=Paper=
{{Paper
|id=Vol-3645/forum10
|storemode=property
|title=Towards achieving competitive advantage through making the right operating
model choices
|pdfUrl=https://ceur-ws.org/Vol-3645/forum10.pdf
|volume=Vol-3645
|authors=Bart van der Heijden
|dblpUrl=https://dblp.org/rec/conf/ifip8-1/Heijden23
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==Towards achieving competitive advantage through making the right operating
model choices
==
https://ceur-ws.org/Vol-3645/forum10.pdf
Towards achieving competitive advantage through
making the right operating model choices
Bart van der Heijden1,2,3
1
Vlerick Business School 1, Bolwerklaan 21 bus 32 1210 Brussels, Belgium
2
KU Leuven, Naamsestraat 69, 3000 Leuven, Belgium
3
Ghent University, Tweekerkenstraat 2 9000 Ghent, Belgium
Abstract
Increasing turbulence of business environments provides entities with opportunities for innovation
and transformation. A frequently used concept to organize for such environments and to make
resource-driven decisions for innovation and transformation is an operating model (OM). Recent
research has contributed to a better understanding of OM, but overall, we lack a comprehensive
picture of the OM concept and more specifically, how entities can use the OM concept to configure
digital resources (DR) and position the OM as an EA artifact in organizing for digital transformation
and to support strategic decision making. In this PhD study, we aim to answer the research question
how the fit between strategy and OM can lead to competitive move(s). We plan to answer our
research question by undertaking three studies with each a unique methodology, both qualitative and
quantitative, and therefore enforcing rigor in the design of the studies. We have combined the concept
of an OM with the resource-based view (RBV) theory and will show its potential to become a powerful
explanatory framework for decisions on orchestrating and leveraging resources in organizations.
Especially when extending the boundaries of the OM to an ecosystem and focusing on digital
resources, there is yet a lot left unexplored. This research should result in a research agenda to
position the OM in academic research as an EA artifact to study decisions related to digital resources.
For managers, this PhD should result in a framework to describe and discuss digital resource related
decisions and guidelines for discussing governance and value of configuring digital resources.
Keywords
Operating Model, Digital Transformation, Digital Resources, Enterprise Architecture, Configuration
Theory1
1. Introduction
The environment in which firms operate is becoming increasingly turbulent [1]. Innovation and
transformation offer numerous opportunities for companies to organize for turbulent business
environments [2]. The concept of an operating model (OM) is frequently used by organizations
when making resource driven decisions for innovation and transformation [3]. An OM can be
defined as a “representation of a configuration of resources (e.g., organizational structure,
business processes, technology) that show the transformation of an entity to an improved state
for the customer” [3]. An OM can be classified as an artifact in the context of enterprise
Companion Proceedings of the 16th IFIP WG 8.1 Working Conference on the Practice of Enterprise Modeling and the
13th Enterprise Design and Engineering Working Conference, November 28 – December 1, 2023, Vienna, Austria
bart.van.der.heijden@edu.vlerick.com (B. van der Heijden);
0000-0001-5380-6727 (B. van der Heijden)
© 2023 Copyright for this paper by its authors. Use permitted under Creative Commons License Attribution 4.0 International (CC BY 4.0).
CEUR
ceur-ws.org
Workshop ISSN 1613-0073
Proceedings
architecture (EA) [4]. An EA artifact can be defined as a “distinct document describing a specific
narrow aspect of an organization from the perspective of its Business and IT” [4]. A topic closely
related to the OM concept is the business model (BM). To clearly distinguish the OM concept
with the BM, we will adopt the definition of the BM as the design of organizational structures
to enact a commercial opportunity [5]. In their paper, the authors fence the BM as a
representation of a form of entrepreneurial opportunity creation explicitly initiated by market
imperfections. This would position the BM more as a model to describe the composition of
resources (i.e. creating new resources) whereas the OM would be positioned as a model to
describe the orchestration of resources (i.e. leveraging existing resources). This is closer related
to resource orchestration, which is defined as the comprehensive process of structuring,
bundling, and leveraging the firm’s resources with the purpose of creating value for customers
and competitive advantages for the firm [6]. For the sake of conceptual clarity, we argue that
the OM is an EA artifact to describe the representation of configuration(s) involving resource
orchestration. In our view, having an explicit research stream on modeling the orchestration of
resources would benefit both scholars and managers.
