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Integrated quality approach in business networks

October 26, 2010

Juhani AnttilaAcademician, International Academy for Quality (IAQ)Venture Knowledgist Quality IntegrationHelsinki, Finlandjuhani.anttila@telecon.fi , www.QualityIntegration.biz

These pages are licensed

under the Creative Commons 3.0 License http://creativecommons.org/licenses/by/3.0

(Mention the origin)

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xxxx/2.1.2010/jan

Contents and key themes:1. Universal networking phenomena, People networking2. Organizations’ value networks3. Responsive processes of relating in networks4. Scale-free networks, Win / Win and the quality of networks5. Collaborating and learning in networks6. IT support for networking7. Societal networking

Integrated quality approach in business networks

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There are networks everywhere:

- Biological nature- Physics and chemistry- Mathematics- Human aggregations- Business communities- Economy- Technics- Societies

Networking

3802/20.2.2010/jan (Ref.: Albert-Lazlo Barabasi)

Here the focus is on organizational businesscases and some related aspects, e.g. regardinghuman, societal and technical networks.

Network

- A group of interconnected independentindividuals or other actors who exchangeinformation, contacts, and experience forprofessional or social purposes

In all networks there are knots and links.Relationship is the most significant issue.

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Networked communities (*) of individuals

3329/1.10.2010/jan (*) http://en.wikipedia.org/wiki/Community_of_practice

Etienne Wenger

"A person starts to live when hecan live outside himself."Albert Einstein

Community of practice

Community of interest

Community of action

Community of context

Communities of circumstance

Communities of position

Communities of purpose

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Amateur professionalism or professional amateurism (shortened toProAm) is a socioeconomic concept that describes a blurring of thedistinction between professional and amateur.

ProAms work at their enthusiasm and leisure, regard consumption as aproductive activity and set professional standards to judge their amateurefforts.

ProAms fields today increasingly include astronomy, activism, sportsequipment, software engineering, education, and music production anddistribution.

An example of professional amateurism on a large, and socially andeconomically notable, scale is the global open source and freesoftware projecting.

“ProAms” - How enthusiasts are changing oureconomy and society

3803/1.10.2010/jan (Ref.: Charles Leadbeater & Paul Miller: The Pro-am revolution)

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Organizational hierarchy and informal networks

3149/1.3.2010/jan (Ref.: Valdis Krebs, www.orgnet.com)

The decision-making links revealthat some information flows alongformal ties within the hierarchy, whileother information flows alonginformal ties outside of the hierarchy. Similar networking is also within theorganization.

The new interactive informationtechnology encourages and promotesbiths of informal and temporalnetworking.

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Stakeholder-networks of an organization

• Customer network(s)• Partner networks (Out-sourcing, Crowd-sourcing,

the Japanese keiretsu - 系列)• Supplier networks• Networks with other stakeholders

• Expert networks, science communities• Free actor networks - "Communities of practice”

• Internal networks

• Networks of regional operators

• Business clusters

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Very often organizations’ businessnetworks are not genuine networks butvarious kinds of organizationalextensions or even ”slave networks”.

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The new forces are wreaking havoc on value chainsof the organizations. Could any more anyorganization truly execute any plan for optimizing avalue chain? In various industries existingcompetitive advantage is being wiped out as newcompetitors quickly produce new value chains thatuse digital technology.

Company’s strategy can no longer be based ontinkering with today’s value chain - but to find waysto alter it radically through value networking.

Achieving competitive advantage is now moredemanding. Surrounding the traditional five forces(Ref. Porter):

Buyers - Suppliers - Substitutes - Competitors- New entrants

there are three new forces:Digitalization - Globalization - Deregulation

Traditional value chains are under extreme pressure

2185/29.9.2010/jan (Ref.: Downess & Mui )

Organiz-ation C

Organiz-ation A

Organiz-ation B

A traditional value-chain

?

X

Y

Z

M

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From value chain to value network

1989/20.7.2008/jan

Value network:- the context within which a firm identifies and responds to customers’ needs, solves problems, procures input, reacts to competitors, and strives for profit

Within a value network, each firm’s competitive strategy, and particularly its pastchoices of markets, determines its perception of economic value of a newtechnology.

(Ref.: Christensen)

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Genuine business networks are primarily unplanned, emergent aggregations. Their growth issporadic and self-organizing. Networks may not be managed in a traditional way like organizationsbecause they are not any single systems. E.g. networks may not have shared values, strategies, etc.

