Structure Follows Strategy?

#entarch In his talk to the BCS Enterprise Architecture Group this week, Patrick Hoverstadt suggested that traditional enterprise architecture obeyed Alfred Chandler's principle: Structure Follows Strategy. In other words, first the leadership defines a strategy, and then enterprise architecture helps to create a structure (of sociotechnical systems) to support the strategy.

Chandler's principle was published in 1962, and is generally regarded nowadays as much too simplistic. In 1980, Hall and Saias published a paper asserting the converse principle Strategy Follows Structure! (pdf), and most modern writers now follow Henry Mintzberg in regarding the relationship between strategy and structure as reciprocal.

What are the implications of this for enterprise architecture? Patrick offered us a simple syllogism: if enterprise architects determine structure, and if structure determines strategy, then enterprise architects are (consciously or unconsciously) determining strategy. In particular, the strategies that are available to the enterprise are limited by the information systems that the enterprise uses (a) to understand what is going on both internally and externally, and (b) to anticipate future developments. In many situations, the information isn't readily accessible in the form that managers would need to mobilize a strategic response to the complexity of the demand ecosystem.

Of course it isn't as simple as this. The defacto structure (including its information systems) is hardly ever as directed by enterprise architecture, but is created by countless acts of improvisation by managers and workers just trying to get things done. (The late Claudio Ciborra wrote brilliantly about this.) People somehow get most of the information they need, not thanks to the formal information systems but despite them. Thus the emergent structures are a lot more powerful and rich than the official structures that enterprise architects and others are mandated to produce. Patrick cites the example of a wallpaper factory where productivity was markedly reduced after smoking was banned; a plausible explanation for this was that smoking had provided a pretext for informal communication between groups.

Meanwhile, Minztberg drew our attention to a potential gulf between the official strategy and the defacto emergent strategy. (I have always especially liked his example of the Canadian Film Board, published in HBR July-Aug 1987.)

Nevertheless, Patrick's mission (which I endorse) is to connect enterprise architects with the strategy processes in an enterprise. He is a strong advocate of Stafford Beer's Viable Systems Model (VSM). Using his approach, which he encourages enterprise architects to adopt, VSM provides a unique lens for viewing the structure of enterprise, and for recognizing some common structural errors, which he calls pathological; I encourage enterprise architects to read his book on The Fractal Organization.


Related post: Co-Production of Strategy and Execution (December 2012)