Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
Virtual Organisation Breeding Environments Value System and its Elements David Romero*, Nathalie Galeano, Arturo Molina Tecnológico de Monterrey, Campus Monterrey, Mexico Abstract. Value systems are strategic management tools aimed at supporting the definition and assessment of organisational strategies towards successful value creation processes. Value systems aim to identify the value generation objects available in an organisation to respond to business opportunities and innovate in order to remain competitive in the market. Also, value systems support governance models towards a regulatory role in the value exchange among business entities. In a Virtual Organisation Breeding Environment (VBE), a long-term strategic alliance of organisations, value systems play also the same role as strategic management tools for the identification of the diversity of value generation objects available in the VBE members. VBE value systems recognize, measure and configure the available value generation objects inside a VBE network towards the creation of successful Virtual Organisations (VOs) and the development of new collaboration (business) opportunities. This paper presents a conceptual model to identify the different VBE value system elements, such as value generation objects (or assets that generate value), its performance measurement system, and the guidelines to define an ethical code to guarantee the ethical viability of the VBE business operation. Keywords: Collaborative Networked Organisations, Governance, Performance Measurement, Value Systems, Virtual Breeding Environments, Virtual Organisations.
1. Introduction Nowadays, strategy is no longer a matter of positioning an organisation in the right place in the value chain with a set of fixed value added activities. The traditional strategic thinking or old fashion value creation logic is based on the Porter’s value chain (1985). In this model a value creation strategy is described as a combination of different activities within an organisation that contributes to a value system (inter-organisational) in a linear and mechanistic view. During this industrial age, strategic thinking was based on the belief that a source of competitive advantage would be achieved, by performing particular value added activities and by managing the linkages between organisations. Nevertheless, this value creation logic is outmoded for today’s competitive environment and it is inadequate to comprehend the value creation complexity in present networked economy. Nowadays, value is not only produced by organisations in sequential chains, but also in complex value chain extensions and integrations. These extended value chains include not only suppliers and customers, but also complementors and competitors for co-producing value in a new value creation system called: “value network” (Allee, 2000). The term value network refers to a web of relationships that generate tangible (goods, services, revenues) and intangible (knowledge, and other intangible benefits) values through dynamic exchanges between two or more organisations (Allee, 2000). Value networks represent the new thinking that focuses on strategic partnerships and alliances for achieving superior customer satisfaction and stakeholders’ profitability by integrating the best of value chains. These networks represent a new value creation logic based on a value creation system that combines and aggregates knowledge, resources and value added activities into “value constellations” (Normann & Ramirez, 1993). Value constellations are represented by different collaborative organisations that come together in close relationships to combine their competencies and resources in order to co-produce value (e.g. a product and/or a service) and obtain a competitive advantage by excelling individual capabilities. *
Corresponding Author: Tecnológico de Monterrey, Campus Monterrey, Av. Eugenio Garza Sada #2501 Sur, Edif. CETEC, Torre Norte, 5to Piso, Monterrey, N.L., Mex. 64849 E-mail:
[email protected] Phone +52 81-83582000 Ext. 5355, Fax +52 81-83581209
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Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
Virtual Organisation Breeding Environments (VBEs) as long-term strategic alliance of organisations represent value networks that concentrate interactive groups of collaborative organisations combining and exchanging tangible and intangible assets in multiple value constellations to co-create value through the creation and operation of successful Virtual Organisations (short-term coalitions) and other collaborative models, and also the offer of a portfolio of services to its members (Camarinha-Matos & Afsarmanesh, 2006). Furthermore, value systems and value creation models are modern management concepts to describe and organise the value creation logic (strategy) in all kind of organisations. Starting from a brief definition of the main terms needed to understand a VBE value system, such as: value, value system and performance measurement, this paper will present a conceptual model for defining a VBE value system. It is important to mention that this paper is an extension of the paper published by Romero et al (2007). Main research questions that guide this article are: What is a VBE value system? Which are the values generated in a VBE? How to represent those values in a value system? How does value exchange occurs among VBE members? How is value creation measured? How to describe a value system ontology? Which tools can support the development of a VBE value system?
2. Basic Concepts on Value Systems 2.1 Value Definition The “value” concept has been widely studied in many scientific disciplines, but mainly two disciplines have studied this concept for several years: economy and sociology. Each discipline has developed a different value definition. On one hand, economists have defined value as: “the amount buyers are willing to pay for what a firm provides them” (Porter, 1985); “the perceived worth in monetary units of the set of economic, technical, service, and social benefits received by the customer in exchange for the price paid for a product offering, taking into consideration the available suppliers’ offering and prices” (Andersen et al, 1993). In short: “the worth of a product or service (often measured in terms of money) to someone” (Macedo et al, 2006). On the other hand, sociologists define value under an ethical and ideological perspective. Ethical values are those values which serve to distinguish between good and bad, right and wrong, moral and immoral, and Ideological values deal with the broader or more abstract areas of politics, religion, economics, and social moral (Abreu & Camarinha-Matos, 2006). Briefly: “the shared beliefs on moral/ethical principles that govern the behaviour of individuals and organisations in society” (Macedo et al, 2006). For the purpose of this paper, economic values will be understood in relation to the four production factors: land, labour, capital and knowledge, involved in value creation, considering tangible and intangible perceptions of what is valuable. Furthermore, ethical values will be comprehended as the set of accepted conduct standards that regulate the behaviour of organisations in the value exchange among them and their customers in the market (Romero et al, 2007). 2.2 Value Systems Definition Value systems underline the assets and actors through which an organisation, or group of organisations, produce value. Therefore, a value system represents the identification, structure and measurement of a set of values that an actor creates, holds and exchanges for specific purposes (Romero et al, 2007). Moreover, value systems are based on the economical notion that “each product and/or service offered requires a set of activities carried out by a number of actors forming a value creation system, that use tangible and intangible resources for creating value for customers” (Parolini, 1999). Adding the social definition of “values”, the value system should be supported by the required social values that will guide the economical value generation process. Generally in all organisations the definition of an ethical code, ethical values, and governance principles, are the supporting mechanisms that guide its operation. Value systems are important in terms of a regulation role for guaranteeing social cohesion and understanding between actors and their transactional mechanisms to assure an equality utility in value exchange. Value systems are also important in terms of performance measurement to monitor how different actors, activities and resources work together to co-produce value (Afsarmanesh & CamarinhaMatos, 2005).
