Transparency Through Taxonomies
Reducing Ambiguity Across Your Company
To many people, the mention of taxonomies surfaces a benign response of indifference, unnecessary administration, and overhead. I mean unless you’re a taxonomist, how many folks do you know become passionate about this topic in the business world? However, I have the completely opposite opinion and a passion aligned with taxonomists and ontologists, and I hope I can share a little bit of passion as to why through this post, and how it can help you improve your business operations.
My professional experience has led me to believe- the humble taxonomy, when managed and done right, can have a profound impact on your operational efficiency, organisational communication, team ownership and identity, delivery flow, and product contribution, not to mention your portfolio, product lifecycle, and investment strategies.
Before we dive into more detail, let’s kick off with a simple definition of a Taxonomy and Ontology underpinning this article. For most of the organisational structure and high-level definitions we will be leaning more into a Taxonomy within this article.
Taxonomy is a framework for classifying hierarchical relationships of objects and information. It is a structure to create aligned definitions and categories, which aims to reduce ambiguity and difference.
Ontology explains the structure of objects and seeks the classification and explanation of entities. It provides information on the object of inquiry, what you set to examine.
Most of us by the time we reach adulthood are experienced taxonomists and inherit the benefit of these embedded frameworks in our society, and I’ll explain why. When we are learning about the complex environment we live in, we use taxonomies and ontologies to help us understand objects and their relationships to us and each other. This model allows us to map the world around us and interact with a sense of alignment, difference, and reference. Consider as young children we learn about animals through our earliest childhood books. At first their species, names, types, and attributes colours from these first books. We learn what a bird is, and the characteristics of a bird, and as we progress, we explore different types of birds, their traits, types, and names etc. (Linnean Taxonomy of Biology– created by Swedish Naturalist Carl Linnaeus ….. Side note, if you are ever in London, I highly recommend visiting the Linnean Society founded in 1788 where you can see his original archive).
It’s not just biology either. Consider linguistics and science overall. A fundamental construct of all language is referenced to the description of objects, relationships, and states, which allow us to communicate and transfer knowledge. How we identify and describe everything is informed by a taxonomy from linguistics. These mostly need to be aligned for us to transfer knowledge and communicate. Putting the cultural reference of herding cats aside, if you believe a cat is, in fact, a cow, and I believe a cow is a cat, then the sentence, “I’ve been managing the herd of cats” has a different reference representation for each party.
Let’s explore another example that impacts our lives. Consider a trip to your local supermarket, which contains thousands of items. You have a shopping list of things to buy, and you literally navigate the store by the inherited taxonomy the store has mandated to organise its produce. You go to the fruit section and expect to see bananas and apples, and grouped are all the types of apples next to each other. Then you may go to the dairy section to buy your milk, then maybe the health section, where you follow the hierarchy further to buy Calpol for your child under the infant section, located within the pain relief section, grouped by age.
This system is so well understood, people from all different countries, cultures, ages and experiences can navigate this system almost intuitively just by walking into the store. And if you ever see a change in this system where for instance a supermarket has moved the location of the milk, for a period of time people can become disorientated, confused and, frustrated as the taxonomy structure which dictates position is disrupted.
I would be confident that all of us would agree that if the store changed this structure, it would increase the time it would take to carry out a shopping exercise and lower the customer experience and satisfaction rating.
Back To Business
For a long time, I’ve been helping companies modernise, transform, drive growth, and improve operational and operating model efficiencies amongst other things. And I have to say having worked with companies of all sizes, domains, and industries taxonomies are rarely managed well or even exist. And in many instances, multiple taxonomies or at least definitions of key entities are conflicting in definition, which fundamentally impacts the way they are managed. And it’s not just objects, but this includes status of objects as well, considering the term that something is “high risk”. Without a common agreement on what this constitutes, the same event could be managed or responded to differently.
I believe as soon as a company gets to a certain size which lands somewhere in the SME/Mid-Market Range the negative impact of lack of taxonomy and ontology management starts becoming a problem. And it’s not just the size, it’s the history and rate of change in any organisation. For example, companies that evolve through growth, M&A or diversification and innovation, often are faced with all the symptoms of a poorly managed taxonomy and it impacts their business by the $Millions if not in some cases $Billions!
