msc business management dissertation 2007 maria belyaeva

7/22/2019 MSc Business Management Dissertation 2007 Maria Belyaeva

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Contents

T ransformation of the Business Model: Purpose and Authenticity to

Form New Approach to Business Development

Chapter ONE: Introduction to the Study

Statement of the Problem

Business nowadays is becoming more socially orientated due to the certain trend of open

communication, emphasis on relationships and value as a desirable outcome of the certain social

and individual activities. Ethical, environmentally concerned and socially responsible approaches

in business are becoming a norm due to increase of the number of the new consumers

[www.newconsumer.com 2007] and overall uncertainty about the future perspectives in

business. Ethical and relevant to it approaches now seems to be not a weak attempt, but

developing alternatives to improve the quality of life on a personal and social level, to sustain the

resources and to achieve overall happiness within the business functions or business activities.

Most of the business is now focusing on maximizing value on internal and external levels. And

the question is what the new value is for the customer and what can create the real value. The

answer can be the business with the specific purpose, which is positioned before the profit in the

mind of the business organization. Hence, such firms which contribute positive approach in

business are operating mainly not focusing on profit, but on certain value, as the outcome of the

positively purposeful business activities, with the expectation of return. It is hard to name this

approach strategic, thus it can be considered as alternative approach.


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It is important to mention that conventionally the major numbers of the businesses are still

adopting aggressive strategy to achieve success in business and to obtain the maxim possible

profit thought the business activities, which is traditionally seen as the priority for the business.

Value and its components, hadnt been emphasized within the strategic approach, though the

main advantages are represented as the core competences and capabilities, which are the main

aspects of the business. Hence the business models are organized for cost cutting, increase of

productivity and exploitation of resources, which make critically negative effects on society and

environment, in addition, business is emerging with politics to reinforce the impact [The

Corporation 2003]. These facts were ignored by the reason that initially the business has to

justify the profit at any price. Aggressive competition in business has become a norm and further

destruction, stress and other negative consequences had followed. Conventional business

approach doesnt take an individual needs for the better wellbeing into account to plan businessactivities. Consequently, individuals have to support or to accept the norm or to choose

alternative direction towards individual freedom, true happiness and personal fulfillment within

the alternative business approach, which usually represents a weak attempt.

Assuming that realizing a certain purpose in business can give a chance to people who would

like to fulfill their personal needs for positive contribution, express individual vision on the

common basis and be responsible for their own business activities, but not to be involved in

global profit generation, by the reason if the corporative profile is not supported. Ethics,

sustainability, environment consideration and fulfillment at work are very important for these

individuals, which further create the reason for the new business model formation, to satisfy

certain aspirations. Mentioned aspects are directed to create the value for the individual and

society within the business framework to exist in relatively uncertain conditions of the present

environment. Hence on this basis there must be certain approach in business, which can

stimulate the creation of the new value for the individual, society and environment. It is

important not to neglect such aspects, as those represent the essential individual needs.

Here is the next question what is the tool for the conceptual approaches in business and assuming

that it is not just the business organization, but the business model, which sets up certain

components to create the value of the business and to provide sustainability for the organization.

It is important to mention that the concept is not that effective on its own; it should be

strengthened by the certain model.

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Business model is a logical structure (as business is striving to function flawlessly on different

levels) which combines certain ideas, based on traditions or trends, and is set to function

effectively and efficiently and to serve the vision of the individuals. Some specific business

activity forms definite business model, which operates like mechanism to support, to deliver and

to develop the value of the business in products, services, impacts on society and environment.

There is the number of different business approaches are declared to exist, among them is

Authentic Business, the leader of authentic business community [Crofts 2005] identifies that the

business is concerned with the environment and personal happiness, satisfaction, personal

growth and lifestyle of the individuals, who find themselves passionate to create new business to

operate successfully [www. authenticbusiness.com 2007]. Though, Crofts [2007] states that he

represents certain approach, but realises that it requires a certain business model, which would becapable to sustain the approach. On this basis there is certain understanding that any alternative

approach in business should be justified and supported by the business model as a unique

structure, to make an approach more effective and efficient. Assuming that business model could

reduce misconceptions by the means of certain business logic or business rule.

Traditional strategic approach is a business norm. Michael E. Porter has set up the guides for

aggressive competition and simple frameworks for the business analysis, which stimulates the

business to consume, with the negative impact on society and environment, to generate profit

[The Corporation 2003], what the business returns to society and environment in valuable

equivalent is almost neglected, though corporate social responsibility is set to perform

contributions to society and environment under the social legislation. By the mentioned reason

conventional business approach of competitive advantage creates misbalance [Chan Kim and

Mauborgne (2005) ] between business from one side and society and environment from the other

side in, which makes social and environmental problems arise [The Corporation 2003].

Competitive strategy is not making contribution on external level, though corporation can be

forced to make contribution under the legislation. Such approach is not adopted by the business

organisations, which adapt positive purpose realisation in business, which aim is to improve the

value for the society to gain customers appreciation, then to increase sustainable position the

market, which is seen as more difficult task due to strong strategic profit orientated opponents.

Business is for the customer and the customer choice can be dramatic in spite of the well planned

strategic approaches. If customers choose to support recent trend of the concern about society,

environment and individual fulfillment, then new approach in business is highly important for

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the further business development and establishing itself in the certain niche as Kim and

Mauborgne [2005] suggest. Conceptual approach in business is promising to evaluate the

approaches constantly to offer the best one, which is able to satisfy the new needs of society to

develop new trends in business, based on appreciation human being and their contribution to the

business.

Due to the certain trend there is a requirement to reorganize the businesses to satisfy new needs

of the customers and to create the structure, based on the concept. In the following parts the

reasons behind the origins of the alternative approach are represented.

Exploring the Nature of Modern Business Fundamentals

In this paper the main question is of initial approach in business, hence business fundamentalsare important to discuss. Conventional approach in business is resulting in negative affects on

society and environment (developed consumerism with negative consequences and decreased

overall social unhappiness with the business world), which builds up certain social opposition of

the society to the business world, which forces existing businesses to make efforts to shift

approach and to transform the business, e.g. from aggressive to responsible and responsive.

From the review of the recent trends in business there is significant move to identify and develop

human capital and customers as the main component of the business (IBM Corporation), which

signifies that business fundamentals are transforming from tangible capital (natural goods) to

intangible capital power (people and moral goods). It is important to look precisely at the real

needs of the human part of the business and to identify what is essential for the new level

business performance. Requirements for the individual satisfaction and fulfillments are supposed

to become important for the new business approach. Purpose, as positive goal, and authenticity,

as real value, are considered to appear better intangible business fundamental, as they represent

human concern for the well being.

Business fundamentals are essential in the question of the new approach. Fundamentals by

Sussland [2004] are seen as the human capital with the real drivers of the business as knowledge,

which is able to create value to satisfy the key stakeholders. It is important to understand the real

value of the business in the modern conditions. Sussland [2004] suggests that value is the key

factor of the strong enterprise, provided by core competences, which is conventionally true, but

considering the fact that competences can loose its value over time is important too. The author

mentions that resulting dispersion of resources within the organization reduces the profit

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potential of the enterprise as a whole and, unless purposefully dealt with, becomes a crucial

policy constraint, which negatively reflects on performance.

