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Center for Technology and Innovation Management

Working Paper Series

ISSN: 1667-738X

Working Paper No. 3305

The CeTIM Virtual Enterprise Lab A Living, Distributed, Collaboration Lab

Bernhard Katzy, Hermann Loeh Gordon Sung

CeTIM @ Uni Bw Munich, 85579 Neubiberg, Germany

[email protected],[email protected],[email protected]

http://www.cetim.org/wps

[email protected]


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Katzy, B.R., Loeh, H., Sung, G., CeTIM Virtual Enterprise Lab 2

Mission of the Working Paper Series

The working paper series of the Center for Technology and Innovation Management aims

at supporting the exchange of ideas and intermediate academic results in the field of

Technology and Innovation Management. Papers included in the Working Paper series

fulfil minimal formal standards only. They are not reviewed, and are not intended to

substitute proper journal publication. In contrast, the working paper is intended to

facilitate the academic process, which by its achievement shall lead to high quality

results.

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Subscription is free of charge.

Authors Contributions:

Contributions are invited from all academics in the field of Technology and Innovation

Management, regardless of the affiliation of the researchers. Please contact the editor.

Editor:

Prof. Dr. Bernhard R. Katzy

Professor for Technology and Innovation Management

[email protected]

www.CeTIM.org/wps

Disclaimer:

Working papers are distributed to invite discussion on on-going research. This working

paper is not published and should be considered preliminary in nature. In especially, it

may be subject to revision. Accordingly, it should not be quoted nor the data referred to

without written consent of the author(s). Your comments are welcome and should be

directed to the author(s).


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Abstract

Virtual collaboration is becoming a relevant way of knowledge intensive working. The

paper argues for a distinct research approach to study the interdependence of technical

change and the emergence of new forms of organizing. Technology has advanced to

provide more powerful, richer and more integrated communication functionalities, which

now triggers change in working routines and organisational forms that are required to

make productive use of even further optimized technical possibilities. Our research

approach uses a living laboratory infrastructure to stimulate open innovation processes

for ICT applications and new working and management methods from their productive

application in a social context. It combines development of advanced information

technology applications with rigorous study of fundamental organizational and

management research questions. The paper describes how the Virtual Enterprise Lab

(VE-Lab) at CeTIM has been designed and which facilities it currently offers.

Keywords

Living laboratory, virtual collaboration, virtual enterprise, open innovation, user driven

innovation


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Introduction

Trends like globalisation, accelerating pace of change in markets and increasing

computer use do change how work needs to be organized for high productivity. Only

twenty-five years ago Abernathy & Utterback, (1978) assumed productivity to be

efficiency in operative processes and that therefore a firms focus on productivity gains

does inhibit its flexibility and ability to innovate. Abernathy observed that in the

automotive industry a firms economic decline was directly related to such productivity

efforts. He consequently suggested that a firms ability to compete needs to be

simultaneously rooted in its ability to increase efficiency and also in its ability toinnovative (Hage, 1999).

Flexibility and efficiency as the two far ends of a productivity trade-off for organizing

labour still dominates the discussion for example on the agile, virtual enterprise (Katzy &

Schuh, 1998; Mowshowitz, 1997). Experiments with new ways of organizing are

observable in many of todays highly competitive industries such as aeronautics,

telecommunication, IT and Media, but equally in service industries like finance or health

care. Terms like network organizations, project organizations, or program management

point to the fundamental organizational question how complementary resources can bemarshalled to jointly achieve results (Barnard, 1938). Airbus is one example how such

organizational forms span traditional boundaries and geographies to achieve results

which are bigger than each of the partners could achieve individually. (Figure 1)

FRANCE- Centre Wing Box- Nose Fuselage- Nose LG Bay- Engine Mounts- Sponsons- Rudder- Wing-Fuselage Fairing- Cockpit Furnishing- Ramp

GERMANY- Wing Panels

- Centre Fuselage- Fuselage Furnishing- Pre-FAL- Vertical Tail Plane Box & Assembly- Flaps (with Airbus-UK & FLABEL)- 30% Rear Fuselage - Assembly- 50% Rear Fuselage - Components- Cargo Door

AIRBUS UK- Outer Wing Box- Flaps (with Airbus-GE & FLABEL)

EADS-CASA- Final Assembly Line- HorizantalTail Plane- Engine Nacelle- Flap Track Fairings- VTP Leading & Trailing Edges- Elevators

