Identification of forms and components of VO inheritance

Identification of forms and componentsof VO inheritanceIris Karvonen, Iiro Salkari, Martin OllusPro-VE 2007

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADContent• VO inheritance concepts at VO – network (VBE) interface• Benefits of VO inheritance• VO output view - Identification of VO inheritance components• Network (VBE) view - VO inheritance components• Review of main components• SME network case studies• ConclusionsECOLEAD:VO: Virtual Organization : temporary assignmentVBE: Virtual Organization Breeding Environment (network)12.9.2007Pro-VE 2007 Iris Karvonen2

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADVO inheritance – from temporary projects to continuityChallenge:• Virtual Organizations operate on a temporary basis; timerestrictions• VOs incorporate several organizations• After the VO people return to their line functions or newprojects-> How to keep the resulting VO experience? -> can be storedby the network/VBE-> What are the useful outputs/ elements to be utilized andhow?VO: Virtual Organization : temporary assignmentVBE: Virtual Organization Breeding Environment12.9.2007Pro-VE 2007 Iris Karvonen3

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADVO – VBE (network) interfaceVBEin VO creation: VBEpractices&systems,knowledge,capabilities,resourcesVO operationHeir:• all VBE members• participating VO partners• VO managementVBEmembersin VO operation/evolution: previousexperience data etc.VOpartnersVBEmanagerVO dissolution:inheritancereturned to VBE:VOmanagerproduct/servicepaymentCustomerVBE = Virtual Organization Breeding Environment; VO= Virtual Organization12.9.2007Pro-VE 2007 Iris Karvonen5

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADBenefits of VO inheritance• improving the preparedness of the VBE: VOs can be created andstarted faster, support for partner selection• increasing the value of the VBE for the members, for example byincreasing their knowledge and market position• making the VOs more effective and reliable both in time and costs,and improving or ensuring the quality,• decreasing VO management efforts through increased trust andstrengthened relationships,• supporting decision-making and tracking of VO problems ordeviations• supporting the marketing and sales of the VBE services12.9.2007Pro-VE 2007 Iris Karvonen6

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADIdentification of forms of assets– VBE bag of assets approach• The VBE Bag of Assets refers to all valuable elements thatdifferent VBE Members may wish to share with others and whichare available to all VBE members. *• VO inheritance gives input to VBE Bag of Assets• Three types of capitals are identified:• Financial capital• Intellectual capital• Social capital* ECOLEAD WP212.9.2007Pro-VE 2007 Iris Karvonen8

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADVO outputExperience data & informationVO output - VBE Bag of assetsPartner performance dataNew knowledgeSocial relations, trust, motivationMarket position, customer relationsReferencesVBE Bag of assetsFinancial capitalIntellectual capitalSocial capitalVO structures & configurationsObligations, warranties12.9.2007Pro-VE 2007 Iris Karvonen9

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADClassifications of knowledge to be inherited*(intellectual capital)• Entrepreneurial knowledge: markets and customers• Technical knowledge: technological viewpoint to the product andproduction.• VO management knowledge• Performance measurement model and related performance data• Milestones & activities plan• Knowledge concerning VO management model• Knowledge related to VO structure (= who works with who and in which workpackages etc.)• VO actions, changes, problems, deviations-> Challenging: Not only quantitative but also qualitative information &knowledge*From project management, applied to VOs12.9.2007Pro-VE 2007 Iris Karvonen10

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADSocial/ relational assets• Between the VBE members:• trust creation both at the personal and organizational level• knowing the capabilities, strengths and weaknesses• tested groups of partners• the creation of a VBE “culture”• increase of the motivation to work together by succesfull VOs• Towards the customers:• improved customer relationship and customer’s trust to the VBE• understanding the customer needs (useful for future business andidentification of new opportunities)• improved personal relationships• knowledge of customer practices support the preparedness to work for thecustomer in future• the achieved market position and the VO references-> Challenging: the social heritage of a VO may become negative12.9.2007Pro-VE 2007 Iris Karvonen11