As a business demand enterprise must able to satisfy its stakeholders and to operate efficiently

[Sussland 2004], which represents value only on internal level of the business, the contribution

to society and environment, which suggests to be considered by the enterprise.

Business value by Sussland [2004] is only considered as the profit potential that can be generated

by the interaction of the resources and the processes, which is right in the conventional way of

business organization. Business value is only internal value represented as profit; other aspects

are not taking in consideration.

Lazlo [2005], who is highly supportive for sustainability, identifies business fundamentals as the

value creative initiative and sustainable value strategy with the initial stakeholders discovery

within the social and environmental concern, which will result in shared values and the profit as

economic success.

Nature of the business value is now changing from numbers to concepts [Collins 2007]. Concept

of value is the primarily one in the modern business. In this paper concept of the core purpose

and authenticity as sustainable support are assumed to become fundamental aspects of the new

business. The value of the concept in business is unique, as it represents the outcome of the

certain human intelligence (due to the certain components of human intellect) as the main aspect

of the human capital, invested in certain business.

Collins [2007] manifests the concept of purpose as the part of the core ideology within the center

of business organization for the further progress stimulation on the basis of the operational

autonomy. Collins views on business fundamentals are considered to be the accepted in this

paper.

Business fundamentals are currently very different from business to business and manifested in

the form of various businesses models. Hence it becomes very important to understand the nature

of the business model and its role for the society and environment. In addition the nature of the

business changes and transformations follows the society changes and the changes on the

individual level with the aim to achieve certain fulfillment [Zahar and Marshall 2005] and to

improve wellbeing.

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To achieve human wellbeing within the business requires certain shift in approach and

restructure to form the new business model. Towers [2006] suggests that there is a need to

reassess and fundamentally realign structures and priorities, which is paramount, is consequence

any organisation that cant make the leap must face the prospect of being left behind in this new

age.

Discovering Purpose and Authenticity in Modern Business

Purpose and authenticity are intangible aspects, which are connected with the certain socialawareness of the new values in life on social, environmental and individual levels, which

consequences in business transformation as a trend. In this paper there are few authors are

raising the importance of purpose and authenticity in business, which could be accepted as an

alternative to strategic approach.

Customers of the new generation are represented as the new consumer

[www.newconsumer.com], also appear as new age business, the age of spiritual awareness with

the new requirements in business (could be the roots of ethical and moral approaches) and other

communities have a need for the business model to support the certain conceptual business

activities. Purpose and authenticity also could become motivational tools for those who strive for

the new approach in business. Why business model is emphasised in this research, because it is a

primary structure for the conceptual realisation in business on the basis of the core purpose and

authenticity, and appears to be as dynamic structure in opposition to conventional approach,

which is not supported due to aggressive warfare approaches for the external benefits, while

purpose and authenticity are concerned on both external and external benefits.

In this research the generic trend of the new age is deliberately not divided on ethics,

environmental concern, social responsibility and lifestyle, by the reason they have one origin as

it could be spiritual development, also discovered as the new component of the human intellect

[Zohar 2005] along with intellectual, which will be mentioned in part TWO Connection of

Purposeful and Authentic Approaches in Business with the Individual There is new demand for

the new business structure and business model, which could perfectly fit the requirements of the

new age groups and individuals.

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Purpose and authenticity are the new value focused approaches, which could be embedded in the

business model for the further realisation in the existing environment with the aim to improve

human wellbeing, to reduce uncertainty and to increase sustainability and support balance

between society, environment and business.

Importance of Business Model Formation

Initial identification of the business model is essential, by the reason that business is considered

as an activity for the profit generation, and model, where model is considered as a structure of

various logical components, then the conceptis justifying the business model. Hence, it makes

business model a dynamic structure for the conceptual business activities of an individual inorganisation. Business model is a product of development and innovation [Osterwalder 2005] to

function for the certain purpose and value, where innovation is developing the methods and tools

to improve the conditions for the purpose realisation. In a motor industry the purpose is to

provide considerate customers with the environmentally friendly vehicles, this purpose is to

achieve sustainable value and ethical performance.

Business model is not officially established theory, and currently there are certain researches

[http://business-model-design.blogspot.com 2005] are produced to clarify the understanding of

the business model. According to the general definition of the business model, it is complex real

world object [http://business-model-design.blogspot.com/2005/11/what-is-business-model.html],

which consists of building blocks represented as various business activities to support and to

develop the business organisation. In a positive meaning business model is set to function for the

society and this could be the ultimate purpose of the modern business. In this paper there will be

a perspective of purpose and authenticity investigated, which are identified as the core principles

or concepts for the business model.

Certainly innovations and technology have significant impact on the business model, improving

the technological and informational components of the business [Osterwalder 2005], but initially

the business is functioning to satisfy the needs of society in general and human as individual on

the basis of value, which should be highly considered. There are plenty of definitions of the

business model, all definition have similarity to express the variety and advantages of the

business model as a business tool for conceptualisation and coordination the components of the

business and the certain business activities [ http://conceptspace.london.edu/ 2007].

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Unfortunately, strategically orientated business, as the activity to generate profit, have made a

negative impact on society. The business activities within the business model can create new

approach to build up balances business organisation on the basis of concept, which could be

strengthen by intangible aspects. Business model allows applying any approach in business,

which is significant for the alternative approach.

Business model is important due to the move from the strategic approaches in business to the

conceptual approaches [ORC International 2007], which will ensure the quality of the business

and sustainability of the business performance. Business model is unique structure which

provides business organisation with essential elements, supported by the unique vision, purpose

and builds value as a result [Mourkogiannis 2006].

The aim of identifying a business model is to provide the platform for business concept

justification by the means of strong business logic, which is set to enforce the routes and the

methods by which business objects are accessed and updated

[http://en.wikipedia.org/wiki/Business_logic 2007].

Introducing Purpose as Core of the Modern Business Model

Understanding that the business model is the platform for the concept, it is vital to identify the

position of the concept within the business model, as it supposed to influence all the components

of the business. In this paper the concept could be considered as the core of the business model,

hence it is important not to misinterpret core of the business with the centralised business, as the

physical centre of the business.

Any solid structure contains the core and respectively the business requires the core concept to

support relevant business activities. In this paper there is an attempt to justify the purpose as the

core of the business and the main intangible aspect for the individuals, who are involved in

certain business.

Human capital is general representation of internal value of the company. Purpose could be

condition of the human capital to sustain the business. This conceptual core is essential for the

human capital, as it supposed to contain certain value and further to stimulate human capital to

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support the purpose and other significant intangible aspect of the business. Purpose could

function either on individual level or social level, but it appears to be the major drive for

achievement.

Identifying the Signs of Business Transformation

Transformation of the business is an essential topic nowadays, which is not clarified by some

specific theory and every business organisation is trying to identify the appropriate methods for

the business transformation, focusing on various aspects of the business. In this paper the

transformation on intangible level is investigated due to importance of the factor in suggested

approach.

Most of the business models are transforming due to innovation in technology, though it

represents a part of the reason for transformation, in this paper the human factor is considered as

the moving power for the transformation. This is transformation of individual, the development

of demand on individual level and of society in general to form the new purpose of the world

[Towers 2007].

