Value creation machine
Value creation machine is the name of the methodology for process and organizational design, also known as the Graz approach , in order to derive organizational and process structures from the business strategy and at the same time reduce operational complexity. The approach was originally developed in the 1990s at the Institute for Management and Organization of the Graz University of Technology by a team led by Prof. Andreas Suter and has since been further developed by the current institute director, Prof. Stefan Vorbach. In addition, the methodology was expanded in the 2000s through work at the ETH Zurich and the University of St. Gallen .
The approach today comprises a self-contained methodology with a coordinated design and process model. Constituent design features are the black box approach as well as the simple client-contractor relationships between the business processes and the organizational units derived from them. With the (main) business processes, the approach determines the organizational roles and responsibilities for value creation in the company without overlapping.
The "value creation machine" differs from other approaches to business process management in that it focuses on the strategy-based determination of (target) business processes and the organization, and can also be seen as an initial step in business process management in general. Depending on the objective, the approach can also be classified as part of strategic management , namely the operationalization of the business strategy in everyday life. Originally the focus was on the process and organizational design of the day-to-day business of companies, but the approach was later developed further as an "innovation machine" on the design of the innovation activities of a company.
Design features
Client-contractor relationship
The focus of the "value creation machine" is on the consideration of the external (to customers and suppliers) and internal interfaces within the scope of order processing. This is justified with the observation that many inefficiencies, idle runs or duplication of work can be traced back to unclear interfaces or insufficient order clarifications at the interfaces. In practice, further processing is often started even though the order specification is not yet sufficiently known.
The client-contractor relationship is postulated as a new target. This is understood as a simple delegation of tasks under the two conditions (1) of the completely clarified order specification and (2) the closed return of the work result to the client (see Figure 1). The latter enables the client and contractor to jointly and easily check the conformity of the work result with the order. This is comparable to a service level agreement . In this respect, the client-contractor relationship also includes implicit quality assurance.
At the same time, the client-contractor relationship reduces operational complexity because it encourages us to clearly describe the assignment and keep the contractor away from things that have not yet been clarified. The client-contractor relationship can also be used to reduce the assignment to standard services (see Figure 1).
Black box approach
Another design feature of the Graz approach is the black box , which as an abstract construct represents an entire company (including a part of it or even an entire industry). It exchanges information with customers or suppliers via defined interfaces and somehow performs all value-adding activities. The internal organization as well as internal processes are hidden according to the principle of secrecy. As far as expedient, the black box is broken down into smaller black boxes according to the principle of self-similarity, whereby the interfaces with one another as well as with customers and suppliers are designed as simple client-contractor relationships. This creates a cascade of value creation platforms and business processes along the value chain.
By dismantling the black box, roles and responsibilities are also clarified without overlapping, because the responsibilities are clearly assigned to one or the other black box. However, the ordering black box remains responsible.
Depending on the definition of the initial black box, not only companies but entire industries or supply chains can be modeled by decomposition.
External view of the business process
The (smaller) black boxes resulting from the dismantling of the “company” black box and connected by client-contractor relationships are understood as customer-oriented, value-adding and consistently responsible business processes . Following the black box logic, the business process determined in this way has a certain scope of services, is determined by a specific trigger as input (e.g. commissioning) and a corresponding result as output (e.g. delivery), is repeatable, adds Added value to process objects, has a consistently responsible process owner and has all the necessary resources and information.
From this point of view, the internal process structuring is of secondary importance. The logical sequence of operational activities or activities with the goal of a clearly defined output to generate customer benefits, on the other hand, characterizes the conventional understanding of processes.
method
From the strategy to the macro design to the micro design of the processes
Based on the strategy identification, the “value creation machine ” describes a procedure in three stages, which breaks down the black box “company” with the macro design and defines the business processes in line with the strategy in terms of the external design. The latter are detailed in the subsequent micro-design in terms of the interior design.
When identifying the strategy, the description of the services exchanged at the company boundary with the customer or supplier in the sense of WHAT (should be provided by the value-adding machine) is decisive. In the macro design, this is used to derive the WHO (as the contractor, which share should be provided for the WHAT). The HOW is only relevant in micro-design.
