Holistic Business Model

Description

The Holistic Business Model is a (pictorial) synopsis portraying the interlinking activities conducted within an organisation as well as its external relationships.  This model depicts the Organisation’s entire business system in terms of markets, business processes, alliances and relationships, core services/products, customers and external forces.  It groups the Organisation’s internal functions into a set of interrelated, value-producing business processes and graphically depicts them within an Organisation and industry specific “value-chain” model.

Business Value

• Senior managers typically have divergent perspectives on the key issues and areas of opportunity that characterise their business environment. The Holistic Business Model establishes a single, consistent frame of reference (context) and language around which specific business discussions occur.  It shifts people’s perspective of the organisation from a “functional” to a “process” oriented view .
• The Holistic Business Model or Value Chain are key building blocks used in developing a (Confirmed) Business Vision and Focus Areas.  If these models are not developed, an Organisation’s management and staff will have difficulty grasping the notion that the organisation is comprised of “core and support processes which add value to a customer”—a cornerstone of BPI.

Approach

The Holistic Business Model serves to unify and confirm understanding of the Organisation’s business environment for organisation personnel and consultants alike.  It is a modeling technique that is easy-to-understand, can suit the Organisation’s industry/context and provides an appropriate level of detail for senior executives.

The diagram below establishes a standardised “Entity-level Business Model” (refer to diagram below) which serves as the starting point for business modeling. If more detail is required for each process the following information can be capture:

1. Process Description
2. Process Objectives
3. Critical Success Factors (CSFs) liked to achieving the Business Process objectives
4. Key Performance Indicators (KPI’s) linked to CFSs
5. Process Inputs
6. Process Key Activities
7. Process Outputs
8. Business Systems required to support the processes
9. Data and information related to the process for use
10. Risks that threaten the achievement of the Objectives
11. Management Responses to the Risks i.e.the policies and procedures, which may or may not be put in place, that help provide assurance that the risks are reduced to an acceptable level
12. Symptoms of Poor Performance Performance Improvement Observations

To focus further attention on the Organisation’s key business processes, consider also building a “Value Chain” model,  as a subset of the Holistic Business Model.  (Be aware that the “Value Chain” concept was originally developed by the renowned management theorist, Peter Drucker and that its use must be attributed appropriately.)

Initially identify and configure the Value Chain processes by stringing together the various functions of the organisation.  (Note that deciding which functions to string together, where to define “process boundaries” and what to name the resultant process often requires considerable reflection and creativity.)

1. Complete the Entity Level Business Model. Draw upon information gathered for the Internal organisational Overview and Business Position, as well as in interviews with executives.
2. Determine secondary business modeling requirements.
3. Select and develop secondary business model, if required. (Business Modeling)
4. Develop the Value Chain for the organisation.  (Value Chain Analysis)
5. Validate the Holistic Business Model(s) with senior management.

Guidelines

Problems/Solutions

• Organisations (and even consultants) often will not recognize the value in this deliverable, and may not be willing to invest time developing and building consensus around the model.   In such circumstances, develop a “strawman” model, without Organisation input, and then relentlessly pursue senior management to validate and adopt it into their day-to-day thinking about the business.
• Organisations will tend to describe their business in terms of departments, functions and the problems that exist.   Focus on processes and activities that add value to the Organisations products and services, not on organisational problems.  Be sure, however, to document any problems identified during this exercise for future deliverables.
• Isolating and naming business processes can be both a creative and passionate activity.  Using conventional names is easier, but it will reflect the industry as a whole and not a value-chain specifically customized to address the nuances of how the Organisation views the  business (i.e. as drawn out of the Organisation through creative challenge and thinking sessions).  Always declare  the start and end points (or events) of a process first, then describe the things that happen between these two ends.  This will allow you to identify and group the various business functions/departments together into a final discrete process.
• If it is too early to define processes to a very low detail at this time, delineate the entire business into not more than 15 major process names and 45 sub-components (the relationships between the 15 are valuable; the 45 are names only).

Tactics/Helpful Hints

• View the business model as a portrait of the Organisation’s entire business system (markets, business processes, alliances and relationships, core services/products, customers and external forces).  View the Organisation’s Value Chain as a subset of the business model focused on the processes of the business.
• The tactics of executing this deliverable are critical.  Throughout the BPI exercise, Organisation representatives are educated and trained to think of their business in a different and differently structured way.
• This deliverable is first created in “strawman” form by the consultant alone (i.e. use audit personnel and knowledge base when audit Organisation) with some one-on-one discussions to collect and document knowledge about the Organisation and their business.
• Creating this deliverable begins to build a business-focused relationship and credibility with the Organisation as well as the confidence of the consultant to speak to the Organisation on business terms (versus technical terms).
• Multiple sessions (one-on-one or executive workshops) will be required to finalize the business model and value chain;  start with a high level model (entity level) add more detailed models if greater clarity and visual aids are needed to adequately focus, describe or talk about business issues with the Organisation
• Selection of a modeling technique should be based on what the Organisation team can understand, comprehend and sees as valuable.  Utilize simple frameworks (i.e.  solely to communicate understanding); use the type of  business model that will be the most easily understood in the organisation .
• The greatest impact of the Holistic Business Model and Value Chain is when they become a continuously referenced tool among Organisation and consultant during discussions about the business, the BPI Program, the scope and areas for improvement;  having such common ground provides clarity of process boundaries, scope of projects, expected benefits, results and costs

Resources/Timing

• Set concrete time limits for the completion of this business model.  The consultant needs to recognize when to stop adding detail or refining the model. The Organisation team should understand at the beginning of this task that the model is a starting point for other activities, and that the scope and definition of business processes will probably be refined and modified in later steps.
• Senior management workshop facilitation skills are required along with verbal and written communication skills, including interviewing and presentations; ability to work with Organisation personnel at multiple levels of the organisation
• Organisation staff involvement may be extensive, depending on the size, complexity and detail of the busi­ness model selected.  This involvement may include participation in workshops, individual inter­views, and validation of the interpretation of the process relationships.
• Senior executives and management must have ownership of this model; when they are passionately engaged they will find it insightful and eye-opening;  the responsibility is on the project team to spend one-on-one time with executives to evoke the passion, interest  and recognition of the value of this deliverable.