=Paper=
{{Paper
|id=None
|storemode=property
|title=
Linking Strategic Innovation to Requirements: a look into Blue Ocean Strategy
|pdfUrl=https://ceur-ws.org/Vol-933/pap11.pdf
|volume=Vol-933
|dblpUrl=https://dblp.org/rec/conf/ifip8-1/GiannoulisZ12
}}
==
Linking Strategic Innovation to Requirements: a look into Blue Ocean Strategy
==
https://ceur-ws.org/Vol-933/pap11.pdf
Linking Strategic Innovation to Requirements: a
look into Blue Ocean Strategy
Constantinos Giannoulis, Jelena Zdravkovic
Department of Computer and Systems Sciences (DSV),
Stockholm University,
Forum 100, SE-164 Kista, Sweden
constantinos,jelenaz@dsv.su.se
Abstract. Business Strategy encapsulates an organisation’s intentions
towards the achievement of its vision. As such, business strategy frames
the overarching business roadmap towards the accomplishment of strate-
gic goals driven by competition, by own capabilities, or by innovation.
Consequently, such a roadmap needs to be considered when building
systems aimed at supporting the functionality of an enterprise. Intro-
ducing business strategy to system’s design using models facilitates the
propagation of strategic notions to development techniques and methods.
This study focuses on bringing a business strategy formulation driven by
innovation into system requirements; specifically, relating Blue Ocean
Strategy to the notions of i*, an established goal modeling technique
within requirements engineering.
Key words: Business Strategy, Business-IT alignment, Requirements
Engineering
1 Introduction
Alignment between business and IT has been extensively addressed in research
- there exist approaches that consider business strategy in a holistic man-
ner [1, 2, 3] but also specifically through distinct business strategy formula-
tions [4, 5]. From an IT perspective, business strategy should function as an
initial frame within which IS development takes place; ergo provide initial or-
ganisational rationale to a system.
Strategic planning is the process during which a strategy is defined by
analysing the current status of an enterprise and the competitive environment
in which it resides. Good planning is driven by three different aspects [6]; the
resource based view, where strategy formulation is driven by the capabilities
of the enterprise; the industrial organization view, where the positioning is the
main driver; and the Shumpeterian view, where radical innovations are in focus
disrupting the environment in which the firm operates, thus giving opportunities
for taking advantage over companies whose capability to innovate is lower. The
first two views have been traditionally dominant both in research and practice,
with formulations such as Strategy Maps and Balanced Scorecards (SMBSC) [7]
and the Value Chain [8] respectively. Primary focus has been on value creation by
improving how products and services are offered in respect to competition aim-
ing at differentiation, low cost. or focus [8]. Efforts to link such business strategy
formulations with requirements have been already proposed, such as mappings
between SMBSC and i* [9], a goal modeling technique used in requirements
engineering, informally in [5], and semi-formally in [10].
However, no such effort exists for business strategy formulations of the Shum-
peterian view. Such effort would enable the linkage of strategically innovative
intentions and requirements. Although strategic initiatives do not change con-
stantly, though they are monitored and altered regularly due to today’s rapid
changing business scene, modelling business strategy allows for establishing and
maintaining a strategic frame in IS development. Therefore, the goal of this study
is to link a business strategy formulation belonging to the Shumpeterian view,
to a technique used in requirements engineering. The purpose is to facilitate the
relationship between strategic innovation and IS development supporting such
innovation. Such linkage constitutes a frame for IS development because it cap-
tures strategy and expresses it using a requirements’ notation, thus enabling the
use of strategic intent when deriving system requirements contributing to the
alignment between business and IS development.
Specifically, Blue Ocean Strategy, BOS [11] is used, a business strategy formu-
lation that has recently attracted attention due to successful innovative solutions.