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEAD Inheriting financial capital ?• Financial capital is typically owned by the independentorganizations.• Part of the profit created in a VO may be inherited to the VBE• How about risks and losses (negative financial heritage)?• Warranties of the customer product• Other obligations and liabilities• Inheritance of failed VOs, realized risks-> Challenging: Customer’s acceptance; willingness and capability ofthe VBE and companies to carry risk12.9.2007Pro-VE 2007 Iris Karvonen12

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADCase studies: SME networks• 8 industrial SME networks were questionnaired about VOinheritance• Current practices• Importance to different parties, importance of experience• Requirements & challenges12.9.2007Pro-VE 2007 Iris Karvonen13

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADPractices of SME networks• Mostly no systematic practices but some informal exchange ofexperience between similar VOs.• Some examples of short term partner performance measurement;for example customer’s requirement.• Network platform / portal exist in most cases but usability low.• Cooperation meetings the most used practice.• Obligations towards the customer carried by the VO manager.12.9.2007Pro-VE 2007 Iris Karvonen14

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADImportance to different partiesImportance of VOexperienceto the VO/V Tmanagerto the VBEmembers or VOparticipantsnot /lessimportantimportantveryimportant/necessary- 5 33 5 -to the customer 1 5 212.9.2007Pro-VE 2007 Iris Karvonen15

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADImportance of VO experienceOptions offeredmost weightingimportantA product knowledge and experience 1 243 30B experience of the customer relationship, prac ticesetc.C experience about needed tasks, actions,resources, schedules, used approaches,templates etc. (process & managementknowledge)Dexperience about faced changes and problemsand how they were solvedE experience about potentia l partners and theirperformance1 29- 24- 23F some other? 2 1312.9.2007Pro-VE 2007 Iris Karvonen16

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADIn addition to experience –other inheritance componentsWhat does a VO give to the participants (except experience and theorder&payment)? How does the state of the VBE differ before and after aVO? Reuse of VO structures? Inheritance of obligations?• “The number and size of VOs are the most important performance figures of a VBE”• Contribution to new business opportunities, improving customer relationships• State difference of a VBE caused by a fulfilled VO depends on the developmentstage of the VBE• Trust building, motivation and commitment; dependent on personal relationships• Missing formalisation and company specificity makes it difficult to reuse VOstructures & infra.• Most of the customers of the networks do not seem to accept shared responsibility.12.9.2007Pro-VE 2007 Iris Karvonen17

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADRequirements of SME networks for VO inheritance• Contribution to VO inheritance should appear rewarding and beneficial for theactors.• The information has to be easily accessible for all different users• In some cases the amount of data may be a problem for its use, but in most casesthe capture is the main problem.• The contributions required from VO participants should be made as easy and shortas possible.• Part of the needed data could be created automatically or semi-automatically fromthe VO monitoring and operation. Collection of VO experience should partly happenas part of the VO management tasks.• Templates should be created to capture knowledge in order to allow categorizationof information. On the other hand, a sophisticated structure is not as important aseasy search.• The right level of openness and transparency should be found. In most cases it isunrealistic to have totally “open books”.• All networks are not homogeneous; especially when they are in a growing phase.Part of the companies have more experience than the others and don’t need all thatinformation which again may be necessary for newcomers of the network.12.9.2007Pro-VE 2007 Iris Karvonen18

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADConclusions• VO inheritance aims to bridge the gap between the VO discontinuity andnetwork (VBE) continuity.• VO inheritance is not only about partner performance measurement.• The network characteristics affect on the rules of inheritance (openness,responsibilities, avoiding misuse and decrease of trust).• A challenge is to find inheritance mechanisms which don’t require toomany resources.• Social capital / relational assets are an important part of VO heritage.• The relationships to the customers are more important than therelationships to the VBE members.• The VO relational heritage is always not only positive.• Also best practices to preserve the relational and structural assets of VOsshould be found and implemented.12.9.2007Pro-VE 2007 Iris Karvonen19

VTT TECHNICAL RESEARCH CENTRE OF FINLANDECOLEADTHANK YOU!12.9.2007Pro-VE 2007 Iris Karvonen20