Every DTO conversation I have starts with the simple question, “Where do we even start?”.
People then proceed to tell me that they have mapped value streams, strategic objectives, and capability maps; or they tell me that they have been focused on applications, systems, processes, and technology catalogs, but again the question: “Where do we start?”. Whether you start at the value layer and decompose or at the component layer and compose upward, thinking about modeling a twin of something as complex as an enterprise can quickly become overwhelming.
The answer is not so much about where you start, as either approach can be successful, but THAT you start. Ultimately, the DTYO (Digital Twin of Your Organization) is a connected model of how your organization creates and delivers value. It links strategic intent to execution by connecting value chains, value streams, supply chains, capabilities, processes, people, technologies, decisions, information, risks, and health/performance metrics for each of these elements, individually and in aggregate. Getting to that DTO can start from any direction, even multiple directions, as long as there is a clear plan for convergence.
Top-Down Approach: Strategy First
The top-down approach is attractive for several reasons. Top-down starts with strategic objectives, business outcomes, value streams, operating models, and KPIs and progressively decomposes down to the components that enable them (data, applications, roles, process activities, etc.). And there is a logic to starting here as this approach is attractive to executive leadership. It speaks their language and targets the level where they operate. It also starts the population of the DTO with an immediate alignment between DTO investment and business priorities.
The typical top-down progression looks like this:
- Define strategic objectives
- Identify business outcomes and performance measures
- Map the enterprise value chain and operational/organizational value chains
- Map value streams and value stages
- Decompose value stages into enabling capabilities
- Connect enabling PPIT (people, processes, information, and technologies)
- Apply performance and health metrics individually and in the aggregate
The advantage of this approach is clarity. It begins with and stays anchored to the question, “Why does this model exist?” Every component can be traced back to a business outcome or strategic objective.
For example, a utility company looking to improve service restoration could begin with the strategic objective of reducing outage duration. That objective is then decomposed to a customer value stream and then to the outage management capabilities, restoration processes, field service activities, supporting applications, data sources and flows, and finally, the operational metrics.
The result is a DTO explicitly linked to a valuable business outcome: improved service restoration.
But the top-down approach does not come without challenges.
Strategy-level models are conceptually easy to create, but difficult to operationalize. Primarily, complexity exponentially builds as you decompose. Building value stream models and associating capabilities are relatively easy compared to the addition of operational detail necessary to drive measurement, simulation, or automation.
In other words, you understand what you want to achieve but struggle to model how the work is actually performed. It is also easy to get overwhelmed as you decompose because the scope is not kept narrow while the number of data points grows exponentially.
The Bottom-Up Approach: Operations First
This approach starts from the completely opposite direction.
Instead of starting with strategy, you focus on operational reality. You model processes, activities, systems, data structures, workflows, events, decisions, and performance measurements. Then, over time, these components are connected and aggregated (composed) into capabilities, value streams, and strategic outcomes.
The typical bottom-up progression looks like this:
- Inventory operational assets
- Model key processes and workflows
- Capture system interactions
- Map information flows
- Instrument metrics and operational events
- Identify capability relationships
- Aggregate upward into supply chains, value streams, value chains, and strategic objectives
This approach can get going more quickly because you usually have these tangible assets in portfolios, process documentation exists (somewhere), applications are already generating telemetry, workflow platforms already contain execution data, and operational managers understand what their teams actually do.
As a result, organizations can demonstrate DTO value through operational visibility, performance analytics, process mining, simulation, etc.
For example, a manufacturing company might start with production workflows, quality management processes, equipment telemetry, and supply chain transactions. These models then can be elevated into higher level constructs such as capabilities, supply chains, value streams and chains, and finally to strategic objectives around customer fulfillment.
The problem is that these bottom-level efforts are naturally fragmented. While yes, these are data points that you have, connecting them up to the broader business outcomes may never happen. Siloed organizations, operational functions, and even data represent an ever-present, traditional problem for organizations that has been persistently difficult to overcome. There are massive stores of data and detailed operational models that are accumulated without a clear enterprise context.
The risk with this approach is DTO becoming a collection of disconnected process models and process mining data rather than a true digital representation of the organization and it mission to create value.
The Best of Both Worlds (Middle-Out) Approach
The reality of the situation is that it is not a one-or-the-other decision. If you strictly adhere to top-down, lack of proper scoping leads to exponential complexity and stunts the effort. Bottom up will leave you in a valueless limbo state where executive management will lose interest. A meet-in-the-middle approach is a good compromise. In this case, the most important objective is to ensure that you do meet in the middle. Everyone has seen the meme of the bridge being built from two sides toward the middle, and it doesn’t connect.
In this case, one team begins on the strategy side, and the other team begins on the execution side (here is where we spawn the conversation about the strategy-to-execution concept).
Top-down is concerned with:
- What outcomes matter
- Which value streams create value
- Which capabilities support strategic objectives
- What actually should be measured
Bottom-up is concerned with:
- How work is performed
- Which systems enable execution
- What data is available
- What metrics can be calculated today
Again, the magic word is scoping. Too broad a scope and you stall out. Too narrow a scope and there is no over-arching enterprise value.
The most practical starting point for an organization looking at DTO is the identification of a mission-critical or high-priority business outcome and then model in both directions. I guess this could be called a “middle-out” approach. But by starting with a specific outcome, value expectations are set, scope is set, and teams have an anchor or relative focus area. This ensures engagement from all levels of management in all associated functions. This focus area is the convergence point and becomes the foundation of the DTO. Once this business outcome is modeled and DTO is achieved, the approach will have been refined and the DTO scaled out to other outcomes and areas. In other words, you are creating visible value while creating a scalable architecture.
The Answer
Just as with anything, we can debate the pros and cons of how to get started with DTO. We can look at it and say that we need it but just aren’t ready, it is too complicated and will take too long, or it would be nice to have but we just don’t know where to start. The fact is, the best starting point is the one that starts now. DTO is not a finite project. You are creating a living representation of your organization’s body, mind, and spirit. And just as an individual grows and changes, so does the organization. The goal here is the same whether you start at the bottom or the top (or the middle). That goal is a connected, measurable, continually evolving understanding of how your organization creates value and how you can optimize that value…an adaptable, self-correcting enterprise (a topic for a different blog).
So the answer is not where start as much as it is JUST GET STARTED!
