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Management Systems. Methods and Structures.

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Prof. MAGDOLNA CSATH
Kodolanyi Janos University of Applied Sciences
Department of Economics and Management
Furdo utca 1,
8000 Szekesfehervar, Hungary
Prof. STEFAN TRZCIELIŃSKI
Poznan University of Technology
Institute of Management Engineering
pl. Marii Skłodowskiej-Curie 5,
60-965 Poznań, Poland
Reviewed by:
Prof. JERZY SZKUTNIK
ul. Przybyszewskiego 18
42-200 Częstochowa University of Technology
Cover design
MAREK DERBICH
Typesetting
EMILIA KOZŁOWSKA

No part of this book may be reproduced, stored in a retrieval system,

or transmitted, in any form or by any means, electronic, mechanical,
photocopying, recording or otherwise, without permission in writing
from the author.

ISBN 978-83-7143-867-2

Edition I

Copyright © by Poznan University of Technology 2009

PUBLISHING HOUSE OF POZNAN UNIVERSITY OF TECHNOLOGY

pl. M. Skłodowskiej-Curie 2, 60-965 Poznań, Poland
tel. +48 (0) 61 665 3516, faks +48 (0) 61 665 3583
e-mail: [email protected] www.ed.put.poznan.pl

Orders should be sent to:

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e-mail: [email protected]
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Printed by ESUS Agencja Reklamowo-Wydawnicza Tomasz Przybylak

 CONTENTS

PREFACE ................................................................................................ ................................

5

Daria MOTAŁA
1. Influence of management methods on the market effectiveness of enterprises.
Interpretation of research results ............................................................................. 7
1.1. Introduction ................................................................................................ ...............7
1.2. Issue areas ................................................................................................ .................9
1.3. Results of analyses and their interpretation .............................................................. 12
1.4. Analysis results with application of the rough set theory ................................ 17
1.5. Conclusions ................................................................................................ ...............
22
References ................................................................................................ ............... 24

Sylwia PIERSIALA, Stefan TRZCIELIŃSKI

2. The methodology of continuous improvement process management in a manu-
facturing system. Literature analysis ........................................................................ 27
2.1. Introduction ................................................................................................ ...............
27
2.2. Continuous improvement models’ analysis .............................................................. 28
2.3. Hypotheses ................................................................................................ ................
41
2.3.1. Hypothesis 1 ................................................................................................41
2.3.2. Hypothesis 2 ................................................................................................42
2.3.3. Hypothesis 3 ................................................................................................43
2.4. Literature analysis ................................................................................................ 44
2.5. Conclusions ................................................................................................ ...............
49
References ................................................................................................ ................ 49

Robert MICHALSKI, Stefan TRZCIELIŃSKI

3. From information to decision – business intelligence systems ................................ 53
3.1. Introduction ................................................................................................ ...............
53
3.2. Evolution of decision support systems ................................................................ 54
3.3. Business intelligence systems and decision-making – operational BI ...................... 56
3.4. Data quality and time in decision-making ................................................................ 59
3.5. Business effects of the implementation of BI ........................................................... 60
3.6. Conclusions ................................................................................................ ...............
61
References ................................................................................................ ................ 63

Andrzej BORUCKI
4. Customization as a way to extend software lifecycle .............................................. 65
4.1. Introduction ................................................................................................ ...............
65
4.2. Software customization methods .............................................................................. 66
4.2.1. Evolutionary development ........................................................................................ 67
4.2.2. Incremental development .......................................................................................... 68
4 Contents

4.3. Use of agile software development methods for customizing software .................... 70
4.4. Conclusions ................................................................................................ ...............
75
References ................................................................................................ ................ 75

Joanna KAŁKOWSKA
5. Concurrent engineering virtual teams ...................................................................... 77
5.1. Introduction ................................................................................................ ...............
77
5.2. Virtual teams – some theoretical bases ................................................................ 77
5.3. Virtuality of concurrent engineering team ................................................................ 82
5.4. Model of concurrent engineering virtual team – an example ................................ 86
5.5. Conclusions ................................................................................................ ...............
88
References ................................................................................................ ................ 89

Aleksander JURGA
6. Paradigms of a virtual organization .......................................................................... 91
6.1. Introduction ................................................................................................ ...............
91
6.2. A virtual organization ............................................................................................... 92
6.3. Features of virtual organization ................................................................................ 94
6.4. Creator of a virtual organization ............................................................................... 96
6.5. The model of life cycle of a virtual organization ...................................................... 98
6.5.1. The phase of identification .......................................................................................98
6.5.2. The phase of the formation of a virtual organization ................................100
6.5.3. The phase of operational activity of a virtual organization ................................ 101
6.5.4. The phase of disintegration of a virtual organization ................................101
References ................................................................................................ ................ 103

Edmund PAWŁOWSKI
7. Designing the organizational structure of a company. A concept of multidimen-
sional design space ................................................................................................ .. 107
7.1. Introduction ................................................................................................ ...............
107
7.2. A concept of design space ......................................................................................... 109
7.3. Operationalization of design space ........................................................................... 112
7.3.1. Operationalization of dimension 1: interpretation of organizational
structure, and dimension 5: principles of organizational structure
design ................................................................................................ ........................
112
7.3.2. Operationalization of other dimensions of design space methodolo-
gies of modeling and designing of organizational structure ................................ 117
7.4. Conclusions ................................................................................................ ...............
120
References ................................................................................................ ................ 121
 PREFACE

This book concerns some valid issues of organization of contemporary enter-

prises. They are chosen among a lot of other and the choice is determined by the
research which is led in the Division of Management and Information Technology
which is a unit of Institute of Management Engineering at Poznan University of
Technology. The thematic scope of these issues includes methods and structures of
management.
The concepts and methods of management are the dominating issues in that
book. A revive of several of them is included in the first chapter. The results of
research concerning the influence of the methods on market effectiveness of small
and medium enterprises from the gas sector is presented. However the issues of this
chapter is not so much focused on the results as on the interpretation that is ori-
ented on selecting concepts and methods which are crucial to market effectiveness
of investigated enterprises. We thing that because of the relations existing among
the investigated enterprises the findings are representative to industrial clasters
created by SMEs.
The second chapter concerns the management of continuous improvement proc-
ess (CI). A deepen literature analysis of CI models has been led. The findings of
the analysis prepare an empirical research that have been undertaken and are con-
tinued to verify some hypothesis concerning the conditions which have to be ful-
filled in the organizational system of enterprise so the CI process has been durable,
lasting and contingent on the manufacturing system.
The next two chapters generally deal with Integrated Computer-Based Tech-
nologies. The first of them presents a historical review of development of com-
puter-based systems supporting management. The particular interest has been hold
with Business Intelligence Systems. The second one – concerns the optimization of
business IT applications. The discussed approach to adjust the software to the
changing business environment is software customization. The goal is to extend the
software lifecycle. The methods of software development are presented.
The fifth chapter plays a role of connector between the issues on concepts and
methods of management and the issues on organizational structures. It concerns the
Concurrent Engineering (CE) but not so much the process aspects of the method as
structural conditions for implementation of CE. Concurrent engineering requires
inter-functional team-based working and such teams are example of virtual struc-
tures.
6 Preface

In the sixth chapter the problem of virtual organizational structures is treated in

more systematic way. Particular, the features and lifecycle of virtual organization is
discussed.
The seventh chapter is the last one. It deals with problem of designing of organ-
izational structure. The original and inventive approach to the problem which is
present depends on analysis of the designing problem in multidimensional space
that consists of: interpretation of organizational structure, methodology of organ-
izational structure modeling, methodological approach to organizational design,
procedures of organizational structure design, and principles of organizational
structure design.
The editors are conscious that some views and findings which are presented in
that book can be controversial, and particular because of this, we believe that this
book can be inspiring, cause criticism, suggest new ideas, and in this way to con-
tribute to development of both practice and theory of management.

Magdolna Csath, Stefan Trzcieliński

Daria MOTAŁA*

1.
INFLUENCE OF MANAGEMENT METHODS
ON THE MARKET EFFECTIVENESS OF ENTERPRISES
INTERPRETATION OF RESEARCH RESULTS

1.1. INTRODUCTION

A smooth functioning and achieving success most often measured with finan-
cial results and the market share; are basic aims of enterprises. Achieving those
objectives is possible under the condition of a proper management. Both in litera-
ture, as well as in practice managements are being distinguished diverse concep-
tions, methods and tools, application of which influences the quality of functioning
of business entities. On account of the high changeability and the stormy nature of
the environment; leading meta concepts, which realization is being undertaken by
more and more companies are Lean Management and Agile Enterprises. Their
application manifests itself among others with exploiting determined methods of
management, in particular: Total Quality Management, Benchmarking, Continuous
Improvement, Concurrent engineering, Supply-chain Partnering, Just in Time, Out-
sourcing, Team-Based Working, Manufacturing Cells, Total Productivity Mainten-
ance, Empowerment, Integrated Computer Technology, Business Process Reengi-
neering, Learning Culture (Trzcieliński 2001).
Presented conceptions and management methods are being used by enterprises
in diversified scopes, simultaneously they illustrate certain regularities in the con-
text of the co-occurrence in business entities. The concept concerning management
that in a considerable extent applies solutions from modern methods of manage-
ment is the Total Quality Management (TQM). Following elements are included in
it: Benchmarking (BEN) (Szkutnik 2008), Continuous Improvement (CI), Just in
Time (JiT) (Karaszewski 2001). Both BEN and TQM characteristics point out the
implementation of changes with use of the method of Reengineering (BPR) (Ka-

*
Poznan University of Technology, Poland.
8 Daria Motała

raszewski 2001; Węgrzyn 2000). It results from the necessity of realization of radi-
cal changes and expected significant results. In the Business Process Reengineer-
ing method (BPR) method we observe flattening of vertical, hierarchical structure,
which results from putting the particular emphasis to the continuity of processes
realized in the enterprise, irrespectively from functional divisions of individuals
units carrying them out. Functionally separated units are being replaced with the
teams responsible for the process. So, only one team is responsible for the process,
instead of several units distinguished according to a functional criterion. Therefore
it applies the Team-Based Working (TBW) method and Empowerment (EMP)
(Hammer, Champy 1996).
The literature of the subjects underlines the impact of Continuous improvement
(CI) on upgrading the quality of products and processes (Bessant and others 2001).
CI is being developed parallel to methods of the quality management, seeking and
realizing ways of improving the enterprise by its constant rationalizing (Bhuiyan,
Baghel 2005). The complete development can only be achieved by the enterprise,
when innovations are combined with constant upgrading the quality of production
(Imai 1986).
Extensiveness of the TQM conception causes, that they are often used, at least
partly such methods as: Empowerment (EMP), Team-Based Working (TBW),
Concurrent Engineering (CE) or Supply-chain Partnering (SCP). TQM does not
only concern selected workstations, it also requires personal engagement and re-
sponsibility of all employees. Quality improvement is initiated in the area of rea-
lized processes, as well as in products offered to customers. Therefore it seems to
be justified to apply CE, thanks to which it is possible to fulfill rapidly changing
needs of clients (Weiss, 1998), as well as SCP that guarantees a high quality of
materials and their timely supplies (Lee 2007).
Realization of CE and SCP requires that suppliers would know directions of de-
velopment and the technology implemented in the company. From the other side,
enterprieses expect from them to express own opinions and cooperation in the
range of creating new products or modernizing existing ones. They initiate consul-
tations with suppliers in the range of material abilities, in consequence – also con-
struction potentials during the process of design (Fechner 2007).
Supplying within supplies chains systems, which is also often used in CE, takes
place in accordance with principles of the JiT method. Applying JiT requires a proper
organization of work – not only in own enterprise, but also in companies being its
suppliers. SCP functions, when the dialogue is being initiated not only two sides:
supplier and receiver; but when it also encloses all units, starting from the first one
that supplies initial materials and ending at the last one, i.e. the user of particular
product (Lee 2007). The SCP approach confirms the implementation of determined
method in the process of CE because it put impact on consultations realized by
many participants, including the indirectly cooperating ones, in the process of pro-
ducing new products.
 1. Influence of management methods on the market effectiveness of enterprises. … 9

The TBW method also presents certain dependencies in occurrence along with
other modern methods of management. It is especially visible between TBW and
CE method (Hartley 1992; Salomon 1995; Smith, Reinertsen 1991; Syan, Menon
1994). The main effect of implementation of the Concurrent Engineering is short-
ening the cycle of introducing the product to the market. Many specialists from
various domains must be engaged in realization of particular phases to make this
process possible. Such situation naturally forces participant to work in teams. So,
teamwork is one of conditions of the effective CE implementation. It assumes a wide
autonomy of employees that brings positive effects in form of development or crea-
tivity. Teams aim in obtaining the synergy effect; this brings better results if
realized tasks require various skills, accuracies of judgments and experience
(Sikora 2000).
The efficient functioning of enterprises on the market requires their proper
adaptation to its requirements, which should be expressed with exploiting a broad
spectrum of mentioned modern conceptions and methods of management, taking
under consideration connections, which are appearing between them. The scope of
this using and the assessment of effectiveness of market action constitute the sub-
ject of the research led in small and medium enterprises of the gas sector in the
Greater Poland. There were two main areas that were especially examined as foun-
dations to further analysis. Presented elaboration discusses problems that have
occurred while interpreting findings of the research.