OM has emerged as a concept in academic literature, business literature and consultancy
white papers. For example, based on a literature search in Google Scholar in November 2021,
we observed 5,170 papers in peer-reviewed academic journals in which the concept of OM is
used. References to OM in practitioner-related journals and in publications issued by major
consultancy firms (e.g., McKinsey, Bain, Deloitte and PWC) are also considerable; with more
than 4 million hits on Google. The interest seems to be growing, and with it the need for a solid
understanding of the concept and its use.
Recent research has contributed to a better understanding of OM in the domains of
innovation [7] [8], digital- and IT-enabled (business) transformation [9] [10], and enterprise
architecture (EA) [11] [12]. The OM concept is tied to gaining control over resources [7] [13]
[14] [15] [16]; within organizations [17, 18] [19], in supply chains [16] [20], and in broader
ecosystems [21] [22] [14]. But overall, we lack a comprehensive picture of the OM concept and
more specifically, how organizations can use the OM concept to configure digital resources
(DR) and how entities can position the OM as an EA artifact in organizing for digital
transformation and to support strategic decision making.
1.1. Research question
In this PhD, we want to zoom in on a subset of resources within the OM, DR. DR are a specific
class of digital objects that are modular, encapsulate objects of value, and are accessible by way
of a programmatic bitstring interface [23]. DR are a subset of the more general defined
“resources”, that are available and useful in detecting and responding to market opportunities
or threats [24]. Example of digital resources are [23]:
• programmatically accessible data, that a firm owns or controls, for example a database
that foursquare places exposes, with 105+ million geolocated locations/venues with
descriptions, photos, ratings, and reviews.
• the capability by which Google AdWords enables users to programmatically control
advertisement campaigns across Alphabet’s own and partners’ digital properties.
In our study, we aim to answer the following research question:
• How does the fit between strategy and OM lead to competitive moves?
Answering this research question is important, as there is limited knowledge on how OM
choices on DR are made and the impact of these choices on competitive advantage. The
importance of developing more insights on this subject is also confirmed in our pilot study “In
hindsight, I can certainly say that it would have helped us a lot if we would have understood the
impact of the choices before we would have made the changes in the operating model, because we
could have avoided quite some friction.” [25].
1.2. Study design
We plan to provide an answer to our research question by undertaking three studies with each
a unique methodology and research questions, which are described in the section below. The
first study is a literature review and aims at organizing and synthesizing insights from the body
of knowledge across various disciplines on the intersection of OM and digital. Our second study
will be a series of case studies to gain a better understanding of the usage and leveraging of DR.
In our third study, we would like to empirically examine relationship between the configuration
of DR in an OM and competitive moves. We propose to use a survey to collect data for this
study and a potential methodology could be structural equation modelling (SEM) methodology.
However, the completion of study 1 and 2 will provide more direction for the design of study 3.
Our planned contributions are twofold: 1) develop a research agenda to position the OM in
academic research as an EA artifact to study decisions related to digital resources and 2) a
framework to describe and discuss digital resource related decisions and guidelines for
discussing governance and value of configuring digital resources.
2. Conceptual model
In our literature review, we have shown that the OM has three major properties: resources,
configuration and transformation [3]. Furthermore, we have seen that the OM is used to
implement business strategy or business model. However, we should also acknowledge that
there is not one single configuration for a given business strategy (otherwise business facing
similar challenges would all configure their resources in the same way). Therefore, we can add
a fourth important property to our OM: the fact that an OM has configurational multiplicity.
