business organization aspects

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Aspects - a basis for holistic inquiry --
The business organization, being the object of strategy, is the object of inquiry. Strategy requires comprehensive inquiry to produce a deep understanding of the business organization, such as its role in its environment, its behaviors, and its competencies. Competitive advantage, the objective of strategy, is produced from the synergetic interactions of the network of elements making up a business organization. The business elements are representations of parts of the business organization from major subsystems down to, potentially, specific people, processes, principles, etc. Given the complexity of the elements, their variable levels of granularity, and their interrelationships -- effectively tackling the understanding and design of a business requires a simplifying systematic method.

Given the systems nature of the business organization, social systems serve as the model for inquiry. The inquiry process, integral to strategy development, is guided by this model. The social system defines the four primary aspects upon which the inquiry process depends to produce a holistic, balanced, and comprehensive understanding without complexity overwhelming the inquirer. An iterative inquiry based on these aspects can then proceed to find the 'truth of the matter', being a simplified but holistic method for systems inquiry. This approach avoids the complexity involved with an inquiry on the business model elements and their interrelationships.

Aspects and inquiry (Gharajedaghi, 2006) --
An aspect is a way of viewing a complex system. It is a perspective of a system. Aspects provide the basis for inquiry to understand and define systems. Predefined aspects are the 'preconceived notion' required as a starting point for an inquiry process. (See inquiry for a discussion of the 'preconceived notion').

The four basic aspects --

  • environment-purpose,
  • function,
  • process, and
  • resources & structure
-- are derived from the most basic attributes of a system - outputs, process, and inputs with a purpose in the context of its environment.

For inquiry purposes, these aspects are then defined as variables of a system. To be the basis for effective inquiry, these variables must be - mutually exclusive, interdependent, and collectively exhaustive in explaining the system. The inquiry to find the 'truth of the matter' regarding a system is analogous to solving a multivariate equation.

These variables co-produce one another, therefore, technically, no one variable dominates others.

The variables and multidimensionality --
The rational basis for the selection of these particular variables goes beyond the basic systems attributes. The system characteristic, or behavioral principle, of plurality aids in bringing further understanding and definition to the variables (see social system for a discussion of multidimensionality and plurality). The principle of plurality states that systems can have multiple structures, multiple functions, and multiple processes to produce the same output from different inputs and produce different output from the same inputs.

  • A single structure can produce multiple functions (e.g. one business organization can have a diverse set of functions, i.e. outputs, or the function of fitness training can be produced by multiple means).
  • A single function can be produced by multiple structures (e.g. financial planning is provided by many types of organizations).
  • Processes, rather than initial conditions (the 'cause' of 'cause and effect') are responsible for future states. There is both equifinality -- where a final state may be reached by a number of routes from various initial conditions and multifinality -- where similar initial conditions can lead to dissimilar end states. Note: this principle does not abolish the effects of path dependence.
  • Structure, function, and process work together to fulfill a purpose within the environment.

The primary aspects --
The definition for the aspects is not as simple as the terms input, process, and output might imply. Those terms don't convey the full nature of the variables that meet the requirements of mutual exclusivity and collective exhaustiveness in holistically describing a complex system. For example, inputs and outputs encompass such notions as means and ends, cause and effect, and resources and outcomes. Processes are also more than activities strung together; they include the embedded know-how of the organization to perform those activities. And of course these three variables are meaningless without a context to give them a purpose within an environment. The four primary aspects are defined as follows --

  • Function -- the outcomes or results produced based on the system's function, or role, in its environment; what a system does to fulfill its purpose. Function entails the notion of effect, the change in the environment due to the function. Related to this is the notion of ends, the sake for which the function is performed. The notion of output is included as well, both as something supplied by the system and as a place where offerings and information leave the system.
  • Process -- the network of activities and the know-how to produce the function; how a system acts to fulfills its purpose. This entails the notion of competencies embedded in the activities that add value in producing the function. These activities producing the function in fulfilling its purpose make up the organization's portion of the value system. Process fills the gap between structure and function - between cause and effect, means and ends, and inputs and outputs.
  • Resources & Structure -- the components and their relationships; how a system is organized and resourced to fulfill its purpose. This entails the notion of cause, the thing that gives rise to action, prescribing which events have which effects. Another related notion is means, especially as related to technology, both physical and social. Structure encompasses the notion of input, what is taken in by the processes in producing the function.
  • Environment - Purpose -- the system's reason for being. Why a system exists in its environment. Purpose provides the system an identity and the context and meaning for the function, process, and structure. The purpose is defined by what's important to the business outside the business boundaries.

Aspect interrelatedness and competitive advantage --
The inquiry of aspect interrelationships achieves an integrated holistic understanding of the whole. This inquiry gets at how the aspects synergistically combine to produce the uniqueness, efficiency, and other factors of a competitive advantage --

  • The purpose is defined in the context of the environment.
  • The purpose determines the function.
  • The function fulfills the purpose.
  • The function specifies the process requirements.
  • The process produces the function.
  • The resources feed and perform the processes
  • The structure organizes the process activities.
  • The structure reflects the purpose.
  • The purpose provides for the structure.
  • The structure is the means, the function is the ends

Aspects correlation with schools of management (see Gharajedaghi, 2006) --
Interestingly enough, the historical development of the discipline of management can be correlated with a shift in focus from one aspect to the next.