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Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
2.3 Performance Measurement Performance management is a systematic process of planning work and setting expectations and continually monitoring performance by evolving/developing the capacity to perform periodically rating of performance in a summary fashion way and rewarding for any good performance. Performance management consists of a series of steps and activities that together define a measurement approach. These steps in a sequence order make a performance management cycle (see Figure 1), where performance measurement is the central activity and it is performed in different stages of the cycle.
Figure 1. Performance Management Cycle Performance measurement is the selection and use of quantitative and qualitative measures of capacities, processes and outcomes to develop information about critical aspects of activities, including their effect on the achievement of goals. This relates the final outcome value to the resources and competencies used in given activities within a specific time period. Figure 1 presents a suggested performance management cycle for different VBE activities. Performance measurement is an important activity within the performance management cycle, where performance measurement is carried out in three of the five steps in the complete process of performance management, namely: monitoring, evolving and rating. Three important factors to be considered when measuring performance are: (1) organisational capacities, (2) organisational processes performance, and (3) organisational final or progressive outcomes. One important purpose of performance measurement is to assess whether progress is being made towards the desired goals and whether activities are performed efficiently. Performance measurement can also serve to identify problems that may require additional efforts or attention. In order to measure performance activities, some quantifiable variables must be defined. These are called criteria, sometimes are referred as key performance indicators (KPIs), and are defined as standards, rules, or tests on which a judgment or decision can be based on. An indicator is a combination of metrics that provide insights into processes, capacities and outcomes; and metrics are measurement standards that are used to scale and provide meaningful interpretation of quantities measured for each criterion (e.g. an indicator). Performance management cycle in the VBE context will follow the same stages followed by an individual organisation, but moving towards collaborative performance measurement will imply new strategies and measures. Collaborative performance measurement and management means that all VBE actors and VO customers get access to performance reports beyond their own organisations based on a set of access rights and responsibilities, which are stored and managed by the VBE administration. By sharing performance information (e.g. reports) with all VBE actors, the VBE administration can identify bottlenecks and weak links in the VBE network and act in accordance to improve the overall performance. Collaborative performance measurement systems should then evaluate both local measures in the VBE members and global measures in the VBE network as a whole and in their VOs created within. VBE members represent organisations that may belong to different domains and thus can also possess different autonomy interests and goals. Moreover, VOs focus on different objectives depending on the collaboration (business) opportunity goal. For these reasons it is difficult to have defined and fixed performance measurements and criteria (metrics) for the different performance management needs in the VBE. The VBE performance management system should then reflect different KPIs for its members, VOs and for itself. These KPIs can evolve conforming the VBE evolves over time (for example, when new strategies are defined and as consequence, new KPIs should be defined).
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Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
Different models and methods for performance measurement exist, and each organisation, or network, should select the most appropriate ones to measure the value generated (value-added) depending on the purpose, situation and audience, since no one method or model can fulfil all purposes (Sveiby, 2007).
3. VBE Value System Model VBE value system main purpose is to identify the sources of value available in the VBE network, which can be measured, through a performance measurement system, in terms of tangible (economic benefits, productivity related) and intangible (strategic, social, among others) values or benefits. Value systems are a useful strategic management tool for the identification, measurement and configuration of value generation objects and activities inside the breeding environment (Romero et al, 2007). Therefore, a VBE value system is a tool that makes possible to identify how the different VBE stakeholders, such as members, support institutions, administrators, opportunity brokers, VO planners and VO coordinators, combine their knowledge, resources and activities in a value creation system capable of creating different types of values, for instance: economical and ethical values (Romero et al, 2007). 3.1 The VBE Value System and its Elements Three important elements constitute the VBE value system conceptual model (Romero et al, 2007): 1. The Value Generation Objects as different types of capitals held by the breeding environment itself and by its members (or assets that generate value owned by VBE actors); 2. The Performance Measurement System evaluating the value co-creation process; and 3. The Culture and Ethical Code which define the ethical values guiding the value exchange among actors (customers and stakeholders). Additionally, VBE value system elements support the trust-building process among actors (as shown in Figure 2) by providing an inventory of the value generation objects inside the breeding environment, and also through an ethical code as a set of functional rules to ensure the ethical viability of business operation (Romero et al, 2007).
Value Generation Objects Trust Building Performance Measurement System
Culture + Ethical Code
Figure 2. VBE Value System Model (Romero et al, 2007) Figure 3 presents the relationship among the first two VBE value system elements: the value generation objects and the performance measurement system. The VBE value system combines the value generation objects (detailed in section 3.2) represented by the financial, intellectual and social capitals of VBE members with the value generation objects of the VBE itself (also known as VBE platform). These value generation objects are combined by VBE actors to co-create value during the development of collaborative (business) opportunities. Furthermore, the value co-creation processes are measured to assess the performance and results achieved by VBE actors; five dimensions are defined for this purpose: financial, productivity, strategic, social and trust. The performance measurement system (detailed in section 3.3) evaluates at different levels: VBE members, VOs and the VBE itself. Additionally, some monitoring and reporting tools could be based on actual valuation models such as Balance Scorecard model (BSC) or European Foundation for Quality Management Model (EFQM). Finally according to the results of the performance indicators, incentives and sanctions can be identified for each VBE member (Romero et al, 2007).
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Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
Figure 3. Relationship between VBE Value Generation Objects and VBE Performance Measurement System (Romero et al, 2007) 3.2 VBE Value Generation Objects: Capitals in Organisations
Isolated Organisations
VBE Platform
Value Exchange between VBE Members
Value Generation Objects, or Capitals, identify the main values and benefits, such as economic success and other types of valuable benefits (productivity, strategic, social, trust) for VBE stakeholders. VBE members participate in the breeding environment by converting their competencies and knowledge into tangible and intangible deliverables that are valuable for other VBE members, stakeholders and VO customers. In a successful breeding environment every VBE member contributes and receives value in ways that sustain their own success and the success of the VBE as a whole system (Romero et al, 2007).
