Assessing Stakeholder Salience Through the view of Lean Enterprise Transformation

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Assessing Stakeholder Salience

through the view of Lean

Enterprise Transformation

Gwendolyn Sisto

SM 2010 Aero-Astro

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Thesis motivation

1. Desire to elucidate connections between stakeholder salience

and Enterprise Architecture (EA). Specifically with respect to transformations (ie dynamic view of the enterprise)

2. Significant for practitioners to carry-out successful transformation

• Second Principle of Lean Enterprise Thinking: Identify

relevant stakeholders and determine their value propositions (Nightingale 2009)

• Enterprises that are better at engaging the structural, and

cultural aspects are more successful at Lean value creation (Roth 2006)

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Key Definitions

• Three Lenses(Carroll 2002)

• Stakeholder -" any group or individual who can affect or is affected by the achievement of the organization's

objectives“ (Freeman 1984).

• Salience - “the degree to which managers give priority to competing stakeholder claims” (Mitchell 1995)

• Power, Legitimacy, and Urgency- (1) power to influence the firm, (2) legitimacy of relationship with the firm, and (3) the urgency of the stakeholder's claim on the firm (Mitchell 1995)

• Saliency is dynamic- stakeholder influence is dependent on life cycle stage(Jawahar 2001)

• Epochs and Era’s – context and time space (Rhodes, Ross, Nightingale 2009

• Corporate Social Responsibility

• Core Ideology (Collins ad Porras 1996)

• Institutional and Resource dependency (Oliver 1991)

• Network versus dyadic behavior of stakeholders (Rowley 1997)

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Literature Review

Research Question Relevant Body of work Rationale

How do the most salient enterprise stakeholders affect the Enterprise’s

Architecture (EA)? LAI Research Provides EA framework Enterprise thinking and

industry challenges Context for research motivations

Stakeholder Theory Provides stakeholder framework Enterprise Core Ideology Connects EA and Stakeholders

How do these stakeholder relationships

change as the enterprise transforms? Stakeholder Theory Provides stakeholder framework Stakeholder behavior and

decision making

Provides theory for Stakeholder relationships

Stakeholders and Corporate Social Responsibility

Connects stakeholder dynamics to enterprise dynamics

Enterprise Core Ideology

Connects stakeholder dynamics to enterprise dynamics

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Policy / External Factors

Process Process Organization Organization Knowledge Knowledge Strategy Strategy Products / _A Services Products / Services Information Technology Information Technology

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August 2009 February 2009 April 2008 Operations begin

Risto website fully operational B2B operations begin Full production of Risto model January 2010

Epoch 1 Epoch 2 Epoch 3 Epoch 4

Method

Complete a Case study on fast clock speed enterprise- Risto Sports-- using the EA framework

• Determine stakeholders and values using EA & ESAT to determine affect on architecture

• Map stakeholder in EA views over enterprise epochs

• Assess saliency with Normalized Stakeholder Saliency Index (NSSI) (Grossi 2003)

• Assess Network effects • Design future state EA

• Interview Stakeholders to assess validity, reliability of Future EA

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Enterprise Background

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Risto Goals and Core Values

Strategic goals :

1. Grow market share 2. Gain Legitimacy 3. Grow profitability

Core Values:

1. Stronger:Promote and serve strength sports

2.Greener: Sustainable, socially

responsible products and services 3. Leaner: Aspire to be a Lean

Thinking Enterprise

4. Better: Highest quality and exceptional value

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Background- Growth Strategy

Potential customers Customers Adoption Rate Word of Mouth Ease of ordering Cool Factor Marketing Distributor sites hits Risto Website hits

Sales profit Order fullfillment costs + -+ Price Relative to competitors -Price + + + Website/process improvements R&D/investment dollars + + + Value relative to competitors Fashion Trends -Style improvements -+ + Website hits Search engine referencing + + Unique offerings People using free weights Potential customer conversion rate Knowledge of weightlifting shoes + + + + Unique searches + + + Satisfied customers + + Brand Legitimacy+ + + + + Institutional Affiliations + Sponsorships + + + returns production costs + + -+ +

Cool Factor Loop

W.O.M. Loop

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Background-Stakeholders

Stakeholder Network model, January 2010

USAW Distributors Distributor 1 Leadership Customers Industrial Engineer Colombian Business Bureau US Customs Domestic Shipper IT Contractor Competitors US manufacturing policymakers B2B customers Credit/ banking Instituti ons Artisans Gym Affiliate Strategy View

