Business model

Breaking the barrier between the organisation and the customer An organisation is a legal and economic entity, so how can this barrier be removed? The answer is by thinking and acting in conjunction with the customer, by focusing not primarily on the business model, but on customer utility value. The customer knows what brings value to him or her and why. The company knows how to obtain that value. This back-and-forth between the parties will bring “moments of truth” in the interaction between customer and organisation and motivation/energy for mutual benefit. Here both the customer and the organisation will gain new insight into and knowledge about creating utility value and innovation.

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It is much easier to define the business model once the utility value has been identified. It will appear obvious for both parties, and naturally both will reap an appropriate share of the benefit. Also, if the agreement is properly structured, the customer will find it hard to switch to other suppliers, because the terms for delivering utility value would have to change with a whole new supplier organisation.

The customer would virtually have to start all over again. Clarification of the utility value terms would still mean an improvement for the customer due to the process described above. However, the new supplier would have to gain insight into the customer’s business, spending his organisation’s valuable time and energy. The process would have to start all over again both for the customer and for the supplier before benefits could be gained for either party. How is it possible to promote new products/services while simultaneously optimising the value chain? The solution is the CompetenceWeb(r) process2, depicted in Figure 2.

Externalisation – a customer-focused strategy – goes hand in hand with internalisation – the value chain – towards the goal of fulfilling customer utility value. It is a learning process that continues through these two phases creating an enhanced holistic awareness and insight within an increasingly shorter time span. Figure 2. The CompetenceWeb(r) process – A three-loop learning circle It is essential to both create and retain an external and an internal process. Repeating the external process – continuously monitoring customer needs in tandem with the customer – creates one learning loop. Repeating the internal process – constantly identifying and developing competences and activities – creates another learning loop.

In addition, the interchange between the external and the internal processes generates a third learning loop. Rapid innovation will ensue in this loose, yet also unifying learning circle resulting in systematic analysis and follow up. The learning loop consists of seven steps. Half of the allocated resources are expended within the area of externalisation, the other half within internalisation. This indicates a balanced approach to the two types of innovation. Furthermore, the individual steps are linked with the process starting at the top of the externalisation stage, proceeding through the internalisation phase and returning to the top of the externalisation segment.

Understanding and insight, in addition to execution and action, belong in the external loop. Understanding and insight, and also competence development and activities, are in the internal loop. Understanding and insight – and hence knowledge – are the common elements on which further initiatives are based. Thus, the innovative learning organisation has been created and can be incorporated into day-to-day activities. The organisation as a whole is part of the innovation and ready to implement it.

Here is a closer look at the seven steps: The steps are obvious and simple to complete, but they are heavily dependent on the correct pool of participants for the process, and the tools have to be adapted to the participants’ way of thinking and to each business area to the greatest extent possible. The CompetenceWeb(r) process can therefore be implemented in many different ways, not only one – in fact, as many ways as there are organisations. The case studies in the book describe various types of adaptation3.

Sustained effort A Better Workplace for All Wide Applicability 6. Can both types of innovation function together in day-to-day operations? The answer is Yes, provided the barriers mentioned above are removed, otherwise the answer is No. It depends on the willingness of the organisation to whole-heartedly adopt the concept of innovation. The theories will have no impact, if they are only brought up at informal social functions. However, controlling mechanisms also have to be loosened.

Therefore management has to change and apply much more leadership through direction of customer utility value and leadership in involving the employees in order to achieve optimal utility value. Sustained effort is needed. All levels of the hierarchy need to cooperate within the organisation; they must believe in the implementation and understand how to apply the activities in practise. The outlined innovation ideas need the support of top management as well as middle managers and regular staff. If implemented, they will create a better workplace for everyone, since the motivation inherent in the organisation will be allowed to flourish creating positive energy.

The CompetenceWeb(r) concept is applicable to both large and small organisations within production and service, across industries, and within loosely linked systems. The process is particularly constructive for the latter group, which includes clusters and industry cooperatives, since it helps to promote a common understanding and insight into innovation processes. The case study below outlines the application of the CompetenceWeb(r) concept in an actual process at a shipyard with a prime focus on order production.