Figure 4. VBE Value Generation Model 5
Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
VBE value generation objects may fall into several categories; two major types of values are identified in organisations: tangible and intangible values. Three types of capitals can be identified in organisations: financial, intellectual and social (Romero et al, 2007). The value generation objects in a VBE (see Figure 4) are identified as the sum of: • VBE member’s value generation objects that represent the capitals that each member has and generates by itself, which will be shared in the network. • VBE platform value generation objects that represent the methodologies, ICT and supporting tools that the breeding environment offers to its members. This platform by itself offers different types of values. The total VBE system value generation objects are constituted by the synergy of the shared capitals of each VBE member and the capitals of the VBE platform (Romero et al, 2007). 3.2.1 VBE Generation Objects Definition Three types of capitals can be identified in an organisation: financial, intellectual and social. The financial capital is related to all physical assets (that generate tangible values), meanwhile intellectual and social capitals are related to all the knowledge and relational-based assets (that generate intangible and tangible values). The following paragraphs describe each capital and the values they generate (Romero et al, 2007): • Financial Capital: It refers to the financial resources (e.g. cash, bank accounts, physical assets) that an organisation uses to achieve its objectives. It can be also understood as any kind of representation of financial value (e.g. cash, insurances, accounts) with the possibility to acquire physical assets or any kind of physical assets (e.g. tools, equipment, inventories) that represent a real capital. • Intellectual Capital: o Human Capital. It refers to the assets of knowledge (explicit or tacit) of the organisation staff useful to create value through their human competencies (skills, talent, capabilities & knowledge). It also refers to the capacity of the organisation staff to act in various situations to create value. This capital can be regenerated by continuous learning, training and knowledge deployment (know-how). o Structure Capital. It is the knowledge that an organisation materializes, systematizes and internalizes in the form of physical resources like: information and communication technologies, production technologies, work processes, management systems, and quality standards. This capital improves the efficacy and efficiency of an organisation to produce value or add value. o Innovation & Learning Capital. The possibility to maintain the success of an organisation in the long-term by developing and/or improving its competencies to increase and fortify the efficiency of its manufacturing processes or services delivering. Also by developing new strategic relationships with other organisations, or by expanding or improving the range of products and services offered to the market, including the additional value that an organisation owns by possessing exclusive use of certain assets and/or processes (e.g. Intellectual Property Rights). • Social Capital: o Relational Capital. It refers to the value that an organisation owns because of its strategic relationships and logistic channels maintained with its clients, suppliers or other organisations (e.g. supply chain, collaborative networks, and VBE relationships). The quality and sustainability of these strategic relationships with other organisations and its potentiality to generate new collaborative opportunities in the future are key issues for success, as is the knowledge (know-how) that can be obtained from these partnerships with other organisations. o Identity Capital. It refers to the mix of recognition and history of an organisation used to influence the perception and activities of its employees, customers and other organisations. It has the ability to create a vision for an organisation as part of its culture.
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Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
The components of the VBE Value Generation Model are (Romero et al, 2007): 1. VBE Member Capital (VBE member value generation objects). Defined as the financial capital (tangible assets) and intellectual and social capitals (intangible assets) of an organisation. • Financial Capital • Intellectual Capital o Human Capital o Structure Capital o Innovation & Learning Capital • Social Capital o Relational Capital o Identity Capital 2. VBE Platform Capital (VBE platform value generation objects). Defined as the financial capital (tangible assets) and intellectual and social capitals (intangible assets) of the VBE platform. • Financial Capital. It refers to the financial resources that a VBE as a Platform uses to achieve objectives (e.g. cash, insurances, bank accounts, physical assets such as tools, equipment, inventories). • Intellectual Capital: o Human Capital. Composed by the VBE administrator, opportunity broker, VO planner, VO coordinator, VBE advisor, VBE service provider and VBE ontology provider with their skills, talent, capabilities and knowledge. o Infrastructure Capital. It includes the technologies, methods, techniques, processes, practices, procedures and physical resources that support the VBE operation. • Social Capital: o Culture Capital. It refers to the VBE working and sharing principles represented in its strategies, philosophy, culture and ethical code (e.g. governance rules, bylaws, policies, agreements and contracts). 3. VBE System Capital (VBE system value generation objects). Defined as the as the financial capital (tangible assets) and intellectual and social capitals (intangible assets) produced by combining the VBE member(s) capital and the VBE platform capital. • Financial Capital. It refers to the sum of the financial capital of the VBE members that will be shared in the VBE and VBE platform. • Intellectual Capital: o Expert Human Capital. It is the result of sharing and combining the human capital competencies (skills, talent, capabilities and knowledge) of the VBE members’ staff with other VBE member’s or VBE platform staff. This will lead to create expert teams able to increment the VBE actors’ capacity of using knowledge (know-how) to common objectives (e.g. add value to a product/process). o Integrated Infrastructure Capital. It is the result of sharing and combining resources (e.g. physical, technological and financial resources) between VBE members to increment their competence, capability and capacity to develop new products or services. • Social Capital: o Community Interaction Capital. It refers to the VBE strategies focused on the utilization of VBE members’ relations and logistics channels. Also, it represents the relations and working & sharing principles of a VBE and its VBE members that create a moral responsibility, positive intentions, understanding, respect and equity between them in collaborative (business) opportunities. 3.2.2 VBE Actors (Value Creation, Holding and Exchange) It is important to identify all VBE actors’ values according to the business processes that they perform during the VBE lifecycle. An actor can play multiple roles to add (create) value to the VBE business processes by performing or supporting one or more processes. Nevertheless, it is important to consider that every role assumed by a VBE actor represents a set of rights and responsibilities, for which each role will require a set of competencies and resources to guarantee its good performance. Table 1 presents the correlation between the types of value generation objects that a VBE actor holds and the way they add value to the VBE as a whole.
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Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
Different business processes can be performed or supported by a VBE actor at different times, or even at the same time. For instance, in addition to its primary role as a VO partner, a VBE member can act also as a VO broker, VO planner, and/or VO coordinator. When different, and perhaps simultaneous business processes are developed by a VBE actor, the value creation is then an additive operation of the types of values that a VBE actor holds in its primary business process (e.g. as a VBE member), plus the types of values that holds when performing the additional business processes (e.g. a VBE member acting also as a VO broker). Table 1 – Correlation between VBE actors and their Value Generation Objects VBE Process
VBE Administrator
Collaboration Opportunity Identification VO Planning + VO Partners Search & Selection
• • • •
Human Capital Cultural Capital Relational Capital Innovation & Learning Capital • Human Capital • Cultural Capital
VBE Advisor
VO Coordination
VBE Advising
VBE Service Provisioning
VBE Ontology provider
Values Generation Objects • Financial Capital • Human Capital • Structure Capital • Innovation & Learning Capital • Relational Capital • Identity Capital • Human Capital • Cultural Capital • Relational Capital
• Human Capital • Cultural Capital
VBE Service Provider
VO Coordinator
VBE Management
Broker
VO Creation + VO Partnership
VO Planner
VBE Member
VBE Actor
VBE Ontology Provisioning
• Human Capital • Cultural Capital
Value Creation & Exchange • Members can create value by exchanging and combining their value generation objects with other VBE actors in order to participate in different value activities such as VO partnership (e.g. VO creation). • Members can create value by assuming additional roles than just becoming VO partners when a collaboration opportunity arises (e.g. VBE actors’ roles). • Administrator can create value by managing and supporting the overall VBE operation, including main and supporting business processes such as: o Membership & Structure management o Profiling & Competency management o Governance management o Ontology management o Performance management o Strategy & Marketing management o Trust management • Brokers can create value by identifying potential collaboration opportunities. • Brokers can create value by marketing VBE domain competency. • Brokers can create value by supporting negotiation/contract process with the customer. • Planners can create value by acting as integrators of all the VBE members with the required competencies, capabilities, and capacities to respond to a collaboration opportunity (e.g. VO creation). • Planners can create value by proposing a set of rough plans for the potential VO. • Coordinators can create value by controlling VO operational processes, tasks and interdependencies in order to meet or exceed the quality-, time- and cost- frame requirements of the customer. • Coordinators can create value by managing in an efficient and effective way the deployment of the VBE and their members’ resources within a VO. • Advisors can create value by submitting recommendations to the VBE actors to improve their performance (e.g. consulting services).