One such case is the one of Apple introducing their online music store iTunes,
thus revealing a blue ocean in digital music [12]. Blue Ocean shifts strategy
from value creation, to value innovation, where old things are no longer done,
i.e. either new things are done, or similar ones in a fundamentally new way,
while pursuing differentiation and low cost simultaneously. i* [9] is used due to
its known support expressing social intentionality and rationale enhancing the
early phase of requirements engineering [13].
Section 2 provides an overview of Blue Ocean Strategy along with a proposed
conceptualisation of the formulation in the form of a meta-model and related
constraints. Section 3 provides the conceptual relationships identified between
the BOS meta-model and the i* meta-model [10] along with an illustration using
a case from the airline industry. Section 4 provides a discussion on the usage of
proposed relationships, as well as it outlines the directions of the future work.
2 Modeling Blue Ocean Strategy
2.1 Overview
Blue Ocean Strategy [11] aims at competing where there are no competitors
by challenging industry’s structural conditions and therefore, the objective is
to redefine the problem an industry is focused on rather than finding solutions
to existing problems. It moves from value creation, doing similar things in an
improved way, to value innovation, which means stop doing old things and either
start doing new ones or do similar ones in a fundamentally new way, while
pursuing differentiation and low cost simultaneously. The core elements of the
formulation are the strategy canvas and the four-actions framework (structured
of the eliminate-reduce-raise-create factor grid).
The strategy canvas offers a graphical representation of the current state in
a known market by identifying the range of factors an industry competes on
and invests in (horizontal axis), as well as their offering level to buyers (vertical
axis). A factor is a feature or benefit identified as essential to the provision of
the product or service a company offers to buyers. A basic component of the
strategy canvas is the value curve capturing a company’s relative performance
across the aforementioned competition factors of a given market (Figure 1).
Fig. 1. The strategy canvas captures an industry’s current state, in dotted and in
dashed lines and the result of the four-action framework, a new value curve in solid
line (adapted from [11]).
The four-actions framework challenges current strategic logic along the
eliminate-reduce-raise-create factor grid and by driving chosen changes on the
factors, creates a new value curve. Eliminate and reduce aim at dropping the
current cost structure by looking into which of the factors that the industry takes
for granted should be eliminated, and which factors should be reduced well be-
low the industry’s standard, respectively. Raise and create strive for how-to in
terms of lifting buyers value and creating by looking into which factors should
be raised well above the industry’s standard and which factors should be created
that the industry has never offered respectively.
Blue Ocean Strategy Meta-model (BOSMM) Our conceptualisation of
Blue Ocean Strategy is based on its original formulation presented in [11] and
focuses on the main constructs and their underlying concepts, while methodolog-
ical aspects, such as the process of building a Blue Ocean Strategy, are reflected
through the outcome, i.e. the strategy itself:
– BlueOceanStrategy class captures the strategy and carries three attributes
being its main characteristics. Tagline captures the strategy’s clear mes-
sage/slogan with great commercial potential, Focus confirms whether the
strategy is focused, as indicated by the strategy canvas, and is captured
through a boolean variable, and Divergence shows whether the new value curve
is different than the existing one(s), also captured by a boolean variable. The
class adheres to the following constraint: Focus must be true and Divergence
must be true when comparing NewValueCurve to IndustryValueCurve.
– Enterprise captures the organisation for which Blue Ocean Strategy is formu-
lated.
– Resource captures the enterprise’s offering to buyers, while Service and Prod-
uct capture types of resources offered to buyers.
– Factor captures the key competing factors. This includes both the factors an
industry currently competes on as well factors introduced to shape a blue
ocean. Each factor carries an offering level attribute that captures the offering
that buyers receive; high means buyers receive more and thus the enterprise
invests more in that factor. For price, high offering level means a higher price.
– ValueCurve captures a graphic depiction of a company’s relative performance
across its industry’s factors of competition.
– NewValueCurve captures a value curve capturing the value curve created by
applying the four-action framework. This class adheres to the following con-
straint: an instance of NewValueCurve always ConsistsOf more instances of
Factor than the ones that Shape instances of IndustryValueCurve due to the
create action of the four action framework that introduces factors that existing
market play does not capture.
