Management Buyouts Repeating Failure or Healthy New Start?

I was reading today about a current management buyout where a failing manufacturer in the leisure equipment industry was undergoing a management buyout. One can surmise that recently well publicised poor quality issues and ensuing warranty work has come home to roost. It seems that the existing management team are proposing a buyout which is interesting, if not somewhat worrying.

Management buy outs often fail because the reason they happen is to maintain the jobs of the managers and the workforce. The “new” management team then take a previously failed business model often made worse with an over leveraged balance sheet and just repeat the same model all over again with the same results reappearing after a short period. Minor tweaks and changes are not enough.

Often it an emotional conveyor belt that carries these things forward; very difficult to have true objectivity if one is drawn into the demise of the organisation you work for. On the other hand the emotional ownership  and commitment can be beneficial in drive and leadership but the earlier issues still remain behind the scenes. 

Institutionalised management teams have great difficult in making the step changes to turn a business round as they are often set in their ways; their original lack of skills creating the situation “as is” so making any real beneficial change is very unlikely.

What is needed to turn a failing business around is a fresh approach a different mind-set that gets rid of all the myths, legends and group think within the old business: a different business model a different strategy and a new target operating model.

Attributed to Einstein. Insanity: doing the same thing over and over again and expecting different results.

What is strategic architecture?

HNC/D strategy units talk about strategic architecture and it forms a criteria point in the syllabus. Often my students struggle to find a good definition as is it is not present in many text books; so I thought if I placed it here it might help a few people.

Architecture is how components fit together to make the whole so:

Strategic Architecture means how the organisation is constructed to achieve its stated strategy. This will include all the strategic artifacts  goals, missions , visions, business operating models, business models, target operating models and all the components for delivering the strategy including business components, projects and programmes that are created to deliver the strategy.

In essence any identifiable items that connects together with other items to facilitate delivery of that strategy.

As Tom Graves rightly says" architecture represents the lines that connect the boxes". So strategic architecture is how the business is connected together to deliver the strategy.

What is an End to End process?

End to End is:

From when the customer triggers the process to when the customer decides or is satisfied that the process is complete.

This means not when the provider thinks the process started or when provider thinks the process is finished. e.g. The call may complete from the process perspective but the customer may not have his/or her problem fulfilled. When the reason or problem is not closed the end has not been reached.

Many companies publish self congratulatory SLA statistics that evidence to them good service but the clients in reality think the company is "rubbish".

Working in Corporate Syrup!

I deal with a lot of people in major corporates who have roles to develop and promote cross functional business design - business architecture.  Often they have been promoted into the role or have worked elsewhere and arrive with enthusiasm and drive to do the right thing.

I usually meet them because they know I work in this space or from the various websites and blogs I maintain and usually it is from a training point of view. Some are at a sufficient level or have influence to access budget and discussions move forward to a satisfactory piece of training or supportive consultancy work. On the other hand I find individuals whose organisations have given them a role, reasonably paid at that, but then fail to support them in their personal development or provide funding for tools and software.

The latter part around the subject of tools is also interesting in that recently I did some training for an organisation and was a little surprised to find process mapping being done using PowerPoint. Visio was not even available because there was no budget or the organisation was just making it too difficult to obtain anything. The employee said

“Doing anything here is like walking in six inches of syrup!”

In some cases this situation creates the scenario where one gets an email or phone call asking for materials to assist – free of charge of course - and this is difficult because one doesn’t want to come across as unhelpful but on the other hand the  freelancer has to make a living. This is particularly emphasised by the fact that many organisations that these people work for are some of the largest and wealthiest corporations in the economy. In reality the employee has no power or authority and getting approval to do anything is just too hard. The waste of this Syrup must be extensive if we extrapolate it across the knowledge worker population.

What underlies this is the fact that employees tasked to deliver do not have the empowerment to engage the resources that they need to be effective – they are as the client above said – working in corporate syrup. Surely if we employ expensive people we need to fund the whole package: training personal development, tools and culturally make the organisation able to innovate and change else these appointments are potentially futile.

Business Architecture Maturity Models

The subject of business architecture capability maturity models has come up in discussion with clients recently. Organisations are seeing them as a means to bench mark their own capability and plan the implementation towards a higher degree of maturity. Whilst I do see some benefit in this, in that it gives you something to think about and ask yourself questions, I am a little concerned to some respect.

The issue is how you can use a maturity model to test yourself against when the discipline itself is unclear and fragmented. Business architecture is different things to different people and is still under innovation and debate in many of its aspects.

What is happening here is that certain well-meaning and well intentioned groups are claiming the space as their own and proclaiming “bodies of knowledge” and publishing models of “their” best practice. Many of these groups are highly I.T. centric and to be honest I am not sure that the provenance of this material is too helpful. Even the Wikipedia entry for business architecture currently promotes and tries to create legitimacy for certain bodies who have perhaps taken it upon themselves to proclaim their ownership of this topic.

Quite often it how an I.T. person thinks business architecture should be from his or her systems based view of the world.  To be fair to them though a lot of the content has value but it isn’t gospel. We are not at a point where these models are of an equivalent status to CMMI or similar.

The forums are full of debate on business architecture and there are multiple threads of thought and opinion, so no firm view in any form is possible at this point in time. I do accept that they probably are worthy endeavours and are based on positive and well-meant intention but one could argue that it is very pretentious and somewhat a potentially arrogant approach.

If organisations are using these models thinking that this is the only way, or seeing them as something to aspire too, when in reality the approach put forward is perhaps not right for their organisation then big mistakes are going to be made. This will not add to the good name of the discipline as a whole.

Business architecture needs to be applied appropriately, not in a one way fits approach; each and every organisation will benefit from an approach that suite: its business, its market and its culture. Business architecture is not painting by numbers!

So we need to use these emerging models carefully and use then to ask questions and promote thought, not as a blue print for what we should do.

The models should be used to develop an appropriate model for the organisation under discussion and then the model becomes a bespoke implementation plan for that organisation not a business architecture maturity model.