In the global competition, the tangible resources as differentiating factors of competitive advantage losing their power. Whiles the subject of the intangibles and the knowledge management is associated with the high economic performance, and is becoming increasingly significant in the strategy implementation. This paper explores how Enterprise Modelling (EM) can be used to mitigate the gap between the theoretical stands of the importance of the intangibles and their practical application. In particular, the study presents the application of fractal enterprise modelling (FEM) technique in the strategic resource analysis. The aim of the research is to propose a duo-hierarchy modelling method for intangibles, and to apply it in a real case example. The business situation concerns the structural change within the product development processes in pursuit of the strategic leadership. The study deploys the Design Research (DR) methodology and generate a new knowledge about EM application in the intangible resource management. A clear and well-documented Word document is presented as an article formatted for publication by CEUR-WS in a conference proceedings. This article presents and explains many of the common variations, as well as many of the formatting elements an author may use in the preparation of the documentation of their work.
The ability to create and utilise the difficult-to-imitate resources is one of the key success factors
to differentiate and sustain a competitive advantage [
[
Therewith, the strategic view on the resource analysis suggests to enrich the notion of
intangible resource hierarchy not only with the level of their development but also with the
complexity in their composition. One example of such hierarchy can be found in [
composition in a particular business instance. However, at the present moment of this paper, there have been no such attempts identified in the research field. The main body of research on intangibles is dedicated to intangible resource evaluation using mathematical and/or statistical models, such as in [21], [22], [23], [24], [25].
of the intangible resource building considering double hierarchy. Previously, EM has been used for modelling a generic resource development hierarchy, i.e., from assets to capabilities development, see example in [26]. In this study, the approach accounts for the operant resource hierarchy, i.e., how the BORs are organised to comprise CORs and/or IORs in a particular business situation.
combines two types of the resource hierarchies: a) the general resources development hierarchy
[27] (used previously in [26], [28]), and b) the operant resource hierarchy [
and the research background; Section 3 describes the methodology used; Section 4 gives more details on how the deign to modelling intangibles has been approached; Section 5 introduces
Previously, the method of modelling of generic resource hierarchy has been applied in a
realworld example of the R&D analysis, where two patterns related to building organisational
competence have been identified [26]. These patterns represent the adaptive learning and the
generative learning. The organisational structure has been pointed out as one of the main facets
in distinguishing the patterns; because of the structural aspect ‘shapes the behaviour of the
members’ [
profound quality checks. This practice has been historically successful; therefore, there is lots of
confusion among members about why the profitability is declining. The lower graph in Figure 1
illustrates the pro-active approach, where the company develops a ‘Long-term holistic product
strategy’ together with the customer (see more in [26], [28]).
To achieve the overarching coordination, the activities of a new department focus on early
engagement with the external environment by ‘actively hunting for the information’. Namely, by
reaching out to the strategic customers before ‘they know’ what they want, by obtaining the
technological information on the future products together with the customer, and by feeding this
information back at the high organisational level to ensure a strategic coordination. However,
there are many intangibles behind each tangible resource and to acquire such resources is a
complex matter based on the development of the unique series of the organisational activities
[
The aim of this study is to propose a duo-hierarchy method for the intangible resource analysis by combining the operant resource hierarchy model and the resource development hierarchy using EM, in particular FEM. Thus, the presented research belongs to design science research (DSR) methodology. The process of the DSR consists of several iterative steps, such as: 1) identify the problem, 2) define the solution, 3) design, 4) demonstrate, 5) evaluate, 6) communicate/report [29]. This paper reports on the results of the EM design solution (a duohierarchy method for modelling intangibles using patterning) as well as demonstration/evaluation by the practical application of the proposed design.
The knowledge obtained in the preceding studies, where FEM has been applied in the strategic analyses, is used as an input to the design solution, more detail in [28], [30]. According to [29], the demonstration requires effective knowledge on how to use the tested artefact to solve a specific problem. Thus, the demonstration step in this research aims at showing how the proposed method can be used in the strategic operant resource analysis. The outcome of this step takes a form of the FEM models illustrating the relevant to the analysis resources and processes of the enterprise. The models produced for the case have been analysed from the perspective of the duo-hierarchy patterns; where the business situation in intangible resource management have been diagnosed.
requires certain assumptions about the solution’s performance [29]. From the modelling perspective, the proposed solution should be able to support the quests to represent different type of operant resources and their composition. From the DSR perspective, the knowledge obtained during practical application of the new method, can be fed back into the design phase.
insights about the business situation, i.e., the state of the strategic resource management. Hence, any outcome, positive and negative, generates a new knowledge that can be used in developing a better solution for a given problem. It advances the general knowledge about EM usage for the purpose, it also provides more insights about how particularly FEM can be used in the intangible resource analysis, and it helps to generate new ideas about the future research directions.