FLABEL- Wing Leading Edge- Flaps (with Airbus-GE and Airbus-UK)- Flap Track & Mechanism- Main LG Doors

TAI- Forward Centre Fuselage- Tail Cone & top shell on rear fuselage- Paratroop Doors & Hatch Door- Ailerons & Spoilers

A400M Strategic Workshare

Airbus MilitaryPrime Contractor AIRBUS France

EADS France

AIRBUS Germany

EADS Germany

Figure 1: Virtual Enterprise of Airbus[Source: DASA 1998]


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Productivity is the ratio of outcome achieved to input needed. Where the nominator is

fixed as a market defines standards for the outcome, productivity turns into a measure for

the denominator as how effectively work is organized and coordinated between the

collaborating partners. And when the requested outcome changes, productivity turns into

a measure how fast and how well the organization can adapt and fit its relevant

environment. In other words, organizational architecture is a choice to be made to

achieve productivity (Katzy & Sung, 2005). Traditionally there have been two major

alternatives of coordination either through market mechanism between firms or - if

transaction costs become too high - through hierarchy inside the firm, where work is

managed through supervision. The term virtual enterprise in the name of the Lab

indicates that it is designed to search for new organizational architectures with better

productivity for collaboration across firm boundaries.

Obviously, encompassing information and communication technology systems (ICT)

bring about a whole new range of collaboration and coordination mechanism through

easy access to geographically distributed information as well as people. It is the working

hypothesis of the here described research approach that new working practices can go

beyond the foreseeable advantages of adopting ICT technologies to automate existing

working practices. Rather, new technology can be expected to trigger processes of social

dynamics and structuring and thus re-structuring of the social system, which changes

individual behaviour, working norms and governance structures (Giddens, 1979).

The living laboratory is intended to serve as an experimentation and testing platform for

collaborative work that is enabled by the use of ICT. The lab shall give room for social

restructuring processes to unfold and therefore is not a physical room in the sense of e.g.

a chemistry laboratory. Instead it is a technical infrastructure and organizational platform

that allows experimenting new working processes and routines under changing

collaborative settings. State-of-the-art ICT technologies are set-up to stimulate the

emergence of new work routines from which in turn user requirements for further

enhanced ICT technologies are derived that again allow different working routines. As a

Living-Lab, experimentation is not separated from real life organizing, governance of

projects and teams, and the organization or networks of partners. Rapid feedback cycles

stimulate the user-driven innovation process (Hippel, 2005; Morrison, Roberts, & Hippel,

2000). However, fundamental academic research complements the applied dimension in

order to achieve theoretical progress as solid foundation for new work. The living

laboratory research is thus positioned with Pasteurs fundamental-applied research

(Stokes, 1996).


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Enhanced

Theory

BetterExperience

[Donald E. Stokes, 1996]

Fundamental Research

Bohr

Applied Research

Edison

Todays

Theory

VE-Lab

Living Laboratory forFundamental-applied

Research

Pasteur

Todays

Experience

Figure 2 : Research positioning of VE-Lab

The objective of this paper is to present the concepts that guided the design of the lab, its

current settings and facilities. The remainder of the paper is structured as follows: we will

first elaborate on the term Living -Laboratory by reviewing existing definitions in the

literature. We will then turn to future scenarios of collaborative working which we

developed to guide the development of the Living-Laboratory. We will complete the

paper with a summary of the technical concepts including the physical layouts of thelaboratory and equipment for virtual collaboration.

What is the Living Laboratory Approach at VE-Lab?

The term Living Laboratory comes with multiple connotations. It is becoming

increasingly popular for a broad range of scientific settings that range from large gardens

or agricultural areas like the Selman Living Laboratory, to specially fitted flats that offer

the possibility to observe inhabitants with multiple sensors in the MIT PlaceLab, to open

mass user experiments in the Botnia Living Lab and the MobileCity Bremen. The VE-

Lab shares with the above cited labs that it is used for longitudinal experiments in as

much real-life settings as possible.

Fundamental research at VE-Lab focuses on longitudinal work studies and organizational

(psychological) experiments. Mainstream analytical experiment methodologies focus on

the test of a small number of variables with control of all other parameters to allow for a

good statistical sampling and the isolation of the impact of each individual factor. Instead,

the real-life settings of the living lab target the interdependence of multiple influences

over time, which affect individual behaviour and labour skills, working routines on teamlevel and overall coordination of the organization. Typical VE-Lab research settings are


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thus operated as one large experiment, with the objective to observe new pattern of work

and organizing that emerge from changed behaviour of those who use the VE-Lab for

their work and over time get accustomed to its advanced technical infrastructure and

changed organizational structures.