– IndustryValueCurve captures a value curve where the industry currently com-
petes on; it’s used to build the new value curve and to confirm it constitutes
a blue ocean strategy (evidence for comparison on focus and divergence).
– StrategyCanvas captures both the current state of play in a known market
space, as well as the desired one. This class adheres to the constraint: an
instance of StrategyCanvas includes at least two instances of ValueCurve,
where at least one must be an instance of IndustryValueCurve and at least
one must be an instance of NewValueCurve.
2.2 A reference model for i*
Since the introduction of i* in 1995 [9] several variants of the notation have
emerged [14, 15, 16, 17, 18]. For this study the i* reference model [13] is chosen,
Fig. 2. The Blue Ocean Strategy meta-model (BOSMM).
because it allows the use of the aforementioned variants of the notation and to
the best of the authors’ knowledge it is the most comprehensive i* reference
model, thus minimising the risk of excluding i* variants (e.g. the unified model
of [19] captures only the original i* [9] and [15]). Additionally, this model has
been built considering the possibility of new i* variants emerging and as such it
is open to accommodate them by not being strictly restrictive considering the
existing variations of certain concepts from different i* variants.
3 Mapping Blue Ocean to i*
Mapping Blue Ocean Strategy to i*, requires the concepts of BOSMM presented
in Section 2 to be mapped to the concepts of the i* reference model when possible.
When not possible, the lexicon of the reference model terms for i* is used to
propose a basis for mapping:
– Enterprise from BOSMM is mapped to i*.Actor because it carries out actions
to attain goals and may depend on other actors to attain these goals. An en-
terprise carries out actions to attain their goals, expressing their blue ocean
strategy and depends on other enterprises to attain these goals by comparing
their value curve with existing ones (from enterprises constituting the indus-
try) which effectively express a desired state, thus a set of goals related to
each factor that altogether constitute the value curve. This mapping also al-
lows the use of actor with relationships is-part-of and is-a, therefore, when
further refining enterprise actors within can be identified.
– BlueOceanStrategy is related to the parts of the SD and SR models relevant
to blue ocean strategy. Therefore, it can be mapped to the derived SR, which
includes a goal expressing the strategy’s tagline, along with a task to achieve
this goal, the resource offered to buyers and the set of goals and soft-goals
stemming from the factors of the new value curve.
– Focus and Divergence are i* dependums expressed as goals for the tagline for
blue ocean strategy, being focused and being divergent. Depender is the Enter-
prise to whom the new value curve BelongsTo and dependee is the Enterprise
to whom the existing value curve RelatesTo. Focus and Divergence are true
only if compared to existing value curves, thus making the enterprise depen-
dent to other actors to confirm focus and divergence for blue ocean strategy.
– Factor is mapped to two i* elements: Goal and Soft-Goal. For a value curve,
factors express a desired state to be achieved without neither specifying how
nor being able to validate their satisfaction. This desired state is aligned with
the definition of a goal or a soft-goal in i*, the former strictly referring to a
desired state without knowing how to achieve it, the latter without being able
to define their achievement a priori as true or false [13]. Such goals and soft-
goals express enterprise intention in i*, therefore, formulating these should
include both the factor itself as wells its offering level. For Southwest the goal
Low Lounges be Provided is achieved by the task Provide Low on Lounges
which uses the resource Lounges (Figure 3).
– Goals and soft-goals can be then decomposed in i* according to how factors are
planned to be provided (not captured by the Strategy Canvas), thus capturing
how they can be achieved. When mapping factors to goals and soft-goals, one
should always check whether there exists a resource related to that factor, as
it would influence that factor’s analysis through decomposition in i*. In this
case, a relevant task would be defined in i* and consequently through task
decomposition, appropriate resources would be modeled.