Operating in a networked business community

3671/20.9.2010/jan (Ref.: Valdis Krebs)

The network as a whole is managedby nobody but each actor has its owncharacteristic impact in the network:• Access = actor’s easiness getting to theresources of the network• Reach = actor’s potential wielding influence inthe network• Control = actor’s ability to control over theresources of the network

A business community (a “corporate”)A company, organization (private, public,non-profit)A business unit, competence centreAn individual, e.g. expert or business leader

Business clustersSociety

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Business partners are linked with each othersin networks via business processes

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SupplierCustomer

Supplier’s business processesCustomer’s business processes

Business interface(business interactions)

Product(Goods + Service)

Organizations in networked business connection:

Partner Relationship processes are extremely difficultto be managed because of their complexity.

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Activities within complex responsive processesof relating

High Certainty Low

High

Low

Agr

eem

ent

StandardsGuidanceMonitoring

Politicalcontrol -compromise

Experimenting

Chaos

Anarchy

Innovation

Creativity

Debate

“Zone of Complexity”

Serendipity

Trial & Error

3430/15.1.2008/jan (Ref.: Stacey: http://www.plexusinstitute.org/edgeware/archive/think/main_aides3.htm l)

All kinds of activitiesmay exist in networkingprocesses.

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A power law of the scale-free network:“the rich get richer”

Scale-free network:- A network grows one by one node.- A new node is easier linked with a nodewith many existing links (Ref. Paretoprinciple 80/20)- A power law: p nodes / k links per anode:

- p = a*k-n

- Distribution parameters a and nvary according to the network.

3676/16.3.2010/jan (Ref.: Barabasi)

Power law of the scale-freenetworks:

Many knots withfew links

Few knots withmany links

Knots with k links

Number of links (k)

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Quality of a network based on multiple win / win

Quality of a network “v”, Qvm:“Degree to which a set of inherentcharacteristics of the network fulfilsneeds and expectations of the involvednetwork members”:- Number of members (m) in the network- Each member gets something useful(Si) from the other network members butalso loses something (Ai) of its own.

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Networkmember i

Networkmember j

S

A A

S

i

j

Metcalfe’s Law: A network increases in value as the square of the numbers of its users.

A network “v”

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Learning is the most important factor forthe quality of networking.

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Ivan Illich 1926-2002Deschooling society (1971) / Tools for conviviality (1973):

Deschooling: The pupils are "schooled" to confuse teaching with learning,grade advancement with education, a diploma with competence, and fluencywith the ability to say something new. Education through schooling is notfeasible. It must be reversed into the search for educational webs whichheighten the opportunity for each one to transform each moment of hisliving into one of learning, sharing, and caring.Similarly medical treatment is mistaken for health care, social work for theimprovement of community life, police protection for safety, military poisefor national security, the rat race for productive work.

Conviviality: It is to designate the autonomous and creative intercourseamong persons, the intercourse of persons with their environment; and thisin contrast with the conditioned response of persons to the demands madeupon them by others, and by a man-made environment. It is individualfreedom realized in personal interdependence and, as such, an intrinsicethical value. As conviviality is reduced below a certain level, no amount ofindustrial productivity can effectively satisfy the needs among society'smembers.

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3423/17.1.2008/jan (*) Jay Cross: http://www.youtube.com/watch?v=NlETGJ0mnno (**) Ray Oldenburg

"The best learninghappens in real lifewith real problemsand real people andnot in classrooms."Charles Handy

Informal learning – The other 80%

”Cappuccino U is a metaphor for a new approach to learning based oncommunity, networking, self-study, distance education, andtechnology. The Third Place, the coffee shop where people gather towork and chat, we can transpose it to libraries, hotels, and otherlocations (including our homes) where we might work and meet withother people, or may be alone in a crowd – or just alone.” (*)

”3rd place hosts the regular, voluntary, informal, and happilyanticipated gatherings of individuals beyond the realms of home andwork.” (**)

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“Ba” as a shared context in motion

Knowledge

2690/14.2.2006/jan (Ref.: Nonaka)

Individualcontext

Individualcontext

Shared context

Ba:(originating+dialoguing+systemizing+exercizing) Ba = A shared space for

emerging relationships

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The knowledge-conversion process:Tacit Explicit

Knowledge conversion process, SECI:

3528/14.5.2009/jan (Ref.: Nonaka - SECI, Shiba)

Tacit Tacit

Taci

t

ExplicitExplicit

Taci

t

ExplicitExplicitSocialization

S Externalization

E

CCombination

IInternalization

ConsciousSub-conscious

Explicit

Tacit

Knowledge

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Learning process is sped up and made more effectivethrough participation in collaborative networks

3509x/20.8.2008/jan (Ref.: Gloor)

Degree ofconnectivity

among networkmembers

Degree ofinteractivity

between networkmembers

Degree of sharing

knowledge withinthe network

0 0

m m

LowPersonalHigh

Community

Target: Highlyeffective

learning innetworks

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IT (InteractiveTechnology) serves our knowing andlearning as an extension of the body

The medium is the message.