The contribution of the VE-Lab is to provide possible scenarios of how collaborative

work could look like 10 or 20 years ahead. Fundamental research allows understanding

through concept development and reflection the wanted and not wanted effects of such

developments. The purpose of living lab experimentation is to use the full social setting

for observation and to establish new concepts and theories.

More application oriented research strives for quick conceptual learning cycles from fast

and direct feedback by the participants and their involvement in user-driven iterative

cycles of technology development (Hippel, 2005; Morrison, Roberts, & Hippel, 2000).

The role of VE-Lab in this process is to provide a common platform for technology users

and technology developers and facilitate direct cooperation between the two.

However, the better this user driven process works, the larger is a tendency to develop

idiosyncratic solutions for individual users, not general insights and results. In order to

avoid this shortcoming, VE-Lab will combine the three research methods, user driveninnovation experiments with external validation experiments and organizational change

experiments:

User driven innovation experiments: researchers and experimenters bring

typical business scenarios into the setting of VE-Lab. For example, product

development teams exercise working routines like project planning, brainstorming

and concept development, or distributed project meetings. They change their ways

of working. Technology providers customize information systems to the changing

needs of the experimenters until a mature situation of productive working hasbeen reached. A number of prototypes and pilot versions of software applications

are made available within VE-Lab by technology providers who derive insights

for their development roadmaps from these early application test experiments.

External validation experiments: Conceptual insights and explorative theories

need to be generalized from the specific settings of VE-Lab to general explanation

of a broad range of organizational situations. A second research step therefore is

empirical studies of organizations that are not related to VE- Lab to verify the

concepts and theories that resulted from the user driven innovation process. Next

to the development of well founded research insights, these studies are equally


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meant to provide feedback for the further development of VE-Lab and its

installations.

Longitudinal organizational change experiments: Not only different ways of

working and organizing as they are developed in the VE-Lab are relevant objects

of study. The third type of study focuses on organizational transformation

processes of how organizations implement the new organizational forms and how

their members adopt appropriate working routines and individual skills. Such

studies will use the Lab infrastructure over a prolonged period of time both

locally on campus and remotely as training environment. Application and

information services can be provided into the users host organization. Such

design provides the chance to collect detailed data for an evolutionary perspective,

e.g. how do project members change their behaviour over time due to higher

proficiency in the use of the new ICT.

A further dimension of the Living-Laboratory approach is the application of both the

technologies and the organizational concepts of the virtual enterprise at the research

institute CeTIM in its research operations as part of a continuous self-trial. To this end,

CeTIM lives in the laboratory. Its roughly 25 members have culturally diverse

backgrounds with more than six different native languages and nationalities, are

geographical distributed across five countries and are distributed in affiliation with some

members being at the same time also members of other organisations. Most CeTIM

projects and activities are undertaken in collaboration with other academic and industrial

partners. CeTIM does not have any fall-back systems or an alternative operative

infrastructure to its VE-Lab infrastructure. The experimenters thus regularly work in

advanced cases of virtual organisations to develop first hand understanding of the

technological possibilities as well as the practical and social challenges.


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Figure 3 : Federated working principle of CeTIM

Virtual Enterprise Scenarios

The design of the VE-Lab has been based on scenarios of virtual enterprises (Katzy, Loeh

& Zhang, 2004). The scenarios were established in a scenario development process

through literature research, review of software concepts and designs, and user workshops.

Insights were condensed to three complementary scenarios of future organisations as a

global networked firm, regional cluster and enterprise networks, and professional

communities (Figure 4).

Service

provision

Regional clustersand enterprise

networks

Professional

communities

Global Networked Firm

Figure 4 : Guiding Scenarios of Virtual Organising

In the global networked firm scenario, large global groups will offer global branding,

marketing and sales and global distribution channels. Their main business model is based

on organising global coordination infrastructures that allow high degrees of functional


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outsourcing. Smaller firms and individuals operate in regional networks as suppliers to

the global groups. Flexible project oriented teams or mixed service team will be

supported through highly automated, standardized processing systems. Literature presents

Dell, Cisco or Nike as role-models of such global firms.