Three modeling techniques for macro design
The macro design is the central procedural stage for determining the target business processes. Three modeling techniques are used sequentially:
- Cascading: dismantling of the black box or the business process by delegating defined tasks to another black box. The client-contractor relationship between the two black boxes is used.
- Segmentation: Differentiation of the resulting black boxes or business processes on the basis of freely selectable specialization features (e.g. different product groups). The segmentation creates process variants.
- Horizontal integration: Merging two business processes in order to benefit from consistency, e.g. B. Know-how transfer (e.g. from the sales phase to the execution phase) or resource use (e.g. from the outward journey with goods and return journey with old goods).
Important properties
Top-down approach
The dismantling by cascading is a central design feature. The initial black box plays a crucial role as a starting point. Since in the vast majority of cases this is the black box "company", the management is involved in the macro design.
Free level of detail
Depending on the degree of decomposition, the level of detail can be freely selected. The key is a sufficiently precise description of the interfaces, e.g. B. the documents exchanged.
Modularity
With the client-contractor relationship, the business processes are only weakly linked to one another, i. H. modular. This property is particularly important with process variants (segmentation) or a geographical distribution of business processes.
Object orientation
The resulting business processes are object-oriented, which helps in the design of the supporting or automated information technology. Since the source and sink of information are each in the same business process, decentralized systems are also easy to implement.
Separation of value-defining and value-creating processes
A distinction is made between value-defining (e.g. innovation process) and value-creating processes (e.g. customer acquisition). They belong to different design systems, are asynchronous and not linked by client-contractor relationships (see Figure 2).
Decoupling of value-added flow and timing
The two-dimensional representation of the value-added flow and time makes it easy to display supply chains with order-controlled or forecast-driven procurement.
Special benefit of the "shipyard creation machine"
- Bridging the gap between business strategy and process model : In macro design, business processes are determined by strategy. This means that generic process landscapes, industry models or system-driven "best practice" can be dispensed with.
- Depiction of comprehensive value-added bundles: The exchange of services with customers often involves a large number of main and ancillary services along the relationship cycle. The comprehensive value-added bundle is the service mandate to the initial black box. A service process can be determined for each service. These can in turn be merged into a superordinate main process using horizontal integration.
- Reduction of operational complexity through clarifications at the interfaces: The client-contractor relationships have a disciplinary effect and prevent the transfer of unresolved orders. In addition, the transition from customer-specific and standardized services can be determined at an interface in the cascade system (“business firewall”, also called “freeze-line” or “order penetration point” ).
- Process-based organizational structure: Implementation in a process-based organization is possible without a matrix organization, because the black box approach enables overlapping-free decomposition.
- Process cost accounting : If the cost centers are determined along the main processes, the process cost accounting can be created directly and without shadow accounting using classic cost and performance accounting.
Criticism of the "value creation machine"
- Lack of bottom-up process option: In practice, the focus is often on optimizing an existing business process. A top-down approach, however, requires that the existing process limits can be adjusted.
- Total approach: Based on the black box "Entire company", all main processes are potentially affected by a redefinition of the process limits.
- Implicit compulsion to adapt the organization during implementation : Since the process boundaries coincide with those of the organization, changing them also affects the organizational structure.
- High level of abstraction: Since the focus is primarily on the interfaces, but not on individual process steps, a high level of abstraction is required.
- Limited compatibility with other BPM tools: Well-known BPM tools are not designed for macro design, but for micro design.
History
The idea of a simple client-contractor relationship between parts of the organization, each with the necessary resources and information, arose in 1990/91. At that time, McKinsey & Company redesigned processes and organization in an electrical engineering company as part of two business reengineering projects. In the course of the general criticism of the low success rate of business reengineering, Andreas Suter took up the idea of the client-contractor relationship again. The approach was subsequently developed by a team around him at the Graz University of Technology in the years 1994–99.
