structure architecture

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Structure architecture encompasses all the business model elements associated with the structure aspect of the business organization. Structure encompasses resources, inputs, means, and cause (see structure aspect). Structure elements include --

  • principles - organizational, business, and management principles which guide behaviors -- lessen the need for explicit detailed rules and higher level decision making in response to events and opportunities.
  • value system structure - the organization and ownership of the network of activities making up the channel, supply chain, value chain, and overall value system. This structure determines the degree of control and influence over the value produced by the value system and who collects the benefits of providing the value.
  • organizational structure - is certainly the structure of the human resources of the business organization, but more importantly it is the decision making structure of the organization. As the decision making structure it addresses both who and how decision get made - addressing one of the key purposes of a social system, effecting choices. The decision making structure creates the power-to-do within the organization, duplicating power from the very top of the organization down to lower levels (see social system). The lower the level decisions can be made, guided by such things as values and principles, enabled by such things as skills and business savvy, the more efficient decision making is and the more responsive the organization is to events, whether those events are problems or opportunities.
  • functional expertise - includes the skills needed by the members of the organization to effectively carry out the activities of the processes of the organization. Functional expertise relates to the skills of individuals in contrast to the competencies of the organization. How skilled people are organized and how effective the process designs are key factors determining the level of competency of the organization.
  • physical configuration - addresses the physical structure and geographical location of the assets of the business organization, including its members. Physical location has not only significant impact on costs for such things as the distribution of goods -- but also for the type of community which is best for attracting and retaining the right members for the organization and the culture of the area where the organization is located. Certain types of businesses thrive best in a business ecosystem of similar businesses, such as financial companies in Manhattan and high tech firms in silicone valley in California. Also, the culture of countries have a significant impact on the financial success of their business organizations.
  • strategic assets - include tangible and intangible assets - brands, patents, oil field leases, mineral rights, infrastructure, proprietary standards, secret formulations, etc. The more unique and valuable these assets, the more the opportunity exists for them to contribute to a competitive advantage.
  • other resources - includes any non-strategic resources or assets that are necessary to organization to carry out its business, whether people, skills, other physical assets, partners, suppliers, and alliances.
  • consumable resources for conversion - includes those resources acquired and converted to add value, even if the conversion is only to deliver the acquired resources.

All of these elements have architectural aspects to be considered as part of the business design. How modular vs. integrated these elements are will drive their costs, effectiveness, modifiability, extendibility, and customizability. The degree of alignment of each element and the purpose of the business determines overall value in the customer's eyes and in the fulfillment of purpose. The designs of these elements are constrained by the nature of the resources available, tailored to maximize the value produced by the processes in delivering the function of the organization. Degree of compatibility between the function, process, and structure architectures determines the effectiveness of the business.

Beneficial characteristics of an organization (Ackoff, 1994) --
Russell L. Ackoff identified the desirable characteristics of an organization which makes for a self-transforming adaptable learning organization --

  • modular structure (see modularity)
  • hierarchical network based on the division of labor
  • dynamic module linking capability
  • free market principles compelling mission and common values
  • participative management engages organizational members
  • democratic principles capture and reflect the members thinking
  • dynamically restructures to changing demands