– Resource is mapped to i*.IntentionalElement with Resource as Intentional-
Type but only for resources provided to customers, thus in a traditional i*
model this would be the physical or informational entity provided by the en-
terprise to buyers, constituting the line of business for the enterprise.
– NewValueCurve captures the intentionality and rationale within the enter-
prise, which in i* is captured through the SR model apart from the goal
expressing the tagline, the task being means to this goal and the resource
required by this task. A new value curve of an enterprise is related to an SR
model of this enterprise including its factors as goals or soft-goals.
– IndustryValueCurve captures the intentionality and rationale within the en-
terprise, which in i* is captured through the SR model. The existing value
curve is mapped to an SR model of the actor enterprise other than the En-
terprise for which blue ocean strategy is built, and includes the factors as
goals/soft-goals that shape it.
Mappings are summarised and illustrated by the BOS of Southwest Airlines
in Table 1.
Table 1. Proposed mappings
BOSMM i* Example for Southwest Airlines
Enterprise Actor Southwest Airlines, Average Airlines and Car
Transport are captured as actors in i* (Figure 3).
BlueOceanStrategy SR model The SR model for the actor Southwest Airlines.
Focus and Dependum Southwest depends on Average Airlines and Car
Divergence Transport for its blue ocean strategy expressed
by the goal: Airline Service with ”The speed of a
Plane at the Price of a Car-Whenever You Need
It” be Provided to be focused and divergent thus
good blue ocean strategy (Figure 3).
Factor Goal and The factor ”Price” from the strategy canvas
Soft-Goal becomes: i*.Node.Label:LowPriceBeOffered
is-a i*.IntentionalElement.IntentionalType:Goal.
Resource Resource For Southwest the resource is Airline Services.
NewValueCurve The SR model Southwests goals and soft-goal within
of the enterprise its boundaries in figure 3 capture their offering;
with its factors. Southwest’s NewValueCurve.
IndustryValueCurve The SR model Existing value curves capturing the offerings
of other markets of Average Airlines and Car Transport expressed
from the strategic by factors as goals/soft-goals, within the actors
canvas with their boundaries (Figure 3).
factors.
The aforementioned mappings are operationalised into an i* SR model for
Southwest Airlines including the dependencies to other actors that compete on
existing offerings (Figure 3). i* addresses the early phase of requirements en-
gineering aiming at understanding the rationale for a system and provides the
modeling features to capture strategic rationale. The strategic rationale of BOS
scopes the refinement around system goals by defining the highest level of goals
set by the organisation. It is within that scope that systems serve some purpose.
Capturing that scope allows the understanding of what needs to be done by
the organisation. For example, the strategic offerings proposed by an enterprise,
such as the goals and soft goals for Southwest Airlines.
Thereafter, organisational actors influencing the goals set as well as their
achievement can be identified, intentional elements (goals, soft-goals, resources,
tasks) can be refined (the SD model) [20]. For example, within the organisational
boundaries of Southwest Airlines all actors influencing the goals and soft goals
set need to be identified, as well as all their dependencies.
Furthermore, actors can be refined to capture their intentionality and provide
means of analysis for achieving something by identifying workability of achieving
that something by decomposition of tasks and means-ends links, by checking
viability of achieving that something based on some quality conditions, etc.
For example, goals and soft goals set need to be decomposed through means-
end and contribution links into goals, soft goals, tasks, and resources, similarly
to the goal ”Low lounges be provided” of Southwest Airlines (Figure 3). These
decompositions eventually allow identifying, and establishing dependencies with,
actors who can accomplish a goal, carry out a task, or deliver some needed
resources.
This early phase of requirements is input to the late phase of requirements.
For example, [21] proposes a set of guidelines to map i* models to UML use
case diagrams, where the use of i* to derive use cases allows traceability and
evaluation of the impact into the functional requirements of the intended system;
use cases are derived from the actors’ perspective, as well as from the explicitly
captured actor dependencies of i*.
Fig. 3. The Blue Ocean Strategy of Southwest Airlines in i*.