• Cultural Capital • Infrastructure Capital
• Service providers can create value by developing and providing VBE actors with a set of assisting tools to perform their roles and associated activities in the most effective and efficient way.
• Cultural Capital • Infrastructure Capital
• Ontology providers can create value by developing and continue evolving the VBE ontology.
3.3 VBE Performance Measurement System, Incentives & Sanctions VBE performance measurement system is formed by a set of performance indicators that translate the value co-creation process into “numbers”. Organisations that measure and manage their performance can better focus in the achievement of their operational and financial goals. The ability to quantify VBE performance results based on an indicator system is the first step for improving the overall performance of the VBE members and therefore the value co-creation process in the breeding environment. The indicators defined in the performance measurement system should be the base to define and create incentives and sanctions in the breeding environment (Romero et al, 2007).
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Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
3.3.1 VBE Performance Measurement System It is difficult to pre-define metrics for a VBE value system, because value systems are not static and change depending on many factors including their users, time-line and objectives. Nevertheless in the following paragraphs the identification of generic performance measures aimed to measure the value generation objects according to different VBE aspects. Tables 2 to 4 present a proposal of some important value generation aspects to include in a VBE performance measurement system; each VBE typology should consider the selection of each of these elements according to its strategy and domain. Table 2 – VBE Member Value Generation Objects Financial Capital Physical & Monetary Assets • Cash • Bank accounts • Insurances • Tools • Equipment • Inventories • Physical assets
Human Capital Human Competencies (VBE member): • Skills • Talent • Capabilities • Knowledge • ‘Know-how’
Intellectual Capital Structure Innovation & Capital Learning Capital Knowledge • Developed and materialized, improved systematized and competencies internalized in the • Development of form of physical new types of resources like: relations with • ICTs other • Production Organisations technologies • Expanding and • Management improving range systems of products/ services offered • Quality standards • Intellectual Property Rights
Social Capital Relational Capital Development and maintenance of relation and logistic channels: • Supply chain Relationships • Collaborative Networks • VBE Relationships
Identity Capital • • • • •
Mission Vision Objectives Strategies Corporate Image • Brand Recognition • Organisational Values
Table 3 – VBE Platform Value Generation Objects Financial Capital Physical & Monetary Assets • • • • • •
Cash Bank accounts Insurances Tools Equipment Inventories Physical assets
Intellectual Capital Human Capital Human Competencies (VBE Staff): • Skills • Talent • Capabilities • Knowledge • ‘Know-how’
Social Capital
Infrastructure Capital
Culture Capital
Information and Communication Technologies: • Profile and Competence Management System • Value and Performance Measurement System • Trust building and management • VO creation tools • VBE administration tools Other physical resources that support the VBE operation
• Working & Sharing Principles • Strategies • Philosophy • Culture • Ethical Code • Rules & Policies • Agreements • Contracts
Table 4 – VBE System Value Generation Objects Financial Capital Physical & Monetary Assets • • • • • • •
Cash Bank accounts Insurances Tools Equipment Inventories Physical assets
Intellectual Capital Expert Human Capital Human Competencies (VBE members + VBE staff = VBE expert teams): • Skills • Talent • Capabilities • Knowledge • ‘Know-how’
Integrated Infrastructure Capital Resources Integration: • Physical • Human • Technology • Financial For increase VOs competency, capability and capacity for developing new products, processes and/or services.
Social Capital Community Interaction Capital VBE strategies focused on: • VBE members’ integration of competencies, capabilities and capacities. • VO creation • Strategic development of collaboration opportunities (e.g. brokerage) • Trust building among VBE actors and VO customers
The VBE performance measurement system will provide strategic information to the VBE actors about how the VBE platform capitals and VBE members’ capitals work together to co-produce value. The VBE performance measurement system will also permit to the VBE actors to calculate the value of their relationships inside the breeding environment, and this information will be useful for taking the right and strategic collaborative and/or business decisions. The VBE indicator system will make easier to monitor the progress of the VBE value co-creation, reflecting on the nature of the VBE activities (Romero et al, 2007). Table 5 presents a group of indicators proposed to be included in the VBE performance measurement system to measure the VBE value generation based on four dimensions: financial, productivity, strategic and social. The indicators are also grouped according to the following main entities: VBE itself, VO(s) and VBE member(s). 9
Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
Table 5 – VBE Value Performance Measures Proposal
Social
Strategic
Productivity
Financial
VBE
VOs
1. 2. 3. 4.
VBE Total Profit = Σ VO Profits VBE Sales = Σ VO Sales Incomes from VBE member memberships Incomes to VBE as result of VOs creation 5. Expenses in VBE operation
1. 2. 3. 4.