The reason of the business transformation alone with innovation can be that culture has become

the part of the business world and now it is quite difficult to distinct traditional culture from

culture adjusted up to demand by insightful marketing. That is why there is a need for the

business model, which considers the certain culture as the essential element of the structure,

produced by human trough communication and other social aspect.

Nowadays human creates their existence within the business in predominant way, which

consequences in certain changes and creating the reasons for the new approaches, according to

the new demand for the business structure to satisfy it.

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Purpose of the Study

Purpose of the study is to identify the conceptual approach in business model formation and to

discover the sources of the new approaches in business, considering the signs which show that

conventional approaches are losing the value and there is a new task for the business world to see

new approaches to satisfy the new social needs and aspirations, to consider social and

environmental changes.

The aim of the research is to see how the purpose could create, support and sustain the business.

It is initial moment to imagine business as an autonomic individual or an organism which

functions and makes an external impact; hence the business model is a structure for the certain

business establishment. In the good scenario purpose is expected to provide the quality andsustainability for the business, while structure is the second dependant on the core purpose and

appears to be logical and effective system, which makes the purpose of the business materialized

in value and to be delivered externally. The position of the purpose in the business model is very

important, hence identifying its place in the business model is essential.

Hypotheses of the Study

H1: Business model is a conceptual tool to justify and support certain business approach.

H2: Business activities based on purpose and authenticity can create a certain conceptual

approach for the further formation of the sustainable business model.

H3: Traditional businesses are experiencing transformations due to certain growth of intangible

aspects in business.

Research Questions:

What is the role of business model in business formation?

What is purpose and authenticity in the business context?

Does purpose and authenticity offer alternative approach in business than competition?

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What place purpose and authenticity take in the business model?

Chapter TWO. Literature Review

Business and management research is concerned with the social world in which we live

[Saunders, Lewis and Thornhill 2007]. It is reasonable to say that business makes a huge impact

on society by the means of certain activities like resource management, marketing, distribution

and sales. In the present time marketing is aggressively replacing the traditional culture and tends

to manipulate the choices of the society. Marketing is aggressively reinforcing competitive

advantage and significant investments are put in this direction. Conventionally such approacheshave become a norm in business. In contrast authentic approach in business is set to reduce the

role of marketing through manifesting the importance of the real value for the customer, which is

supported by the certain positive purpose, further to contribute to society and environment by

delivering the meaning and value fort the customer [Crofts 2005]. All this aspects should be

applied within the business model for the effective results and sustainable development.

Identifying Business Model and its Conceptual Nature

By definition from the academic paper [Osterwalder, Pigneur and Tucci 2005] A business

model is a conceptual tool that contains a big set of elements and their relationships and allows

expressing the business logic of a specific firm. It is a description of the value a company offers

to one or several segments of customers and of the architecture of the firm and its network of

partners for creating, marketing, and delivering this value and relationship capital, to generate

profitable and sustainable revenue streams.

The most important aspect of this definition is that initially the business model is conceptual tool

[Chesbrough and Rosenbloom 2002], which is consistent of value elements with the expression

of the business logic and business purpose to achieve value on different levels of business

[Laszlo 2005]. In this paper it the emphasis is put on the importance of the business concept in

the first place, and that all the outcomes of the business depend on the approach, which

conventionally is identified as strategy. It can not be ignored that the strategy has the

consequences and the classical strategies are developed from military approaches which had

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adopted the name warfare strategies initially introduces by military leaders Sun Tzu in his book

The art of war and has become a classics in the business world. This approach can be

considered as the core concept of the business model, which is aggressively enforced with

competitive advantage.

In the new century there is a significant alternative movement supported by the new approaches

in business has started to be notices, and if the conventional approaches are based on competition

and warfare strategies, then unconventional approach is focusing on finding the niche in the

market [Chan Kim and Mauborgne (2005)] and enriching business with social and individual

content as well as to make a positive impact on society and environment. This could represent

transformation or shift of values; hence from the focus on the material values as profit there is a

change to social and individual values as fulfilment and happiness. Transformation of tangiblevalues into intangible is currently taking place, which was neglected in the period of warfare

business approaches, based only on strategy and competition. The business model is now set to

include the factor of that value transformation.

There are dynamic changes in business and the moving power is human intellect. Hence changes

in business are of certain intellectual nature of a human (the components of the intellect will be

discussed further in the paper), which further has created the platform for the business

transformation on the basis of the new human needs and aspirations.

Human intellect is dynamic and progressive, from this point of view it means that intellect

transforms the business in various forms and the outcome could be a certain approach in

business, hence specific business model as the tool for the activity. As an example of the new

approaches in business is Authentic Business [Crofts 2005], Funky Business [Ridderstrle and

Nordstrm 2002] and Sustainable Business [Laszlo 2005]. Emerging business approacches are

forming new models of business activities, and the conventional businesses are in the phase of

transformation. Transformation will be described in the Chapter Current Transformations of the

Existing Business Models.

The core of value of the business model could be the most important and fundamental aspect, not

the profit, as it appears to be the raw interpretation of the values and the reason for the aggressive

competition. By this reason transformation of the business model could signify that the business

encounter problems with the core values or their concept is in the phase of experiencing

evolvement due to external changes in society and environment.

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According to the academic paper produced by Osterwalder [2005] business model is based on

individual or group concepts and business activities and internal and external relationships are

the paramount of the business model, as the power for the business activities and business model

can be identified and supported by the main concept of the creators and attract conceptual

business partners and participants.

Business model is generic definition of the new approach in business, which includes conceptual,

logical and structural aspects, further to combine them into entire complex system to form

certain justified business activities. Business model can be divided into consistent parts, while

the core concept is applied to for the whole system and justifies the business model in its any

condition. Business model could be state-of-the-art fundamental structure of the businessorganisation [http://www.businessmodeldesign.com 2007]. Business model could be set not to

stimulate the business organisation to adapt to strategic and competitive environment, but to

provide an opportunity to model unique structure of the business activities and to reinforce it

with the concept to build sustainable business organisation of a high quality to establish certain

benchmark for sustainability.

Business model is a just a structure which has to be nurtured by some specific activity, provided

by human capital. This specific activity is identified as synergy, which is highly important

intangible component (specifically human) of the modern business model, in this paper synergy

is mentioned to emphasise importance of intangible aspects in business. Synergy by definition

(from the Greek synergos, meaning working together [circa1660] ) refers to the

phenomenon in which two or more discrete influences or agents acting together create an effect

greater than that predicted by knowing only the separate effects of the individual agents

[http://en.wikipedia.org/wiki/Synergy 2007]. Number of the business companies adapt term

synergy to express progressiveness, e.g. 1*1*1=111 is formula of Synergy according to well

known business coaches

[http://www.1000ventures.com/business_guide/crosscuttings/synergy.html 2007] and

cohesiveness of their business activities with the aim to improve business outcome. Synergy in

business is the benefit derived from combining two or more elements or businesses so that the

performance of the combination is higher than that of the sum of the individual elements or

businesses [ http://www.1000ventures.com/business_guide/crosscuttings/synergy.html 2007].

