still necessary in making good quality decisions. Using public self-governance allows a business to scale its decision-making, but a business must also reinforce the learning culture so that staff members understand how to categorise their proposals and make better decisions.
To survive in this digital age, architecture must change. The old monsters of heavyweight governance, centralised authority, and long wait times are impediments in this new arena. Public self-governance breaks up decision hierarchies and speeds up technology decisions in the organisation. It encourages a business to move faster. This will have an enormous impact, allowing companies to adjust quickly to customer needs, changes in technology, and emerging business models. Public self-governance is a necessary step in setting a business up for success in this new era.
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This article originally appeared in Vol. 32, No. 9 of Cutter Business Technology Journal