1.2. ISSUE AREAS

First area included the analysis of the scope of using modern conceptions and
management methods. There has been accepted the presumption that their applica-
tion is represented by the occurrence of determined symptoms (Trzcieliński,
Motała 2006; Trzcieliński, Motała 2007; Trzcieliński and others 2008). Appearing
of symptoms was described with the binary system, i.e. individual symptom is
being identified in the enterprise or it is not. Next, basing on particular set of symp-
toms it is necessary to assess, if the method they describe is applied in the company
and in what extent. Individual analyzed symptoms have different meaning in the
range of application of the concept or method. First problem appeared in this level
of research. It concerned the weight of individual symptoms in the evaluation of
the range of implementation of modern concepts and methods of management.
With a view to comparing received results two methods were applied. First
from them consisted in granting weights to individual symptoms with use of the
expert method1. The other way of assigning weights was made by comparing in

1
Prof. EngD S. Trzcieliński, who is the adviser of a doctoral dissertation carried out by Msc
D. Motała has accepted the role of expert.
10 Daria Motała

pairs all symptoms, typical for the given conception or the method. One should
next group results received in this way. Determining whether the analyzed concep-
tion or method are applied and in what extend, was a purpose. There has been as-
sumed a division into three groups: lack of application, partial application and ap-
plication in significant range. It caused appearance of next problem associated with
the interpretation of results: which to accept limits of the level of appearing of
symptoms, letting assign using the method for one of mentioned groups.
Answers that were considered during the analysis of the results include three
variants. The first one is establishing, that level of appearing symptoms reaching
25% means that the given method isn't applied; results between 25% and 75% state
about partial application of the method and results higher than 75% confirm the
application in significant range. The second solution established analogically limits
of values 33% and 66%. However the third solution consists limits on the level of
50% and 75%.
The second area, in which appeared problems concerning interpretation of re-
sults, were evaluation obtained from market partners and the final receiver. During
the collection they were asked for the evaluation of a succession of aspects of func-
tioning of tested enterprises. This way there have been received several notes for
each company, instead of one. So, also in this case one should adjust the gravity of
individual aspects for determining one final assessment. Moreover, a division into
opinions expressed by partners and by final recipient was presented. Each assess-
ment assigned to particular aspects of company’s activity obtained a weight. All
weights have been assigned with use of a method of comparison in pairs.

5,00

4,00

3,00

2,00

1,00

0,00
A B C D E F G H I J K L M N O P R

hig h eva lua tion obta ined from the fina l recipient hig h eva lua tion obta ined from pa rtners

Fig. 1. List of evaluations obtained by enterprises that have been well perceived by their
partners and final receivers, taking under consideration a division through the median
Source: personal elaboration
 1. Influence of management methods on the market effectiveness of enterprises. … 11

The inspection, what conceptions and methods are being used by enterprises
effectively functioning on the market required determining, which companies can
be perceived as efficient. After collecting conclusive assessments of enterprises
received from market partners and competitors, each group was divided on two
next that reflect business units that have gained high notes and those, which had
poor evaluations. Determining the borderline in this assessment was the problem.
Two solutions have been taken under consideration: the median has been estab-
lished as the borderline dividing good and weak enterprises. Hence determined
method had a disadvantage – it didn’t have any relation with the accepted scale of
evaluation. Figure 1 presents values of those evaluations. As a result of such a divi-
sion from market partners nine enterprises got a good mark and similarly well nine
companies were judged by the final recipient.

5,00

4,00

3,00

2,00

1,00

0,00
A B C D E F G H I J K L M N O P R
high evaluation obtained from the final recipient high evaluation obtained from partners

Fig. 2. List of evaluations obtained by enterprises that have been well perceived by their
partners and final receivers, taking under consideration a division with the value 3.
Source: personal elaboration

While collecting the opinion on examined enterprises a Likert scale (1–5) was
applied, in which the value 1 has been accepted as the lowest note and the value 5 –
the highest one. In aim to maintain the relation of the division into group of strong
and weak firms with the scale of notes, there has been accepted to treat the value 3
as the borderline value because it divides the scale into two halves. Sixteen enter-
prises got high note from their partners in this type of division of well assessed
companies; however twelve obtained high note from final recipients in this method.
Figure 2 illustrates values of determined assessments.
12 Daria Motała

1.3. RESULTS OF ANALYSES AND THEIR INTERPRETATION

For every of adopted alternatives obtained findings were verified. Results get in
this way were presented in Figures 3–6. The axis of abscissae presents modern
concepts and methods of management, selected on basis of findings from research
managed in the UK (Pepper and others 1998) and Australia (Morrison and others
1998). The axis of ordinates presents the percentage share of enterprises imple-
menting in their practice particular method or concept. In respect to the extensive-
ness of obtained data, further deliberation are reduced to the level of appearance of
symptoms pointing out significant use of concepts and methods of management
that have been analyzed.

Table 1. Explanation of symbols used in the publication – caption of figures

Symbol Name of the concept/method Symbol Name of the concept/method

TQM Total Quality Management TBW Team-based Working
BEN Benchmarking MC Manufacturing Cells
CI Continuous Improvement TPM Total Productive Maintenance
CE Concurrent Engineering EMP Empowerment
SCP Supply-chain Partnering BPR Business Process Reengineering
JiT Just in Time ICT Integrated Computer Technology
OS Outsourcing LC Learning Culture
Source: personal elaboration.

30

25
quantity of enterprises

20

15

10

0
TQM BEN CI CE SCP JiT OS TBW MC TPM EMP BPR ICT LC
concepts and methods of management

good evaluation obtained from the final recipient with reference to a considerable extent of application determined on the level of 75% of
symptoms
good evaluation obtained from partners with reference to a considerable extent of application determined on the level of 75% of symptoms

good evaluation obtained from the final recipient with reference to a considerable extent of application determined on the level of 66% of
symptoms
good evaluation obtained from partners with reference to a considerable extent of application determined on the level of 66% of symptoms

Fig. 3. Range of application of methods used in a large extend (taking under consideration
determined limits of 75% and 66% weights of symptoms assigned with use of the expert
method) in well perceived enterprises (with the limit determined through application of the
median). Source: personal elaboration
 1. Influence of management methods on the market effectiveness of enterprises. … 13

45
40
quantity of enterprises

35
30
25
20
15
10
5
0
TQM BEN CI CE SCP JiT OS TBW MC TPM EMP BPR ICT LC
concepts and methods of management

good evaluation obtained from the final recipient with reference to a considerable extent of application determined on the level of 75% of
symptoms
good evaluation obtained from partners with reference to a considerable extent of application determined on the level of 75% of symptoms

good evaluation obtained from the final recipient with reference to a considerable extent of application determined on the level of 66% of
symptoms
good evaluation obtained from partners with reference to a considerable extent of application determined on the level of 66% of symptoms

Fig. 4. Range of using methods applied in the considerable extent (taking under considera-
tion determined limits of 75% and 66% weights of symptoms given with use of the expert
method) in well evaluated enterprises (with the limit determined by the value 3).
Source: personal elaboration

The first considered alternative was assigning weight to symptoms using the
expert method and accepting a significant range of use of determined concepts and
methods of management in the borderline, which reached the level of 75% and
66%. The median was the most important value that constituted the border between
good and weak notes for enterprises (Fig. 3), next was the average of evaluations
that were possible to obtain, i.e. 3 (Fig. 4). Having conditions determined in this
way, for the borderline of 75% of symptoms, the majority of enterprise has used
following methods:
– Concurrent Engineering,
– Total Productivity Maintenance,
– Empowerment,
– Manufacturing Cells,
– Learning Culture,
– Integrated Computer Technology,
And for the borderline of 66% of symptoms it is important to add to following
method:
– Continuous Improvement (kaizen).
Findings received as a result of making analyses include two sets of conceptions
and methods with similar comtent. They differ in the little scope depending on the
accepted threshold of the number of symptoms confirming the application of par-
ticular method or concept in a considerable extent. In the variant accepting the limit
of 75%, there has been identified six concepts and methods applied in a relative big
14 Daria Motała

amount of enterprises. The lower limit of 60% enlarged this group to seven ele-
ments.
The set of concepts and methods used by a well-evaluated enterprise is the same
independently from the accepted threshold (the median or the value 3) of the divi-
sion of units into well and poorly assessed. The diversification concerns the scope
of their implementation in examined enterprises. In the case of analysis of the con-
siderable range of application of concepts and methods with use of the borderline
determined by the median, there has been stated that the biggest number of compa-
nies implementing it reaches the value of 29%. However in the case of the thre-
shold determined by the value 3 determined amount upraised to 41%.
The analysis of the range of implementation of concepts and methods after as-
signing symptoms weights with use of the method of comparing in pairs, with ref-
erence to borderline values dividing enteprises established earlier and in ranges of
significant implementation of those methods, was the next stage of work on ob-
tained results. Figures 5 and 6 present results of this study.