Importance of synergy aspect in business is very high due to support of the certain concepts in

business, further to form sustainable business model, hence the business gains conceptual

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strength, reinforced by necessary business relationships. Synergy would be important to support

and strengthen new approaches in business on the basis of relationships, which will be

mentioned in the Chapter THREE Theory of Implementation of the Conceptual Business

Model.

Value innovation is another concept, which plays the key role in business model formation as the

value would become the top goal of the modern business. Understanding the real value can be

the purpose of the business and the organisation would be structured in order to create the that

certain value. According to the modern business coach

[http://www.1000ventures.com/business_guide/ innovation_value.html 2007] value innovation is

the process of constant value evaluation (transvaluation) on the basis of the real and expected

future customer needs. Amazon is one of the companies, which focus is on value innovation forthe customers, along with Dell, which is launching new computers with Linux operating system,

where Linux is the product of the open source community, these two companies has identified

the growing trends for the customer innovative value. The value should be the most important

goal of the modern business, where also value seen as the outcome of the certain conceptual

approaches and differentiation as intangible aspect.

The certain information shows the fact that the role conceptual approach to form the new

business model is growing and the business concept is expected to be unique and based on the

social needs and aspiration, trends and environmental conditions.

Conceptual approaches are applied by the certain businesses, which are primarily focusing on

differentiation of its products or the services. The simple strategic approach to differentiate now

is representing many forms, depending on the concept, which provides differentiation in order to

form the certain business model.

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Connection of Purpose and Authenticity in Business with the Individual

It is important to start from the individual to discuss the value of mentioned conceptual

approaches in business, as the individual has the most complex nature and affects the business

performance on different levels. Value in this context is almost intuitive intangible aspect, which

is has certain relation to ethics, morality and good aspects of human being. Understanding the

origins of the individual needs and aspirations, apart from the needs for the economic value

products or services, is essential. Individuals significantly contribute in the further business

model formation on the basis of their needs, aspirations and desire to realise the whole potential

of their intellect.

It is important to mention that individual is striving for the purpose, which is positively seen asthe goal to realise individual potential, further to achieve happiness and successes with the

overall aim to improve human wellbeing. On this basis an assumption occurs that the purpose is

actually beyond the profit, as purpose contains the reason to generate happiness, not profit. Profit

is considered to be traditional reason for the business, which eventually can fail to make an

individual happy, due to total tangibility and inability to be effective on intangible level of

individual.

Crofts [2005] Collins [2005] and Mourkogiannis [2006] are supporting the idea of purpose

importance in business and considering the purpose as the root reason for the future business

transformations. Trough the purpose the business will ultimately focus on identifying the

significant aspects, which can make customers and employees satisfied, happy and fulfilled to

become more productive, so it would make the profit second important externally, but would

appear as equivalent of social appreciation of the value delivered to the customers on external

level, will become the return on value. It is important to mention that purpose primarily effective

on individual level, furthered to form the network of those who share and appreciate the certain

purpose. Basis of individual is important in this approach.

Understanding the purpose makes better self awareness of individual. By Mourkogiannis [2006]

purpose is not simply motivational tool; it is also works as inspiration and leads to understanding

personal moral ideas. Purpose works as inner identification (self realisation), person with better

inner identification is simply more happy, which affects the business activities.

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Purpose is central to good human being. Modern spiritual philosophy sees the purpose in life as

improving the environment and world condition for all beings [http://en.wikipedia.org/

wiki/Purpose 2007]. Life improving is major motivation for an individual; the aim is positive

development and personal growth on the basis of the intellectual components of individual. In

the latest time it has become highly important to focus not only on business outcomes, but even

to shift the focus on individual welfare and human wellbeing to emphasise on ethics, morale and

other intangible aspect of individual. This cannot be ignored in terms of business as initially

social structure.

Purpose is directly connected with the human capital, further it exists as the positive reason for

development the aspects of the business with the aim to achieve better results for the better

wellbeing, when this could be concerned by specific business. Human capital is certain numberof individuals within the business; hence input of each individual is important for the business

performance on the basis of purpose.

There is a question what makes an individual to realise their purpose within the business

(businesses is seen as the essential activity fort the certain individual to achieve specific tangible

or intangible goals). Previous research on authenticity had been carried out, which aim was to

identify the impact of authenticity on the business venture performance. Authenticity had been

identified as the quality of the leader in organisation [Jensen (2003)]. The author identified

authenticity as the psychological capital of the leader, which represents other psychological

qualities like optimism and trustworthiness. Here is strong agreement that authentic leader

affects the employees positively, but it just a positive influential impact, the most important is

how employee see the goal without the leaders impact. Assuming that the purpose can be better

alternative of the leader in the business organisation, as purpose holds the meaning of the

business and striving to deliver the value of it to the individual, every individual according to

their knowledge and skills make a contribution to the business purpose.

As it was discussed, individual as the part of the human capital has intellect, which is quite

general meaning of the asset. Intellect is conventionally considered as IQ or EQ (EI), which is

known emotional intelligence. Alone with IQ and EQ, SQ recently has been introduced as

Spiritual Intelligence [Zohar and Marshall 2005] as a one of the components of the complex

individual nature and its further impact on the business development as the ultimate modern

activity.

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Explaining SQ as important component of individual intelligence Zohar [2005] describes it as

the transformative intelligence that allows breaking old paradigms and to recognise or invent

new ones. In an individual according to the author all three components of intelligence IQ, EQ

and SQ are striving for the balance, as a usual pattern individuals with high IQ are developing

business mechanics to generate profit, ignoring other aspects ethics, morale, responsibility,

honesty, happiness, balance, these qualities are described by Zohar and Marshall [2005] as the

array of values which are the natural outcomes of SQ of one. Low level of SQ could lead to

certain destruction of human values, which is not positive for the individual and the society as

whole. New trends in business as the everyday activity are developing under the demand for the

development of spiritual intelligence. Individual by Zohar and Marshall [2005] could be

considered with all the three components of intellect as a human capital for the business. SQ was

scientifically noticed on the basis of the experiments on the human neural mass in the late1990and was described as the third intelligence that uses values, meaning and purpose.

Zohar [2005] states that the reason of SQ is the ability to get deep sense of organisational

identity, sense of personality and purpose of the organisations as a sense of their meaning for the

society and environment.

The assumption of this paper is that vision and creativity are natural outcomes of the spiritual

intelligence of one individual. Creativity and vision could be the tools for the modern business

transformation, when creativity and vision are the sources of the innovative approaches in

business. Creativity as the asset of the individual being part of the human capital in business,

which is a major method nowadays and almost intangible, the main evidence of its importance is

differentiation strategy, which is now is the essential part of any business.

Alone with IQ, which is the equivalent of one individual potential for innovation and smart

decision making, SQ goal is to develop and innovate intangible value, which contribute to ethics,

morale and personal development within the business for the better, more fulfilled wellbeing.