The practical question to answer is how someone using EM, can understand the intangible resource composition and modify them through the change in tangible resources e.g., organisational structure. The question can be answered in two ways. The first way is top-down, i.e., to identify the key IORs necessary for reaching the strategic objectives, and then, decompose them into CORs and/or BORs. The second way is bottom-up, i.e., to map the key basic tangible and intangible resources (BORs) in the given process/s, and analyse their usage in order to discover the combinations that may comprise CORs and IORs. The latter approach to resource analysis has been performed in the presented business example.
of operant resources’ constructs has been used, i.e., one key organisational competence within
information in the case study is inherently subjective and the matter of biases [31]. Furthermore, considering the arguments that the perceived usefulness of modelling is in the modelling process, and not in the models themselves [32], a single participation of a junior researcher in the case analysis enhances such biases.
There are three intangible resource frameworks combined in this work to design a modelling
technique technique using FEM notations. The deployment of these frameworks contributes to
the more holistic approach to the intangible resource analysis in following ways:
•
•
•
the classification of the intangible resources [
There are multiple ways to classify the intangible resources, see for example [
craft, know-how, etc., i.e., the knowledge-related intangible resources that may directly control the process execution [40].
Since both, human and informational, operant resources in [
to the organisational scope. Whereas, the concept of the operant resource hierarchy is used to
denote the intangible resource complexity [
• Asset level – the physical resources, such as workforce, representing a repository for the intangible resources. • Resource level – the personal skills, know-how, competences, etc. to perform a task in an effective and efficient way to contribute in the production of valued market offer (strategic). • Competence level – the combination, coordination and management of the personal knowledge, skills and competences of the teams, the unit or function level to produce effectively and efficiently valued market offer. • Capability level – the coordination of knowledge, skills, etc., within and between the multiple organisational functions and units (the organisational level) to produce effectively and efficiently valued market offers.
4.3.
The value innovation resource hierarchy [27]) has been complemented with the operant
resource hierarchy proposed by [
value innovation resource hierarchy is used to refer to an intangible resource to show its level of development, i.e., referencing to the organisational scope. Whereas, the concept of the operant resource hierarchy is used to refer to an intangible resource complexity at any level of development, i.e., at any organisational scope. Figure 2 illustrates this logic.
Capability (BOR;COR;IOR)
Competence (BOR; COR; IOR) Human Resource (BOR; COR; IOR)
Asset (Workforce)
Interconnected
Operant Resources (IOR)
Composite Operant Resources (COR)
Basic Operant Resources (BOR) F
FEM is a modelling technique based on the fractal view on an organisation [41], [42]. Graphically,
it represents the system of interconnected processes and assets; whereas, a process has an oval
shape, an asset is rectangular, and the relationships are captured by the arrows of different types,
see example in Figure 3. Together, these elements construct different types of patterns: a
process-asset pattern shows the assets used in the process (see (a) in Figure 3), an asset-process
pattern shows what processes must be in place to manage a given asset (see (b) in Figure1), and
a decomposition of a process which provides more details about the activities and assets in a
given process (see (c) in Figure 3).These patterns represent the fractals which can be alternated
to create a directed graph relevant to a particular situation showing the chain of the relationships
across the fractal levels. The ADOxx toolkit is used to implement FEM software tool [
because of it covers the necessary requirements for the presented study, such as the possibility to visualise the low-level intangible elements on the basis of which the higher-level intangibles can be developed, i.e., competences and capabilities. Besides, FEM advances other EMs by its recurring structure allowing to navigate the relevant chain of the relationships across the fractalic hierarchy of the processes and assets paying attention to their roles in the system.
The patterns for modelling a generic value innovation resource hierarchy using FEM has been described in [28]. In particular, through connection of the knowledge and experience type of assets to the ‘Workforce’ asset at different hierarchical level, it was possible to notate the owner of the intangibles within the organisational system. For example, if the knowledge is possessed by a person, then such resource is ‘resides within’ the lowest level of the organisation. Hence, this knowledge is accessible only to a particular employee and might be lost by an organisation when he/she leaves. In contrast, if such resource ‘resides within’ a ‘Workforce’ asset representing the team or inter-functional teams, then the resource is commonly shared and accessible among multiple people, or functions respectively; thus is an organisational resource.