Total VO Profit Total VO sales Average cost of VO creation Average cost of VO operation
1. Annual number of business/ collaborative opportunities answered 2. Annual number of business/ collaborative opportunities not-answered 3. Number of products/services developed in VBE = Σ Product/services developed in VOs 4. Annual number of patents registered = Σ VO patents 5. Annual number of best practice established as result of VO participation = Σ VO best practices 6. Annual number of VBE members incursions in new technology as result of VO participation 1. Number of members in the VBE 2. Annual number of new VBE members 3. Annual number of VOs created 4. Annual % of VBE members that participate in VOs 5. Annual number of certifications in VBE members 6. Total investment in research and development = Σ VO R&D 7. % of VBE members that trust in other VBE members 8. % of VBE members that see VO participation as highly profit activity 9. % of satisfied VBE members in VO participation 1. Employment generation 2. Total Investment in social impact projects 3. Number of projects developed with social impact = Σ VO project with social impact
1. Number of products/services developed in the VO 2. Number of patents registered in the VO 3. Number of best practice established in the VO
1. Total investment in research and development in the VO
1. Number of created employments
VBE Members 1. Annual profits derived from VO participation 2. Annual incomes derived from VO participation 3. Increase in annual sales as result of VO participation 4. Increment in profits as result of VO participation 1. Number of products/services developed 2. Annual number of best practice established as result of VO participation 3. Annual number of incursions in new technology as result of VO participation 4. % improvement in quality of product/services as result of VO participation 5. % of improvement in lead time as result of VO participation 6. Increment % in productivity as result of VO participation 1. Annual number of participations in VOs 2. Number of competencies identified 3. Number of certifications 4. Total investment in research and development
1. Increment % in employment level 2. Number of participations in projects with social impact
Table 5 depicts that VBE indicators are formed by the corresponding VBE indicators + VOs indicators + VBE members’ indicators. The VOs indicators are composed of the corresponding VOs indicators + VBE members’ indicators (derived from its participation in VOs). The VBE members’ indicators show the individual results of the participation of each VBE member in VOs. Figure 5 presents the correlation mentioned before using UML notation.
Figure 5. Relationship between VBE Members’ Indicators, VOs Indicators and VBE Indicators in a VBE Indicator System (UML Class diagram) 10
Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
In order to monitor the VBE performance the performance measurement system can be supported by the Balanced Scorecard (BSC) model (Kaplan & Norton, 2007). BSC is a model that shows the balance between the present and the future of an organisation, including its internal and external perspectives. It permits the organisations to analyze their final results (financial and non financial) and at the same time to monitor the progress of the construction of intangible assets for which the organisation needs to create more value. The measures depend on the indicators, which need to be aligned to the activities originated by the organisation strategy (Romero et al, 2007). Figure 6 presents a VBE generic strategic map based on the BSC concepts, as a proposal for supporting the VBE performance measurement system. It is important to mention that depending on the focus, strategy and main goals of each VBE this map should change accordingly; for example one important distinctive aspect is the focus on the development of profit or non-profit VOs, usually the key driver in a profit VO is the financial results - which will become a main outcome in the VBE (Romero et al, 2007). . Four perspectives can be identified in a VBE strategic map based on BSC model (see Figure 6); these perspectives were used to describe a generic profit-driven VBE as follows (Romero et al, 2007): • Outcomes Perspective. Constitute the final outcomes which are the result of the actions taken by the breeding environment. The measurement of outcomes indicates how the strategies have lead to results for the organisation. Four main outcomes are generally expected in profit-driven VBEs: (1) expand market for its members, (2) support the development of collaborative opportunities, (3) boost innovation, and (4) increase flexibility of its members. • Stakeholder Perspective. In this perspective, the organisation identifies the market segments in which it wants to compete. Some of the most common indicators for this perspective are: the VBE stakeholders’ satisfaction and retention, number of VBE new stakeholders and collaborative opportunities. In the VBE there are four main stakeholders: VBE members, VO brokerage team (broker, VO planner or integrator and VO coordinator), VO customer and support institutions. • Internal Processes Perspective. In this perspective the processes which must be precisely executed and improved continuously are identified. These processes help the VBE to develop a value proposition to: obtain and maintain members, create VOs, and satisfy the expectations of all its stakeholders. The main processes in a VBE include: (1) those related with the delivery of services of the VBE, such as: VO creation services management, trust and relationship management, and ICT management; (2) those related with the creation of demand in terms of collaboration (business) opportunities exploitation, such as: VBE members management, branding and marketing management, and VO services management; and (3) those related with the planning and development of the VBE such as: VBE administrative management, support institutions management, governance management, and knowledge management. • Leaning and Growth Perspective. It refers to the infrastructure that the VBE must construct to create growth in long term. This infrastructure is supported by the value generation objects that are present in a VBE, including: VBE community interaction capital, VBE integrated infrastructure capital, VBE expert human capital and VBE financial capital. All of them, supported by the VBE culture, leadership, collaboration and alignment of goals among the VBE and its members.
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Outcomes Perspective
Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
Internal Perspective
Stakeholder Perspective
Competence Deployment
Learning and Growth Perspective
Develop Collaborative Opportunities
Expand Market
Improve Competitiveness
Partnership Development
VBE Member
Increase Flexibility
Competitive Price
Improve Brokerage Process
Support Competence Integration
VO Brokerage Team
Quick Response
Boost Innovation
Improve Client Portfolio
Quality Excellence
ICT Service Integration
Service/Product Diversity
VO Customer
Support Institutions
Creation of Demand
Delivery of Services
Planning & Development
*VBE Members Management *Branding & Marketing Management *VO Creation Services Management
*VO Creation Services Management *Trust Management *ICT Management
*VBE Administrative Management *Support Institutions Management *Governance Management *Knowledge Management
Financial Capital Expe rt Human Capital Integrated Infrastructure Capital Community Interaction Capital Culture
Leadership
Alignment of goals
Collaboration
Figure 6. VBE Generic Strategic Map based on BSC Model (Romero et al, 2007) The monitoring of performance indicators in a VBE can be guided by this model. Together with the identification of the indicators in each perspective, its relation among perspectives should be analyzed. This means that there is a direct relation between the internal perspective, stakeholder perspective and outcome perspective indicators. The internal perspective indicators (those that are measured in the VBE business processes) should support the improvement and achievement of goals related with the stakeholder perspective indicators (which are defined according to the stakeholders’ interests). In the same way, the stakeholder perspective should support the achievement of goals and improvement of the outcome perspective indicators. Table 6 presents these relations. Table 6 – VBE Framework Perspectives and Indicators Relationship Acronyms: VBEM = VBE Member, VOBT = VO Brokerage Team, VOC = VO Customer, SI = Support Institutions (see Figure 6) Outcome Perspective Stakeholder Perspective Internal Perspective Expand Market Improve Competitiveness (VBEM) VO Creation Service Management • Annual VBE sales • Annual number of participations in VOs • Annual incomes to VBE as result of VO services offered • Partnership Development (VBEM) • Number of VO creation services available in the VBE • Annual number of VO brought into VBE • ICT management • Competitive Price (VOC) • % of coverage of services demanded by VBE members • Customer satisfaction evaluation • Annual cost of maintenance of VBE infrastructure • % of CO that meets target price • VBE Members Management presented by customer • Annual VBE incomes derived from memberships • Improve client portfolio (SI) • Increment % in productivity as result of VO participation • Number of the members in the VBE • Branding and Marketing management • Annual number of participation in VO • Level of satisfaction of VO customer • % increment in profits as result of • VBE Administrative management VO participation • Annual expenses in VBE operation Develop Competence Deployment (VBEM) VO Creation Services Management Collaborative • Annual number of products/services • Number of VO creation services available in the VBE Opportunity developed in the VBE Governance Management • Annual number of • % improvement in quality of product/ • Annual number of conflict resolutions in the VBE VOs created service as result of VO participation • VBE Members Management • Number of competencies identified • Annual number of participations of a VBE member in VOs Partnership Development (VBEM) • Number of certifications of VBE member • Number of participations as broker Branding & Marketing Management • Improve Brokerage Process (VOBT) • Annual investments in marketing and branding • Annual % of business/collaborative Support Institutions Management opportunities answered over • Number of support institutions in the VBE opportunities identified. Trust Management • Annual number of VO participations • Number of trustable evaluations (VBE members base trust over total number of VO created level assessments)
