Why do companies exists? Why do they have the size they have? Howdoes the company conclude what should be done internally and what should be left to the market? Nobelprice winner, Ronald Coase has studied these basic questions. Coase has found that the answer to these questions is the fact that companies do some tasks more effectively than the market. According to Coase, do companies exist because the cost to organize and sustain them are lower than the costs of transactionsbetween individuals on the open market And companies grows until the cost of performing a single additional transaction internally is just as high as buying it externally.

Up until now the development of the digital technology has stimulated the growth of companies. Computers and networks has made it possible to grow not just locally but also globally. But the development of technology not only makes the companies more effective. It also makes the market more effective. The cost of transactions decreases for almost every product, in some cases dramatically. And it decreases much faster on the open market. According to Larry Downes and Chunka Mui this leads to:

“The Law of Diminishing Firms,” which states that “as transaction costs in the open market approach zero, so does the size of the firm.” From Unleashing the Killer App: Digital Strategies for Market Dominance, by Larry Downes and Chunka Mui.

So, does this mean that we are moving towards single person companies? No way Jose. We humans are flock animals and we like to hang out together. The transaction cost is only one parameter in defining the size of a company. But there’s a balance. Some claim, that the ideal company doesn’t have more than 150 employees.

Even if the new connectivity that we are experiencing today, levels the playing ground. I still believe the tribal society will exist and continue to prosper. We will see new tribal configurations and on new levels. What will change though, and in some ways has started to change already. Is why we want to work for a specific company or organization.

In the not-so-distant old-days, we worked for a living, for food on the table. Today, particular in the connected part of the world, these reasons are not the primary ones anymore. There are other reasons why we want to belong to this or that tribe. Values. Values are also one of the most influential forces today.

The fundamental values expressed in three words:

FUN, FUN, FUN

For several years now, the leading ERP vendors have tried to convince us that One-Size-Fits-All. Companies like SAP, JD Edwards, Baan, and Intentia has made us believe that this is really the case and it’s almost like a natural law. We have heard that tailor made systems are much more expensive and even dangerous. How come organizations fell into the trap, embracing the One-Size-Fits-All model, when we are not accepting it in any other areas (except for maybe our tennis socks)?

Costs. In the late 80s and early 90s the Information System costs started to rise above previous levels. And with the increase in use of PCs, the cost increase was accelerated. At the same time, organizations did not view their IS as a core process. Only as a cost center. And cost centers should be limited and reduced in size. So what could be reduced?

To develop and maintain systems you need people. Often you need people with different specialties to maintain your systems. And as maintenance is a major part of all system costs, how compelling was it not to listen to all the sweet talks from various vendors. The costs would be reduced and you didn’t need any people to take care of your systems.

So what happened? Were these so called standard systems the grail that saved us from all rising costs and eliminated all our problems. No way Jose! Instead of reduced costs, most organizations experienced an even higher increase. But what was even more serious, was that the so called standard system didn’t support the business processes. Instead the business processes had to be adopted to the new system.

The following picture depicts the evolution of the process/system model. At the moment we are at the “Turnkey” phase. Also known as the One-Size-Fits-All phase. What’s significant about this phase, is that the control is out-sourced.

Another significant feature of the One-Size-Fits-All system, is that it is very costly to upgrade or modify. Often these systems are so called integrated systems. Which means, that if you have to upgrade one part, you have to upgrade the rest as well. It’s like if you want to replace your microwave oven, you have to replace the whole kitchen. Cupboards, sink, stove, fridge the lot. An expensive endeavor to say the least.

When we realize that IT is a core process of any organization. And when we come to insight that the most important issue for any organization is to be able to provide:

Then we will see less of One-Size-Fits-All systems and less of IT out-sourcing. We will move towards Components and Modularized systems, that grows with the organization. That are Best-of-Breed systems, aligned with the Business Processes. The upgrade and modification costs will be low to moderate.

By using a Business Analysis Framework (see Figure 1) we can establish:

• Business Goals
• Business Views
  • Abstractions (areas/views)
  • Perspectives (separation of concern)
• Business Definitions
  • Business Information
  • Business Roles & Responsibilities
  • Business Rules
  • Business Operations
  • Business Infrastructure

Figure 1. The Business Analysis Framework

The Success Framework

The Success Framework builds upon “A Framework for Information Systems Architecture”, by John Zachman published in an 1987 article in the IBM Systems journal.

The Zachman Framework summarizes a collection of perspectives involved in enterprise architecture. These perspectives are represented in a two-dimensional matrix that defines along the rows the type of stakeholders with the columns the aspects of the architecture.

The Zachman Framework is an Enterprise Architecture framework, which provides a formal and highly structured way of viewing and defining an enterprise. It consists of a two dimensional classification matrix based on the intersection of six communication questions (Why, Who, How, What, When, and Where) with six rows according to rectification transformations.