35%

30%
quantity of enterprises

25%

20%

15%

10%

5%

0%
TQM BEN CI CE SCP JIT OS TBW MC TMP EMP BPR ICT LC
concepts and methods of management

good evaluation obtained from the final recipient with reference to a considerable extent of application of the method
determined on the level of 75% of symptoms
good evaluation obtained from partners with reference to a considerable extent of application of the method determined on
the level of 75% of symptoms
good evaluation obtained from the final recipient with reference to a considerable extent of application of the method
determined on the level of 66% of symptoms
good evaluation obtained from partners with reference to a considerable extent of application of the method determined on
the level of 66% of symptoms

Fig. 5. Range of using methods applied in the considerable extent (taking under considera-
tion determined limits of 75% and 66% weights of symptoms given with use of the method
of comparison in pairs) in well evaluated enterprises (with the limit determined through
application of the median). Source: personal elaboration
 1. Influence of management methods on the market effectiveness of enterprises. … 15

50%

45%

40%

35%
quantity of enterprises

30%

25%

20%

15%

10%

5%

0%
TQM BEN CI CE SCP JIT OS TBW MC TMP EMP BPR ICT LC
concepts and methods of management

good evaluation obtained from the final recipient with reference to a considerable extent of application of the method determined on the
level of 75% of symptoms
good evaluation obtained from partners with reference to a considerable extent of application of the method determined on the level of
75% of symptoms
good evaluation obtained from the final recipient with reference to a considerable extent of application of the method determined on the
level of 66% of symptoms
good evaluation obtained from partners with reference to a considerable extent of application of the method determined on the level of
66% of symptoms

Fig. 6. Range of using methods applied in the considerable extent (taking under considera-
tion determined limits of 75% and 66% weights of symptoms given with use of the method of
comparison in pairs) in well evaluated enterprises (with the limit determined by the value 3).
Source: personal elaboration

In result of the realized analysis there have been stated that, similarly like at
granting symptoms weights with use of the expert method, sets of concepts and
methods obtained for threshold values 75% and 66% differ from each other in a
very small extent. Those groups are also similarly are shaped for the accepted as-
sessment distinguishing enterprise into good and weaker on the level of the median
or the average value of potential evaluations. In result, following elements consist
in the set of symptoms for the threshold of 75%:
– Continuous Improvement (kaizen),
– Total Productivity Maintenance,
– Manufacturing Cells,
– Learning Culture,
– Integrated Computer Technology,
And for the borderline of 66% of symptoms it is important to add to following
method:
– Just in time.
16 Daria Motała

In a similar way to results obtained for weights given to symptoms with use of
the expert method, the set of concepts and methods that have been applied by well
evaluated enterprises identical idependently from the accepted borderline value
(median or value 3) of division of objects into well or worse assessed. The diversi-
fication concerns the scope of using them by companies. In the analysis of the
range of significant scope of implementation of concepts and methods, in the case
of the borderline evaluation determined by the median, there has been stated that
the highest amount of enterprises using them reaches 29%. However, for the bor-
derline evaluation determined by the value 3 it reaches the maximum 47%.

Table 2. Listing of concepts and methods used in a considerable extent by well perceived
enterprises obtained in result of the quantitative analysis
Weights assigned to symptoms with use of Weights assigned to symptoms with use of
the expert method the comparison in pairs
Considerable imple- Considerable Considerable imple- Considerable
mentation from the implementation mentation from the implementation
appearance of 75% from the appear- appearance of 75% from the appear-
symptoms ance of 66% symptoms ance of 66%
symptoms symptoms
– Concurrent Engi- additionary: – Continuous Im- additionary:
A partition of enterprises
according to the median

neering – Continuous provement (kaizen) – Just in time

– Total Productivity Improvement – Total Productivity
Maintenance (kaizen) Maintenance
– Empowerment – Manufacturing Cells
– Manufacturing Cells – Learning Culture
– Learning Culture – Integrated Computer
– Integrated Computer Technology
Technology

– Concurrent Engi- additionary: – Continuous Im- additionary:

A partition of enterprises ac-

neering – Continuous provement (kaizen) – Just in time

cording to the value 3

– Total Productivity Improvement – Total Productivity

Maintenance (kaizen) Maintenance
– Upodmiotowienie – Manufacturing Cells
szczebla wykonawc- – Learning Culture
zego – Integrated Computer
– Manufacturing Cells Technology
– Learning Culture
– Integrated Computer
Technology
Source: personal elaboration.

The listing of all concepts and methods of management, taking under considera-
tion both methods of granting weights to symptoms, used in a considerable extent
by well assessed enterprises is presented in the Table 2. The column presenting
cncepts and methods used by good firms in a considerable extent, assuming that
 1. Influence of management methods on the market effectiveness of enterprises. … 17

66% of occurrence of symptoms determines it, constitutes a supplement of the set

elaborated for the accepted level of 75% of symptoms. Research results obtained
for two ways of assigning weights to symptoms are similar. In the case of the ex-
pert method for the borderline of 66% of implementation of concepts or methods in
a considerable extent they include seven methods and two from them are not iden-
tical as those in the set determined for weights assigned with use of the method of
comparison in pairs. They have been distinguished in the Table 2 with italics.
However, the set elaborated with use of the method of comparison in pairs in-
cludes six concepts and methods, for the borderline level of 66% of their applica-
tion in a considerable extent. This causes that only one of them does not constitute
a set common with the group prepared with use of the expert method. Following
concepts and methods occurred in both sets:
– Total Productivity Maintenance,
– Manufacturing Cells,
– Integrated Computer Technology,
– Learning Culture,
– Continuous Improvement.

1.4. ANALYSIS RESULTS WITH APPLICATION OF THE ROUGH

SET THEORY

A Polish Professor, Zdzisław Pawlak, is the author of the rough set concept,
which principles he has published in the early eighties of the 20th century. Deter-
mined theory has widespread in the word of science and presently it constitutes one
of more quickly developing methods of the artificial intelligence. It allows dealing
with incomplete or disconnected sets of information (Pawlak 2001). The theory
aims in presenting dependencies existing between two sets describing examined
objects, which existence has been identified in the process of generating decisive
principles.
The issue in the rough sets theory is examining the adjustment between classes
and atoms. Decisive classes define the division of objects into sets, which allow
separating objects from various classes only on basis of knowledge of values of
conditional attributes. In consequence of such division there is no need of distin-
guishing objects being in the same class. However, atoms inform about the border-
line ability of distinguishing objects. If two objects consist in the same atom, it
means that they are characterized with the same set of values of conditional
attributes. So, it is not possible to distinguish them only on basis of information
concerning conditional attributes (Pawlak 1999).
There are two sorts of dependencies between classes and atoms. It is possible
that all objects consisting in particular atom simultaneously have the same value of
18 Daria Motała

the decisive attribute, i.e. they come from the same class. In such situation there is
no need of distinguishing them. Still, sometimes it happens that objects with iden-
tical values of conditional attributes do not characterize with the same values of the
decisive attribute.
The adherence of objects to the same atom excludes the ability of distinguishing
them from the point of view of the value of conditional attributes; however assig-
nation to different classes suggests the need of existence of such possibility. Pre-
sented situation is called disconnection and it is a form of incertitude of data (Paw-
lak, Skowron 2007).
The data disconnection is always caused by a limited number of features that
describe the object. Such characteristics, managed with use of conditional
attributes, however big would their number be, it still cannot reflect the full state of
objects. In consequence, the disconnection of data causes the necessity of deter-
mining an estimation of decisive classes. It is possible to distinguish two types –
bottom and upper approximation. Interpretation of the bottom approximation is
showing it as the sum of atoms consisting in the particular class and built from
objects characterized with the same values of conditional attributes. However the
upper approximation is a sum of atoms that have any part common with individual
class, i.e. at least a part of objects included in it is characterized with a determined
value of decisive attributes. The difference between upper and bottom approxima-
tion is called the borderline area. It contains objects, which are parts of two or more
classes. Making such sort of division allows generating decisive principles (Siro-
money, Inoue 2000).
In case of the data analysis, constituting the base of examinations introduced in
this publication, with a view to generating decisive rules one should divide the
obtained information in two groups. The first group includes conditional attributes,
describing objects, i.e. enterprises, from the point of view of applied conceptions
and management methods. Ranges of implementation considered concepts and
method in the division into the lack of interest, partial application and application
in considerable extent constitute in the same time values of conditional attributes.
The second group, i.e. decisive attributes; are evaluations obtained from partners
and the final recipient.
After dividing the obtained information in the given way beginning generating
decisive rules is possible. It is made for showing, which from the scope of modern
concepts and methods of management are used by well assessed enterprises. In
case of granting weights for symptoms with expert method, achieved results were
presented in Table 3. Included expressions mean:
– considerable extent – using the particular concept or method in range of
66%/75% or more of appearing symptoms,
– at least partly – using the particular concept or method in range of at least
33%/25% of appearing symptoms,
– partly – using the particular concept or method in range from 33%/25% to
66%/75% of appearing symptoms.
 1. Influence of management methods on the market effectiveness of enterprises. … 19

Table 3. List of conceptions and management methods generated during analysis

with applying rough set theories for symptoms, of which weight were given with use
of the expert method
BORDERLINE VALUES OF BORDERLINE VALUES OF
APPLICATION OF SYMPTOMS 33/66 APPLICATION OF SYMPTOMS 25/75
Borderline evalua- Borderline evalua-
METODS

Borderline evalua- Borderline evalua-

tion of the final tion of the final
tion of partners tion of partners
recipient recipient
median value 3 median value 3 median value 3 median value 3
TQM consider-
able
extent
BEN consider-
able
extent
CI consi- consider- at least at least at least
derable able partly partly partly
extent extent
CE consider- partly consider- consider- at least at least
able able able partly partly
extent extent extent
SCP partly partly at least partly partly
partly
JiT consi- consider- partly consider-
derable able able
extent extent extent
TB partly partly partly partly
W
MC consider- consider- consider- consider-
able able able able
extent extent extent extent
TPM at least consider- consider- at least consider-
partly able able partly able
extent extent extent
EMP at least consider- partly partly at least consider-
partly able partly able
extent extent
BPR partly partly partly partly partly partly
ICT consider- consider- consider-
able able able
extent extent extent
LC consi- consider- consider- consider-
derable able able able
extent extent extent extent
Source: personal elaboration.

Results gathered in the Table 3, for the threshold level of evaluation of enter-
prises in accordance to the median, present a significant application of concepts
and methods, like:
– Continuous Improvement,
– Concurrent Engineering,
– Just in Time,
20 Daria Motała

– Total Productivity Maintenance,

– Empowerment.
However, taking under consideration results for the threshold level of evalua-
tion of enterprises on the level of the value 3, determined set should be completed
with following ones:
– Supply-chain Partnering and
– Learning Culture.

Table 4. List of conceptions and management methods generated during analysis

with applying rough set theories for symptoms, of which weight were given with use of the
method of comparing in pairs
BORDERLINE VALUES OF BORDERLINE VALUES OF APPLICATION OF
APPLICATION OF SYMPTOMS 33/66 SYMPTOMS 25/75
METODS

Borderline evalua-
Borderline evaluation of Borderline evaluation of Borderline evaluation of
tion of the final
partners the final recipient partners
recipient
median value median value 3 median value 3 median value 3
3
considerable at least considerable considerable considerable considerable
CI extent partly extent extent extent extent
considerable
partly partly partly
CE extent
considerable
partly partly partly
SCP extent
considerable
partly
JiT extent
TBW partly partly partly partly
considerable considerable considerable
MC extent extent extent
considerable considerable considerable
TPM extent extent extent
considerable considerable at least
partly partly partly
EMP extent extent partly
considerable
partly partly
BPR extent
considerable considerable
ICT extent extent
considerable considerable considerable considerable
LC extent extent extent extent
Source: personal elaboration.

Results collected in the Table 4, in case of the border level of the evaluation of
enterprises on the level of median, are pointing at importnace of applying such
conceptions and methods, as:
– Continuous Improvement,
– Supply-Chain Partnering,
– Empowerment.
 1. Influence of management methods on the market effectiveness of enterprises. … 21

However for the border evaluation of enterprises on the level of value 3 those
are:
– Continuous Improvement and
– Learning Culture.
Sets of concepts and methods differ to a large extent depending on applied
weights of symptoms and the accepted threshold value of symptoms proving about
using the conception or method. The set of the ones which are applied by well per-
ceived enterprises differs also on account of the accepted borderline of the distribu-
tion of subjects for well or worse evaluated.