This can explain that the businesses are shifting from focusing on groups and teams to focusing

on individuals and specific human resource aspects [IBM 2007]. IBM is currently shifted to B2E

business-to-employee approach [B2E Resourcing, http://www.b2e-resourcing.com/ 2007], which

signifies the importance of employee in business and the aim is to satisfy the needs and demands

of the both parties. The importance of the individual as employee within the business is growing,

hence to value employee means to realise the potential of the business on the intangible level. On

this basis for the prospective outcome the purposes both sides either business and employee have

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to match to provide the essential motivation, satisfaction and fulfilment. Specific characteristics

of the B2E approach are the mixture of organization-specific and employee-defined components

and the potential to be highly customized and easily altered to suit the particular employee

[http://www.b2e-resourcing.com/ 2007], which supports employee friendly policy, in example

adapted by NHS [ Partnership Information Network 2002]. This can be seen as the part of the

business purpose, which is the intention to increase not only efficiency, but also employee

satisfaction and a sense of community within the organization [http://www.b2e-resourcing.com/

2007].

The main aspects of spiritual intelligence had been identified, which could be important for the

business purpose (also array of values [Zahar and Marshall 2005]):

Balance

Excellence

Truth

Inspiration

Respect

Support

Friendship

Awareness

Education

Wisdom

Responsibility

Authenticity

These values are described by author as the applying principles of the present and future

transformation, which help to see deep perspective for the long-term development of the

business on the basis of human capital (intangible), decreasing the importance of the physical

(tangible) capital in business.

Conceptual approach in business is considered to be closely connected with the individual

components on the basis of the individual values, which re set to support and to sustain the

purpose of the certain business. The value of the intangible components of the individual could

very important for the business formation.

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Concept of Purpose and Authenticity for the Business

In the book Purpose: the Starting Point of Great Companies by Mourkogiannis [2006] the

author identifies the purpose as the universal starting point of the business, opposes purpose to

ideology of the certain business activities and manifests its ultimate positivism for the business

development. Another contemporary author Crofts [2005] has introduced the concept of

authentic business in his book Authentic Business: How to Create and Run Your Own

Business identifies authenticity as the most important aspect of the business and further

describes the first stage of starting an authentic business is to identify the purpose.

The business with focus on the purpose is promising to naturally improve the conditions of the

society and environment on various levels [Crofts 2005], which then could support thequalitative business model formation. Certain problems in conventional business and recent

signs of the efforts to transform the business models (IBM, Kodak. etc.) state a question of

incorrect approaches in fundamental business activities and misunderstanding the essential

nature of the gaps and opportunities [Chan Kim and Mauborgne 2005].

The business model, reinforced by purpose, takes in consideration human assets in the first place.

Clearly identified purpose (assumed in this paper as the core purpose) strengthens the company

and creates the ground for the new opportunities [Mourkogiannis 2006]. In example Gryphon

Consultants [http://www.gryphon.com.au/businesspurpose.html 2007] is an Australian

consulting company with more than 25 years of business experience declares the most important

aspect of the business, which are the people of the business, business purpose, commitment and

philosophy, it is obvious that the majority of the aspects are intangible, it can be justified that the

company is offering intangible product like service and the role and the impact of the services is

increasing in the modern life.

Purpose is the primary source for achievement, motivation and energy [Mourkogiannis 2006],

which is identified as the most important aspect for the successful and sustainable company and

has inspirational quality, which is very important to sustain the business model on human

resources level. Positive purpose in business is a goal and could be in opposition to goal as profit

[Crofts 2005]. Purpose reduces risk aversion and fear [Mourkogiannis 2006], which is very

different from strategic approach, based on tough competition in the market and risk. Core

Purpose of the business model is set to validate the business identity on intangible level

[http://www.gryphon.com.au/businesspurpose.html 2007].

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Purpose could be as the ultimate positive condition of an individual, when purpose underpins

trust between individuals both within and beyond the firm and becomes the synthesiser of

qualitative relationships and business collaborations [Mourkogiannis 2006]. Purpose and

authenticity in business have stabilising role for individuals in the business, the strongest

intangible assets of the business. MacLeod has describes such approach as corporate business

collaboration [1986].

In the business context authenticity could protect the purpose from distortion and loosing its

initial value, further stimulates to becoming intangible power to sustain the purpose on desired

level. A successful purpose both drives a company forward to value innovation and helps to

sustain competitive advantage, hence the intangible engine of a company, the source of itsenergy [Mourkogiannis 2006]. The author describes purpose as a central meaning of the

business, which can become the core of the business model, assuming that all the business

activities are powered by purpose and sustained by authenticity for the positive results and

genuine success.

Purpose versus profits is the major conflict and this is the most significant opposition, hence

there are two types of the approaches in business either the focus on profits generation or

building business activities around the purpose with the profit as a natural result of a qualitative

approach. Purpose and authenticity in business are the aspects strongly attached to morality.

Crofts [2005] and Mourkogiannis [2006] are highly supportive of this position.

Modern businesses are tending to consist of various intangible aspects on the basis of

relationships, communications, values and common vision on the basis of one individual value.

Spiritual intelligence (SQ), as the value of the individual, participates in identification of the

desired purpose for the business, which is conventionally ignored. In majority, purpose is

supposed to be the outcome of SQ.

Considering authentic business [Crofts 2005] as the new approach in business, this is assumed as

the outcome of spiritual intelligence. Represented authentic business (also authentic

transformation [Crofts (2007)]), is a group of individuals, believe that this type of approach,

based on trust and personal fulfilment, have certain benefits, which are supported by key

advantages, for the better decision making due to intuitive and emotional empowerment and

stronger motivation due to genuine care about the all aspects of the business, in addition

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achieved external support by the customers due to high appreciation of the business as the

activity with the certain purpose[www.authentictransformation.com 2007]. According to Crofts

those key advantages are to create authentic potential, which is to unleash true energy of the stuff

and to align customers and suppliers as supporters of the business purpose. This approach is

similar to approach based on synergy between businesses, customers and suppliers, when the

business has strong meaning for all the involved parties. In this case the emphasis is on genuine

quality authenticity, and its importance in building sustainable business model of tangible and

intangible assets.

Crofts [2007] in his interview sates that authentic businesses benefit from massively lower

marketing and HR (due to less stuff turnover) costs than conventional counterparts, up to 80%

and 91% respectively. Hence the impact of conventional marketing on business outcomes isdeclining. In the case of authentic business, marketing could be seen as the other business

activity, which could be directly focused on value for the customers with the following benefits

for the business out of delivered value.

The overall role of authenticity in the modern business is growing and some organisations,

mostly consultancy groups, one of them is Business Vision believe that successes in business is

built on relationships that are founded on trust [http://www.vision.com/ 2007], which is one of

the most essences of authenticity, then the group states that it is clear communication and

coordination of actions, supported by technology form strong business, this statement can be

considered as the declaration of the authentic approaches in business communications.

Concept of Purpose and Authenticity to Form the New Business Model

Mourkogiannis [2006] states that for the new business formation it is highly important to identify

the Purpose, which is on the authors opinion is the hardest task. None of the authors on the

purpose in business have suggested the method of how to identify the purpose, though

Mourkogiannis [2006] proposed the method of developing the purpose in 10 steps:

1. Review the strategy

2. Draw out the implications

3. Understand the moral ideas

4. Understand the company traditions

5. Take a purpose inventory of the top team

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6. Take a moral inventory of the community

7. Identify the purpose

8. Create metrics and models

9. Test strategy and purpose

10. Decide and launch a campaign to make the purpose work

In the above list of steps for the purpose development, one of the steps is suggesting to identify

the purpose. The author mentions that to identify the purpose could be the hardest part as the

individual or a group have to fully realise the purpose and it business role on internal and

external levels. If the purpose comes first it should play the core role in business for the

sustainable development and as the motivational tool for the employees and the customers.