As companies grow their organisations evolve for efficiency to help expand and scale these products to the market and wider customer base. This results in a product having many teams contributing to it across different sub-combinations of products, services, platforms, value-streams etc. These have different governance structures, lifecycles, and portfolios, and start cross-referencing their relationships and interactions, increasing complexity and management load. And here is the challenge, as all these things come together and the relationships and definitions become more complex or overlap, it becomes increasingly difficult to manage relationships and classify them, shifting management to a reactive inspection-driven culture. And it’s here that taxonomies can help.
Symptoms Where A Taxonomy May Help
The following symptoms highlight just some examples where a taxonomy might help, or conversely where the absence of a taxonomy may have contributed to a problem. The core problem underpinning these is to remove or reduce ambiguity, where ambiguity is causing waste.
1. Lack of team ownership or clarity for decision making
When changes need to be made to products, services, or platforms it is difficult to trace ownership, or you observe a delayed response time to identify single-threaded leaders. When problems or changes occur, it can be challenging to make quick decisions, and/or when decisions are made it’s unclear which areas will be impacted or need to be updated of changes.
2. Inconsistent or conflicting definitions between platforms, products, services, and features
Your organisation regularly disputes the differences between platforms, products, services, and features, and there is an observation some classifications contradict each other. This creates fragmented governance models, support, and operating models. Albeit business model dependent, you may observe a high ratio of platforms to products, where platforms are akin to internal capabilities, not business models.
Note : I was working with a larger retailer recently exploring this observation further. It was noticed there was a high number of platforms, and a spike in platform creation over the past 18 months. Upon investigation, it was found that Products had higher governance thresholds regarding product management, ROI and customer needs than Platforms. This drove a behaviour where people started classifying new products as platforms to reduce the governance overhead over products, and commission what are in fact products as platforms to bypass the thresholds. Costs and failure rates increased in terms of performance.
3. High number of platforms or portfolio duplication
You observe you have many products, services, and platforms which appear to be solving the same problem across your portfolio. These may be at different lifecycle stages and there may be an aversion to sunsetting as they are operational, revenue-generating, or believed to be supporting other systems with unclear but inferred dependency. It’s not clear what the differences are between the perceived similarities. You may also observe low adoption of platforms or products, but the inference of value to other systems applies.
4. Vague or blurred TCO (Total Cost Of Ownership)
You have high costs for products, platforms or services, and it’s unclear how to proportion or attribute the costs to customer-facing products. These get spread across products equally or may have inferred correlations, which are difficult to quantify and accounting has low confidence in cost allocation.
5. Challenged or limited Portfolio and Lifecycle Management capabilities
Your portfolio is categorised at the product level (customer-facing), but you don’t have in place internal portfolios or categorisations beneath this. Product Lifecycles are not consistent, and it’s difficult or challenging to compare products to products, platforms to platforms etc. You find it challenging to know what to map at a portfolio or lifecycle level. Your organisation consists mainly of temporary projects, which struggle to map to manageable entities after their delivery stages.
Where To Start?
If any of the above symptoms ring true, a clear and managed taxonomy within your organisation could really help you. This doesn’t have to be an onerous task, and the process of implementing and managing a taxonomy can be iterative and exploratory. Below are some recommendations which could get you started.
Before you continue though, I would note that the goal here isn’t to create a world-beating taxonomy and become the next Carl Linnaeus, but to simply define, agree and manage a definition in your organisation, which can align all your employees in how they define and interact around these terms. What I mean by this is, there is no real ‘right’ definition as such, but there is a common model to aim for. If you decide a platform is X and a product is Y, which is different to another company’s definition, that’s ok. As long as you can internally agree on what your definition is and operate against that, then that’s what matters. Although I will add that I would highly recommend observing common environmental definitions and incorporating these such as the supermarket example above. If there are societal behaviours and familiarities, incorporating these will reduce the cognitive load and learning curve, and in some cases where these are defined well and established, accelerate alignment and reduce tension.
First of all, identify the problem you want a taxonomy to improve as it may be other frameworks that might be more suitable. Consider the symptoms above and make it clear what a defined taxonomy seeks to resolve. Where is there most confusion, and/or where is the biggest points of tension where this impacts the business. This will help you work backwards from the problem and help prioritise where to start and which parts of your organisation to involve with subsequent stakeholders.
Obtain sponsorship and communicate this early. Unless you have sponsorship for 1, you are unlikely to succeed in applying taxonomy across your organisation and your attempts and time invested could be seen as waste, which could also irritate people operating the current system. You will need people to know this is sponsored by leadership and why.