Table 5. List of concepts and methods applied in a considerable extent by well evaluated
enterprieses obtained in result of an analysis performed with use of the rough set theory
Weights assigned symptoms with use of Weights assigned symptoms with use of
the expert method the method of comparing in pairs
Significant applica- Significant appli- Significant applica- Significant appli-
tion from occurence cation from occu- tion from occurence cation from occu-
of 75% of symptoms rence of 66% of of 75% of symptoms rence of 66% of
symptoms symptoms
– Concurrent Engi- – Continuous – Upodmiotowienie – Continuous
according to
Division of

the median
companies

neering Improvement szczebla wyko- Improvement

– Total Productivity (kaizen) nawczego – Supply-Chain
Maintenance – Just in time Partnering
– Empowerment
nies according to the
Division of compa-

– Concurrent Engi- – Continuous – Continuous Im-

neering Improvement provement
– Total Productivity (kaizen) – Learning Culture
value 3

Maintenance – Just in time

– Empowerment – Supply-Chain
Partnering
– Learning Culture
Source: personal elaboration.

Comparing results achieved through analyses with applying rough set theories
for all possible variants of interpreting findings was described in the Table 5. The
generated set is much less cohesive than, the analogous list received from the quan-
titative analyses. Lack of presentation of any methods in the case of weights of
symptoms assigned with use of the method of comaring in pairs with the signifi-
cant range of application, from 66% of appearing symptoms and the borderline
evaluation of enterprises on the level of value 3 results from bigger quantity of sets
in relation to other variants in particular group. While generating decisive rules it is
assumed that the minimum percentage level of quantity of companies, as well as
concepts and methods, for which individual rule is supposed to be true. So, the
more lements has the set of enterprises, which situation takes place in the evalua-
tion on the level of 3, and the more concepts and methods appear in the set, which
22 Daria Motała

takes place for considering a significant range of application from 66% of symp-
toms, the smaller is the possibility of occurrence of the rule.

1.5. CONCLUSIONS

The aim of deliberations presents in his paper was determining assumptions that
would allow in a most complex and authorative way evaluating and determining
initial conditions of research intereptation. There have been taken under considera-
tion following possibilities:
– Weights of symptoms assigned with use of the expert method or method of
comparing in pairs,
– Determining the considerable extent of application of concepts and methods
from the level of 66% of occurence of symptoms or from 75% of occurence of
symptoms,
– Division of the group of enterprises into well and poorly evaluated, In reference
with values determined by the median or in accordance with the average poten-
tially obtainable note, i.e., the value 3.
There have been performed two types of analyses. The first one was based on
comparing quantitative listings for particular variants of preliminary assumptions.
The Table 2 presents the list of results obtained from this method. The second me-
thod has used the rough set theory, its findings are presented in the Table 5. The
selection of assumptions in the interpretation has been made by comparing those,
for which results were relatively homogenous and sufficiently wide, that they ena-
ble elaborating conclusion on their basis. Therefore, taking under consideration the
coherence of obtained results and their wideness, it is important to consider values
obtained for concepts and methods of management appearing in weights of symp-
toms appointed with use of the expert method and borderline values of the “signifi-
cant extent of application” on the level of 75%. Still, it is important to consider the
division into good and weak enterprises that has been established on the level of
the value 3; it resulted from the more complete image of concepts and methods
applied by enterprises.
Taking dunder consideration interpretative assumptions presented above, based
on obtained findings, it is possibile to form a conclusion concerning the application
in a considerable range particular methods of management in highly evaluated
enterprises (Table 6). In the case of the quantitative analysis determined cathalog is
a little longer and it presents a slightly more coherent image of applied modern
conceptions and methods of management.
Results obtained in the quantitative analysis and thanks to use of the rough set
theory are in a considerable extent convergent. Amont three concepts and methods
presented in the process of generating decisive rules as thos, which are used in
 1. Influence of management methods on the market effectiveness of enterprises. … 23

a significant extent in well perceived enterprises, all were also identified in the
quantitative analysis. Determined conceptions and methods were as follows: Con-
current Engineering (CE), Total Productivity Maintenance (TPM) and Empower-
ment (EMP).

Table 6. List of conceptions and methods of management

used by well-perceived enterprieses in a considerable range

Quantitative analysis Rough set theory

– Concurrent Engineering (CE) – Concurrent Engineering (CE)
– Total Productivity Maintenance (TPM) – Total Productivity Maintenance (TPM)
– Empowerment (EMP) – Empowerment (EMP)
– Manufacturing Cells (MC)
– Learning Culture (LC)
– Integrated Computer Technology (ICT)
Source: personal elaboration.

CE is mosty connected with the elaboration of a process of introducing the pro-

dukt to the market in a way that would shorten the time between the appearance of
an idea of the product and the moment of providing the product to points of sale as
much as possible. So, similarly to the case of TPM, the most critical factor is time.
Presented method is aiming in reducing outages in work of machines through the
assembly of devices diagnosing their technical condition and both theoretical and
practical preparing, of operators to conducting the conservation and removing
small defects.
In case of the quantitative analysis it is also necessary to add to the presented
catalog the MC method, which most often appears along with TPM. Expectations
related with implementation and use of both methods concern upgrading the effi-
ciency of processes of production in their context of quality, as well as time of their
realization. Therefore the application of MC in a considerable extent in highly eva-
luated companies, that has been distinguished while the quantitative analysis, har-
monizes with the use of TPM method.
In EMP a wide range of the decisive autonomy and good qualifications of em-
ployees is being assumed. The employee should have information adequate to the
range of duties he has and to the extent of decisive independence accordant to the
level of responsibility. The condition of high qualifications is fulfilled among oth-
ers by realization of trainings, in which employees of well evaluated enterprises
widely take part.
Additional application of LC that is widely presented in the determined quantit-
ative analysis is supported by the realization of EMP assumptions, which represent
a symptom of occurrence of the LC. Subjective approach to employed persons and
perceiving them as a source of the company’s potential success is expressed by the
24 Daria Motała

use of determined methods of management and it is accordant with contemporary

developing business units.
Conducted quantitative analysis and using the rough set theories showed that
methods applied by well evaluated companies in the considerable scope were: CE,
TPM and EMP. So, transponing obtained results it is possible to state that in the
gas sector, in the group of small and medium enterprises, the application of pre-
sented methods will directly affect the value of evaluation obtained from the final
recipient and partners and competitors. Presented assessment confirms the reputa-
tion that companies have gaine in their environment. Hence, the specificity of the
activity of determined enterprises allows treating the quality of this reputation as
assessment of the efficiency of functioning of companies on the market. So, con-
duced research have shown that efficient enterprises in the examined group are
those, which have implemented and used in practice CE, TPM and EMP methods.
Still, findings require further discussion, especially in the context of results ob-
tained by other authors.

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Ecole “Blaise Pascal”.
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Sylwia PIERSIALA*, Stefan TRZCIELIŃSKI*

2.
THE METHODOLOGY OF CONTINUOUS
IMPROVEMENT PROCESS MANAGEMENT
IN A MANUFACTURING SYSTEM. LITERATURE ANALYSIS

2.1. INTRODUCTION

Organizations today are required to maintain low conversion cost, shorten

changeovers, decrease production runs and reduce wastes to achieve competitive-
ness. This can be done thought the implementation of continuous improvement (CI,
kaizen) defined as “an organization-wide process of focused and sustained incre-
mental innovation” (Bessant, Caffyn 1997). There is no one best way to implement
it and the variety of CI models presented in literature can create difficulties in se-
lecting suitable model for a business enterprise. According to theory, implementa-
tion process is linear (Bessant, Caffyn 1997), but in reality we should also consider
internal and external conditions. Actually, kaizen is formulated by a set of organi-
zational and environmental forces (Savolainen 1999), and a series of managerial
choices, which are likely to affect and fit some organizations more strongly and
effectively than others.
As a point for further discussion we take into consideration CI maturity model
(behavioral CI implementation model) presented by Bessant, Caffyn (1997). On the
base of its features’ analysis, we can select set of organizational solutions neces-
sary for kaizen implementation in developing stages and favorable conditions for
mature phases. The result of the researches is compared with the literature findings.

*
Poznan University of Technology, Poland.
28 Sylwia Piersiala, Stefan Trzcieliński

2.2. CONTINUOUS IMPROVEMENT MODELS’ ANALYSIS

On the base of literature analysis, we would like to present continuous im-

provement models. As a next step we focus and compare three of them: Bessant,
Caffyn (1997), Kaye, Anderson (1999) and Ljungstrom (2005) (Table 3). Common
features of these models contribute to formulate hypotheses, therein a collection of
necessary conditions.
CI implementation models can be divided into four categories (Piersiala,
Trzcieliński 2007):
– indicating factors conditioning CI (Kaye, Anderson 1999; Harrington 1995;
Ljungstrom 2005),
– behavior (Bessant, Caffyn 1997; Wu, Chen 2006),
– iterative (Caffyn 1999; Gieskes et al. 1999; Lee, Chuah 2001; Bateman, David
2002; Bhuyan et al. 2006; Watson et al. 2004; Schindel, Rogers 2000),
– general approach to implementation and development CI (Upton 1996; Rijnder,
Boer 2004).
The model presented by Kaye, Anderson (1999) is included in the indicating
factors conditioning CI group. On the basis of the literature analysis the authors
show the conditions, which must be fulfilled in an organization to achieve and con-
tinue CI. They fall into two categories:
1. Drivers – which are necessary for making a decision about CI implementa-
tion. They allow not only for implementing but also maintaining the development
of the concept in a long period of time. The factors include: involvement of senior
management, leadership and high level of activity represented by all level manage-
rial staff, focus on needs of stakeholder groups, building the measurement and
feedback system, learning from CI results as well as acquiring and sharing knowl-
edge automatically.
2. Enablers that should be the first to be fulfilled and they are as follows: inte-
gration of CI activities with strategic objectives of a business organization as a whole
as well as goals of organizational units at all levels of a structure, creating favora-
ble culture for „kaizen” and supporting innovations, the focus on employees and
critical processes, standardization of performance by means of the documented
quality management system.
The subsequent model proposed by Ljungstrom (2005) is considerably different
from the previous ones; namely, it is concerned with initial stages of implementing
both continuous improvement and teamwork. It consists of the following elements:
– „software” structure, the point of which is to connect „kaizen” activities with
strategic goals of a business enterprise. The need for such a structure results
from the conviction that by motivating of employees from production shopfloor
CI makes it possible to introduce strategic changes on the level of these opera-
tional units and thus, to achieve notable financial benefits,
 2. The methodology of continuous improvement process management … 29

– „hardware” structure which is composed by : 5S tools („seiri” – selection, „sei-

ton” – segregation, „seiso” – sanitation, „ seiketsu” – standardization,
„shitsuke” – self-discipline), 5S criteria, information boards and forms, training
, management support, teams, 5S coordinators and consultants,
– implementation structure including: initiating a project, management training,
selection and training of internal consultants , training teams of employees.
Having conducted empirical research Ljungstrom (2005) supplemented the
above-mentioned model with the following elements: continuous development of
competence of both production employees and auxiliary staff setting clear objec-
tive for a team connected with the strategy of a business enterprise as well as cross-
functional teams.
The next model proposed by Bessant and Caffyn (1997) belongs to behavior
category and illustrates how organizations can progress towards higher CI maturity
levels by acquiring, practicing and repeating CI behaviors until they become an
integral part of the culture of the organization (Bessant, Caffyn 1997). CI can be
practiced with various levels of impact on business performance, i.e. on different
capability levels (Table 1). The model is made up of eight abilities Dabhilkar,
Bengtsson 2006). Companies enhance their CI capability by developing these abili-
ties: understanding CI, getting the CI habit, focusing CI, leading the way, aligning
CI, shared problem solving, continuous improvement of continuous improvement,
the learning organization. Each ability is made up specific cluster of behaviors that
reinforce each other. Developing an ability implies changes in its constituent beha-
viors. The model is made up of 36 behaviors (Figure 1).
An assumption underlying the model is that this development occurs in a rela-
tively linear fashion (Jorgensen et al. 2006). In essence, this means that the organi-
zation must practice all of the behaviors associated with the first level of capabili-
ties before focusing on the second level, and so on. According to the model, all of
the CI capabilities are equally important for organizations and, therefore, an organ-
ization should spread its efforts over development of all of the CI capabilities at
approximately the same time.