Configurational multiplicity refers to a situation where even within a particular theoretical
perspective there may be different configurations of factors such that there is not one best way
but in fact several effective ways to organize [26]. Our conceptual model, shown in Figure 1,
captures those properties and puts them in a relationship. In this model, we can see that
strategic type, as defined by Miles et al. [27], together with OM characteristics drive the OM fit
with strategic type. This is the level on which the configuration happens. The fit is defined as a
set of causal recipes explaining how causally relevant elements combine into configurations
associated with outcomes of interest [26]. Causal recipes theoretically explain multiple
configurations either a priori by a theory in a top-down deductive approach, or by an emergent
theory in a bottom-up inductive approach, or in an abductive approach marked by “the dialogue
of ideas and evidence” [28].
Figure 1: Conceptual Model
2.1. Operating model characteristics
The OM characteristics consist of two types: 1) structural characteristics and 2) resource
characteristics. Structural characteristics are derived from the organizational theory and are 1)
centralization, 2) formalization and 3) specialization [29]. Structural characteristics are
important because they describe how the strategy is implemented in terms of being bureaucratic
versus organic.
Resource characteristics can be broken down in three (measurable) components: 1) resource
interdependence [30], 2) transformational capability [31] and 3) resource fluidity [32]. Resource
interdependence means the extent to which an entity depends on other entities for resources to
accomplish tasks [30] and can be subdivided in pooled, sequential, and reciprocal [33]. When
looking at it from the unit of analysis of an entity and the effect on the boundary [3], we could
argue that pooled interdependence is linked to our within entity boundary, meaning that the
OM configuration is for resources within the entity, the sequential interdependence is matched
to the value chain boundary as being a sequence of inputs and outputs between dependent firms
and the reciprocal interdependence links to the ecosystem interdependence, which means that
the configuration of resources is made to participate in an ecosystem. Transformational
capability is the ability of an entity to transform organizational and IT resources into digital
resources [31]. From the RBV theory [34], we know that an entity is composed of resources and
capabilities. In order to transform an organizational or IT resource into a digital resource, it
needs to encapsulate the value and make it accessible through a bitstring interface [31].
Resource fluidity means the ability to reconfigure capabilities and redeploy resources effectively
rapidly [32]. The inertia of existing structures, processes and beliefs throughout the
organization and the evolving complexity of its existing business strategy often make change
particularly difficult. Resource fluidity can help with allocating resources where they contribute
most value [35]. Different resource fluidity strategies are decoupling, modularizing,
dissociating, switching and grafting [35].
Next to the configurational elements derived from the theory, we have identified the
following elements for configuring the fit from our case study project (project 2) in which we
are analyzing two distinct cases of configuring DR, a setting where a large pharmaceutical
company created an algorithm for image recognition by using artificial intelligence that is
leveraged by a start-up (case A) and a large financial services company that is providing DR in
the domain of PSD2 and open banking that are leveraged in an ecosystem to fuel innovation
(case B):
1. Value Capture – where the value of the resource is captured (either within core or
extending the core).
2. Leverage – how the resource is used in a configuration (either one to one or one to
many).
3. Creation path – determining what triggered the creation of the resource (which can be
internal versus external).
4. Rationale – explaining why the resource was created (which can be organic,
commercial, or collaborative).
5. Knowledge sharing – describing how knowledge sharing was organized (can be formal
or informal).
6. Value – denoting where the value capturing is done (can be intrinsic or extraneous).
7. Governance – containing how governance is organized for the DR in scope (can be
formal or informal).
As these elements need to be further derived from the case studies, we have not yet included
them in our conceptual model.
2.2. Competitive moves
The outcome of the configuration, our dependent variable in our PhD study, should result
in competitive move(s) (CM). A competitive move is defined as “any externally oriented,
specific, observable action initiated by a firm to enhance its relative competitive position” [36].