The Success Framework builds upon the Zachman framework, but also extends it with two additional perspectives/views (see Figure 2):

• The Objectives/Scope perspective; the strategic view
• The result/benefit perspective; the value view

Figure 2. The Success Framework

Abstractions and Perspectives

Each perspective focuses attention on the same fundamental questions, then answers those questions from that viewpoint, creating different descriptive representations (i.e., models), which translate from higher to lower perspectives. The basic model for the focus (or abstraction see Figure 3) remains constant. The basic model of each column is uniquely defined, yet related across and down the matrix. In addition, the seven categories of business architecture components, and the underlying interrogatives that they answer or address, form the columns of the Success Framework and these are:

1. The data description – What
2. The function description – How
3. The Network description – Where
4. The people description – Who
5. The time description – When
6. The motivation description – Why
7. The results/benefits description – Value

Figure 3. The Abstractions/Views

The Business Anatomy

By using the focus area/abstraction questions, we can translate these questions into relevant business parts that forms the business anatomy (see Figure 4).

• WHY – Represents the Leadership focus which in turn focuses on vision & mission, values, strategies & goals, policies
• WHO – Represents the Organization focus and its focuses on roles & responsibilities, competence & capabilities, relations, development & satisfaction
• WHAT – Represents the Information & Analysis focus and its focus on information management, measures, and analysis
• HOW – Represents the Process & System focus and its focus on product & service processes, business process, support processes, functional requirements
• WHERE – Represents the Infrastructure focus and its focus on locations, requirements, influences, interfaces
• WHEN – Represents the Timing focus
• VALUE – Represents the Results focus broken down into customer satisfaction, employee motivation, partnerships, and business results

Figure 4. The Business Anatomy

By using a framework we can mitigate the complexity and provide a holistic approach to translate between different perspectives and views. The framework is also an excellent tool for performing analysis of the current operations and provide a framework for where we want to be in the future.

Figure 5. Multiple stakeholders - Multiple views

Figure 6 illustrates the relationship between different stakeholders and different views.

Figure 6. Matching perspectives and views

So, where are we heading in this warped age? Are there “New Rules for the New Economy” like Kevin Kelly claims in his “Twelve dependable principles for thriving in a turbulent world”, or are we just seeing familiar universal laws applied closer to home base? Is there really something like a New Economy, or is it just so, that we now are experiencing the forces of the universe? Or is it all because the Wall has come down, like Thomas Friedman writes in his book The Lexus and the Olive Tree?

THE LAWS:

The development of the computer chip has for more than thirty years followed a formula devised by Gordon Moore. Moore’s Law, as it is also known as, says: “The computer capacity will double every eighteen month, while the price will remain the same”.

Another law that effects us in many ways is Metcalfe’s Law. This law was formulated by Robert Metcalfe, Ethernets inventor. Metcalfe’s Law says: “The power of a network increases geometrically by the number of connected computers”. What Metcalfe’s Law also says in a little different way is that: “The value of a network increases geometrically by the number of participants”. In other words, the more we connect the higher the value.

Yet another law that deals with the development of technology has been formulated by George Gilder. Gilder’s Law says: “The bandwidth will triple every twelve month for the next twenty five years” (Gilder’s Law was formulated in 1997).

What these laws tell us, is that not only do we get double our moneys worth every eighteen months or so and networking is the way of creating great value, but our Information Highways also triples in size every twelve months.

Time and Talent are our most critical resources. They also posses some common features, they can’t be reproduced and they can’t be recycled (at least not yet). When they are gone, they are gone. Wasted time and talent are gone forever and their levels of uniqueness are extremely high.

There is only one master of your time and talent“ you! Ultimately it is you who decide what you want to do with your time and talent. But remember, the clock is ticking.

What’s your unique talent? What are you good at and what do you love to do? These are the questions that you should ask yourself. If you love doing what you do and you excel at that, then there is really no limit to how successful you can get.

That is if you have the passion, stamina, and focus. Because the second you loose focus, you will fumble. And the minute you even think of giving up or your passion fades, you will stumble.

With this in mind, we can then formulate the Talent Success Formula as:

S = PA x FO x PE

Where:
S = Success
PA = Passion
FO = Focus
PE = Persistence

So, take your passion and make it happen and you can be joyful all the way to the bank.

Information about money has become almost as important as money itself

This famous remark, was formulated in the 1970s, now inscribed in the lobby of New York’s Library of Science, Industry, and Business. Walter Wriston was a true visionary. The former banker was regarded as the kingpin of modern American finance.

The basis for wealth has evolved from land to labour to information. We are witnessing the third great revolution in the history of the world. First came the Neolithic revolution in agriculture. Then the industrial revolution. Now we’re moving to an information society. Where the power is shifting. Today, intellectual capital is at least as important as money capital and probably more so. The problem is, that we don’t book-keep intellectual assets. But the market values it. The marketplace is capitalizing intellectual assets, while the accounting profession is not. That’s why Microsoft has a higher market value than e.g. GE.