Table 1. Continuous improvement capability level (Dabhilkar, Bengtsson 2006)

Continuous improvement capability level Characteristic behavior patterns

Level 1- Pre- CI Problem are solved randomly; no formal efforts
Interest in the concept has been triggered by or structure for improving the organization;
a crisis, by attendance at a seminar, by occasional bursts of improvement punctuated by
a visit to another organization, etc., but imple- inactivity and non-participation. Solutions tend
mentation is on ad hoc basis to realize short-term benefits. No strategic impact
on human resources, finance or other measurable
targets. Staff and management are unaware of CI
process.
 30 Sylwia Piersiala, Stefan Trzcieliński

Table 1 cont.
Level 2 – Structured CI CI or equivalent organization improvement
There is formal commitment to building a sys- initiative has been introduced. Staff use struc-
tem which will develop CI across the organiza- tured problem solving processes; a high propor-
tion tion of staff participate in CI activities; staff has
been trained in basic CI tools. Structured idea
management system is in place. Recognition
system has been introduced. CI activities have
not been integrated into day-to-day operations.
Level 3 – Goal-Oriented CI All above plus:
There is a commitment to linking CI behavior Formal deployment of strategic goals; monitor-
established at the local level to the wider strateg- ing and measuring of CI against these goals;
ic concerns of the organization CI activities are part of main business activities.
Focus includes cross-boundary and even cross-
enterprise problem solving.
Level 4 –Proactive CI All the above plus:
There is an attempt to devolve autonomy and to CI responsibilities devolved to problem solving
empower individuals and groups to manage and unit; high levels of experimentation.
direct their own processes.
Level 5 – Learning organization All the above plus:
Approximates a model “learning organization” Extensive and widely distributed learning beha-
vior; systematic finding and solving problems
and capture and sharing of learning; widespread,
autonomous but controlled experimentation

Capability level 1-5

Ability 1 Ability 2 Ability 3 Ability 4 Ability 5 Ability 6 Ability 7 Ability 8

Key behavior 1

Key behavior 2

Key behavior 3

Key behavior etc.

Key behavior 36

Fig. 1. Behavior model of CI capability. Based on (Dabhilkar, Bengtsson 2006)

 2. The methodology of continuous improvement process management … 31

As many of the CI behaviors are highly inter-correlated, focusing on one area

while neglecting others may sacrifice overall development in the long run. There is
another aspect of the issue from the viewpoint of managerial implications (Jorgen-
sen et al. 2003). Suppose that an operations manager wishes to enhance a business
unit’s CI maturity level and consults with a researcher, who propose to focus on
these 36 constituting continuous improvement behaviors at the same point in time
starting right now. This is not feasible from practical point of view and there is
a need to select necessary conditions that should be focus on at the beginning of
implementation to create persistent CI system. It is important to acknowledge that
organizations are unique, and therefore there must be room for alternative trajecto-
ries (Savolainen 1999; Rijnders, Boer 2002; Jorgensen et al. 2003). Some researches
support a non-linear understanding of how CI maturity evolves by showing that
changes in individual CI abilities can lead to improved performance as well. This
opens up the possibility of individual observations that follow alternative trajecto-
ries, although the main pattern of the sample is in the direction of a linear under-
standing (Savolainen 1999; Rijnders, Boer 2002; Jorgensen et al. 2003). A simple
explanation for the incongruence between the CI maturity model and the results of
the cited implementation studies is that the former model is normative, while the
latter publications are based on case studies of what is actually happening in com-
panies implementing CI (Jorgensen et al. 2006). Accepting this explanation would
then suggest the need for an updated, empirically based model of CI maturity, pre-
ferably going beyond single or a limited set of case studies. Experiences with ac-
tual CI implementations, however, indicate that CI development may occur in a
much less orderly manner, with development of some CI capabilities taking prece-
dence over others. Some organizations may have logical justification for con-
sciously prioritizing the development of one or more abilities over others or this
development may occur naturally due to certain conditions in a given organiza-
tions. Three abilities (Dabhilkar, Bengtsson 2006): understanding CI, getting the
CI habit, focusing CI, shared problem solving correspond to the lower levels of the
model: pre-CI, structured CI, goal-oriented CI. Abilities: aligning CI, continuous
improvement of continuous improvement, the learning organization corresponds to
higher CI capability levels, such as: proactive CI, the learning organization.
Thus, we can ask some questions that need to be further investigated:
– how CI development should progress?
– whether a linear development is preferable in all cases /in which circumstances?
– which CI capabilities should be developed in which order?
– what is a collection of necessary conditions that ensure persistence of CI system
in early developing stage?
– what is a collection of favorable conditions that ensure continuity of CI system
in mature phases?
– what are the relations between 36 constituting continuous improvement beha-
viors?
32 Sylwia Piersiala, Stefan Trzcieliński

To fulfill this task we start with analysis and comparing CI models. As a next
step we propose a collection of necessary and favorably conditions for CI imple-
mentation and compare them with the literature analysis.
Majority of CI implementation models (Kaye, Anderson 1999; Harrington
1995; Ljungstrom 2005; Bhuyan et al. 2006) focus on CI tools and techniques. In
order to link and compare CI maturity model (Bessant, Caffyn 1997) including
behavior patterns with other models, we need to find common denominator. On the
base of literature analysis, we collect typical indicators of progress on the way to
developing particular abilities (organizational solutions, tools, methods, tech-
niques) (Table 2). Than we select organizational solutions regarding to level 1 (pre-
CI) and level 2 (structured CI), that refer to persistence of CI system. During ela-
borating there were difficulties with finding progress indicators for some abilities
and that why only step changes are visible.
As a next step we compare (Table 3):
– drivers from iterative model of Kaye, Anderson (1999): (involvement of senior
management, leadership and high level of activity represented by all level of
managerial staff, focus on needs of stakeholder groups, building the measure-
ment and feedback system, learning from CI results and acquiring and sharing
knowledge) with typical indicators of progress of abilities at the first and second
CI level and tools and methods proposed by Ljungstrom (2005) in model for
starting up and implementing continuous improvements and work development
– implementation sequence of organizational solutions, tools, methods, tech-
niques between and within maturity levels by enterprises on the base of litera-
ture analysis, if the development mode is linear and consistent with CI maturity
level without any cyclical loops.
Comparing areas of focus for all three models mentioned above, we can say that
model proposed by Bessant, Caffyn (1997) is the most comprehensive and includes
area, that is omitted in others, i.e. “aligning” ability. But generally model of Kaye,
Anderson (1999) and behavior are quite concurrent.
There is another aspect from an implementation point of view, model of Kaye,
Anderson requires implementation of all drivers before CI system at a very ad-
vanced level, which is not easy.
Model proposed by Ljunstrom (2005) is quite simple, do not include two areas:
aligning and shared problem solving abilities versus behavior model. But it could
be useful from implementation perspective; it seems to concentrate on the most
important things at the beginning of implementation. After pilot testing this model
was updated with more focus on measurement area.
On the base of CI models analysis, we propose to indicate the collection of nec-
essary conditions for CI implementation (Table 3):
– providing understanding, awareness and communication about CI system for
management and employees (presenting employees’ potential role which can
play in sharing ideas, basic CI training, attendance at workshop and conference,
program of visit in other organizations),
 2. The methodology of continuous improvement process management … 33

– understanding of strategy, using organization’s strategic goals to focus and pri-

oritise improvement activities,
– sharing ideas on a structural basis and feed back on the ideas (suggestion
schemes or box),
– solving problems (training in problem solving tools – fishbone, Pareto analysis,
check sheets, process map, brainstorming, using problem solving cycle PDCA –
Plan, Do, Check, Action, using 5S, set-up reduction as a structured approach for
improvement),
– rewarding and recognition system,
– CI progress measurement system, monitoring system
– management support (adapting participative style of management, display ac-
tive commitment and leadership of CI through visiting production, challenging
of new ways of doing things, giving feedback about CI activities, acting as
champions, leading local initiatives, recognizing and acknowledge people’s
contribution),
– using organizational solutions to ensure time for CI activities (pre-shift team
meetings, using overtime for trainings, reducing line speed in order to free up
employees for CI),
– designated individual or team responsible for CI activities (Process Improve-
ment Groups, Corrective Action Teams, Quality Circles Task Forces, task
forces for solving complex problems),
– discussion of learning from CI activities, both positive and negative sharing
mechanisms (reports, smart ideas presentations, storyboards, updating SOP –
Standard Operating Procedure).
On the base of Table 3 we can make an attempt to select a collection of organi-
zational solutions that favors an assurance of continuity of continuous improve-
ment system:
– analyzing problem after making mistake, finding root causes,
– use of teams working on strategic problems,
– strategy is transformed into targets and standards which are used in prioritizing
– policy deployment,
– using formal structure/cross-boundary teams for solving problems,
– CI process reviewed regularly, structured framework and result used for im-
proving CI system,
– training and development for employees to enable strategic problem solving.
 Table 2. Typical indicators of progress on the way to developing particular abilities (on the base of Bessant, 2003)

34
Key Behaviors, organizational solutions, tools, techniques
organizational
abilities Level 1 Level 2 Level 3 Level 4 Level 5
– attendance at workshops and conference, – people come up with proposal of – people come up with – proactive improving, – integral part of
Understanding program of visits in other organizations to changes from time to time on goal–oriented proposal of – sharing ideas is operations,
CI understand how CI works, specific issues, changes against internal expected and widespread – way of doing
– presentation for employees regarding their – sharing ideas on a structured targets, across levels and things around here,
potential role in sharing ideas basis, functions,
– sharing ideas is a part of – no–blame culture
– introduction training in CI – discussion about made mistake. performance appraisal of – mistakes are seen as mistakes are
–people come up with proposal of changes managers, improvement opportunities.
only when facilitated, – analyzing problem after opportunities and
– possibility to suggest changes (the making mistake, finding experiments encouraged
suggestion scheme or box), root causes. even if they lead to
– blaming individual for making mistake. problems,
– no formal cycle for problem solving PDCA – problem solving cycle exist and – problem solving cycle – problem solving cycle – problem–solving
Getting the (Plan, Do, Check, Action) but people may use people have been trained in using (PDCA) used regularly, used automatically, approaches adapted
habit problem lists and informal approaches, it, – people use a cycle and closing the loop in terms to suit different
– people are aware of problem solving tools – people are trained in basic cycle toolbox of different aids – of measurement and problems and
(fishbone, Pareto analysis, brainstorming, and tools, but still need for implementation, circumstances –
check sheets, process map) but not trained in – use of formal approach to initiate facilitation, – people use a cycle and flexible problem
their use – need facilitation, CI activities and carry them – use of teams working on toolbox of different aids solving,
– no formal approaches to initiate CI activities through to completion – e.g. focus strategic problems, may – no need for facilitation, – anyone in the
and carry them through to completion teams use multiple approaches – – skilled teams plus ad team can coach
– people are aware of structured approach for teams plus individuals hoc project teams for others in problem
improvement (5S, set–up reduction), bigger problems if solving,
– recognition to involve wide group of people necessary – ad hoc team and
in CI on a systematic basis, other mechanisms
Sylwia Piersiala, Stefan Trzcieliński

