Syncho Research 2008 ECM

What is an Enterprise Complexity

Model
Raul Espejo
March 2008

Syncho Research 2008 ECM

Whats an enterprise complexity

model?
it is an ingenious form of deploying resources
to bridge the complexity gap between
p
and environment. It is an extension
enterprise
of the VSM and provides a heuristic to
develop dynamic capabilities
capabilities. It is based on
variety engineering (see paper Enterprise
C
Complexity
l it M
Model).
d l)

Syncho Research 2008 ECM

K issues
Key
i
Explaining what is variety, Law of Requisite
(
1))
Varietyy and Residual Varietyy (Module
Introduction to complexity management;
revision of VSM as discussed in Module 2
Viplan Method; revision of 5 steps as
discussed in Module 3
Enterprise Complexity Model as discussed in
this Module (Module 4).

Syncho Research 2008 ECM

Methodological Issues
SSystem
t
i ffocus: di
in
distinguishing
ti
i hi organisation,
i ti
enterprise,
t
i primary
i
enterprise, network, cluster, extended cluster and institution.
Network is a group of aligned enterprises driven by a primary
enterprise
t
i ((e.g. Nik
Nike),
) which
hi h iis it
itself
lf an organisation.
i ti
Cluster is group enabled by institution or enterprise, but members
do not necessarily have alignment of their transformations (e.g.
S i
Science
P
Park)
k)
Structural models are focused both on the organisations
transformation and the enterprises transformation.
Variety engineering: variety operators and best practice
(communications, transducers and performance)
Dynamic
y
capabilities
p

Syncho Research 2008 ECM

Variety engineering
In the
h ffollowing
ll i slides
lid we fi
find
d examples
l off variety
i
operators for enterprises in the network
economy (amplifiers,
(
lifi
attenuators
tt
t and
d
transducers)
The definition of variety operators depends on
the transformation (named system) and
performance
f
criteria
i i (h
(how stringent
i
iis these
h
criteria)

Enterprise Complexity Model

Syncho Research 2008

ECM

Amplifiers of Ent. variety

Attenuators of Env variety

Variety Balance

Internal to enterprise

In Operational Environment

Enterprise

Org structure; pushing down

autonomy
t
Resource centralisation,
functional decentralisation

Internet platform to support

communications
i ti
b
between
t
customers and suppliers to
work out e.g. equipment
specifications

Lead enterprise interacting

with
ith global
l b l market
k t th
through
h
Regional Industrial Cluster (the
Organisation)

External to enterprise

External to enterprise

Transformation

Subcontracting
manufacturing globally
Distribution network

Bar coding customers

behaviours to support sales.
Blogging, market research

producing quality textiles for

retail markets

In Operational Environment

Internal to enterprise

Performance

Internet systems to enable

customers perform
enterprises transactions

Operational standards
Decoding suppliers and
customers performance

KPI for supply chain

management

Syncho Research 2008 ECM

1. Amplifiers
1
A lifi off Variety
V i t th
thatt are
Internal to Primary Enterprise
Strengthening the Increasing the
Creating new
Enterprises Variety resolution of the
variety for the
Enterprises Variety Enterprise

Making the
Enterprises variety
time independent

Website linking
customers,
suppliers and
distributors.

Use internal
communication
systems to respond
queries globally.

Marketing and
communications
offices
ff

Use of Web2 to
target customers
individually with a
focused message
(e.g. Amazon)

R&D, future
groups..
Developing
Dynamic
Capabilities

Regional and local

sorting offices
ff
ffor
Organisation
postage and parcels Structure

Syncho Research 2008 ECM

2. Amplifiers of Variety that are

External to Primary Enterprise
Strengthening
g
g the
Increasingg the
Creatingg new
Enterprises Variety resolution of the
variety for the
Enterprises Variety Enterprise
Marketing
companies
supporting
pp
g
enterprise,
Outsourcing
g
Post Office
Branches
Banks paying social
services benefits
(amplifying social
services)

Information
technology
companies
p
dealingg
with enterprises
transactions (e.g.
banks, shares
management )

Makingg the
Enterprises variety
time independent

Distribution centres Call Centres ,

Customer Services
Enterprises
p
Internet operations,
p
,
contributing to
operating 24 hours
network /cluster
a day, 7 days a
week.
Global publicity

Syncho Research 2008 ECM

3. Amplifiers
3
A lifi off Variety
V i t within
ithi th
the
Operational Env. of Primary Enterprise
Strengthening the Increasing the
Creating new
Enterprises Variety resolution of the
variety for the
Enterprises Variety Enterprise

Making the
Enterprises variety
time independent

Franchising:
Regional
enterprises selling
locally the primary
enterprises
offerings

Customers use of
blogs creating
public opinion
about enterprise

Regional
enterprises
adjusting the
enterprises
offerings to local
requirements

Manufacturing
outlets in cheap
countries doing the
enterprises
designs.

4. Attenuators of Variety within

Operational Env. of Primary Enterprise
Weakening the
strength of the
environmental
variety

Reducing the
resolution of
relevant
environmental
variety

Chopping off parts

of the
environmental
variety

Making
environmental
variety time
dependant

Self-organisation
Self
organisation of
agents in the
environment: more
variety absorption at
the local level, less
residual variety

Media managing
information in real
time and by
exception

Media selecting
stories and
constructing them

Rythmun of
publications and
reporting

Government
regulations: reducing
restrictions,, liftingg
constraints

Atenuadored de

5. Attenuators of Variety that are

External to Primary Enterprise
Weakening the
strength of the
environmental
variety
Blogging

Reducing the
resolution of the
environmental
variety

Making
environmental
variety time
dependant

Atenuadored
de
Screening agencies Blogging
Media highlighting

for personnel hiring

Automatic check-in
of passengers in air
terminal

Chopping off parts

of the
environmental
variety

Market research
agency doing
research for
enterprise

stakeholders and
stakeholders
customers views
about enterprise for
a short time

6. Attenuators of Variety that are

Internall to the
h Primary Enterprise
Weakening the
strength of the
environmental
variety
Internal review of
blogs and other
forms of
stakeholders views

Reducing the
resolution of the
environmental
variety

Chopping off parts

of the
environmental
variety

Making
environmental
variety time
dependant

Atenuadored
de
Clustering
Defining purpose
Reducing contact
environmental
for enterprise
agents in categories.
Model of
market research
Organisational
done internally
structure
Enterprise
complexity model
Operational
p
model
of customers,
suppliers and
competitors

periods with
customers and
suppliers to
opening
opening hours
hours