Examples of competitive moves are given by Chen such as introducing a new product or
entering a new market, that may lead to the firm's acquiring its rivals' market shares or reducing
their anticipated return [37]. Ferrier [7] provides the following six categories of moves into the
pricing actions, marketing actions, new product actions, capacity actions, service actions, and
signaling actions.
3. Impact plan
The proposed PhD research should result in original contributions that satisfy the requirements
of rigor, relevance, and reach. The way that we plan to make impact with this research is
described in the sections below.
3.1. Rigor
This PhD study comprises a mixed-method approach, both qualitative and quantitative studies
are undertaken. This combination of research methodologies will decrease the risk of drawing
conclusions that are coincidental instead of structural. As part of the school’s research
declaration, we strive to conduct research in a transparent way that is open to replication. For
each study, we will create a protocol that is discussed with the supervisors that will describe
the setup of the study and a justification for the different choices (e.g., the sampling technique
and the data collection instruments). This protocol will be reflected in the final paper to ensure
that readers of the paper can follow the reasoning and understand the choices made in the
design.
3.1. Relevance
3.1.1. Academic relevance
This research explores the concept of an OM which is, as listed as one of the findings of the
literature review, a subject which is still not entirely understood and defined. When combining
the OM with the RBV theory, it can create a powerful explanatory framework for decisions on
sharing resources in organizations. Especially when extending the boundaries of the OM to an
ecosystem and focusing on DR, there is yet a lot left unexplored. This research should provide
a research agenda to position the OM in academic research as an EA artifact to study DR related
decisions.
3.1.2. Business or managerial relevance
For managers, we believe that this research should bring a framework that guides decisions on
the management and sharing of DR in a more structural and explicit way. We also aim to
develop an artifact to document these choices and create guidelines on who the stakeholders
are in these discussions to address potential questions on governance and value.
3.2. Reach
The concept of an OM, positioned as an EA artefact describing a specific narrow aspect of an
organization from the perspective of its Business and IT [4] has the ability to become an
important link in the alignment of business and IT. The potential was already shown by Ross
et al. in the book “Enterprise architecture as a strategy” where the OM was as part of a
“foundation for business execution”, which includes business strategy, enterprise architecture
(EA) and an IT engagement model. OM was defined as “the desired state of business process
integration and business process standardization for delivering goods and services to
customers” [38]. We believe that by extending the focus from business process integration and
standardization to resources the OM could be re-positioned as a topic in strategy, enterprise
architecture and information systems domains as well as being a subject in management
education and business schools. We will share the knowledge gathered in this PhD through
publishing in academic journals. We also would like to contribute to management or business
journals. Finally, we want to reach out to the community of CIO’s by presenting in forums like
CIONet (www.cionet.com) or MIT Club (www.mitclub.be).
4. Work plan
This PhD is divided in three studies, all with a specific focus on understanding one of several
elements of the main research question of how the fit between strategy and OM can lead to
competitive advantage? In Appendix I, an overview is shown of the different research studies,
the contribution aimed at with the study, the goals of the study, the research question(s)
addressed in the study, potential literature findings, the methodology, the justification for
undertaking this study, the impact foreseen with the study and the current status of the study
with a preliminary timing for completing the study.
The first study is a literature review and aims at developing a conceptual understanding of
OM and digital resources. The research question that we have defined for this study is “What
are properties of digital resources in the context of an operating model?”. The methodology that
we will use for this study is a Systematic Literature Review (SLR) method as described in
Kitchenham et al. [39]. This research will contribute to the ongoing research developments of
the resource-based view (RBV) with a focus on the use of DR and identify properties of DR that
are relevant to OM configurations. For this study, we have completed and published an initial
literature review in June 2022. We plan to extend this literature review with the scope described
above during December 2023 and June 2024 with the objective to have a publication ready in
June 2024.