  • The classical school of management prevalent in the first half of the 1900s focused on structure and resources. This focus produced such structures as Ford's River Rouge plant with its integrated resources from steel production to finished automobiles and GM's divisional structure which dominated management thinking for decades. Debates still rage today over the best structure of an organization. Under this school of management, the key approach to thinking is analytical.
  • The neo-classical school came along later in the 1960s. It is characterized as management by objectives with its focus is on function. It has been a basis for many management techniques. It has reached significant heights with such techniques as the balanced scorecard and strategy mapping. Under this school of management, the key approach to thinking is synthesis, with the integration of objectives to produce outcomes.
  • The total quality movement, which began mid-century, first reaching maturity in Japan and moving into the U.S. and elsewhere starting in a big way in the late 1970s, is preoccupied with processes, their control, and their improvement. Lean and six-sigma have developed to new heights in this school of management. Under this school, the key approach is process control, a blend of analytical and synthetic thinking.
  • There are even hints of a school of management forming around purpose, with the attention to values, principles, authenticity, and environmental sustainability (the green movement) ascending in recognized importance. If there is such a school of management, its focus is on purposeful thinking.

The answer to competitive advantage does not lie in any one school of management, but in the holistic and systematic approach that recognizes the role and importance of each of them.

Aspects and the inquiry process (Gharajedaghi, 2006) --
The inquirer focuses their inquiry on each aspect, one aspect at a time, then considers the integration of the aspects. This approach avoids several potential pitfalls - the inquirer being overwhelmed by the complexity of the overall system and its interrelated parts, the failure to integrate the views to understand their interdependencies, and the inquirer unknowingly limiting their inquiry to one or two aspects of their own making, falling short of a holistic understanding of the system. See inquiry, systems inquiry, and iterative inquiry.

Aspects and business models --
The four basic aspects form the basis for the business model. The strategic management process uses the model to guide the inquiry of the business organization. The model structures and elements act as the guiding light for the inquiry. A comprehensive model, including aspects and elements, is required to understand and define the business organization for the purpose of strategy development and to convey the business organization design for strategy deployment. The model inspires business design innovation through iterative inquiry of the interrelationships of the aspects and elements, seeking new advantage creating configurations.

In developing the model, the aspects and elements play off of one another. When inquiring on an aspect, attention is drawn to elements, or the need to define the elements, relevant to the inquiry. When observing the business, each part begs the question as too what element it is, or is part of, and what the view of that element is from various aspects. Through this inquiry process, aspects then become a natural framework for organizing the business elements, thus providing the primary structure for the business model.

Elements vs. aspects --
Business elements, the parts of the business, are associated with the aspects of the business organization in the business model construct. The elements, though organized by aspect, do not constitute an aspect. An aspect is a perspective by which to view the business organization as defined above.

Said another way, aspects are perspectives of a system and elements are parts of a system, and though for business model representation purposes elements are associated with aspects, the aspects do not ""own"" the elements, that is, an aspect is not a super set made up of parts most visible to that aspect. Thus a particular set of business model elements may be more visible from a particular aspect, but are not ""parts"" making up the aspect.

All of the business model elements are visible from any of the aspects, some are just more clearly visible than others. For example, offerings are most clearly visible from the function aspect, but the elements of mission, values, behavioral principles, inputs, and processes are visible as well, if the inquirer looks for those elements as well. The inquiry on the integration of the aspects requires viewing all of the elements from multiple perspectives.

Collectively, the elements making up a business organization are connected in a practically indecipherable network of interrelationships. What the aspects provide is a perspective for inquiry on this mess of interrelationships and to draw attention to a particular subset of elements in the process. This does not mean that the elements of purpose can only be ""seen"" from the purpose aspect. For example, they can also be viewed, discerned, and contemplated from the aspect of function, which is the output of the business organization.

Other than holistic inquiries --
Aspects and their interrelationships are tailored to the needs of the inquiry. The four aspects described above support a comprehensive holistic inquiry of the business organization. There are other inquiries which focus in on a subset of the whole. I the case of these inquiries, the 'aspects' are subsets of the full aspects.

  • Strategic focus inquiry -- The strategic focus is the ""sweet spot"" where an organization's distinctive competencies are used to produce a unique value proposition in passionate pursuit of its purpose. The aspects of the strategic focus include parts of the other four - core ideology, fundamental value proposition, and distinctive competency. See strategic focus.
  • Culture inquiry -- Culture emerges from the fundamental organizational processes of the business organization. Given the power of the culture to replicate the organization, like the DNA of an organism, culture must be addressed explicitly in order to transform an organization. Culture requires effective inquiry as part of strategic management. See culture.

Customized aspects --
Once the concept of an aspect is generalized to be a view of the business organization to guide inquiry, the possibility exists to develop other aspects tailored to suit the need of a particular inquiry.