- Adaptive Enterprise
The Decision Model (TDM) is a rapidly growing framework for modeling and executing the business logic behind business decisions. When I first read the book “The Decision Model – A Business Logic Framework Linking Business and Technology” by Larry Goldberg and Barbara von Halle, I was impressed with how TDM models the business logic behind operational business decisions. However I also wondered if there were any applications of TDM to the practice of strategic management, business performance management and balanced scorecards.
Now with the availability of affordable TDM modeling tools, led by BiZZdesign’s Enterprise Studio, it is now time to revisit and explore the potential application of TDM to business performance management and in particular the Balanced Scorecard.
This post is my attempt to kick-start a discussion in this exciting area of the business enterprise. I hope that others will find other applications of The Decision Model to other business management practices such as Lean Management, Six Sigma and Lean Six Sigma.
The key to successfully implementing a business performance management programme is to understand the importance of the operational business decisions that are executed across all business processes and the business logic that powers these business decisions.
An organization that is able to improve its operational decision-making processes and the business logic used to derive these business decisions can gain a strategic advantage over its competitors, grow shareholders value, increase customer satisfaction and reduce business risks.
Business logic is the means by which an organization reaches conclusions (decisions) based on facts. The Decision Model enables business managers and subject matter experts, using a business friendly graphical notation, to model the business logic behind the business decisions that the business wants to manage.
The key advantage of The Decision Model is that business managers can now explicitly see the business logic behind their business decisions; which can then be fine-tuned in a highly agile matter to respond to the rapidly changing environment that surrounds their business operations.
This post assumes that you know something about The Decision Model. For further background information read this excellent primer on The Decision Model.
For those who do not know much about the practice of Business Performance Management and the Balanced Scorecard, allow me to give a quick overview.
The Balanced Scorecard (BSC) is a strategy performance management tool which outperforms the traditional methods of performance evaluation owing to its ability to give an integrated view of the organization, by incorporating both financial and non-financial parameters.
A recent article in Business Week said “Business Strategy is now the single most important issue... and will remain so for the next five years”. A recent Fortune article said “Less than 10% of strategies effectively formulated are effectively executed”.
The Balanced Scorecard is now in use by many thousands of corporations and organizations worldwide (including local and national governments), both large, and small. It is one of the most effective tools to implement business strategy. The question we are now about to explore is, how can TDM enable a more effective implementation of the Balanced Scorecard?
Figure 1 shows the four perspectives used by the Balanced Scorecard for implementing strategy and measuring business performance – Financial, Customer, Internal Business Processes, and Leaning & Innovation. The uses of the Balanced Scorecard include:
Let’s look at each of the four perspectives to see where TDM could be applied to improve the effective implementation of an existing Balanced Scorecard within an organization. Let’s start with the “Internal Business Processes” perspective.
The Internal Processes Perspective is all about asking and answering the following questions:
The following 8-step procedure is highly condensed and is based in part on the KPISTEP TDM methodology (see Figure 2) and is intended only to outline the key steps of the improvement process for each business process:
A similar principle applies to each of the other BSC perspectives. Let’s have a quick look at the Financial and Customer Perspectives:
Currently there is only one tool that enables the integrated modelling of TDM models, BPMN™ (for Process Modelling), UML® (Fact Type Modelling) and ArchiMate® (Business Motivation Modelling) that is required for Balanced Scorecard improvement projects and that BiZZdesign Enterprise Studio.
To find out more about how Enterprise Studio can be used for integrated modeling of Strategic goals and objectives with TDM see my second post in this series ‘The Decision Model, Enterprise Architecture and Enterprise Studio’.
I hope that I have demonstrated that The Decision Model has the potential to make Balanced Scorecard implementation more effective and agile. Looking forward what I would really like to see is tool support to permit the direct modeling of Balanced Scorecards and their direct integration with TDM models, Business Motivation Models, BPMN models, UML models. Currently we can integrate TDM, Business Motivation (including Strategy Models), BPMN and UML using BiZZdesign Enterprise Studio.