– people get little or no feedback on the ideas

which they suggests

– no use of the organization’s strategic goals – some use of the organization’s – strategy is transformed – strategy integrated in – priority process is
Focusing to focus and prioritize improvement activities, strategic goals to focus and into targets and standards all priorities, a benchmark and a
– limited understanding of organization’s prioritize improvement activities, which are used in – people know what the way of life,
strategy, goals, objectives by employees, – understanding of strategy but not prioritizing – policy strategy is and have an – people know
implemented continuously, deployment, awareness of why these what and why and
– understanding of strategy targets matter for the participate in
is reflected in results – business, helping to set/make
people know what the strategy,
strategy is and how they fit
into it,
Table 2 cont.
– no measurement of CI activities and no CI – measuring takes place – measurement and – measurement part of – measurement
impact on strategic or departmental occasionally but no interpretation feedback used to drive daily activities and culture, used as a
objectives. or action. improvements and people carry out their benchmark for
corrective initiatives own measurement others
Leading – managers rarely/ sometimes display active – managers (not all) on formal – most managers – managers proactively – it is a way doing
commitment and leadership of CI through occasions display active frequently display active display active things around,
visiting production and talking about it, commitment and leadership of CI commitment and commitment and – managers seen as
challenging of new ways of doing things, through visiting production and leadership of CI through leadership of CI through part of the group
giving feedback about CI activities, talking about it, challenging of new visiting production and visiting production and and participate and
– managers rarely/ sometimes are involved in ways of doing things, giving talking about it, talking about it, help others to
problem solving teams or part of focus feedback about CI activities, challenging of new ways of challenging of new ways participate in CI,
groups, – managers (not all) on formal doing things, giving of doing things, giving – people act
– managers occasionally facilitate CI occasions are involved in problem feedback about CI feedback about CI automatically on CI
activities, delivering trainings, acting as solving or part of focus groups, activities, activities – champions of and do not wait for
champions (e.g. taking part in 5S cleaning – managers (not all) facilitate CI – managers are involved in CI, management
day) activities, delivering trainings, problem solving or part of – managers actively formal backing
– managers rarely/ sometimes incorporate CI acting as champions, focus group, delivering CI support CI, formally and
into business plans, lead local initiatives, – managers incorporate CI into trainings, incorporating CI informally,
recognize and acknowledge people’s business plans, lead local into business plans, leading – everybody formally
contribution, initiatives, recognize and local initiatives, recognizing and informally
acknowledge people’s and acknowledging people’s facilitating CI activities,
contribution, contribution, are part of CI teams,
– managers most of the time
facilitating CI activities, are
part of CI teams,
Aligning – CI is an add–on extra operations for – CI operations/ activities still seen – CI operations are in line – CI operations are in line – CI is at the heart
employees, as something different from regular with the day–to–day work with the day–to–day work of a way of doing
– company processes /systems (e.g. the reward work, of business, benefits which of business, benefits things around,
system, the personal development process, the – some company’s processes come from it are shared, which come from it are – CI is at the heart
production process) often conflict with CI, /systems fit with CI, some of them time and resources are shared, time and resources of a way of doing
– use of organizational solutions to integrate in conflict, allocated, are allocated, people are things around,
CI with daily work (pre–shifts team meetings, – sometimes CI system assessment – company processes enabled and encouraged to – CI is a way of
taking people from line to start with 5S, set– and adjustment under consideration /systems fit with CI, change their ways of ensuring constant
up time programs), (if necessary) when a major – formal links in process of working to allow for CI change capability
– no CI system assessment and adjustment (if organizational change is planned, a major organizational development,
2. The methodology of continuous improvement process management …

necessary) when a major organizational usually as an afterthought change planning and – company processes
change is planned, – use of organizational solutions to implementation. /systems fit with CI,
– use of organizational solutions to integrate ensure time for CI activities (using – designed at the
CI with daily work (pre–shift team meetings, overtime for trainings, reducing beginning as a way of
35

taking people from line to do 5S, SMED – line speed in order to free up making changes happen
Single Minute Exchange of Die) employees for CI) and develop
Table 2 cont.
Shared problem – no cross–boundary problem solving teams, – informal cross–boundary – formal structure/ cross– – active CI across – no boundaries –

36
solving – unhealthy competition between network for solving problems, boundary teams for solving multiple boundaries, CI extends across
departments/ functions, – understand impact on others, but problems, – cooperation is natural – the real and
– no cross–boundary cooperation between still work in silos, – cooperation is enforced people see the value of “virtual/extended”
departments/ functions/ division – informal cooperation between through formal structures, improved effectiveness organization,
departments/ functions/ divisions – informal cooperation through working together – shared goals
between departments/ on common problems more important
functions/ divisions (action – natural phenomenon – than competition,
teams, problem–solving formal and informal – significant ability
teams). cooperation to work across
boundaries
Continuous – no–one responsible for CI activities, – designated individual or team – designated individual or – work teams responsible – self management
improvement of – CI system not monitored or measured, responsible for CI activities team responsible for CI for CI activities, CI – everyone
the system – CI process not reviewed, (Process Improvement Groups, activities, – work teams monitor involved in
– no management support for CI system Corrective Action Teams, Quality – CI system monitored, and measure their own developing CI
development (no allocated resources) Circles Task Forces, task forces for impact for business drivers CI activities, system,
solving complex problems), visible, – work team CI activities – CI improved
– CI system monitored, but no – CI process reviewed linked to company CI continuously but
impact on business drivers regularly, structured steering/support team, also occasionally
(launching of short–term framework and result used – CI improved the whole system is
campaigns), for improving CI system continuously not only by reset to a higher
– CI process reviewed regularly, (further trainings), CI support team but also maturity level,
but ad hoc framework – senior management by individual CI teams – CI of CI by
– limited resources for CI of CI support internal and themselves outside of everyone involved
external reviews of CI formal review process, in CI system
– people are trusted to
develop and change their
CI process
Sylwia Piersiala, Stefan Trzcieliński

The learning – review of completed task/projects to – frequently review of completed – formal forum with action – automatic review of – consistent
organization identify problems and corrective actions on an task/projects, but informal plans for corrective actions completed task/projects, learning,
ad hoc basis discussions only (changes in SOP, which leads to – internet, setting
– discussion of learning from CI activities, – discussion of learning from CI performance indicators, implementation of new standards,
both positive and negative ad hoc or by activities formally, using sharing generate post–project changes in process and distance learning,
accident and using sharing mechanisms mechanisms reports), standards, – everyone in the
(reports, smart ideas presentations, – formal training/ development – company–wide focused – best–practice forum organization is
storyboards, updating SOP – Standard opportunities limited to task– interest, over hierarchical encouraged and
Operating Procedure), related skills – training and development boundaries, enabled to be an
– no formal trainings, development to enable strategic problem – individual training active learner
opportunities solving needs assessment and
individuals contribute to
identifying their needs
 Table 3. CI models’ comparision (own study on the base on Bessant, Caffyn 1997; Kaye, Anderson 1999; Ljungstrom 2005)
Bessant/Caffyn (1997) Kaye/Anderson (1999) Ljungstrom (2005)
Understanding CI (level 1 + level 2) Involvement of senior management
– attendance at workshops and conference, program of visits in other – effective communication mechanisms to inform, Hardware structure
organizations to understand how CI works, raise awareness and involve staff in the aims of the
– presentation for employees regarding their potential role in sharing organization should be established, – boards and sheets (specially designed forms
ideas – mechanisms should be established for recognising, are used to minimize administration, facilitate
– introduction training in CI communicating and where appropriate rewarding the creating of investment decision and
– people come up with proposal of changes from time to time on successes information between shifts)
specific issues, Leadership and high level of activity represented Implementation structure
– sharing ideas on a structured basis by all level managerial staff – project consolidation (management
– discussion about made mistake. – the awareness of all managers should be raised, and conference, where involved managers
training provided where appropriate, as to the participate in a seminar about CI, after this
relevance and importance of quality and continuous introduction, a pre–study is made where the
improvement within their particular organizational special prerequisite for the company or
context, department are investigated)
– management training (prepare the
management for their role in the
implementation)
– short training in 5S for involved personnel
Getting the habit (level 1 + level 2)
– problem solving cycle (PDCA – Plan, Do, Check, Action) exist and Building the measurement and feedback system Hardware structure
people have been trained in using it,
– people are trained in basic cycle and tools (fishbone, Pareto analysis, – too much focus on just financial indicators should – 5S as start–up for improvement
brainstorming, check sheets, process mapping), be avoided, – forming project teams
– people are aware and trained of structured approach for – performance trends should be identified and
improvement (5S, set–up reduction), appropriate action taken,
– recognition to involve wide group of people in CI on a systematic basis,
– people get feedback on the ideas which they suggests,
– use of formal approach to initiate CI activities and carry them
through to completion – e.g. focus teams.
Leading (level 1+ level 2) Involvement of senior management
– managers (not all) on formal occasions display active commitment – senior management should demonstrate its Hardware structure
and leadership of CI through visiting production and talking about it, commitment and involvement to quality and
challenging of new ways of doing things, giving feedback about CI continuous improvement by regularly being available – management support (specific role
activities, to speak to staff through: operating an “open door” descriptions and direct advise on how to handle
2. The methodology of continuous improvement process management …

– managers (not all) on formal occasions are involved in problem policy, walking the floor and holding briefing and different problems)
solving or part of focus groups, feedback meetings,
– managers (not all) facilitate CI activities, delivering trainings, acting – senior management commitment should be
as champions(e.g. taking part in 5S cleaning day) demonstrated through their acting on issues raised by
37

– managers incorporate CI into business plans, lead local initiatives, staff, or which they themselves identify, which lead to
recognize and acknowledge people’s contribution, improvements in quality or the working environment,
Table 3 cont.

38
Focusing (level 1 + level 2) Involvement of senior management
– some use of the organization’s strategic goals to focus and prioritize – senior management should, in consultation with Hardware structure
improvement activities, other managers and staff, establish a vision and
– understanding of strategy but not implemented continuously, – 5S criteria (the improvement activities are
mission statements for the organization which clearly monitored through time and number of
– measuring takes place occasionally but no interpretation or action. identify the long–term aims and purpose of the limitations)
business/service
– appropriate business objectives and associated
critical success should be identified which link to
vision, mission, and business plans,
– business objectives should be cascaded and linked
into individual staff work objectives (for example,
using the Investors in People standard),
– an appropriate quality policy which includes a
commitment to continuous improvement should be
implemented and publicised
– mechanisms should be establish in order to identify
“successes” at organizational, team and individual
levels,

Building the measurement and feedback system

– appropriate performance indicators which relate to
all critical success factors and business processes at
organizational, team and individual levels, should be
identified and regularly reviewed,
– regular and timely measurement of performance
against the performance indicators should be carried
Sylwia Piersiala, Stefan Trzcieliński

out,
– all appropriate management and employees should
be made aware of the results of measurements to
encourage on–going improvement,

– successes, as well as poor results, should be

highlighted and fed back to employees
Leadership and high level of activity represented
by all level managerial staff
– all managers should be fully aware of the long term
strategies of the organization and have appropriate
measurable objectives for achievements for
themselves and their teams
Table 3 cont.
Aligning (level 1 + level 2)
– CI operations/ activities still seen as something different from
regular work,
– some company’s processes /systems fit with CI, some of them in
conflict (e.g. the reward system, the personal development process, the
production process),
– sometimes CI system assessment and adjustment under
consideration (if necessary) when a major organizational change is
planned, usually as an afterthought
– use of organizational solutions to ensure time for CI activities (pre–
shifts team meetings, taking people from line to start with 5S, set–up
time programs, using overtime for trainings, reducing line speed in
order to free up employees for CI)
Shared problem solving (level 1 + level 2) Focus on needs of stakeholder groups
– informal cross–boundary network for solving problems, – mechanisms should be established to identify and
– understand impact on others, but still work in silos, keep up–to–date with the changing needs and
– informal cooperation between departments/ functions/ divisions expectations of stakeholders (through regular
contacts and meetings, surveys, feedback from
employees/field staff),
– the organization’s major stakeholders should be
identified (customers, shareholders, employees,
suppliers),
– mechanisms should be established to regularly
review the level of stakeholders’ satisfaction
(particularly customers and employees),
Continuous improvement of the system (level 1 + level 2)
– designated individual or team responsible for CI activities (Process Involvement of senior management Hardware structure
Improvement Groups, Corrective Action Teams, Quality Circles Task
Forces, task forces for solving complex problems), – timely review points should be planned for – 5S coordinators (makes sure that meetings are
– CI system monitored, but no impact on business drivers (launching revisiting the vision, mission statements, business held and that the CI work is running)
of short–term campaigns), plans and objectives, individual objectives to modify – facilitators (persons that support the teams
– CI process reviewed regularly, but ad hoc framework or re–energise as appropriate and demonstrate/ensure and management and act as linking–pins in the
– limited resources for CI of CI constancy of purpose organization when needed),
Building the measurement and feedback system – project steering committee,
– facilitators are selected and trained
– internal auditing should identify and highlight best
2. The methodology of continuous improvement process management …

practices as well as nonconformity,

– self–assessment techniques should be used,
– a proactive approach to identifying problems
should be taken to avoid reliance on customer
39

complaints and inspection systems (e.g. improved

internal auditing systems)
 40
Table 3 cont.

