Business Drivers - Carrot and Stick


An often stated goal of enterprise IT architecture, and of IT governance, is to ensure that the information technology used by an organization serves the operations of the organization – to use the standard jargon, that IT is aligned with the business. An important role for enterprise modeling is to support this by defining the mappings from business-level elements down to more technical elements, both the mappings that exist and the mappings that we aim to implement.

If we take things to a greater level of detail, we have motivation models that we can use to examine how the overall business drivers of the organization map down to into more concrete goals, and concrete requirements, and concrete objectives. Following this, we can create further mappings from them to the operations of the organization. In this way we can understand how the projects and individual components of our architecture support these goals. Hopefully this is not new territory to anyone with experience with enterprise modeling.

So, in our modeling utopia, business drivers sit at the top of a trail of relationships that burrow via business processes, data, and applications, all the way down to infrastructure. Given that this is the case, business drivers seem to sit at the summit of the whole modeling activity (ideally that is – it assumes that we can identify them, that they are agreed, and so on – but that's a subject for more than one blog post on its own). But where do business drivers, the summit of our pyramid, come from?

Let's look at some common business drivers. On the positive side we have “Improve Market Share”, or “Improve Profitability”, or “Maximize Revenue”. On the negative side, we have “Control Costs”, or “Ensure regulatory compliance”.

From the preceding examples, it seems like every business driver falls into one of two categories – achieving better financials or avoiding problems. More of the good things, less of the bad. Obtaining the carrot, and not getting the stick. So is that all that business drivers come down to – must every business driver be a carrot or a stick?

It's a seductively simple classification, but it ignores an important consideration – which is that all of the business drivers that fall into this classification scheme are extrinsic. To put this another way, the business drivers that fall into this conveniently simple classification of carrot and stick are all business drivers that are imposed by actors that are themselves external to the organization. The panoply of financial targets that inform business drivers are important because of external investors or because of external markets (or external bankers). Likewise, the variety of external business drivers on the debit side tend to relate to avoiding conflict with external stakeholders, whether it's a question of regulatory compliance (which can be critical for a publicly funded organization) or negative consumer opinion (which can be deadly to a corporate brand).

This neglects one, critical area for business drivers, which is internal motivation for an organization. If all we focus on is revenue and profitability, costs and risk avoidance, then how does one organization differ from another in a way that truly drives the organization? It comes down to the mission statement of the organization – what does this organization provide? What is its reason for existing? That might sound like a very angst-ridden question, except that it speaks to motivation. Every annual report, every speech from the C-suite to employees doesn't reference revenues or risk reduction – it references what the organization has accomplished. Neither of which fall into this convenient categorization of carrots or sticks.

So business drivers, in order to be accurate, must reflect the internal programming of the organization. What is its mission? Why can employees feel like they've made a difference?

There's a common human bias that says that what cannot be measured is not important. While it's important to take account of empirical observation, this isn’t true in every factor of every endeavour. Anyone in a large organization is going to be prone to this bias that says that external measurements are the only source of truth. This can be a healthy bias, but at the top level it's important to take account of the more intangible drivers of an organization.