The exchange of information has also gone through four revolutions. We are now in the midst of the forth great revolution. First came the ability to communicate through speech. The spoken language was the first great information exchange revolution. This was the first time that we could reproduce information. Even though it also meant, that the original message was gradually transformed every time it was exchanged (the feather-and-the-hen syndrome). Already now, we saw the first signs of the importance, value, and power of information and knowledge. In those days the shamans were the most powerful and respected individuals, because they had the knowledge about how to communicate with all the worlds, the upper, this, and the lower world. And they could read all the signs in nature.

Eons later came the ability to communicate through a written language. Now we could exchange information without the context of the original message being changed. This is also meant a shift of power. With the written information, the shamans power evaporated, and instead it was transferred to the issuer, and to some extent the holders/keepers of the information. The Jewish, Christian, and Islamic religions are all an example of this. But also the Roman empire was built on the ability to send written information to all corners of the empire. The power of reach had increased compared to the information distributed via the spoken language.

In the 15th century came the third great revolution. The printing revolution. This was the first time that we could reproduce information at a relative low cost. It is no coincident that the spread of the thesis of Martin Luther had such great impact only years after Gutenberg’s invention. The printing revolution also paved the way for other revolutions. Once again we saw a shift in power. This time from the issuer to the information itself. The power of reach was multiplied, and because of this, the effect of the information was also multiplying.

The fourth revolution is the Internet revolution. Once again the power of reach has multiplied. The Internet revolution has all the features of all the previous revolutions in regards to information exchange: one-to-one, one-to-many, many-to-many, and many-to-one. But the most important elements of this revolution is interactivity and availability. It’s an Any Time World, and it’s Real Time. Sure we have seen both interactivity and availability before. But not on the same time and not on the same scale. The magnitude of reach and spread can now be compared to a biological process. The small world effect, which states that any two humans on the planet are linked with no more than six degrees of separation, is also changing. The degrees of separation is decreasing as more and more are getting connected. So how does this impact on the value of information, when information is available to almost everybody?

Once again there’s a shift in power. This time from the information itself, to the knowledge of how to manage the information. Not so long ago, the access to privileged information was limited to but a few. But not so anymore. With Internet, CNN, and all other information channels, the playing field has changed again. Like in the super-bowl, everybody in the arena has the same access to what’s going on. We might have different views of reference, but we have the same information at hand at the same time. So what then makes a winning team? It’s all about the ability to provide:

THE RIGHT INFORMATION TO THE RIGHT PERSON AT THE RIGHT TIME

We could call this Information Management. It is also what it boils down to when the quarterback makes his play. It’s of no use if a spectator on the 14th row in the B section knows what to do with the information at hand, if the quarterback doesn’t. It’s the decision he makes that’s important. And that decision is based on his level of skill, knowledge, and experience, also known as talent.

So the value of the information is in fact increased when we provide it to THE RIGHT PERSON AT THE RIGHT TIME. This leads us to the conclusion, that apart from the information itself,Time and Talent are the really critical resources. They also posses some common features, they can’t be reproduced and they can’t be recycled (at least not yet). When they are gone, they are gone. Wasted time and talent are gone forever. Their level of uniqueness are extremely high.

So when we combine the uniqueness of time and talent, with the abundance of information, we are creating even higher values. And the longer we can retain that unique talent, the higher value it will generate. In other words, we should opt for time and talent monopolies. Michael Jordan is an excellent example, he created such time and talent monopoly for the Chicago Bulls and himself. He created what I call a high level of uniqueness.

Of course, some might argue that, if we have a well defined and documented process, we will leverage the impact caused by time and talent. But I say no! Only to a very limited extent. Not even the most well documented process or text-book example, will ever compensate for the lack of talent and time. Every athletic coach in the world knows this. A game plan is out dated as soon as the ink has dried on the paper. And if you don’t have the time and talent to execute the plan, it doesn’t matter how many shelves of plans you have.

So if Information about money has become almost as important as money itself, then Information Management is the most strategic issue within any organization. But how do we quantify the value of information? Well, if you play on the horses, every horse is assigned an odds, and that odds will determine the value of the information depending on which horse is winning. The odds is actually an indicator of the level of uniqueness.

Picking the right horse is a form of Information Management. And the better you are at picking the high odds winners, the better the return. So Information Management is all about providing: The Right Information to the Right Person at the Right Time. And the Right Person could also be expressed as the Right Talent, or the right organization with the right talents.

But how do we quantify the value of Information Management in the world of business? Is it the market value, the profit margin or what? It all depends. It could be the market value or the profit margin or both. All depending on what kind of stakeholders we are.