Circular Economy Strategic Planning

You may want to look at other articles in this series to find out more about the context of this article.

1. Alphabet of Enterprise Architecture
2. Enterprise Architecture Framework
3. Enterprise Architecture Rollout Approaches
4. A Practical Example Of A Rollout
5. Domain Architecture: Business Architecture

5.1. Strategic Planning (this article)

Introduction

A successful Strategic Planning of an enterprise extensively depends on a proper understanding of the organization's goals and objectives. There are many resources out there that support this argumentation but in this article, I’d like to take you through a more practical approach and see how we can implement it and what are the steps to do it in action.

In this context, Enterprise Architecure could be used as a tool for modelling the elements of the Business Motivation Model and linking the relevant items together so that each strategy could be traced down to the project delivering it, and, by mapping all of it to the current and future state of the business capability map you would have enough visibility to highlight potential risks and devise mitigation plans.

Let’s experience a Sample Strategic Planning practice for a Bank that has decided to follow a new strategy.

A Sample Scenario

Recently a multi-national bank aimed to minimize waste, reduce resource consumption, and maximize resource productivity, for which defined a new Strategy as follows.

“More Circular Economy”

To fulfil this strategy they defined multiple Business Goals:

1. Financing companies that are active in the circular economy
2. Investing in circular economy start-ups, companies or funds
3. Providing professional services such as sustainability assessments to companies implementing circular economy practices
4. Partnering with other organizations to promote the circular economy
5. Issuing green bonds to finance circular economy projects such as renewable energy
6. Adopting circular economy practices within the bank's operations such as reducing waste, and sourcing sustainable materials.

considering the fact that business goals are more generic and not easy to measure, to be more specific about what they need to do, Bank defined the following?SMART Objectives

1. Increase the percentage of recycled materials used in product manufacturing by 50% by the end of the fiscal year.
2. Reduce waste generated by the bank's operations by 25% by the end of the next quarter.
3. Provide financing to at least 10 circular economy companies by the end of the year.
4. Issue $1 billion in green bonds to finance circular economy projects by the end of the next fiscal year.
5. Implement a take-back program for end-of-life products in at least 5 product categories by the end of the quarter.
6. Develop a circular design training program for at least 50 employees by the end of the next quarter.

And then, the Bank defined the following Tactics to achieve the objectives

1. Source materials from suppliers with a focus on recycled or sustainable materials
2. Implement energy-efficient technologies and processes
3. Develop a return policy and process for customers to return products at the end of their useful life
4. Set targets for the percentage of sustainable materials to be used in product design
5. Develop a leasing program for select products
6. Join industry groups focused on circular economy initiatives

Eventually, Bank defined an Action Plan for executing the strategy/tactics via the following projects. Each project has a budget and a timeline.

1. Supplier Material Selection; Estimated budget: $100,000; Estimated time: 6 months
2. Energy Efficiency Implementation; Estimated budget: $250,000; Estimated time: 12 months
3. Product Take-Back Program; Estimated budget: $150,000; Estimated time: 9 months
4. Sustainable Materials Implementation; Estimated budget: $300,000; Estimated time: 18 months
5. Product Leasing Program; Estimated budget: $200,000; Estimated time: 12 months
6. Circular Economy Collaboration; Estimated budget: $50,000; Estimated time: Ongoing (12 months for initial setup and participation)

It's a Repeatable Process

By referring to the scenario above, from a process perspective we actually took the following steps

1. Specify the Motivation

2. Define the Strategy and its Goals

3. Breakdown the Goals into SMART Objectives

4. Define Tactics to implement

5. Develop the Action Plan by defining Projects with budget and timeline

That's what you could repeat for strategic planning regarding each strategy.

How Enterprise Architecture can add value to it?

From an Enterprise Architecture perspective, we considered 3 key areas to model:

Among all, developing the Business Motivation Model is an essential part.

To ensure the alignment and integrity of the plan, the relationship between the elements in the Business Motivation Model could be specified in an EA context.

And in this article, you would read more about how a Business Capability Map can play a role in Business Motivation Model/Business Architecture alignment.

Please join the Art of the Enterprise Architecture group to discuss more and share your ideas.