The purpose in comparison with the strategy represents the capability to build the business with

the long-term perspective [Mourkogiannis 2006]. Obviously this approach requires some initial

intangible investment like SQ (spiritual capital, which was described in the part Connection of

Purposeful and Authentic Approaches in Business with the Individual) where spiritual capital is

that intangible essential component of the human capital, which would be able to make the

purpose and authenticity as a strong supportive aspects for the sustainable business. It is

important to remind the business is a social venture and initially needs and aspirations of the

individuals are more likely to be satisfied entirely and have benefits for the employees to work

for the purpose they share [Crofts 2005].

Considering conventional approach in business in terms of differentiation or cost leadership,

approach, supporting purpose and authenticity is expected to create certain services or products,

which would be nurtured by moral, ethical, environmental, social and individual fulfilments in

business. Cost leadership could be achieved only in condition of the positive purpose and

authenticity under the self-regulated policy, which would mean that such business has certain

principles.

Approach based on purpose and authenticity is socially and environmentally potential and is set

to create better conditions for the sustainable future of the business in the long-term run. This is

the basis for the sustainable development [Crofts 2005]. Lazlo [2005] also supports similar

position, but his view is based on value creating initiative in organisation.In formation of the new

business model it is essential to consider these aspects, as such approach is affecting important

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conventional business activities like human recourses, product development, marketing, sales,

and though in the process significance of some business activities can be reduced, but

significance of other business activities could be increased with the emphasis on human capital

and all the opportunities can be gained on this basis.

Certainly purpose and authenticity are intangible components and importance of intangible

aspects in the modern business is growing, as of those which create the value. The outcome of

the purpose is value; the outcome of the authenticity is genuine value, which is also unique.

Value formula was identified by [Collins 2007], where the author had identified value as the

component of core ideology for the new business formation.

In representation of importance of intangible aspects like purpose and authenticity for the newbusiness are highly important. These are the aspects are not delivered by the leader (though the

leader manifests the values for individuals), but further on a daily basis these aspects should be

supported and developed by individuals (or human capital), who are involved in any business

activity [Crofts 2005].

In relation to the group purpose open source in software development is relevant to this

discussion of this concept, as the origin of the open source is the purpose not the profit in the

first place. Open source culture as the result of the development the non-profit activities through

the purpose to create secure and customised operational system for the PC. The best example is

Linux software open source community in opposition to Microsoft Corporation, which initially

operating through the educational establishments and currently entering the business world

through new channels of distributions.

In relation to product as the main outcome of the business activities, there is a steady growth of

the ethical consumerism (where the origins of the ethical choices of individual had been

discussed), hence the sign of society development based on the needs of individuals. In Sunday

Times Online in the article Do the Right-On Thing [2007] it was mentioned that the Co-

operative Bank's annual Ethical Consumerism report reveals a sharp increase in sales of ethical

products and services, rising from 9.3 billion in 1999 to 25.8 billion in 2004. This could be an

opportunity for the conventional approaches in business (on the basis of find the gap) and the

purpose to keep developing ethical and moral consumerism for the alternative approach in

business. And according to a recent Mori poll, the general public want their say too, with 78%

agreeing that they want to hear about companies' responsibilities to their customers, employees,

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communities and the environment is the evidence from the same source. These are the reasons to

form the new business model, based on the concepts of purpose and authenticity, where the

purpose is to be ethical, responsible for the society and environment and the relevant activities in

this field. There is the question why consumers now tend to choose those ethical products, the

answer can be that in pursuit of profit the society forgot some more neglected some important

aspect of wellbeing too, which now are gaining its significance.

Glennon [2007] assuming that relationships between the customer and the business are the

paramount, as the communication with the customer is able to achieve better understanding of

the customer needs and further form essential business activities, which are formed into

customer conversation business model [Glennon 2007]. The author emphasises that the customer

needs trusted relationships with the business, not even the product itself. In examplewww.amazon.com and Dell have build their success on the trusted and transparent relationships

and further these companies perfectly manage relationships with the customers on different

levels, which signifies that there is an element of almost intuitive understanding of the customers

needs and aspirations. There is a certain change in business approach, the new business model

should be set to allow customers to direct and to form certain business activities and one of the

purposes is to form strong customer relationships externally and to motivate stuff to build

customer relationships according to Glennon [2007], which requires stuff to share business

purpose on the individual level, otherwise it would be difficult to build customer relationships,

based on trust and support. Here is an assumption that intangible aspects are playing the main

role in modern business and should be capable to maintain creation of desired customer

relationships and precisely understand customer needs. New conceptual approaches in business

and the new methods of using the human capital with the technological support can create the

new capabilities for the modern business. Glennon [2007] didnt mention strategic approach in

forming new customer relationships, which signifies that customer relationships cannot be built

on the basis of the strategic approaches, but can be created on the basis of the new business

model.

On the basis of relationship and communication orientated business development, authenticity

plays a role of providing trust and transparency for the business. Authenticity will help to earn

trust with internal, such as employees and partners and external environment as customers and

society, which can create intangible sustainable benefit for the business. According to Crofts

[2005] authenticity works as an excepted norm within the organisation and stimulates certain

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demand in the market for the genuine products and services, the customers can trust and

appreciate. This aspect is providing certain customer loyalty on the basis appreciated value.

Identifying the Core of the Business Model

Collins [2007] in his book Built to Last: Successful Habits of Visionary Companies clearly

manifests the idea of the conceptual core of the business organisations, the author offered to

preserve the core, which consists of ideology, purpose and value, but the core is divided, which

can bring problems or conflicts between ideology and purpose, purpose and value and ideology

and value on internal and external environment of business.

Traditionally the core of the business had been represented as the certain authentic leader of the

venture [Jensen 2003], the person, who provides the business with the vision and goals on their

individual level. But by Collins [2007] charismatic leadership is not seen as the key mechanism

for work, the author considers that the main difference lies in the establishment of mission-

orientated research and proper targets. How clear target is identified. Here is an assumption that

the proper target or goal is the specific purpose itself in non-strategic meaning. So if historically

the charismatic and outstanding leader was to set up the targets and had been the core source

within the organisation, then today there is the purpose or the goal (strategically), which is

delivered to any individual, who is working for the specific result. Mourkogiannis [2006] insists

that purpose in business functions as identity for the involved individuals, which is on the inner

individual level. The person lives their part within the business and the purpose is the most

attractive component of the business organisation, purpose is seen as priority.

There is certain trend to identify the core of the business model, which can be presented in

different modifications. The most obvious business core is tangible in the representation of

leading and governing individuals such as CEO, CFO, CIO, etc. or a group. This fact is

considerable due to the reason that the company has to manage its tangible resources in the first

place, finances as a highly important economic factor of the business, which is the outcome of

the successful business design, planning and recourses coordination, to provide essential

feasibility for the business.

