Better or Different? An Argument for Adaptability
As a primary direction to create and sustain competitive advantage, some executives have decided it is more important to be different, than better. This is not to say that there is no consideration for operational efficiency, only that it is not the primary driver for many companies seeking sustainable competitive advantage. Many market leaders separate themselves from their competition by operating differently, offering different services, delivering via different channels, providing different information or producing different products. Because success breeds imitation, many competitors will change also, eliminating the differentiating factors. In order to sustain their advantage, companies must differentiate themselves again and force the market in which they compete to continually react to their changes. Consequently, executives of competitive differentiator companies understand the need for an adaptive environment and have enabled corporate agility with an adaptive enterprise architecture (EA) strategy.
What is Competitive Differentiation? Companies with a differentiation strategy strive to provide uniqueness in their industry along dimensions that are widely valued by buyers. They position themselves to provide one or more needs that buyers perceive as important that is different from the competitors in their industry or a specific focus within that market. Differentiation can be presented through a product or service itself, the channels through which the product or service is provided, marketing, procurement and other factors. Each industry has its own factors for differentiation.
Competitive differentiation strategies require faster than average business process change and high demand for information access, both requirements for an adaptive EA. For instance, one market leader has an internal metric for measuring its business process change rate — with a goal of once every 6 months. This compares to the average of once every 12-18 months for other fast-change organizations. This company, like others engaged in competitive differentiation, has placed a high priority on developing an adaptive EA to facilitate this degree of rapid change. The need for information access is derived from the requirement for faster decision making among hyper-competitive organizations. Providing access to the right information to the right people at the right time becomes a key architectural requirement.
The key linkage between the business and enterprise architecture is the identification of the fast-change business capability changes and the parallel business information capability changes affected by the competitive differentiation strategies. Not all processes are affected as dramatically as others by differentiation. For example, a manufacturer that is differentiating itself through multiple distribution channels is more likely to have fast-change within the processes that interact with distributors and customers, rather than its internal manufacturing process. This change will also impact the type and amount of information that is shared between the manufacturer, distributors and customers. Likewise a manufacturer striving for competitive advantage through product differentiation would impact engineering, design and manufacturing processes more than customer service, accounting and billing, while increasing the amount of information sharing necessary between product designers, engineers and the manufacturing floor. The impact of these fast-change strategic capability changes on EA is that they become the basis for the common set of drivers which the business and the IT organization agree to pursue with their EA.