In this work, the intangible resource development patterns have been developed using FEM by combining the generic value innovation hierarchy is combined with the operant resource hierarchy. The examples of duo-hierarchy patterns are summarised in Table 1. To denote different types of operant resources, such as BORs, CORs, and IORs, the intangible assets (in dashed boarders) are used. These assets play the role of inputs in a business activity, which is denoted with ‘EXT/Tech&Info Infrastructure’ connection. To show the level of resource development, the links ‘reside within’ indicate which type of ‘Workforce’ asset possesses a given resource: an employee, a team or a function respectively.
Table 1 shows: BOR/ • • • • • • IOR/ • •
cognitive, e.g., experience and subject knowledge, and personal values and beliefs, represent the lowest level components of organisation’s intangible resources.
capability is obtained when cross-functional teams’ tacit knowledge is shared and accessible to all members of an organisation. Note, at this stage the composition or interconnection is not yet considered, only the possession of such.
resources at individual level, such as personal experience and knowledge, etc., of an employee that produces a COR ‘skilled employee’. This type of COR represents a valuable human resource that provides an organization with unique skills and know-how to make a process more efficient.
of ‘know-how’s (based on tacit knowledge of different teams) from multiple units that together build the base for an innovation competence at a functional level.
that are acquired and reused in a business activity, i.e., the acquired knowledge in a task, changes the way the task is performed and vice versa. These individual assets reinforce each other to acquire a unique ability to perform a task in such a way that may produce different type of the process's outcome, e.g., making it more effective.
Competence level: an example of IOR at the competence level might be a dynamic coordination. Such a competence is based on the shared competences between teams, the resource that is reinforced by the common cultural norms, views, beliefs, etc., possessed by employees within one function. Such reinforcement may change the • processes’ outcome by better understanding, reaction and nature of the response to the new information at a functional level.
Capability level: at the capability level, the organization-wide dynamic coordination become a higher-order operant resource (capability). It emerges on the basis of the common cultural values, norms of behaviours, etc., shared between different functions (note, the sub-cultural difference still may exist). The common cultural norms ease the knowledge exchange between different functions, i.e., reinforce the competence share and the knowledge application throughout the organization. Thus, improve the adjustments and responses to the new information, which may also change the process’s outcome.
Figure 4 represents the extended version of the process ‘Product strategy development’ presented in Figure 1. Particularly, it provides more details on usage of the intangibles in its subprocesses, such as, ‘Processing customer requests’ and ‘Providing feedback on request’. For instance, the former sub-process uses the BOR knowledge ‘Technical expertise tacit knowledge’ which is resided within the internal R&D team. Also, the BOR tacit knowledge, such as, ‘Experience in processing customer requests’, is acquired and reused in this sub-process (blue rectangles in Figure 4). Hence, these two BORs (among others) composite the COR related to knowledge type of intangibles. The R&D unit members disseminate and/or absorb the new knowledge during the sub-process ‘Developing a solution’, where the customer request’s analyses are discussed. The experience of creating a product design together with other members, leads to learning how to collaborate. Hence, in this sub-process the two BORs relational resources are acquired and reused, which enhances the competence of collaboration within R&D function, i.e., form the relational COR resource ‘Functional coordination’. Note, that the cultural BORs control the member’ behaviour organisation-wide, i.e., is applicable in all processes, including the entire ‘Product strategy development’. Thus, this BOR is a constituent part of all higher operant resources: directly, e.g., the COR relational and IOR; or indirectly, e.g., influencing the IOR through the COR knowledge. Hence, Figure 4 shows that the organisation’s IOR ‘Organisational competence in product innovation’ consists of the combination of at least two CORs (‘Technical competence’ and ‘Functional coordination’) and a BOR ‘Internal cognitive tacit knowledge’. The reinforcement occurs through influence of the internal cognitive tacit knowledge (the culture) on the way engineers collaborate; which in turn, has an effect on the organisational technological competence building.
Although, it is argued that the possession of such IOR sustains the competitive advantage [
(‘Organisational competence in product innovation’) belongs to the competence rung within the general resource development hierarchy, i.e., lies within the scope of one function, such as R&D unit (denoted as ‘Workforce’ in the process). After the change, the organisation appropriated the IOR at the capability rung, i.e., the ultimate level in the resource hierarchy. Namely, the IOR ‘Organisational Entrepreneurial proclivity capability’ (Figure 5) has been developed on the basis of differentiated BORs and CORs. The acquisition of such differentiated intangible resources has been enabled through the establishment of the new team (‘Tech advisory global team’) and the sub-processes it performs, ‘Hunting for industry technical knowledge’ and ‘Strategic customer identification and suggesting their future requirements’. There are two peculiarities with such a move. First, the new team place a role of interconnector between the executive and operation levels, i.e., it works closely with R&D function but, also, is directly involve into long-term strategy development function. Second, the new processes it executes, require entrepreneurial cultural norms and behaviour, i.e., different form existing, which are safety-oriented.