The second study will zoom in on DR and will have as research questions: what do entities
define as DR (1), how do entities leverage their most important DR within the context of an
entity (organizational level) or ecosystem (supra-organizational level) (2), what criteria can be
identified for make these choices (3) and how do entities determine value when it comes to
leveraging DR (4). This study aims at empirically validate the use of DR and the level of sharing
in entities. We plan to undertake a series of case studies that starts from a theoretical framework
to test and iteratively develop an understanding of the use of DR by entities. As a sample, we
have selected entities that are currently undergoing some sort of digital transformation (DT),
have a somewhat mature enterprise architecture (EA) practice, are organized on a multi-
country, multi-national or multi-organization (conglomerate) level and have an IT leader at
exco/board level. We plan to run the research project during May 2023 and November 2023 and
aim to finish a complete article draft by December 2023.
The third study aims to empirically validate the relationship between the configuration of
DR in an OM and competitive advantage. The research question that we have defined for this
study is “What drives competitive advantage when configuring DR in an OM?”. In order to
collect data to answer this research question, we believe that a survey might be useful. As
methodology we are currently have identified Structural Equation Modelling based on the
survey data to measuring performance of the OM configuration of DR on large scale. However,
the output from study 1 and 2 might give further direction for the design and execution this
study. We plan to run the research project between June 2024 and December 2024 and aim to
have a complete article draft ready by December 2024.
Acknowledgements
I would like to express my sincere gratitude to my promotors, Prof. dr. Stijn Viaene and Prof.
dr. Amy Van Looy, for their invaluable guidance, encouragement, and support throughout this
PhD project. They have been instrumental in shaping my ideas, providing constructive
feedback, and enhancing my skills.
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A. Work plan
In the table below, an overview of the overall research question with a breakdown in studies,
contribution, goals of the study, specific study research questions, literature review findings,
methodology, justification, impact and status are given.
How does the fit between strategy and OM lead to competitive advantage?
Study Study 1 Study 2 Study 3
Contribution Theoretical Empirical Empirical
Goals of the study Develop a conceptual Empirically validate Empirically validate
understanding of OM the use of DR and the the relationship
and digital resources. level of sharing in between the
entities. configuration of DR
in an OM and
competitive
advantage.
Research What are properties What do entities What drives
question(s) of digital resources in define as DR, how do performance when
the context of an entities leverage configuring DR in an
operating model? their most important OM?
DR within the
context of an entity
(organizational level)
or ecosystem (supra-
organizational level),
what criteria can be
identified for make
these choices and
how do entities
determine value
when it comes to
leveraging DR?
Literature review • OM is not • Digital resources • Literature
findings unambiguously in relation to review will
defined; configurations draw on
• Current OM are findings from
configurations understudied. Study 1 and
are limited to • There is lack of Study 2 and will
within entity understanding further zoom on
boundary; how entities resource
• Current OM position DR in efficiency and
configurational ecosystems and effectiveness.
axis are limited how to
to determine value.
standardization
and integration.
Methodology Systematic Literature Case Studies [40] Survey with
Review (SLR) [39] [41] Structural Equitation
Modeling (SEM) [42]
Justification Contributes to the Series of case studies Quantitative
ongoing research that starts from a approach to
developments of the theoretical measuring
resource-based view framework to test performance on
(RBV) with a focus and iteratively large scale, through
on the use of DR and develop an a survey, of the OM
identify properties of understanding of the configuration of DR.
DR that are relevant use of DR by entities.
to OM
configurations.
Impact • Literature • Pilot study • Academic
review presented presented at Journal
at Vlerick DBA Vlerick DBA publication
Conference Conference targeted at MIS
(2022) (2023) Quarterly
• Conference • HICCS 2024 • Management
proceedings presentation research outlet
published and • Academic (e.g. MIT Sloan,
paper presented Journal HBR, …)
at IEEE CBI 2022 publication • Presentation at
conference. targeted at the CIO forum
• Final outcome Journal of
should be an Management
academic journal Information
publication Systems
targeted at the • Presentation at
European CIO forum
Journal of
Information
Systems.
Status Initial literature • December 2023 • December 2024
review done (2022), Complete Draft Complete Draft
full literature review
for publication
targeted for June
2024