Focus on needs of stakeholder groups

– the organization’s long and short term strategies
(vision, mission, critical success factors, operational
objectives, etc.) should be regularly reviewed, and
modified as necessary, in the light of feedback from
stakeholders (particularly customers)
Learning from CI results as well as acquiring and
The learning organization (level 1 & level 2) sharing knowledge automatically Hardware structure
– regular briefings should be held to enable both
– frequently review of completed task/projects, but informal management and employees to share experiences and – training (the teams get a short theoretical
discussions only progress on projects, best practices, successes and education but a large part of the competence
– discussion of learning from CI activities formally, using sharing failures, development in CI is accomplished at the
mechanisms (reports, smart ideas presentations, storyboards, updating – the outcomes from training courses and other workplace by discussions in the team, with
SOP – Standard Operating Procedure), developmental experiences of employees should be facilitators, supervisors, external experts)
– formal training/ development opportunities limited to task–related evaluated and fed back – info boards how self–running the teams are
skills – benchmarking techniques (internal and external) (teams evaluation)
should be used to compare the organization’s
activities against other departments’/organization’s
best practices
Sylwia Piersiala, Stefan Trzcieliński

– organizational and individual learning should be

actively promoted
Leadership and high level of activity represented
by all level managerial staff
– the skills needed by managers to equip them to
cope within the rapidly changing business
environment and adopt the appropriate style of
management of employees should be assessed.
Appropriate management development programmes
should be considered.
 2. The methodology of continuous improvement process management … 41

2.3. HYPOTHESES

In order to translate above questions into research problems, we attempt to indi-

cate a collection of organizational solutions (Figure 2):
– which implementation in necessary condition for assurance of CI persistence
system,
– situation conditions, which implementation favor assurance of CI continuity
system,
– which complete necessary condition and specific condition up to sufficient con-
dition for assurance of CI continuity system.

HYPOTHESIS 3
HYPOTHESIS 1 HYPOTHESIS 2

SPECIFIC

NECESSARY
CONDITION
SPECIFIC

SUFFICIENT CONDITION FOR GOAL-ORIENTED PHASE

Fig. 2. Sufficient condition for goal-oriented phase (own analysis)

2.3.1. Hypothesis 1

There is a need to indicate necessary condition for assurance of CI persistence

system. The CI system is persist at least in the structured phase (second level).
According to the description of pre-CI stage (Table 1) means “occasional bursts of
improvement punctuated by inactivity and non-participation”. This is the reason to
take pre-CI and structured CI phases together in order to assurance persistence of
CI system.
A collection of necessary conditions for lower development phase of CI system
(e.g. structured CI) will be a set of sufficient conditions for higher stage (e.g. goal-
oriented CI) (Figure 3).
Taking into consideration above assumptions, we can formulate hypothesis.
42 Sylwia Piersiala, Stefan Trzcieliński

There is a collection of organizational solutions, that implementation is ne-

cessary condition for assurance of persistence of continuous improvement
system.
On the base of the CI models’ analysis, we can select a collection of necessary
conditions: providing understanding, awareness and communication about CI, un-
derstanding strategy of a company, using organization’s strategic goals to focus
and prioritise improvement activities, sharing ideas on a structural basis, using
problem solving cycle PDCA – Plan, Do, Check, Action, applying rewarding and
recognition system, monitoring CI system, management support, using organiza-
tional solutions to ensure time for CI activities, designated individual or team re-
sponsible for CI, discussion of learning from CI activities.

2.3.2. Hypothesis 2

The persistence means duration without any breaks in space, without disconti-
nuity. System can change, raise up the higher phase under the influence of positive
factors and fall down as a result of activity of negative factors (Figure 4).

pre-CI and struc- goal-oriented CI phase

tured CI phases

sufficient condi-
tion

necessary condition

sufficient condi-
tion

Fig. 3. Relations between necessary and sufficient conditions for pre-CI, structured CI and
goal-oriented CI (own study)

With persistence definition is connected repeatability, cyclicity in time.

Specific conditions of an enterprise will have influence on assurance of CI
system continuity and will require applying of situation conditioning organizational
solutions and methods. As an example of such conditions we can mention:
– principles for rewarding employees for their contribution in CI (lack of financial
awards for smart ideas),
– manufacturing policy – production compliance pressure can result in lack of CI
meetings,
 2. The methodology of continuous improvement process management … 43

– agreement principles for capital expenditures (capex) for implementing smart

ideas.
Taking into consideration above assumptions, we can formulate hypothesis.
There is a collection of organizational solutions, situation conditioning that im-
plementation favors an assurance of continuity of continuous improvement system.

2.3.3. Hypothesis 3

CI system evolution can be divided into five stages: pre-CI, structured CI, goal-
oriented CI, proactive CI, learning organization. Taking into consideration above
assumptions, we can formulate hypothesis.
There is a collection of organizational solutions, that which complete neces-
sary condition and specific condition up to sufficient condition for assurance
of CI continuity system (Figure 2).

CI capability level

learning organiza-
tion

proactive CI
continuity of CI
goal-oriented CI

HYPOTHESIS 2 HYPOTHESIS
structured CI
persistence of CI
HYPOTHESIS 1
pre-CI

no CI
time

Fig. 4. Persistence and continuity of CI system (own study)

On the base of Table 3 we can make an attempt to select a collection of organi-

zational solutions that favors an assurance of continuity of continuous improve-
ment system: analyzing problem after making mistake, use of teams working on
strategic problems, policy deployment, using formal structure/cross-boundary
teams for solving problems, CI process reviewed regularly, training and develop-
ment for employees to enable strategic problem solving.
44 Sylwia Piersiala, Stefan Trzcieliński

2.4. LITERATURE ANALYSIS

As a next step we would like to present findings about CI implementation in

particular groups of enterprises.
The literature regarding to organizational solutions applied for CI system can be
divided into two groups (Figure 5):
– private sector,
– public sector.
The private sector is further divided into four groups: statistical researches for
big and SME (small and medium enterprises) companies and case studies for big
and SME companies.
We focus on statistical researches regarding to big companies. In our opinion
we can skip public sector analysis, because it remains quite distinct from the pri-
vate sector in a number of features (Fryer et al. 2007): maximizing profit is not the
primary goal, lack of clarity about who their customers are, diverse range of stake-
holders to serve, prone to reorganizations as ministers and governments change.
This time we would like to concentrate on CINet statistical analysis regarding to
big companies. CINet researches refer to behavior model proposed by Bessant,
Caffyn (1997) and it is possible to attempt first verification of necessary conditions
for persistence of CI system.
Over the period March 1995 – March 1996 the survey coordinated by the mem-
bers of EuroCINet (Hyland et. al. 2000) a European-wide network of researches
working in the field of CI, was conducted in Sweden, Denmark, The Netherlands,
Finland, UK, Australia. Each country is producing its own analysis. The survey
was conducted by postal questionnaire.
While the CINet survey collected data on a variety of elements of quality
management (Chapman, Hyland 1997) and CI, we present the results regarding to:
the supporting mechanisms defined as:
– supportive leadership,
– management support,
– monitoring CI process,
– face-to-face communication,
– regular shop floor visit by management,
– work in teams/work groups,
– training personnel in problem- solving tools,
– use of ISO 9000,
– a general problem-solving,
– use of formal policy deployment technique,
– use of total productive maintenance,
– promotion on notice boards,
– promoting though internal media,
 2. The methodology of continuous improvement process management … 45

CI literature analysis

Private sector Public sector

SME enterprises Big enterprises

Case studies Statistical

Case studies
Statistical researches

researches
Alstrup L. Caffyn S.
CINet Others
Caffyn S. (1999) Jorgensen F. et.
al. (2003) Dabhilkar M. et al.
(2007) Christiansen
Bessant J. et.al. T.B., Borges
(1999) Batemann N.
Mellor R et al. L.A.J. (2004)
( )
Humphreys P. Bessant, Francise
(2005) (1999) Terziovski M.,
Sohal A. (2000)
Leede J., Looise Bessant J.
Chapmann R.L., Hyland
J.K. (1999) et.al. (1993)
P. (1997)
Lillrank P. (2001)
Gieskes J.F.B.(1997)
Jager B. et al.
(2004) Middel R. et.al.(2007)

Bhuiyan N et al. Oliver N.(1998)

(2006)
Dabhilkar M.,
Adams M. et. al. Ljungstroem M. Bengtsson L. (2006)
(1999) (2005)
Jorgensen F. et.al.
Savolainen T.I. Kerrin M. (1999) (2006)
(1999)
Coughlan P. (1997)
Jha S. (1996)
Lindberg P,
Bessant J et. al (1993)
Berger A (1997)

Hyland P. et al . (2000)

Fig. 5. Scheme of literature analysis for CI implementation (own study)

46 Sylwia Piersiala, Stefan Trzcieliński

– a suggestion scheme,
– incentive systems,
– promoting through competitions and awards
for the change process involved and the tools used to ensure the success of the
change process.
On the base of Australian researches (Chapman, Hyland 1997), support me-
chanisms regarded as most important in accomplishing CI are: support from mana-
gerial staff and supportive leadership. Monitoring the CI process and face-to-face
communication are also considered important. The only difference between indus-
tries regarding to support mechanism is promoting CI thought internal media. The
use of ISO 9000 is not regarded highly by any group, but it is considered as more
important by companies in the food, beverages and material groups, which ties in
with the generally greater importance given to quality conformance by this group.
Support methods concentrating on individual rewards, such as bonuses for useful
suggestions, incentives payments and awards, were not seen as important in any
industry grouping. Dabhilkar, Bengtsson (2006) select the most important tools in
Swedish manufacturing as: problem solving format, formal policy deployment,
training in problem-solving tools, 5S, TPM, but at the same time they report low
usage of these tools. There are also researches that divide companies into two
groups: with developing CI system and mature CI (Hyland et. al. 2000).
Figure 5. Scheme of literature analysis for CI implementation (own study)
There is reasonable correlation between importance and usage for most items, for
both mature CI and developing CI firms, although, the correlation was generally
higher for developing firms. The correlation was higher for means such as promo-
tion through internal media, notice boards and competitions and awards and usage
of ISO 9000 and total productive maintenance, in the case of both mature and de-
veloping firms. Strikingly, there was low and generally insignificant correlation,
particularly for mature CI firms, between importance and usage of management
support, supportive leadership and face-to-face communication.
The most important tools, according to companies in Netherlands (Middel et al.
2007) the in the survey, for establishing incremental improvement are: supportive
leadership, support from managerial staff, regular shop floor visits by management,
monitoring the improvement activities, face-to-face communication, training of
personnel in problem solving tools, general problem solving format, working in
teams/ work groups. Tools that are not regarded as important are: promotion
though competitions and awards, quality awards and incentive systems. The survey
made a distinction between important a company perceives a means for establish-
ing CI and how often they are used. A group of tools is perceived by the companies
as less important and usage is rare. These include promotion though competitions
and awards, usage of slogans, incentive systems, a suggestion scheme, usage of
Total Productive Maintenance, quality awards, and formal policy deployment. An
important but rarely used tool is training of personnel in problem solving tech-
niques. A second large groups of tools is characterized by high importance and
 2. The methodology of continuous improvement process management … 47