The sub-process ‘Hunting for industry technical knowledge’ introduces the acquisition of the broader and deeper technological knowledge, e.g., BOR ‘Industry technical tacit knowledge’. It also introduces the entrepreneurial cultural norms and behaviour which are necessary to execute such tasks, i.e., BOR ‘Cognitive tacit (Innovative, risk taking, proactive behaviour norms and values)’. All these BORs, including the experience in this new process, reside within the new team ‘Tech advisory global team’. Together, they construct the COR ‘Pro-active product innovation competence’ and are included in new IOR ‘Organisational entrepreneurial proclivity capability’. Hence, by establishing a new team and processes, the organisation bonds together different functions through introduction of new cultural norms and behaviours. Note, that these new norms and behaviours are resided only within one part of the organisation at the start. How this partial strategic-operational coordination enables adjustments in all other parts of the organisation and its functions, is the matter of a more complex schemata in knowledge resource management and organisational learning, which is a future research agenda.
The sub-process ‘Strategic customer identification and suggesting their future requirements’
enables the acquisition of the BORs ‘Technological collaboration reasoning’ and the ‘Experience
in partner identification propensity’. The ability of the firm to predict the industrial technological
path and, therewith, to identify the future customer requirements and to convince them in their
future strategy, provides the grounds to both partners for differentiation, i.e., gives the reason to
collaborate. Such collaboration secures the strategic relationships and alignment of partners’
businesses [
Hence, at least two CORs have been detected to form the IOR ‘Organisational entrepreneurial
proclivity capability’. This IOR belongs to the capability level because of its construction not only
implies on the inter-functional cooperation, but also requires the collaboration and alignment of
activities of multiple parties, such as internal and external (e.g., customer) strategic teams. Thus,
this IOR is critical for building an isolating mechanisms to sustain a competitive advantage since
the relationships with the key players in the industry means pre-emption the relational resource
base [
Hence, the analysis of FEM models with focus on intangibles, may be interpreted as the introduction of a new department complements the existing product development competence with the processes, potentially, capable of advancing the intangible resources’ base to sustain a competitive advantage. For instance, despite having IOR in place to ensure the superior innovation competence, the company has been losing its strategic position and suffering financially. This discourse can be explained by the notion of double resource hierarchy. Namely, according to the general resource development hierarchy, the organisation did not have the IORs at the organisational capability level, i.e., the most complex level of the resource application that is responsible for the coordination and knowledge exchange organisation wise and interorganisation wise [26]. The lack of the complexity and the ambiguity in the resource building imply on the vulnerability and/or unsustainability of the competitive advantage [34].
The application of the proposed modelling technique to describe the organisation’s situation enhances the analyses by providing better visual observation over the intangible resources’ composition; hence, how to better manage them. Namely, the visualisation of intangible resource hierarchies’ fusion may help the practitioners in development of difficult-to-imitate resource and strategy implementation through better understanding of the process-structure-resource relationships.
The existing FEM modelling notations are sufficiently expressive to realise the conceptual methods to show the classification of the intangibles, the scope of the resource application and the resources complexity: • Classification: although, there is none of the explicit notation in FEM toolkit to classify the intangibles into knowledge, culture and relational categories, the differnet colours can be effective for this purpose. • Scope: The scope of the intangible resources application can be denoted by using the arrows, such ‘resides within’ connected to the tangible HR asset, e.g., the person, the team or the entire function (see examples in Appendix 1). • Complexity: The complexity or the composition of the higher level intangibles can be denoted by using the assosiation links between multiple operant resources. However, to determine whether a higher-level operant resource represents a combination type (i.e.,
interpretation is adopted: the composition (COR) occurs when BORs are visible and acounted by different parties in their processes execution, which may change the value of the process outcome; while, the reinforcement occurs when BORs and/or CORs may also influence the business process outcome in such a way that produces different type of outcome.
improved the sustainability of the competitive advantage through building more difficult-toimitate operant resources.
This study provides an alternative perspective on the intangible resource modelling for the strategic analysis but it is limited to the application of the one EM technique (i.e., FEM), the relatively narrow scope of the intangibles’ classification, and to a single case of application. The future research should aim at mitigating such drawbacks. The presented resource decomposition has been useful but it does not show how the combination occurs, i.e., what triggers the change in the pattern of the activities that acquire and combine those resources, such as organisational learning loops investigation. Also, a better understanding and defenition of
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