The form of a medium imbeds itself in the message,creating a symbiotic relationship by which the mediuminfluences how the message is perceived, creatingsubtle change over time.

We shape our tools and afterwards our tools shape us.

Humankind will move from individualism andfragmentation to a collective identity, with a "tribalbase". McLuhan's coinage for this new socialorganism is the global village.

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Marshall McLuhan 1911-1980

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An example: Traditional IT and communications in /from / to a grouped business community

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E-Mailing- good for in one-to-onecommunication- ineffective in groupcommunication

Intranet domain- difficult to use and maintain- ineffective in use

Homepage in the Internet- passive, stagnant

Phone, SMS- good for acute one-to-onecommunication- disturbing, expensive

Physical meetings- necessary for networking- expensive, time consuming- difficult to arrange

Publications-difficult to know what andwhere, passive, expensive

What are the needs for enhancingeffectiveness and transparency?

The Community

Business environmentInterested parties Stakeholders

IT Systems

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New IT* supported information/knowledge-intensivebusiness operations

3514/20.1.2010/jan (*) IT = Interactive Technology

New integrated and effective solutions:

• Portal solutions, integrated information technology solutions(sustaining technology):

– Complicated– Difficult to use and maintain– Expensive

• Interactive technology solutions: Collaborative groupwork and social networkinginfrastructures, Web 2.0, Enterprise 2.0, RTE - Real Time Ecosystem(disruptive technology):

– Simple– Easy to use– cheap, or free of charge

(open source)

TOP DOWN:FOCUS ON

TECHNOLOGY

BOTTOM UP:FOCUS ON

PEOPLE Human inside

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Is your organization already implementingEnterprise Web 2.0?

3441/16.1.2010/jan

It's likely that your organization is already using Enterprise Web2.0 technologies in some way. But make sure you are gettingthe most from Web 2.0 in order to help you plan your EnterpriseWeb 2.0 strategy:• McKinsey: Over 80% of enterprises plan to use Web 2.0technologies for better interactions with customers, partnersand employees.• The Wall Street Journal: About 20% of companies usemashups in one form or another and, over time, mashups willbecome so intuitive non-technology users will be building them.• Economist: Serious business: A perspective on EnterpriseWeb 2.0, and how Web 2.0 goes corporate  and organizationsare taking advantage of it.• IDC: The Hidden Costs of Information Work.  Informationtasks are central to today’s organization’ and organizations thatgive information workers adaptive, enabling technology cangain great competitive advantage.• BusinessWeek: When Companies Do the Mash’.Corporations are jumping onboard the trend of mixing andmatching information from different sources.

(Ref.: A study in 2007: http://www.jackbe.com/resources/business_users.php)

Very often, however, businessleaders or IT departments are

obstacles for the use of socialmedia and Web 2.0 applications

in organizations.

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Cloud computing is an Internet-based provision of shared resources, software andinformation provided to computers and other devices on-demand, “computing on tap”.You pay for what you consume.

SaaS (software as a service) means that a complete software application isoffered as a service, on-demand. A single instance of the software runs on theprovider’s infrastructure and serves multiple client organizations.

Cloud computing and SaaS

3816/2.1.2010 /jan

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Example: Knowledge Work Environment, KWE (Dicole)

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Dicole (Discover-Collaborate-Learn) product from Helsinki, Finland based companyDicole Ltd (www.dicole.com):

SAAS (Software as a Service) from Dicole’s server in trusted IT hostingenvironments in Helsinki - No software installation needed for a particular XXXapplication Technical support from Dicole as the need arises Connected via https://xxx.dicole.net by the Internet secure protocol Interactive social technology (Web 2.0) based on open software

Operated directly by ourselves (not by secretaries or IT people)

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Collaborative knowledge work environment, “KWE”,for a business community (Web 2.0)

3770/15.1.2010/jan

Community-members’ information and profiles (Net-working)

Links to:• Other tools (calendar, to-do list, diary, Skype,virtual meeting room, etc.)• Social utilites• Legacy IT systems of the organization• Administration of the IT environment• Web pages and documents

Additional features or possibilities:• Sub-groups• Tagging• Discussion forums• Aggregators (RSS feeding)• Mashups

Common shared knowledge-base accumulated and updatedby the community-members (Wiki)

Knowledge feeds from community-members' findings,observations, and reflection, and comments (Blog)

Published presentations etc. (Media)

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Wiki

Icons to individual tool-windows An example: KWE user-interface of an organization

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Typical cases where the KWE approach has proved useful are cases where participatingpeople are operating in networks and work is strongly knowledge-intensive:

Corporate-internal expert groups• E.g. product designers, sales people, human resource people, quality managers,and maintenance people

Project groups Process teams Organizations' supplier or customer networks Benchmarking clubs of different organizations Collaborating business-clusters Networked SME's

• E.g. small cooperating consulting or expert companies Educational institutes supporting learning of networked business

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Other business areas for the use of KWE

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Societal networking: Benefits and trendsin civic engagement and social capital

Social capital is the underpinning and core fabric of social communities.Its benefits include safety and security, mutual trust and friendship andcommunity, a sense of civic identity, etc. Social capital creates valueand cooperation through social human relationships or networks.