4 Discussion and Future Work
The goal of this study was to map a business strategy formulation belonging to
the Shumpeterian (i.e. innovation) view, exemplified by Blue Ocean Strategy,
to a technique used in requirements engineering, exemplified by i*. Model-based
mappings between the two formulations were created to facilitate both infor-
mal and semi-formal relationships of the two abstractions. Conceptualisations
of i* already exist, and a wide-used one in the means of a reference model, has
been chosen. However, no conceptualisation existed for Blue Ocean Strategy;
therefore, such conceptualisation has been built into a set of defined notions and
associations between them in the form of a conceptual model (BOSMM) aimed
at decreasing ambiguity thus allowing model-level mappings towards i*. Conse-
quently, the concepts of BOSMM have been mapped to i* and exemplified by a
BOS from the airline industry, Southwest Airlines.
The proposed mappings constitute the main contribution of this work because
they provide an initial set of strategic innovation rational serving as a frame for
developing systems aimed at actualising such strategic initiatives. Thus they pro-
vide information systems development with an early-phase requirements model
expressed in i* that captures the strategic rational within which the system of
interest is developed.
Mapping Blue Ocean Strategy to i* leverages from the notation’s ability to
identify links between the actors and intentional elements. Once Blue Ocean is
laid out as an i* model, all possible links provided by the notation, means-end,
decomposition and contribution can be identified revealing relationships that
could not otherwise have been foreseen (e.g. dependencies, conflicting goals,
negative contributions, etc.). Moreover, using the i* reference model [13] for
the proposed mappings allows for exploring concepts from other variants of the
notation or proposals that can be relevant to strategy. For example, Formal
Tropos [16] includes temporal aspects formally expressed allowing the assess-
ment of temporal synchronisations between actors, or precedence and preference
rules [22], also relevant in business strategy formulations like Blue Ocean. Such
use of i* can provide an additional assessment mechanism for business strategy
from the IS perspective.
Additionally, contribution of this work lies also on the conceptualisation of
Blue Ocean Strategy. BOSMM can be linked to other enterprise models allow-
ing business-IT alignment efforts to leverage from such model-based linkage.
It enhances traceability between business strategy and the system-to-be, which
in turn allows (by considering cause/effect relationship) their fine-tuning. Also
strategy communication among actors is enhanced allowing a better understand-
ing of IS capabilities and the solutions IT is capable of providing, which supports
business strategy formulation. Furthermore, BOSMM supports the integration
with business strategy formulations facilitating the other two aspects of strategic
planning (i.e. resource- and industrial organisation views) as mentioned in the
Introduction of this study, allowing them to complement each other and IS to
support such integration. An effort in this direction has been reported in [23],
where well-established business strategy formulations from the aforementioned
strategic planning perspectives, SMBSC and the Value Chain, have been inte-
grated into a Unified Business Strategy Meta-Model (UBSMM).
Steps forward in this work have many possible directions as this is a first
proposal for such conceptualisation and mappings. From one side more depth
in the current work can be pursued, while on the other hand further extensions
can be also derived.
The contributions of this study can be further assesses for correctness, both
BOSMM and the mappings to i*, through structured reviews with practition-
ers. For example involving business strategists in the conceptualisation process
of BOS. Additional case examples can be conducted to allow for more the as-
sessment of the proposed mappings towards a distinct system being developed,
resulting into additional iterations for the refinement of such mappings. Both
on the semantic level, correspondences between a real BOS and BOSMM, and
the syntactic level, model checking for BOSMM, as well as the pragmatic level,
practitioners’ interpretation of BOSMM.
The proposed mappings can be extended further than the i* reference model
towards particular variants of the notation. Real case evaluations to reflect
strategic innovation from Blue Ocean Strategy to system-to-be requirements
will be beneficial for the mappings. Another possible direction of this work is
within business strategy modeling by using BOSMM to explore its integration
capabilities with other business strategy formulations and various enterprise ar-
chitectures.
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