Defining the Business Context for Change

The purpose of the Business Context phase is to ensure that a common understanding of the business landscape is held by all key decision-makers. It answers the question, “What criteria will your organization use to decide among competing options for change?” It provides a balanced set of commonly accepted decision-making criteria for change based on business drivers and business stakeholder requirements. It strives to ensure that members of the organization gain shared insight about the stakeholders who ultimately determine the future success of the enterprise. It doesn’t aim for depth; it strives to ensure breadth and fit of perspectives.

Results

The major consolidated deliverable from this phase is a Business Context Report, which summarizes the current and future states of the relationships during the planning horizon. It starts by defining business drivers and ends by establishing evaluation criteria based on the defined drivers. It summarizes the current performance of the Organization-in-Focus and examines its current and anticipated business pressures as well as its capabilities. The report documents stakeholders’ needs and expectations and compares them to current performance. It establishes criteria based on stakeholder expectations to be used to set later business priorities for change.

Concepts Handled

Figure 5.5 depicts the concepts dealt with in the Business Context phase.

Concept Knowledge Reused

The most important set of existing concepts in the Business Context phase is that associated with the Organization-in-Focus raison d’etre, or reasons for existence. The organization’s mission should be stable during the planning horizon, as should its principles, values, and vision. These statements of purpose define the business and are the core around which all other aspects of the business are centered. They should exist.

It’s obviously imperative that an organization listen to signals from the outside world. These business drivers will affect the strategies and programs that the organization will have to adopt to remain responsive.

Of course, it is important to understand today’s business performance and to anticipate what it will be in the near term under current operations. Likewise, any strategy formulation depends on the state of the organization’s capabilities. If the strategy aligns strengths with opportunities, it is a different response than if it aligns weaknesses with environment threats.

A strategy based on existing drivers, capabilities, and enterprise foundation knowledge will provide a number of goals and objectives. It might also establish some ways of measuring the progress toward goals and objectives. This strategy formulation component of business context creates support for concepts in later phases. In reality, some of the work in the Architect and Align phase will produce contributions back to the strategic plans that exist there. Strategy guides architecture, and architecture guides strategy.

Concept Knowledge Created

By taking the existing work that has been done and validating it, you can start to develop a process-based business management approach. The first step is to find out who cares about your organization and what they care about. The intent is to develop a set of criteria that, when satisfied, would delight your customers, owners, suppliers, staff, and other stakeholders. Ultimately, this is what you are in business to do, so you better make sure everyone knows and agrees what success would look like.

Identifying the stakeholder groups is clearly the start. This alone often brings clarity to the way business is discussed within the organization. A common understanding of stakeholder categories and sub-types provides a framework for all. Some aspects of this might be reusable for marketing or customer segmentation strategies or for human resource categorizations.

The next concept to understand is that of the relationship because it’s what you must manage well; it’s your processes that do that. The first questions regarding the organization/stakeholder relationship are, “How well are our products and services working today for our stakeholders? Are they contributing toward a healthy relationship?” Based on the answers, you can determine the degree of the gap that exists between what exists now and what stakeholders want and need.

Then you should examine the stated principles and values of the organization for compliance with that witnessed in the stakeholders’ experience. You must have principles that you honor. These principles and values start to form the set of stakeholder-based decision criteria.

These criteria are built from the expectations that the stakeholders will have for your organization at the end of the planning horizon. They are also contributed to by the expectations that you will have of stakeholders because a relationship is a mutual affair. You must make sure that the expectations of your customers do not conflict with what your staff will require from you. This can be a tricky balancing act.

The next puzzle piece is to determine how to evaluate whether the relationship requirements are being met. By associating a set of key performance indicators (KPIs) with each relationship, you can define a balanced measurement system to be assessed continually. But perhaps even more valuable, you can get answers to the question of how much change is required in each metric to meet the requirements of the relationship principles and expectations within defined timeframes.

For the relationship to succeed in terms of performance, you must work out a set of Critical Success factors (CSFs), which must go well or be in place to be able to meet KPI targets and stakeholder expectations.

When rationalized across the set of stakeholders, the total set of knowledge created in the Business Context phase comprises the evaluation criteria to be used to prioritize change and build a program of process-based transformation. Processes exist to serve stakeholders. If you don’t know what’s important to your relationship with them, you can’t optimize your business.

Steps

The following steps are recommended to populate the concepts of the Business Context phase. They are described in detail in Chapter 10, “Discovering the Context for Business Change”:

1.	Validate the mission.
2.	Analyze the business drivers.
3.	Classify the stakeholder types.
4.	Document current interactions and health.
5.	Document principles and values.
6.	Envision the future and set expectations.
7.	Produce key performance indicators (KPIs) and targets.
8.	Determine critical success factors.