The regional network scenario is strongly driven by business architects, entrepreneurial

brokers who identify market opportunities and develop business models for each business

case that brings a set of network partners together. In a matching process skills and

resources are configured on a project basis to fulfil the specific business needs.

Collaboration web portals and real-time communication systems will be typical ICT tools

for supporting project activities within the network. Wireless Leiden and Virtual Factory

are role models of such kind of regional network.

The professional community scenario emerges from the rapidly increasing number of

independent knowledge workers, experts and small teams that provide highly specialised

and flexible services to regional networks and global firms. The organisation of such

communities will very much be membership driven with specific rules and working

practices that members adopt and the development of authority amongst the peers which

is based on merits and seniority of the members.

Each scenario incorporates a set of strong trends. We do not expect future industrial

organizations to follow any one of the scenarios in its pure form. The intention rather is

to help understand future developments from combining elements of all three organising

scenarios.

Technical design principles and facilities of the VE-Lab

The VE-lab is distinct because it is designed to study selected key features of virtual

organizations, which we summarize as the technical design principles: federation, robustconnectivity, concurrency, virtual presence, and low-cost:

Federation describes controlled collaboration amongst entities in the network, which

maintain a degree of autonomy even when they are integrated to serve common and

shared objectives. The VE-Lab architecture (Figure 5) is therefore not designed as

integrated enterprise architecture, but on the basis of a federated service architecture i.e.

there is no centralisation or hierarchy of systems and locations, but systems can route

information flexibly corresponding to the changing organisational set-up. While many

current systems are still influenced by the single-company, hierarchical structure, all newsystems implemented at VE-Lab support the federated design principle.


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MicrosoftExchange

Server

SIEMENS-MicrosoftOpenscape Presence-

Based Real TimeCommunication server

ArelConferencing

Server

VE-forum

Server

Microsoft

ExchangeOutlook

Microsoft

WindowsMessenger

SIEMENS

VoIP

Arelvideo/audio/data

conferencing

VE-forum

Collaborationwork space

Siemens Huskyasynchronous Data

Microsoft .NetApplication

SIEMENS OpenscapeSynchronous Voice

Figure 5 : Federated IT Architecture of VE-Lab

Robust connectivity How effective a virtual enterprise can operate very much depends

on how well the collaborating entities are connected. Robust connectivity describes the

concept that organizations can learn to live with different degrees of network availability.

For the purpose of experimenting a range of different networks are available at VE-Lab.

On the one extreme VE-Lab uses the unsecured open-source regional wireless network of

Wireless Leiden. It is one of the largest outdoor WiFi-networks in the world with over

fifty network nodes that cover the whole region around Leiden in Netherlands with about

200.000 inhabitants. On the other extreme VE-Lab at the University BW Munich isconnected via highly secured high-speed fibre connection. Intermediate connections

include ISDN and 128/768 kBit DSL connections, as well as mobile GPRS and UMTS

connectivity. The aim of providing such range of different connectivity is a feasibility test

of distributed virtual collaboration of entities that are connected through different types of

commercially available or prototyped infrastructures. For the time being we expect

conditions of changing prices and availability and reliability of networks to persist.


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Figure 6: Connectivity through Open Source WIFI Networks of Wireless Leiden

Concurrency describes the possibility of synchronous collaborative activities at

distributed locations with real-time interaction. VE-Lab offers various technologies and

modules for real-time communication such as Skype, MS Messenger, the Arel Life

Communication Platform for data, voice, and video conferencing system, and the

Siemens OpenScape VoIP communication platform.

Figure 7 : Example of real time presence in multimedia conferencing

Virtual presence transfers the organisational principles of collocation, visibility and ad-

hoc exchange to the virtual space. Individuals can collaborate on the basis of availability

and connectivity rather than where they are or what devices they use. Technically,

presence-based communication (Figure 7, left side) is based on detecting seamlessly the

best communication channel and routing intelligently and transparently for example

telephone calls or other real-time interactions to the appropriate device. It is the aim to

allow studies on how virtual presence mechanisms can replace traditional organizational


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concepts that are based on location, for example in building trust, social cohesion, or

coordination.

Low cost of ICT systems is another important design principle that ensures that all

technologies of the VE-Lab are affordable for small and medium sized companies and

professionals. Therefore, business models for setting up and providing collaboration

infrastructures are of concern.

Physical Locations of the VE-Lab

The VE-Lab provides physical locations in Munich (D), Leiden (NL) and Fribourg (CH)to experiment the different scenarios of collaboration between individuals and groups.