The approach was taken up around 2000 by Hugo Tschirky and later by Roman Boutellier at the ETH Zurich and deepened in the field of innovation and technology management. From 2004, Hubert Österle from the University of St. Gallen integrated the approach into the local business engineering methodology for business informatics. Since the 1990s, the "value creation machine" has been implemented in a large number of companies in a wide variety of industries, but also in government organizations.
literature
- Ursula Deplazes: A theory of routinization of the firm's innovation activities. Dissertation, ETH Zurich, 2008
- Wolfgang Deplazes: Organizational design based on routinization of innovation: a conceptual framework and practical approach. Dissertation, ETH Zurich, 2010
- Gene Hall, Wade Judy Rosenthal: How to Make Reengineering Really Work. Harvard Business Review, Nov-Dec, 1993
- Frank Höning: Method core of business engineering - metamodel, procedure model, techniques, result documents and roles. Dissertation, Institute for Information Systems, Dissertation University of St. Gallen, 2009
- Johannes Meleschnig: Success and failure factors in the introduction of workflow management systems. Dissertation, Graz University of Technology, 1999
- Denise Mitterdorfer: Modeling the company-specific process model of innovation. Dissertation, ETH Zurich, 2002
- Dietmar Schantin: Customer- oriented design of business processes through cascading and segmentation. Dissertation, Graz University of Technology, 1999
- Tim Sauber: Design and implementation of a concept of structured innovation strategy formulation. Dissertation, ETH Zurich, 2004
- Tim Sauber, Hugo Tschirky: Structured creativity. Formulating an innovation strategy. Palgrave McMillan, Wiesbaden, New York, NY 2006
- Andreas Suter: The value creation machine. How strategies develop their impetus. Orell Füssli, Zurich 2004
- Andreas Suter: New growth. Use economies of scale, master complexity. Develop flexibility. Orell Füssli, Zurich 2009
- Andreas Suter, Stefan Vorbach, Doris Wild-Weitlaner: The value creation machine. Derive processes and organization from the strategy. Hanser, Munich 2019 (2nd supplemented and expanded edition)
- Christian Tipotsch: Business Modeling - design models and process model. Dissertation, Graz University of Technology, 1997
- Michael Zechner: Design of high-performance organizations applied to the development of software. Dissertation, Graz University of Technology, 1999
Individual evidence
- ^ Tipotsch: Business Modeling - design models and procedural models . Dissertation, Graz University of Technology.
- ↑ Schantin: Customer- oriented design of business processes through cascading and segmentation . Dissertation, Graz University of Technology.
- ^ Zechner: Design of high-performance organizations applied to the development of software . Dissertation, Graz University of Technology.
- ↑ Mitterdorfer: Modeling of the company-specific process model of innovation . Dissertation, ETH Zurich 2002.
- ↑ Sauber: Design and implementation of a concept of structured innovation strategy formulation . Dissertation, ETH Zurich 2004.
- ↑ Deplazes: Organizational design based on routinization of innovation: a conceptual framework and practical approach . Dissertation, ETH Zurich 2010.
- ↑ Höning: Method core of business engineering - metamodel, procedural model, techniques, result documents and roles . Dissertation, University of St. Gallen 2009.
- ↑ Suter et al., 2019, p. 32 and p. 58
- ↑ Suter, 2004, p. 33f.
- ↑ Sauber / Tschirky or Deplazes or Suter et al., 2019, p. 343
- ↑ Suter et al., 2019, pp. 125f.
- ↑ Suter at al., 2019, pp. 177f.
- ↑ Suter, 2009, p. 109f.
- ↑ Suter, 2009, pp. 54f. and p. 490
- ↑ Suter, 2009, p. 143
- ↑ Suter, 2009, p. 211
- ↑ Suter, 2009, p. 59
- ↑ Suter, 2004, p. 39
- ↑ Suter, 2004, p. 42
- ↑ Suter et al., 2019, pp. 177f.
- ↑ Suter et al., 2019, pp. 447f.
- ↑ Suter et al., 2019, p. 495
- ↑ Suter et al., 2019, pp. 492f.
- ↑ Suter et al., 2019, pp. 500f. and 504f.
- ↑ Sauber / Tschirky
- ↑ Suter et al., 2019, pp. 159f.
- ↑ Suter et al., 2019, pp. 207f.
- ↑ Suter et al., 2019, pp. 235f.
- ↑ Suter et al., 2019, pp. 257f.
- ↑ Suter et al., 2019, p. 423f.
- ↑ Suter et al. 2019, p. 326f.
- ^ Hall / Rosenthal