Policy View Information View Knowledge View Leadership Customers B2B Customers Industrial Engineer Artisans Distributor 1 Distributors USAW Colombian Business Bureau US manufacturing Policymakers Colombian Business Bureau Banking Institutions Artisans Customers Leadership Gym Affiliate Leadership IT contractor Customers Industrial Engineer Artisans Distributor 1 Distributors Leadership Industrial Engineer Artisans B2B Customers Customers Distributors Distributor 1 IT Contractor Colombian Business Bureau

Process View Organization View Product View Services View Leadership Industrial Engineer Customers Distributors Distributor 1 B2B customers IT Contractor USAW Leadership Customers B2B Customers Industrial Engineer Distributors Distributor 1 Gym Affiliate Industrial engineer Distributors Customers B2B Customers Competitors USAW Artisans Leadership Customers Gym affiliate

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Part I

- Epochs & Evolution

August 2009 February 2009 April 2008 Operations begin

Risto website fully operational B2B operations begin Full production of Risto model January 2010

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Core

Ideology

Enterprise Architecture

Stakeholders

Capabilities

Part I- EA Space

& Stakeholders

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Core

Ideology

Business model

Stakeholders

Saliency

Part I- Business Strategy Space

& Stakeholders

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Core

Ideology

Stakeholders

Business Model

Enterprise Architecture

Epoch (t)

Part I- Time Dependency

& Constant Inputs

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Normalized Stakeholder Salience with Enterprise Epoch 1 2 3 4 N S S I 100 50

Stakeholder Strategy IT Knowledge Product Policy Process Org Service Strategy IT Knowledge Product Policy Process Org Service

USAW 1 0 1 0 0 0 1 0 1 0 1 0 0 0 1 0 Low End 2 2 2 1 1 1 1 0 2 2 2 1 1 1 1 0 High end 2 2 2 1 1 2 1 0 2 2 2 1 1 2 1 2 B2B customers 2 1 1 1 0 1 1 0 2 1 2 1 0 1 1 0 Distributors 0 0 0 0 0 0 0 0 1 1 1 1 0 1 1 0 Distributor 1 0 0 0 0 0 0 0 0 2 1 1 0 1 2 2 0 IT Contractor 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Artisans 0 0 0 0 0 0 0 0 1 2 2 2 1 2 2 0 Industrial Engineer 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 1 Leadership 2 2 2 2 1 2 2 0 2 2 2 2 1 2 2 2 CB Bureau 0 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 Gym Affiliate 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 OEM 1 2 1 1 2 1 1 1 0 0 0 0 0 0 0 0 0

Stakeholder Strategy IT Knowledge Product Policy Process Org Service Strategy IT Knowledge Product Policy Process Org Service

USAW 1 0 0 1 0 0 1 0 1 0 0 1 0 0 1 0 Low End 1 2 2 1 1 1 1 0 1 2 2 1 1 1 1 0 High end 2 2 2 1 1 2 1 2 2 2 2 1 1 2 1 2 B2B customers 2 1 2 1 0 1 1 0 2 1 2 2 0 1 1 0 Distributors 1 1 1 1 0 1 1 0 1 1 1 1 0 1 1 0 Distributor 1 2 1 1 0 1 2 2 0 2 1 1 0 1 2 2 0 IT Contractor 0 2 1 0 0 1 0 0 0 2 1 0 0 1 0 0 Artisans 1 2 2 2 1 2 2 0 1 2 2 2 1 2 2 0 Industrial Engineer 2 2 2 2 2 2 2 1 2 2 2 2 2 2 2 1 Leadership 2 2 2 2 1 2 2 2 2 2 2 2 1 2 2 2 CB Bureau 0 0 1 0 2 0 0 0 1 0 1 0 2 0 0 0 Gym Affiliate 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 2 OEM 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Epoch 3 Epoch 4 Epoch 1 Epoch 2

Results & Analysis

View prescence

None=0 Moderate=1Strong=2

1 2 3 4 5

Enterprise State

USAW Low End

High end B2B customers

Distributors Distributor 1

IT Contractor Artisans

Industrial Engineer Leadership

COL Business Bureau Gym Affiliate

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Part 1- Conclusions

Core mission and purpose will drive results

Stakeholders must meet your needs dependent on the Epoch

dependent on Epoch context

• Stakeholders trade value with respect to business model

Stakeholders add capabilities to your enterprise (EA)

dependent on Epoch context

• Salient stakeholders permeate each view

Most salient stakeholders are ones that your architecture &

Strategy is inextricably dependent

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Part II- Network Effects

Examine how stakeholders linked to each

other, resource dependency and institutional

power, how relationships evolve with EA &

business model

Per Part 1, define Core and Extended

Enterprise on stakeholder saliency

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USAW Distributors Distributor 1 Leadership Customers Industrial Engineer Colombian Business Bureau US Customs Domestic Shipper IT Contractor Competitors US manufacturing policymakers B2B customers Credit/ banking Instituti ons Artisans Gym Affiliate