Traditional forms of social capital are declining (*):- Political participation- Civic participation- religious participation- Connections in the workplace- Informal social connections- Altruism, volunteering, and philantropy- Reciprocity, honesty, and trust

However, there is development against the general trend in small groupsactivities, social movements, and the net activities.

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President Ahtisaari: ” The strength of a society depends on social capital, which consists of mutualtrust between the people and the ability to cooperate.”

(*) R.Putnam

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Searching for the rootsof the quality of European regional societies

“... open our city to the world, and never exclude foreigners fromany opportunity of learning or observing... ... trust less in system and policy than to the native spirit of ourcitizens...... live exactly as we please...... cultivate refinement without extravagance and knowledgewithout effeminacy, employ wealth more for use than for show,and place the real disgrace of poverty not in owning to the factbut in declining the struggle against it...... public men have, besides politics, their private affairs toattend to, and our ordinary citizens, though occupied with thepursuits of industry, are still fair judges of public matters...... fearless of consequences, confer the benefits not fromcalculations of expediency, but in the confidence of liberality...”

3823/3.1.2010/jan (*) Thukydides

(Philipp von Foltz)

Already the ancient city-state of Athens set profound bases for the quality of our societies. TheAthenians considered the necessary achievements of societal institutions.Pericles in his well-known Funeral Oration (*) at the end of the first year of the Peloponnesian war(431 BC):

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The key objectives of the eEurope Initiative are:

1. Bringing every citizen, home and school, every business and administration,online and into the digital age.

2. Creating a digitally literate Europe, supported by an entrepreneurial cultureready to finance and develop new ideas.

3. Ensuring that the whole process is socially inclusive, builds consumer trust andstrengthens social cohesion.

eEurope - An information society for all

(Ref.: The European Commission, 8 December 1999)2073/2.1.2001/jan

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i2010 - A European information society for growth and employment

2074/10.3.2010/jan

Digital Agenda for Europe is one of flagships of Europe 2020 – the Commission’s proposal ona new economic strategy:

Delivering sustainable economic and social benefits from a digital single marketbased on ultra fast internet All Europeans should have access to high speed internet by 2013. A key element of itwill concern wireless and mobile services, which are essential also to ensure asufficient level and quality of coverage for all European citizens.Consistent regulatory environment for a Digital Single MarketConsumer trust and confidence plays a crucial role in encouraging people to use newdigital services.

(Ref.: Commission, 3.3. 2010, and Neelie Kroes, European Commissioner for Digital agenda )

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(Ref.: http://www.personaleu.eu)3437/25.1.2010/jan

Example: Personal EU

You are Europe.

Start collecting yourown Personal EUteam: the one likeyou from up to everycountry.

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Conclusion

Networking is a most natural phenomenon.The hierarchical structure and bureaucratic ways to operate in organizations based onscientific management thinking are man-made artifacts that often not any longersupport flexibility and responsiveness, and effectiveness and efficiency that arerequired by organizations operating in today’s continuously changing businessenvironments.

The most significant factors for influencing in and getting influences from a network are powerand authority in relationships, and effectiveness of communication.

Paradox of real networks include gaps between private / public and politics / ethics. In areal life politics always overcome ethics.

Quality of a business network depends on its different members’ ability to give to and to getfrom the others for mutual business advantage.

A network may not be managed as a whole.Each organization should create its own networking strategies and practices.

Effective societal networking is increasingly significant for all organizations and individuals.Social media and Web 2.0 technology gives unlimited possibilities for the quality ofnetworking.

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Juhani Anttila, Venture KnowledgistIndependent expert, Quality Integration

• Expertise of more than 40 years in the field of quality• 35 years at different quality related positions at Telecom Finland and Sonera Corporation• Several decades’ involvement with international and national standardization of quality,

reliability, information security and telecommunications• Many years Assembly Representative and Vice President of the European Organization

for Quality (EOQ)• A founder and developer of the Finnish National Quality Award, Developer and assessor

of the European Quality Award• International Academician for Quality (Member of the International Academy for Quality)• Honorary Member of the Finnish Society for Quality• Board member or chairman in some companies• Senior adviser for several organizations in quality management, dependability

management, information security management, crisis management and social media• Lecturer in universities and educational institutes• Expert in projects in some developing countries• Contributing by writings, lectures, and speeches globally on five continents

3678/3.10.2010/jan (Ref.: http://www.qualityintegration.biz/contacts.html )