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Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
Increase Flexibility • Annual number of products/services developed in the VBE
• Number of services available for VBE members
Boost Innovation • Annual number of new products/ services developed in the VBE
Support Competencies Integration (VOBT) • Average number of participations of a VBE member in VOs Improve Brokerage Process (VOBT) • Annual % of business/collaborative opportunities answered over the opportunities identified Support Competence Integration (VOBT) • Average number of participations of a VBE member in VOs Competitive Price (VOC) • Customer satisfaction evaluation Quick Response (VOC) • % collaborative opportunities attended on-time Quality Excellence (VOC) • Customer satisfaction evaluation • % collaborative opportunities rejected by the customer for quality reasons Service/Product Diversity (VOC) • Annual number of new products/services developed in the VBE ICT Service Integration (SI) • Number of services offered to VBE members • Annual number of new services developed for VBE members • Number of ICTs services offer to VBE members Service/Product Diversity (VOC) • Annual number of patents registered • Annual number of new products/ services developed in the VBE • Annual investment in research & development Competence Deployment (VBEM) • Number of competencies available in the VBE ICT Service Integration (SI) • Annual number of new services developed for VBE members
VBE Members Management • Number of competencies available in the VBE • Annual number of participations of a VBE member in VOs • Annual VBE incomes derived from memberships • % of improvement in lead time as result of VO participation Branding & Marketing Management • Annual investment in MKT & branding • Annual number of business/collaborative opportunities identified • Level of satisfaction of VO Customers VO Creation Service Management • Annual incomes to VBE as result of VO services offer • Number of VO creation services available in the VBE Trust Management • Number of trustable relations in the VBE (between its members) ICT Management • % of coverage of services demanded by VBE members Support Institution Management • Number of support institutions in the VBE
VO Creation Service Management • Annual incomes to VBE as result of VO services offer • Number of VO creation services available in the VBE • Annual number of best practices established as result of VO participation ICT Management • % of coverage of services demanded by VBE members Knowledge Management • Number of accesses to the VBE knowledge/ontology sources
It is important to mention that the performance measurement model is a generic one, based on a profit-driven VBE. This performance indicators list may change according to the VBE typology and organisations analyzed. 3.3.2 Incentives and Sanctions After the definition of the performance indicators and their monitoring model, the next challenge is the definition of rewarding and sanctions mechanisms (see Figure 7). However, when talking about rewarding and incentives, how is it possible to rate the contribution for distribution of profits of each VO partner in a VBE? For example, the following incentives to improve the VBE members’ participation can be established as: • Internal Work Contracts Commissions. This incentive should ensure that works contracts are placed internally. In some VBEs it is important that contracts are often made inside the network. For sustainable success of economic driven VBEs enough business volume is essential. • VBE Membership Fee Discounts. Another incentive can be found in a discount on the membership fee for active participation. Participation can be measured for example trough the evaluation of the traffic on collaboration tools. Nevertheless, this method could also discourage some existing and potential new partners because the financial effort is not clear. • VBE Members Sequence Adjustment/Updating in Marketing Documents. Every VBE member is interested in being at a prominent place on marketing documents (e.g. Website, brochures). Once again, these VBE members, which show higher commitment, should be privileged. One approach consists in an adjustment of the VBE members’ nomination sequence.
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Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
• VBE Members’ External Ranking. A new approach to validate VBE members’ performance could be based also on an external ranking. A VBE member can be ranked according to different elements like participation in meetings, internal net orders, knowledge about the VBE network, cooperative behaviour, etc. This ranking could be public announced, and even showed with the public information of the VBE network. This will motivate the VBE members for having high ranking levels that show their good performance in the VBE network for external people. • Brokerage & Service Providing Individual Commission. The success of VBEs depends profoundly on the brokerage activities and services provided. Therefore it is essential to reward those VBE actors that prioritize the VBE activities. In practice unfortunately most brokers prefer to sell products and services of their own company. One reason could be that it is easier to sell a product or service which is made in its own house. Perhaps many of the VO projects are in an early stage quiet unclear and for this reason are difficult to sell. Thus, rewards would be very helpful to promote the VBE activities and specially VBE members that are VO Opportunity Brokers. In addition to incentives, also sanctions can be a manner to influence the motivation and performance of VBE actors. Unfavourable behaviour can be a chock block in emerging networks, which induces other partners to act in a similar selfish way. To avoid this development, some sanctions are indispensable. Depending on the heaviness of the offence, different sanctions can be implemented: private reproof, public reproof (although this may damage the entire VBE, thus it should be evaluated), financial penalty, and exclusion. The identification of incentives and sanctions should be then part of the VBE management activities. VBE Measure VBE Performance Measure System
VBE member Indicators
Monitoring Performance
An e-catalogue can provide this information
VBE Incentives & Sanctions
EFQM View
Measure effects in VBE actors
… View
VO Indicators VBE Indicators
BSC View
Reporting & Analyzing
Graphics Reports Statically Reports Benchmark Reports
VBE Measure Effects
VBE Membe r Ranking
Ranking can contribute to VO partners’ selection
Incentives i.e. Improve rank member Grant access to dedicated services/assets Profit-sharing incentives Advance in management hierarchy Honorific recognition (prestige) Better ranking in VO partners’ selection
Sanctions * Measure effects contribute to rank
VO Partners Selection VBE member profile: • Processing capability • Resources capacity • Physicals • Technology • Hu man • Associated partner capacity • Performance history • Products/Services • Practices
Incentives *
• • • • • •
• • • • • • • • •
Sanctions i.e. Worse rank member (no-advancing) Restrict/deny access to services/assets Higher cost to the access to common services/assets Limit incomes from profit-sharing Public exposure (low collaboration) Passive role in the VBE for a period of time Limit access to collaborationopportunities Lower rank as potential VO partner (e.g. VO creation) Being expelled from the VBE
• Annual # of participations in VOs • Quality in products/services developed •……
Figure 7. Relationship between VBE Performance Measurement System and VBE Incentives & Sanctions 3.4 VBE Ethical Values: Culture & Ethical Code The willingness of potential VBE members to accept and capitalize on new ways of working, including participating in VOs will depend in part on the prevailing organisational culture. VBE culture and its ethical code are the third element that constitutes the VBE value system. The culture of VBE members (shared values: strategy structure, systems, style, staff and skills) represents the “glue” which holds a VBE together. A strong, clear and widely shared, VBE member’s culture is claimed to be critical to VBEs and VOs success (Romero et al, 2007). The VBE culture can be defined as “the collection of relatively uniform and enduring values, beliefs, customs, traditions and practices that are shared by VBE members learned by new VBE member’s recruits, and transmitted from one generation of VBE members to the next”. VBE culture derives from basic assumptions and values held by key VBE members in the VBE which shape VBE objectives, structures, and processes, and which are promoted and shared both directly and indirectly through a range of mechanism. While VOs may be a “temporary” structure, its human resources may be drawn from a range of other VBE members, each with their own (possible conflicting) cultures. The lack of a shared culture may create difficulties for the effective operation of a VO. This is partly due to reduced 14
Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
opportunities for interaction between employees, particularly face-to-face interaction, which provide opportunities for new employees or VBE members of the VO to learn about shared values. Asynchronous communications, which are typical of the VO, mitigate the development of sense of community, although the use of synchronous electronic meetings spaces may help to develop a community with a sense of sharing culture (Romero et al, 2007).