The core of the business also has to provide successful functioning of the human resources and

relationships as different intangible resources and should be treated in appropriate way. Spinosa

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[2005] in his interview emphasises on relationships. The author mentions that establishing good

working relationships with business units is the key, particularly if they are free to run their own

IT operations. The essential question is how to establish good working relationships within the

company. The assumption of this paper is that it should be intangible core, which is able to

develop and stimulate relationships on the day-to-day basis. This should be the intangible

motivational core for the human asset of the business.

In example of the business model template, produced by Osterwalder [2005], there is a certain

emphasis on the central component of the business model, which appears as a core part of the

chain model.

Figure 1. Business Model Template [Osterwalder 2005]

Conceptual business model offered by Osterwalder [2005] represent cycle between 9 key

building blocks with the core as the Value Proposition, where the author puts an emphasis on

value, which should be initially identified as the offer to the market. The model includes themixture of tangible aspects, such as core capacities, distribution channel, customer segment, cost

structure, revenue streams and partner network (partner network is seen as an aspect which

tangible and intangible simultaneously and highly significant for the business development),

intangible aspects of the Osterwalder [2005] business model are value proposition, value

configuration, customer relationships and can be partners network due to its social nature. As

obvious majority of the aspects are tangible, but the key aspect or core aspect is the author had

positioned value, which proves the assumption that business model should contain the certain

core. Osterwalder [2005] has chosen value for the core, in contrast Collins [2005] has chose core

ideology to become a core of the business structure, where all the activities would be build to

26

ValueProposition

CoreCapacities

ValueConfiguration

CustomerSegment

DistributionChannel

Partner

Network

Cost

Structure

Customer

Relationships

Revenue

Streams

Succes

s/Failure

Core

aspect


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support certain business ideology. Osterwalder [2005] hasnt given an explanation of the central

position of the value, presumably value is the priority, when the rest aspects are dependent on

this intangible component of the business. It is also important to mention that the represented

business model is based on strategic free approach in business; hence core orientated value-

creating approach.

Purpose and Authenticity as the Core of the Business Model

Any sustainable structure contains the certain core and respectively the business requires the core

concept to support relevant business activities. In this paper there is an attempt to justify the

purpose as the core of the business and the main intangible aspect for the individuals, who areinvolved in specific business. Human capital is a general representation of the internal value of

the company; purpose is a condition for the human capital to sustain the business.

By Mourkogiannis [2005] in his book about the importance of the purpose in business, purpose

described as the core energy that fuels anything else, which is supported in this paper.

It is natural that every solid structure requires certain core to be sustainable over time. On this

basis there are few aspects can be considered to be the core of the business, for example

ideology, goal, leader and value. Analyzing these aspects there are one common quality is

appearing that all the potential core aspects are tend to change dramatically and the second none

of them promise happiness as outcome.

Ideology can be myth or being significant only in a certain period of time (alone with fashion),

and manifesting specific interests of the certain leader. Though Collins [2007] in his book Built

to Last: Successful Habits for Visionary Companies declares ideology as a core, which provides

continuality, stability and direction for the business, which can be true, but ideology is an

internal aspect, which means the company has ideology, but the usefulness of ideology for the

society and environment can be missed or not supported.

Disney as an example of the strong core ideology created Disney University and required every

employee to attend Disney Traditions seminars as the propaganda of Disney Culture. Here is no

freedom of choice for the employee, which can be seen as the negative aspect within the modern

business context, when the employee is free to choose, without external pressure, if valued as the

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creative and intellectual human capital, hence Disney Traditions seminars can be seen as the

certain strategic ideological force of partly unknown conceptual nature.

In addition ideology has a strong political meaning in the beginning of the last century, in the

modern context when the customer is considered as the significant aspect of the business,

ideology looses it actual meaning.

Good point to support the assumptions of this paper that Collins [2007] emphasises that there

must be a core within the business, which in interplay with the progress as the main drive can

bring desired results for the visionary company. In addition the author states that highly

visionary company does not simply have some vague set of intentions or passionate zeal around

the core and progress, but also have concrete, tangible mechanisms to preserve the core ideologyand stimulate the progress. In this case Collins [2007] consider Mariott, which institutes rigorous

employee screening mechanisms, indoctrination progress and elaborate customer feedback loops,

these are more methods to improve business operations on the customer care level.

Further the author had represented the interaction between the core ideology and the progress in

a yin and yang figure of Chinese dualistic philosophy, where two forces reinforce each other.

Futher Collins [2007] conceptual framework, which the author recommends for CEOs, managers

and entrepreneurs to design and diagnose the organisation.

Stimula te Progress:Drive for Progress

Preserve the Core:Core IdeologyCore Values

Core Purpose

Figure 2. Conceptual framework for the visionary companies [Collins 2007].

Collins [2007] has built the formula, which he stated as useful guide to build up certain core

ideology for the business.

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Core Ideology = Core Values + Purpose, where

Core Values are the organisations essential and enduring tenets small set of general guiding

principles; not to be confused with specific cultural or operating practices or not to be

compromised for financial gain or short-term expediency [Collins 2007]. The author mentions

certain principles as policies and actions, but the nature and the strengths of the principals are

uncertain. The company can declare core values like quality, honesty, trust, customer care, but in

practice it is hard to sustain the values on the basis of ideology, there must be the certain reason

for the values to exist or the get the values as the outcome of certain business activities, the to

state the tangible or intangible value as the asset of the business. Simply value is the outcome of

the certain activity, but not the aspect before activity.

Purpose, according to Collins [2007], is organisations fundamental reason for existence beyond

just making money a perpetual guiding star on the horizon; not to be confused with the specific

goals or business strategies. Further the author states that purpose need to be wholly unique,

which resembles differentiation strategy, when the business approach should be different to

make the company successful. But the author emphasises that the primary role of purpose is to

guide and inspire, not necessary differentiate. This is very important assumption in the context of

this research, and the emphasis is on the guiding and inspiring qualities of purpose, the attempt

to make the purpose as the ultimate core of the certain business.

Collins [2007] had notices that the purpose is unique, which is true due its integration with the

other aspects for the business. One of the aspects which make the difference for the business

purpose is authenticity. This aspect was emphasised by Crofts [2005] in his book Authentic

Business and the internet resource http://www.authentictransformation.co.uk/ [2007]. The author

reveals that authentic business has a purpose for the benefits of the society and environment,

where society is: customers, suppliers, partners, the individuals or the groups, who strive to

support the purpose.

In continuation of discussing the possible core of the business other aspects after ideology like

values, vision and physical leader are not sustainable, but can certainly make special

contributions. Vision is the term most fits the purpose, as the origins of vision are mostly

intuitive. Vision is the insight into the future of the business, which allows choosing certain

direction for the business. Vision itself cannot be the core of the business as exists as a valuable

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idea for the business. Vision is connected with the present business transformation; assuming

that vision could be the output of SQ (spiritual intelligence), as it represents belief in certain

concept or idea.

Leader as creative, smart and visionary central individual of the business is possible only at the

start as the major inspirer. In the case of Linus Torvalds, who have launched the Linux software

product on non-commercial basis had spread the vision and then fixed it with the purpose to

build up open source software by the means of the supporters and purpose shares, which resulted

in the powerful global community and strong developing alternative to the products Microsoft

corporation.