Epoch 4

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USAW Distributors Distributor 1 Leadership Customers Industrial Engineer Colombian Business Bureau IT Contractor B2B customers Artisans Gym Affiliate Extended enterprise Core Enterprise

Epoch 4

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Epoch 3

USAW Distributors Distributor 1 Leadership Customers Industrial Engineer Colombian Business Bureau IT Contractor B2B customers Artisans

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Epoch 2

USAW Distributors Distributor 1 Leadership Customers Industrial Engineer Colombian Business Bureau B2B customers Artisans

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USAW Leadership Customers Industrial Engineer B2B Customers

Epoch 1

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Insights on Network

• Most salient stakeholders are Core enterprise

• Extended enterprise comprised of less salient

stakeholders, saw most delta in NSSI across states

• Core stakeholders high centrality

– Control decision making and information flow

– Control via resource dependency through cluster

linkages

• Most dense where learning and information flow

needed to occur quickly

– Harnessing customer W.O.M., or communicating with

shop

• Network appropriate for organization seeking

higher legitimacy & institutional power

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Strategy View Grow market share Gain Legitimacy

Become more profitable

IT View

Centralize information flow and collection Fewer hand-offs and easier accessibility Enable feedbacks

Policy View

Return policies in sync with market Manufacture where Policy’s stable Process View

More codified

Assess process compliance and maturity

Organization View Improve reflection of Risto values in Distributor to consumer interactions Extract more value from Resource rich stakeholders

Knowledge View

More Efficient & standardized extractions and retention

Harness B2B, B2C knowledge

Products/Services View Standardize offerings

Agile and adaptable Sophistication

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Part III- Value Delivery Gaps

Stakeholder Strategy IT Knowledge Product Policy Process Organization Service

USAW 1 0 0 2 0 0 1 0 Low End 1 2 2 1 1 1 1 0 High end 2 2 2 1 1 2 1 2 B2B 2 1 2 2 0 1 1 0 Distributors 1 1 1 1 0 1 1 0 Distributor 1 2 1 1 0 1 2 2 0 IT 0 2 1 0 0 1 0 0 Artisans 1 2 2 2 1 2 2 0 IE 2 2 2 2 2 2 2 1 Leadership 2 2 2 2 1 2 2 2 COL BB 1 0 1 0 2 0 0 0 Gym Affiliate 0 0 0 0 1 0 1 2

Epoch 4 - B2B Operations Begin

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Colombian Business Bureau

Mapping Future State Stakeholder Value Delivery

High Low High C u rr e n t P e rf o rm a n c e

Relative Importance to Enterprise

USAW Distributors Distributor 1 B2B Industrial engineer High End Customers Artisans Colombian Business Bureau Leadership Low End Customers Gym Affiliate Distributors B2B Leadership Low End Customers

Distributor 1 Gym Affiliate

USAW High End

Customers Artisans

Key:

Present State, EA State 4

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Part IV- Accuracy of

Management’s perceptions

• Interviewed lowest and highest salience

stakeholders, perceptions of management

and other stakeholders

• Shows Risto Sports living-up to Core

Ideology

• Confirms Gap Analysis

• Reveals context

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Part IV-Excerpts

Artisans

• Improved living

standards, work/ wage predictability

• Pride in sending products to USA

• Insensitive to deadlines • “Gringo from Miami”

“we have to ship shoes for the Gringo”

IE

• Able to buy a house

• Growth of product design • “quality is better than

China”.

• “always looking for new, better quality materials” • Checking on Artisans • Uses local materials

D1

• Doing Risto a “favor” • Not core market

USAW

• Need “10-15[companies like] Ristos”

• Can “contribute more” to Risto

COL BB

• USA is the “first commercial ally of Colombia”

• Conscious of China • Controlling of small

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Conclusions

• Core enterprise stakeholders are most salient and present in each view, they define Core Ideology

• Extended enterprise stakeholders may not be salient in every view, tied to the enterprise by the values and capabilities they add

• EA and business Model determine the stakeholders endogenously • Core enterprise less affected by context/Epochs, only constant in the

Enterprise system is Core Ideology

• On Corp. Social Responsibility, the enterprise must possess core values that management truly believes-in and abides consistent with well being of society

• Benevolence IS possible, it all depends on how the enterprise constructs its values and relationships and defines externalities • Much of an enterprise’s work is “invisible work” (Daniels 1987),

employing human relationships in political and cultural context (Carroll 2002)

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