Figure 8. VBE Culture Definition Elements Nevertheless, how can this VBE business culture be defined? There are some constitutive elements, which can well characterize what a good culture represents (see Figure 8): • Commitment. In SMEs it is crucial that the executives have extensive competencies. Since SMEs do not have a background of giant resources, business associates have to count on the commitment of the principal. • Experience Exchange. Another element, which is essential for successful business culture, can be found in the experience exchange between partners. Through continuous experience exchange information asymmetries can be avoided. • Long-term Partnership. Probably the best method to establish trust is the long-term partnership. Trust is a phenomenon that cannot be built in a short time. Every interaction improves the possibility to appraise the counterpart’s character. • Freedom. There should be rules and principles that provide and guide the level of freedom among members to practice their traditional business culture and integrate their cultural values in the VBE cultural values. These elements alone cannot suffice for a goal-oriented deployment of the various relationships in networks. A good practice that should guide the operation of the VBE is then, the definition of an Ethical Code that includes some of the culture elements mentioned before. The Institute of Business Ethics in UK define an “ethical code” (sometimes named: ethical policy, code of conduct, statement of business practice or a set of business principles) as a management tool for establishing and articulating the corporate values, responsibilities, obligations, and ethical ambitions of an organisation and the way it functions. It provides guidance to employees and organisations, on how to handle situations which pose a dilemma between alternative right courses of action, or when faced with the pressure to consider right and wrong. Having an ethical code is not enough. It can only be effective and practically useful with committed dissemination, implementation, monitoring and embedding at all levels so that behaviour is influenced. Starting from these possibilities to improve the collaboration atmosphere, it should be possible to derive some recommended courses of action. Some rules about cooperative behaviour that could be included in a VBE ethical code are: • Regard the participants in the network as partners. • Use information to establish transparency and not as instrument of power. • Play with open cards. • The change of internal business culture is to be considered as a long-term process. • Staff has to be sensitized for the interplant collaboration. • A definite contact person has to be defined. 15
Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
• Staff must be informed about the common goals in the network. • Cooperation has to be considered in the personnel -appraisal and -development. These recommendations should be a contribution to a long-run improvement of the relationship between the different VBE actors, which is the base for sustainable commercial success. Other important issues to consider in the VBE ethical code are: • It should publish the VBE identity and values statements. Publishing such statements the VBE member can influence in an indirect way, the behaviour of employees and partners, and also other VBE members. • It should clearly define the set of standards to direct and enforce the organisations behaviour in the VBE and its employees. • May be internally generated. • It should clearly define all VBE actors’ obligations providing a basis for enforcement and verification. • It should establish the VBE personality by articulating the ethical and moral foundations and the actions that each VBE actor should perform to meet its obligations. After understanding the outline of the content of an ethical code, a first approach to create a VBE ethical code is proposed in Figure 9. VBE Culture
VBE Ethical Code Preamble: VBE objectives and strategic statements
Culture is a collection of uniform & enduring: • Values • Beliefs • Customs • Traditions • Practices
Code Scope: VBE actors accepted conduct standards Collaboration
Values: Sharing attitude
Fairness
Quality and reliability
Competence
Innovation
……
……
……
General Issues: VBE members shared values like: • Strategy • Style • Staff • Skills
Good culture represents: • Commitment • Experience exchange • Long-term partnership • Freedom
Trust-building approach: • Round tables • On-the-job training • Disclosure of internals • Independent controls • Legal fundamentals
VBE actors own Ethical Code Shared Behaviour
Responsibility to Customers • Sales conducts
Responsibility to VBE Partners • • • •
VBE actors information Hiring joint project members Restricted hiring practice Employee transfer between VBE members • Service rates
Responsibility of VBE Actors
Responsibility of VBE Actors
• • • • •
• • • • • •
VBE promotion Respectful competition Professional integrity Compliance with legislation Usage of legal products and services
Responsibility to Society • Environmental care • Community care
Sharing of experiences Confidentiality Business use of “know-how” Standards of use Quality level Quality improvement
Business Operation Issues • Rules • Policies
……
Figure 9. VBE Ethical Code Outline
4. VBE Value System Ontology The UML diagram illustrated in Figure 10 provides the base VBE value system definition, and shows the relations between the value system elements described in sections 3.2 to 3.3. The main elements of the VBE value system are the VBE value generation objects (VBE capital system), the VBE performance measurement system and the VBE ethical values. VBE capital system class has a complex structure divided in: VBE member capital, VBE platform capital and the VBE system capital sub-classes, each class also divided into the value generation objects taxonomy of each system. VBE performance measurement system has also a complex structure divided into an indicator system, metrics, incentive indicators, sanction indicators, and trustworthiness measure sub-classes. Finally, the VBE ethical values class has been divided in two classes: VBE culture and ethical code. 16
Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
Figure 10. VBE Value System Ontology (UML Class Diagram) 17
Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
5. VBE Value System Supporting Tools A strategic management tool that can be defined for supporting a VBE value system is a “performance measurement system”. The VBE performance measurement system will be focused on performing the proper measurement and monitoring of the value generation objects involved in the VBE value creation processes (e.g. VO creation). A VBE performance measurement system can be implemented using a dashboard, which can take many formats, from reports to highly strategic business scorecards. The VBE performance measurement system should use primary VBE value metrics that will provide the VBE actors with relevant performance information in a format that is both intuitive and insightful. A VBE indicator dashboard can support the strategic decision-making process and monitor the VBE strategy deployment in daily business operation. The VBE indicator dashboard should provide the VBE actors with an effective platform for articulating goals, priorities and strategies, and monitoring VBE activities through performance metrics, identifying and analyzing issues, and collaborating and acting on business intelligence