Figure 8: VE-Lab Munich building layout

Rooms are designed by zones that support different collaboration needs:

configurable individual working zones (blue areas)

group meeting rooms, which are each equipped with (yellow areas)

o Two electronic interactive white boards each


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o Video, audio, and data conferencing clients, and a suite of collaborative

tools

o Professional web-based group video conferencing and room microphone

and speaker

Computer and servers rooms (red areas)

Social and informal idea exchange zones (green areas)

Conclusion

We designed the VE-Lab as a living lab for fundamental research in distributed and

virtual collaboration. It is based on an open architecture for experimentation and

development. The Lab accommodates collaborative research projects and is supported

and used by the research institute CeTIM as well as its academic and corporate partners.

Current research projects focus on the following research questions:

What are drivers for productivity of information workers?

What skill profile leads to personal effectiveness of project leaders in virtual

projects?

What dynamic capabilities drive productivity of collaborative product

development of tiered supplier networks?

References

Abernathy, J. M., & Utterback, W. J. 1978. Patterns of industrial innovatoin. Tech. Rev.: 40-47.

Barnard, C. 1938. The functions of the executive: Harverd University Press.

Giddens, A. 1979. Central Problems in Social Theory: Action, Structure and Contradiction in Social analysis.

Berkeley, CA,: University of California Press.

Hage, J. T. 1999. Organisational Innovation and Organisational Change. Annu. Rev. Sociol: 597-622.

Hippel, E. V. 2005. The future of innovation: The rise of the creative consumer, Economist.

Katzy, B. R., & Schuh, G. 1998. The Virtual Enterprise. In A. Molina, J. M. Sanchez, & A. Kusiak (Eds.),

Handbook of Life Cycle Engineering: Concepts, Methods and Tools: 59-92. Dordrecht: Kluwer

Academic Publishers.

Katzy, B.R., Loeh, H., & Zhang, C. 2004. Virtual Organising Scenarios. In. L. Camarinha-Matos & H.

Afsarmanesh (Eds.), Collaborative Networked Organizations: 27-40. Dordrecht: Kluwer Academic

Publishers.

Katzy, B. R., & Sung, G. 2005. Engineering Productivity and Collaboration Systems-A Review of Six YearsResearch at the International Concurrent Enterprising (ICE) Conference. Paper presented at the 11th

International Conference on Concurrent Enterprising, Munich, Germany.

Morrison, P. D., Roberts, J. H., & Hippel, E. V. 2000. Determinants of User Innovation and Innovation

Sharing in a Local Market. Management Science, 46(12): 1513-1527.

Mowshowitz, A. 1997. Virtual Organization. Communications of the ACM, 40(9): 30-37.Stokes, D. E. 1996. Pasteur's Quadrant: Basic Science and Technological Innovation: Brookings Institution

Press.


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Recent CeTIM Working Papers

3305: Katzy, B. R, Loeh, H., Sung, G., The CeTIM Virtual Enterprise Lab A living,

Distributed, Collaboration Lab

3205: Loeh, H., Concurrent Product Development and New Communication

Technology A Research Framework

3105: Katzy, B. R., Sung, G., Engineeting Productivity and Collaboration Systems

A review of Six Years Research at the International Concurrent Enterprise (ICE)

Conference

3005: Katzy, B. R., How to Make Innovation Happen?

2905: Dissel, M., Verwijs, C., Sales Communities: A Dynamic Capability Perspective

on Community Routines

2805: Katzy, B. R., Ma, X., top-management commitment in corporate change

programs

2704: Katzy, B. R., Zhang, C., Loeh, H., Reference Models for Virtual Organizations

2604: Loeh, H., Zhang, C., Katzy, B., Modeling for Virtual Organizations

2504: Katzy, B. R. Van den Hoven, J., Igl, G., In PrincipleTowards an Open

Architecture for eGovernment Identity Management

2404: Katzy, B. R., Sung, G., Serrano, C., Managing Virtual Projects: A Benchmark

Study of collaboration Tools

2304: Dissel, M., Katzy, B. R. Managing Complex Product Innovations in Dynamic

Environments: A Case from the Telecommunications Equipment Manufacturing

Industry

2204: Katzy, B. R., Marcel, D., Integrating Research Methodologies in Managing of

Technology: Getting the Best o Both Worlds?

For earlier paper and full reference please refer to www.CeTIM.org/wps.

33 05 the cetim ve-lab

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