Effective strategy execution with enterprise architecture

Business strategy is like planning a journey for your organization. It tells where your organisation is going and the route it wants to take to get there. It clarifies what you will and will not do by setting the boundaries within which you will operate. Just as you have to consider the roads, the weather and your car's tank capacity while traveling, a business strategy must consider your company's market, competitors and resources.

Strategy execution is then the journey your organization is going to take. It focuses on translating the strategic goals into concrete actions, mobilizing resources, motivating teams, and achieving measurable results. Strategy execution therefore encompasses all the activities, initiatives, and decisions that are necessary to turn your strategic plans into concrete actions and results. In practice, it turns out that this journey is not so easy. Chances are that during your journey you will have to overcome bumps and obstacles to get closer to your travel destination. Consider, for example, events such as the credit crisis, covid, war in Ukraine, tight labour market, etc. and the impact these events have (had) on our society and your organization. In many cases, this means adapting your business strategy to this new reality and take a modified course.

Translating business strategy into reality is a complex task. In practice, 60% to 90% of organizations fail to successfully implement their business strategy. The main underlying causes are:

• Lack of support from senior management;
• Lack of understanding of underlying problems;
• Insufficient understanding the organization’s capabilities;
• Feeling insufficient urgency and necessity to change;
• Underestimating the impact on organisation culture.

Enterprise architecture is essentially about managing coherence and thus giving direction to the development of your organization. With enterprise architecture, you can partially eliminate the above causes or reduce their impact on the implementation of your business strategy. This gives the organization an instrument for translating strategy into reality and a way to manage it.

Enterprise architecture provides insight into the value streams and the capabilities of your organization. This keeps you focused on delivering business value. Through the holistic view of enterprise architecture, you will gain a better understanding of the underlying issues and challenges that come with implementing your business strategy. By stimulating innovation and building a digital foundation, you are able to translate the identified problems and challenges into innovative (digital) solutions. The lean business cases that you draw up underpin the degree of urgency and the need for change.

In the following sections, the use of enterprise architecture is explained based on five practical situations:

The need for enterprise architecture arose in the late 1980s on the information technology side. At the time, the need was to gain insight. Over the past four decades, this need has changed, and a business approach is now being applied. As a result, the focus shifts from gaining insight to delivering business value and improving business performance. Value streams and the capabilities form the foundation of your organization. You determine the impact of your strategy by identifying which capabilities you need to improve, realign, or develop. From that moment on, you will be able to work in a focused and iterative way when implementing your business strategy.

The architect works with directors, executives, portfolio management, and other stakeholders to translate the organizational vision and strategy into strategic themes and operational value streams. Subsequently, the architect further elaborates on this into an architectural vision. This gives you an idea of the impact that a strategy change entails, and you are able to translate this into initiative proposals for (digital) solutions including lean business cases.

Medium to large organizations are complex structures, with different departments, systems, and processes. This anatomy of the organization is reflected in the enterprise architecture. Architectural principles make up the rules and guidelines that your organization follows when constructing this structure. These guiding statements are ideally suited to give direction to changes and to increase the cohesion in your organization. When your organization adjusts its business strategy, it is important that you also take a close look at the enterprise architecture of your organization and the associated guiding statements and recalibrate them.

Enterprise architecture plays an important role in building an agile organization that is able to successfully respond to changes in the market and technology. For your organization, the following five building blocks [1] are essential for digital transformation.

• Shared customer view – which allows you to understand and learn from the needs customers have.
• Operational backbone – supporting your organization's core operations with enterprise systems, master and transactional data, and unified processes.

• Digital platform – allows you to quickly and easily develop (new) digital products and services using reusable components.
• Accountability framework – with which employees feel responsible for the (further) development of digital products and services.
• External development platform – enabling business partners to expand their portfolio.

The architect works with stakeholders to design and set up these five building blocks for your organization.

Companies strengthen their competitive position with their ability to develop new digital products and services. Governments strive to provide their services as effectively and efficiently as possible. To build a solid and future-oriented digital foundation, the architect keeps an eye on IT trends and developments and translates them into opportunities (or threats) for your organization. In addition, enterprise architecture has the task of drawing attention to preconditional IT initiatives for digital innovation at a strategic level and ensuring that these initiatives are assigned sufficient priority and budget.

In the scenarios outlined, enterprise architecture plays an important key role in effective strategy execution. Enterprise architecture enables you to bridge the gap between business strategy and reality. It reduces the gap between formulating business strategy and successfully implementing this strategy in your organization.

If you would like to know more about the successful implementation of a digital strategy and the role of enterprise architecture, please contact Arie van Nistelrooij via arie.vannistelrooij@highberg.com.

[1] Ross, J.W., Beath, C.M., & Mocker, M. (2019). Designed for Digital – How to architect your business for sustained success.

[2] Nistelrooij, A. (2024). Architectuur als motor van digitale innovatie.