Current of Transformations of the Existing Business Structures

Definitions of business transformation vary, but the trend of transformation is growing, which

indicates the shift from the conventional business methods to the new approaches of various

natures from technological innovation to social and individual development with the growth of

awareness of the business as unique socially responsible and responsive system.

Certainly overpowerful and somewhat destructive business corporations are now set up to be

transformed to balance the trend in business to be ethic, environmentally and socially friendly,

value delivering and employee friendly. There is an obvious shift from aggressiveness to

creativity and intelligence in all aspects of the business. There is a great demand of the society

for the new approaches in business activities, which is an important for the future success of the

company. Acquisition is aiming ethical firms to recover the image of the company due to the

ethical issues in the past. In example Body Shop had been acquired by LOreal, Ben and Jerry by

Unilever, which signifies that the companies lack that important component and basically

acquire it by commercial acquisition. Both companies Body Shop and Ben & Jerry initially had a

strong purpose which manifested in quality, naturality and uniqueness of the products on the

basis of the ethical approach in production, hence those companies have created the positive

profile, which is the equivalent of the business value for the society and environment. Body Shop

and Ben & Jerry are qualifying as authentic companies, with genuine products and ethical and

moral approach for the better wellbeing.

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There is transformation of the values are taking place, when the physical product is not

significant anymore, but the intangible aspects related to the product or the service are important

as purpose, vision, relationships, communications, authenticity, culture, history of the business

etc..

There is no obvious pattern that can be repeated at will in any business, so there is belief that

there is a need to have to look at behaviors- behaviors that can be absorbed and translated into

the sort of focus that can transform the business [Towers 2006]. This statement indicates the

importance of relationship and communication in business transformation, when the human

factor is the most significant.

Discovering the signs of the new age in business MacLeod [1986] has noticed that neweconomic model is forming by the individuals who are striving to be autonomous and self-

sustained and the model had adopted the name community development corporation. This type

of business model is set to promote local self-help and development. MacLeod [1986] reflected

the trend for the new business formations.

Nowadays corporations experience problems as the violent business organisation brining

globalisation and negative impact on society by developing consumerism and taking advantage

of various resources [The Corporation Documentary Film 2003]. Due to negative social

reaction the on corporate strategic methods, the corporations have discovered new measurement

of business performance which is value and added corporate social responsibility as the tool

ethics in business due to the social demand. Modern companies are constantly measuring

performance, it has become a norm to measure impact on society and environment, as the society

has become more critical of the business organisations. These actions have started the major

business transformation, when the conventional approaches have become to be criticised by

changing to more ethical and moral society.

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Figure 3. Business transformation [Capgemini Consulting and The Economist Intelligence Unit

2007 Trends in Business Transformation. Survey of European Executives]

This figure indicates that there is no stable ground in business anymore and all the aspects of the

business are under certain transformation and change.

New age in business brings high dynamics and great amount of intangible assets as the value is

more perceives as an intangible asset of the business. Three things have literally changed the

face of business. These things are IT, internet and BI or business intelligence [The New Age

Business Conferencing Centres 2007]. It is important to mention that here is a strong trend of

communication increase in business, which in turns means that people value each other on

intangible level, share experience and knowledge, which gives the chance to rediscover the

purpose in the business and individual levels. There is high level of renewal of the business

structure exists on the communication level. It is important to mention that traditional marketingwith the major component advertising is loosing it effectiveness in the conventional way. In the

context of this paper advertising is not an authentic aspect of the business, but considered as

promotional tool of the high cost, communication and relationship are now capable to reduce the

effectiveness of advertising, however advertising is still important conventional business

activity.

Currie [2007] explains business transformation by the rapid growth of the new mediums, like

internet, mobile phone technology, which makes a huge impact on creative industries and

traditional business models by his opinion need constant revision and the move towards a

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convergence creates highly competitive changing market place. Currie also mentions the

importance of ties between the environments of the city and the industry. The last is emphasising

the role of communication within the business, as the communication is one of the predominant

aspects of business transformation, it is more available and becomes the great mean of the

intellectual exchange.

Open source is the most significant sign of the business transformation and has the predominant

factor for the development of specific knowledge and practices to achieve desirable performance.

Open source is an element of the new age culture and has a specific purpose, first of all to serve

the knowledge, collaboration and communication. Originally open source is the set of principles

and practices to develop software on non-commercial basis for the further free distribution and

development. Participants in such a culture are able to modify the collective outcomes and sharethem with the community. Some consider open source as one of various possible design

approaches, while others consider it a critical strategic element of their operations

[http://en.wikipedia.org/wiki/Open_source 2007]. Open source has an autonomic authentic

nature, as all the activities with in the open source are transparent, which is the most important

spect of the whole open sourse collaborative activity. This is a clear oppositin of Microsoft and

Lynux, where Lunux is developing from its core purpose to provide ultimate sucurity for the PC

users, when Microsoft is acting strategically and had been critisised for the aggressive

approaches in business and unauthenticity of its recent products.

The transformation of the business structure is taking place, when conventional components are

loosing ther effectiveness. Kontes [2004] in his article is concerned with the new corporate

center, the author aware that the center of the business is the most important and the need for the

change wihin the organisation of business is growing, which is also noticed bu Crofts [2005] and

Laszlo [2005]. This changes by the author should provide the balance of resources and achieve

long-term intrinsic value, though those changes develop unclear roles and responsibilities for

creating value, which also adds complexity of decision making. The traditional corporate centre

model is not effective in balancing resourses and developing communication and decision

making.

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Figure 4. Example of Typical Corporate Centre Model [Kontes 2004]

The above figure illustrates conventional structure of the business, where every department is a

tangible asset within the traditional business. The structure is clear and every department has it

function within the conventional approach, though there is no information about the business

concept (purpose) and business nature, further there are no connections links between the

departments and the structure lacks the core, when the CEO is playing the governing role. Other

examples are the alternative departments within the business, which specific companies include

in the business structure with the aim to improve the business performance. The oval

dissatisfaction with the conventional business structure takes place.

To transform the business structure with the emphasis on the corporate centre Kontes [2004]

suggest to create a new model of the centre, which he believes has a complex role. The main taskis to specify the roles of management in value creation and to create clusters of activities that

drive value and balance resources, which in the frame of this specific research is development

due to value orientation strategies offered by Kontes [2004], also the author strongly suggests the

strategy formulation, in this research purpose identification is replacing the strategy, as the

strategy has a warfare meaning, which was discussed in this paper. On the basis of the new value

creating strategy Kontes [2004] had formed the alternative corporate centre model.

CEO

Finance HumanResources

OtherExamples

Legal &Investor

Relations

InformationTechnology

BusinessDevelopment

Marketing

Risk MgmtRegulatory Mgmt

Knowledge Mgmt

Quality Mgmt

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Figure 5. Example of Alternative Corporate Centre Model [Kontes 2004]

There is certain transformation within the departments of the business organisation and the

positive fact of the proposed transformation that the organisation is totally focusing on

maximising the value and most of the changes are to support the value strategy. The essential

aspect of the alternative corporate centre model is that the departments are now changes into the

business activity groups, with the aim to focus on group decision making to achieve synergy

msc business management dissertation 2007 maria belyaeva

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