Prof. Jan Bosch, 11 January 2021
Many years ago, together with a few colleagues, I wrote a paper on the BAPO model. The BAPO model says that business and business strategy should drive architecture and technology choices (A). These should, in turn, drive process, ways of working and tooling choices (P). Finally, these should be used to define an organization that makes sense to realize the business and technology strategy (O). Although this model is intuitively very appealing and in many ways makes a lot of sense, the challenge is that it misses an important point: technology is becoming increasingly central in business and the way that companies traditionally work with business strategy is becoming increasingly obsolete.
'No matter what business you’re in, you’re a digital technology company'
No matter what business you’re in, you’re a digital technology company. The success of the clothing store Zara is often attributed to its ability to detect trends in fashion and respond to these trends in weeks. The only way it can do this is by using digital technologies. Similarly, banks are huge IT houses and the budget for IT often is on par with, if not larger than, the other functions in a bank. The implication is that developing a business strategy without incorporating technology is impossible and makes no sense. Instead, the technology and business strategy are so tightly interwoven that these need to become one and the same.
One reason for this is that the nature of business is changing from a one-directional, transactional model where the company stresses the features of the product and tries to convince customers to buy it, to a bi-directional, continuous model where there’s a continuous dialog between the company and its customers. This dialog can take more of a qualitative approach, such as surveys and questionnaires. With the increasing digitalization of the industry, however, it often tends to be more quantitative and driven by mechanisms to measure customer behavior, such as A/B testing.
A second reason is that digital technologies allow for the automation of processes to an extent that was infeasible even a few years ago. Ranging from robotic process automation (RPA) to full AI solutions, processes requiring significant human effort can these days be fully automated, reducing cost and error rates and significantly speeding things up. And with the increasing prevalence of no-code and low-code solutions, processes can be automated by teams mostly consisting of domain experts with minimal support from engineers. All this is of course not constrained to the boundaries of the organization but can, and in fact should extend to your ecosystem of partners, suppliers and customers.
Third, the pace of technology development is now so high that the traditional infrequent, time-consuming strategy process needs to become continuous as well. We don’t do strategy once per year, but continuously. New technologies enable new business models, new ways of serving customers, and so on, and if you don’t exploit those immediately, others will do it for you. Similarly, new business models require new technologies, which in turn often require new partners to interact with.
Business strategy and technology strategy are becoming one and the same. This requires us to suspend the traditional division of the business side and the R&D side of the house, and build a continuous conversation with the market, continuously engage in the strategy process and constantly experiment and test to inform the strategy. Remember, no matter what business you’re in, you’re a digital technology company. So, you better start behaving like one.