information towards the identification of new collaborative (business) opportunities. Some performance measurement applications oriented to measure and monitor the value creation process in single organisations use “BSC valuation model” to construct a dashboard that provides a view of the organisations indicator system. BSC model can be easily replicated in the VBE members and by combining these VBE members’ indicator dashboards it can be possible to create a VBE indicator dashboard to understand the main business challenges, effectively shape solutions, and quickly execute on VBE operation objectives. Section 3.3.1 detailed the VBE performance indicators main elements that should be included in a VBE performance measurement system. Based on VBE actors’ roles and rights, the VBE administrator will be the key actor for defining, setting-up and generating the performance indicators that will make possible for the performance measurement system to create scorecards for monitoring, measuring and managing the VBE performance during its lifecycle. Scorecards will be transformed by the performance measurement system in dashboards and reports that should be easily accessed and understandable by the VBE actors. With the information retrieved from the reports and dashboards, VBE actors should take actions based on their responsibilities, considering the current VBE performance and ensuring that the VBE strategy objectives are attained. Figure 11 presents a generic VBE performance measure system using UML notation for describing a set of features for setting-up a VBE indicator system and displaying its results in different dashboard views (e.g. balance scorecard view, EFQM excellence model view, etc.).
Figure 11. VBE Performance Measurement System (UML Activity Diagram)
6. Study Case A value system modelling exercise is proposed for a manufacturing VBE, where a value creation process is illustrated as a VO creation process triggered by the identification of a collaboration (business) opportunity to manufacture a plastic product that will not be possible to be manufactured or would have a higher cost if an organisation (e.g. a SME) attempted it individually. In order to respond to the collaboration (business) opportunity identified, the VBE members will cluster their competencies and 18
Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
Organisation A (Plastic Injection) IECOS VO (for Plastic Products)
Organisation B (Injection Moulds Design)
VBE Platform Capitals VBE System Capitals
VBE Members’ Capitals
capacities (their value generation objects) in a VO to create new capabilities to satisfy customer requirements with the quality, and within the required time and cost frame expected. For this modelling exercise three VBE actors will be represented in the value system (see Figure 12): • IECOS (Integration Engineering and Construction Systems - www.iecos.com) is an engineering company playing the VBE platform role. Its role focuses on the integration of VBE members’ competencies and capacities to guarantee VO customer satisfaction and cost reduction, plus the search for new collaboration (business) opportunities for the VBE members (e.g. brokerage). • Organisation A (Plastic Injection) as a VBE member which core-competence is the manufacturing process of plastic injection. • Organisation B (Injection Moulds Design) as a VBE member which core-competence is the design of moulds for plastic products.
Figure 12. VBE Value System Modelling Exercise 19
Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
The VO competencies emerged from clustering VBE members competencies where the result of designing and configuring a VO value system that reshuffle VBE members capitals (Organisation A and B) and VBE platform capitals (IECOS) in order to respond the collaboration (business) opportunity identified. In the value system modelling exercise, IECOS-VBE platform role was to facilitate the integration of the competencies and capacities of the organisation A (plastic injection) and organisation B (injection moulds design) to respond to the collaborative opportunity identified (the manufacturing of a plastic product) through a VO creation process. The VO created integrates the value generation objects of each of its partners (Organisation A + B), plus the IECOS-VBE platform value generation objects, which act as “articulators”. The articulators serve as enablers to combine the different value generation objects to co-create a value creation system that puts together the design and manufacturing competencies required to manufacture a new plastic product by excelling individual capabilities.
7. Conclusions A novel VBE value system is presented in this paper including the following main elements: (1) VBE value generation objects (or capitals), (2) VBE performance measurement system, and (3) VBE ethical values. The VBE value system proposed involves not only tangible value generation objects (financial capital), but also intangible value generation objects (intellectual and social capitals) involved in most of value creation processes. The VBE performance measurement system includes a set of VBE performance metrics, and also a proposal for a VBE incentives and sanctions schema in order to promote collaborative endeavours and avoid opportunistic behaviours. The VBE ethical values that were represented by the VBE culture were also studied through the definition of a VBE ethical code. The results of modelling the relationships between the VBE value system elements were also presented in the VBE value system ontology proposed (see Figure 10), this modelling exercise was able to support: (1) the VBE value generation objects identification within the VBE members, the VBE platform and the VBE as a whole in order to understand the value creation logic within a VBE network towards the VBE system capitals creation, (2) the understating of the complexity and importance of measuring and monitoring the VBE value creation process, and (3) the recognition a collaborative culture within a VBE and the requirement of an ethical code as a governance entity to guarantee the ethical viability of the VBE business operation. With the case study presented, the use of the VBE value system as an strategic managerial tool was validated. The VBE value system has the ability to identify, systematize and develop the diversity of value generation objects available in the VBE members and in the VBE platform towards the creation of VOs and the development of new collaboration (business) opportunities. Finally, some further research tasks include the validation of the VBE value system model in different VBE domains and the development of a supporting tool that could be integrated by the VBE performance measurement system proposed.
8. Acknowledgement The research presented in this document is a contribution for the ECOLEAD Project, funded by the European Community, FP6 IP 506958. The authors wish to acknowledge the support of the Innovation Center in Design and Technology from ITESM - Campus Monterrey. This paper is an extended version of the original article published in the 8th IFIP Working Conference on Virtual Enterprises (PRO-VE’07) [Romero et al, 2007].
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Journal of Intelligent Manufacturing, (2010), Vol. 21, pp. 267-286, DOI 10.1007/s10845-008-0179-0, Springer Netherlands Publisher, ISSN 0956-5515 (Print) 1572-8145 (Online), Impact Factor 1.018 (2008)
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