Assign a single-threaded leader. Whether you assigned an individual to define, release and manage the taxonomy, or you assign a community leader to steer the community, make it clear which individual, or group owns the taxonomy and can be consulted with to make decisions and publish and communicate change. Don’t create this as a side project as another job to do if one has time. It requires too much thought and exploration to be a passive side project.
Start with Products, Platforms, and Services. Pretty much all businesses nowadays have these three and these are common points of definition contention. Getting clear alignment and definition on these three will be challenging, but an anchor point for much of the work ahead, particularly for portfolio and lifecycle management later down the line. Make a clear distinction between internal and external versions of the objects as well. An external product vs an external customer-facing product for instance.
Identify sub-classifications or groups related to the above. This may include terms such as Innovation, Transformation, Operating Model etc. These terms impact how you may classify Products, Platforms and Services differently. If you don’t classify this sub-group they can potentially challenge the definitions in the previous point.
Align and publish lifecycle governance for products, portfolios and services. Make it clear how different entities are governed at different lifecycle stages. Applying this to investment and management portfolio bodies for consistent and comparable performance management.
When you first define this, you will have to undertake a mapping exercise to map your Products, Portfolios and Services to their respective stage and call out and advocate gaps in alignment or management practices to capture more information.
You will need to actively manage change of types. Some products become platforms and some become services, and some features become products etc. You will need to apply triggers where entities evolve and get re-classified accordingly or you will see degradation of the systems.
Distinguish between the need of a Taxonomy or Ontology. Taxonomies might be the best format to determine hierarchal relationships which resonate highly with the examples so far in this post. However when organising more fluid relationships, considering information itself used and consumed in many different ways, then an Ontological system might be more beneficial. Personally where a portfolio is identified and needed, which requires TCO management, and aggregated accounting management, then taxonomies are my go-to and a good place to start, for hierarchical systems. At the object level, you can still use Ontology structures as well.
Sometimes classifications can result in multiple or parental categories which challenge absolute hierarchical systems. For instance, following on from our supermarket example, depending on where you are in the world consider the simple Mexican Fajita. These items in a supermarket could fall into Bakery, Mexican Foods and World Foods. The product itself is exactly the same, but it exists in three categories, and rightly so. From a production and supply chain point of view, the object is the same, but it can appear or appeal to different categories or multiple locations within a superstore; promotions is another example. In this case, the product definition is absolute when you want to know how many of these items you sold. You also want to know sales by category. A taxonomy is suitable to the product level, but can also be augmented with ontological models to extend the relationships.
Invest in Product Operations and Systems. Don’t make it theoretical and update Systems, Data and Reporting capabilities. When you have your taxonomy defined, it needs to be implemented in your core enabling platforms and systems. If you haven’t got a portfolio management solution in place which can manage your lifecycle, it’s recommended you put one in place and apply product portfolio management tooling. This is particularly important to PMO’s or PPO (Product and Portfolio Office).
You should also ensure your investment and management governance is updated, and any systems like your ERPs, Cloud Platforms and Provisioning systems, Value Steam and deployment tooling recognise these definitions. Basically anywhere, where contextual management is required for your Products, Platform, Services, Features should be updated to align with these terms.
Communication, Collaboration and Training. As you define and evolve your Taxonomy and/or Ontology, you will need to ensure you communicate, collaborate and embrace feedback constantly. This will help you actively evolve your definitions and classification, but also proactively manage and prevent degradation of the portfolio which will result in the symptoms reoccurring above. It’s also a key asset for reference for onboarding new employees so they can operate consistently with the existing organisation and don’t assume behaviours from previous employer definitions.
Summary
Taxonomies are powerful frameworks that can help improve organisation transparency, performance management, and internal communication, as well as employee ownership. They can reduce ambiguity, and tension and promote improved objective comparisons to be made. Putting in place a taxonomy does require leadership sponsorship as it impacts the wider organisation and is cross-departmental in its application. It doesn’t require a large team or people or significant investment and usually, this can be managed by a single individual or a small team of people initially which then diminishes to a single individual, supported by a community. These owners are expected to collaborate, research and observe the system to create their taxonomy.
I hope you found this post useful. If you have references to your taxonomies or ontologies and would like to share your examples or feedback, please feel free to comment and share this post below.