high usage. This group includes monitoring improvement activities, support from
managerial staff, supportive leadership, working in teams/work in groups, a general
problem solving format (e.g. PDCA), face-to-face communication and regular shop
floor visit by management. In general, it appeared that the usage of tools in estab-
lishing incremental improvement was lacking when compared to the perceived
importance of the same tools by the companies. However there was one exception
ISO 9000 or any quality standard was used frequently used in establishing CI com-
pared to the importance of the tool.
Regarding to supportive tools, the researches include:
– problem identification tools/checklist,
– seven basic quality tools (cause and effect diagram – Ishikawa diagram, fish-
bone; check sheet, control charts, histogram, Pareto chart, scatter diagram, stra-
tification),
– process mapping tools,
– creativity tools/idea generation tools,
– display/visualization tools,
– standardization tools,
– 5S,
– FMEA (failure mode and effect analysis),
– QFD (quality function deployment),
– seven new quality tools (affinity diagram, interrelationship diagraph, tree dia-
gram, prioritization matrix, matrix diagram, process decision program chart, ac-
tivity network diagram).
The results indicate (Chapman, Hyland 1997), that the majority of companies
appear to concentrate on the simple tools, which may be rapidly implemented
rather those that may require long-term planning and data collection. Problem iden-
tification tools (checklists, etc.) are considered to be most important by all industry
groupings, while the seven basic tools (e.g. Pareto charts, fishbone or cause-and-
effect diagrams) and process mapping tools, are also regarded as important. Very
few firms have considered the more sophisticated tools such as failure mode and
effect analysis (FMEA), quality functional deployment (QFD) or seven new tools.
Result of recent CI study (Chapman, Hyland 1997), suggest that senior manag-
ers retain direction setting responsibilities with limited involvement in improve-
ment activities, while work teams and individual operators have little or no in-
volvement in policy setting or activity monitoring. Employee involvement is rec-
ognized as a critical factor in achieving a dynamic and responsive organization by
most management authors; however, firms often struggle with this concept, often
due to difficulties in the education and training requirements for employees neces-
sary for successful empowerment. Regarding to specific tools and techniques ap-
plicable to CI, many firms have adopted problem identification tools and the seven
basic tools, but only a small number have utilized the more sophisticated tools such
as FMEA, QDF or the seven new tools. Training and involvement of personnel in
CI activities is still very limited across most organizations.
48 Sylwia Piersiala, Stefan Trzcieliński

The comparative sectoral analysis (Chapman, Hyland 1997), of the results of

this manufacturing CI show that the machinery manufacturing sector (including
both industrial and non-industrial machinery). has a different approach to CI from
other sectors, although motives for CI implementation in this sector are similar to
other sectors. This sector more frequently includes product designs and
administrative routines in the application of CI activities and less frequently
includes safety and machine up-time and speed than other sector. The machinery
sector also places greater importance on promoting CI though internal media as
a means of supporting and implementing CI. This sector also places greater
importance on the use of QFD than other sectors, although usage of these more
advanced tools is generally quite low across all industry sectors.
The food, beverages and materials sector recorded significant differences in CI
support methods. This findings are consistent with the emphasis on regulatory
conformance (such as government – maintained GMP requirements) experienced
across much of this sector. For firms successfully to support an ongoing climate for
change the most important activities include management support, supportive
leadership, face-to-face communication, working in teams and the training of all
employees in problem solving.
A similar analysis (Hyland et al. 2000) of the correlation between importance
and usage of the problem solving tools employed in CI showed a significant corre-
lation for all tools for both mature and developing firms. One again, the correlation
was higher in all cases except processing mapping tools for the developing CI
firms. It would seem that the firms more mature in their implementation of CI are
more selective in the tools that they employ, presumably based upon their expe-
riences. Whilst the less development firms in terms of CI sophistication, are more
likely to simply implement those problem solving tools that they consider impor-
tant.
The companies were asked to indicate which problem-finding and solving tools
were used in improvement activities and how important they perceived the tool.
The most important problem-finding and solving tools in the Netherlands were
(Middel et al. 2007): problem identification tools/check lists, process mapping
tools, display/visualization tools, seven basic quality tools. Less important tools
were simulation, Six Sigma, and QFD. The four most important tools, mentioned
above, were used most frequently. The tools that were used rarely are also per-
ceived as less important tools in establishing CI. This exceptions were the creativi-
ty tools/ideageneration tools, FMEA, and seven new quality tools, which were
perceived as important: but the companies’ usage of these tools compared to the
other tools was lower in the Netherlands.
 2. The methodology of continuous improvement process management … 49

2.5. CONCLUSIONS

Statistical researches regarding to organizational solutions used to support CI

development are not unequivocal, different support mechanisms are important in
different counties. Of course there are common findings regarding to support from
managerial staff and supportive leadership, but deeper analysis is required. The
first conclusions from the literature give us hints to pay attention for. For example,
(Hyland et al. 2000) use of ISO 9000 correlated with companies in the food, beve-
rages and material groups. The support methods concentrating on individual re-
wards, such as bonuses for useful suggestions, incentives payments and awards, are
not seen as important in any industry, while these elements are emphasize in the
literature. This same situation is with used tools and methods. A greater under-
standing of the reasons (Hyland et al. 2000) why there are differences in the use of
CI tools between mature and developing firms is clearly called for. Looking (Hyland
et al. 2000) at the importance that managers place on the problem solving tools, it can
be observed that only one sophisticated tool, quality function deployment, shows a
significant difference, along with the less sophisticated problem identification tools
such as checklists. Interestingly, the developing firms regarded both these tools are
more important than the more sophisticated implementations of CI.
We can not confirm, that identified for CI implementation collection of neces-
sary and favor conditions is consisted with statistical researches and further analy-
sis is required. We should pay attention on the reasons for selecting specific orga-
nizational solutions and the correlations with different factors.

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Robert MICHALSKI, Stefan TRZCIELIŃSKI*

3. FROM INFORMATION TO DECISION – BUSINESS

INTELLIGENCE SYSTEMS

3.1. INTRODUCTION

Market and competition force company managers to take quick and accurate
decisions in ever-increasing risk. Up-to-date, valuable information obtained at the
right time becomes a critical success factor for companies to maintain a competi-
tive edge. Everyday decisions made by managers working at different levels in the
management hierarchy influence the efficiency of any organization. The success of
a company depends not only on the strategic decisions taken by the Board, but also
on the operational decisions made each day by the company’s executives and its
line employees. In modern organizations, each decision involves an action that
affects their efficiency, costs, stocks, and consequently their profit or loss. Thus, in
order to take decisions, managers and line employees of each business organization
should receive reports and analyses of various indicators concerning the function-
ing of the company. The primary purpose for conducting such business studies –-
displayed on the monitor screen or presented in the written form – is to provide
information necessary to take the best decision at a given time. It creates the situa-
tion when information becomes extremely important for the management of a com-
pany and decision-making is based on the past, present, and also current data ob-
tained in real time. A large amount of data and numerous operating systems, make
it difficult to obtain precise and uniform knowledge of a company. The data incon-
sistency and the need for easy access to reliable and timely information can be
overcome by designing and building a proper analysis and decision support system
based on Business Intelligence (BI) technology. In view of the above, some ques-
tions need to be tackled: How important are BI systems in decision-making proc-
esses? Whether business decisions are taken on the basis of up-to-date, complete
and reliable information supported by information technology or on the basis of
*
Poznan University of Technology, Poland.
54 Robert Michalski, Stefan Trzcieliński

assumptions and intuition? What is the role of a human being in the process of
making decisions? What is the role of information technology systems in the proc-
ess of making decisions? In the next sections of this paper, we will attempt to an-
swer the above questions. In order to provide some insight into the issues related to
the subject, we will present the evolution of the decision support systems and we
will explain the term Business Intelligence.

3.2. EVOLUTION OF DECISION SUPPORT SYSTEMS

It appears that in order to make a proper use of one of a company’s assets,

namely of its knowledge, information management tools are indispensable. These
tools may include various information and communication technologies: ranging
from computer networks, corporate portals, intranet, and internet browsers to Busi-
ness Intelligence solutions. In the next sections of this paper, we will present a brief
history of the evolution of systems that support decision-making processes. It can
be assumed that human beings from the very beginning of their existence have
been collecting and processing information in their brains. Such information has been
transferred orally, on paper, and following the invention of the printing machine, in
a printed form. The body of information that a human being was confronted with was
not as big as it is today. Recently, the amount of information that surrounds a mod-
ern human being has dramatically grown. The use of computers and information
systems play an important role in processing such a big amount of data.
In the 1960s, highly developed countries formed the first management informa-
tion systems – Management Information Systems (MIS), which were supposed to
help their leaders to obtain information and take decisions. These systems were
intended as an aid for managers at all levels of management. They were used for
planning, governing and developing organizations, i.e. for constant decision-
making (Zieliński 2000). In fact, these systems provided information for the opera-
tional and tactical business management.
In order to complete MIS with the missing features, at the beginning of 1970s,
Decision Support Systems (DSS) were developed (Power 2007). Professional lit-
erature gives a number of definitions of these systems; it can be assumed, however,
that the DSS is a computer system that provides information from a given field,
allows for the use of analytical models of decision-making with the access to data-
bases, and assists the management in a poorly structured decision-making envi-
ronment (Zieliński 2000). Thus, the DSS’s system architecture includes databases,
a database of models, and a user-friendly interface for communication with the
system. Decision support systems combine analyses of complex data with compli-
cated models that facilitate decision-making processes in atypical situations
(Jashapara 2006).
 3. From information to decision – business intelligence systems 55

In the mid 1970s, due to the difficulties in using data models by organizations’
management another model for supporting decision-making process – Executive
Information System (EIS) was developed (Power 2007). The main task of the EIS
systems was to provide assistance to the process of strategic planning and to exer-
cise control over the organization by providing managers, at their request, with
useful, up-to-date, accurate and transparent information (Jashapara 2006). The EIS
model, which is recommended primarily for organizations’ executive managers,
incorporates data visualization, graphics, and multimedia interface.
In the early 1990s data warehouse solutions allowing for the storage of data
from different sources came into being. The data warehouse solutions have intro-
duced a new quality to data management. Data warehouses serve as an intermedi-
ary between various transactional systems and advanced tools for data processing
and analyses. Data warehouses are set up to work with management support soft-
ware that supports management and allows for taking business decisions (Mikuła
2007).
Data warehouses gave rise to the recently fashionable Business Intelligence (BI)
systems, which brought into existence a variety of decision support systems (DSS).
In professional literature, the first information on Business Intelligence (BI) sys-
tems appeared in the late 1980s. The concept of BI was conceived by Howard
Dresner, an analyst with Gartner Group, who popularized it as a set of methods and
concepts to improve a decision-making process by using data resources (Power
2007). The professional literature gives a variety of definitions of the BI concept, it
describes it as: business intelligence, knowledge of business systems, intelligent
business or business information system. In general, BI comprises knowledge,
processes and tools to create analytical intelligent applications for efficient and
effective handling of business processes (Klonowski 2004). BI solutions are con-
sidered the next stage in the development of analytical systems following the Ex-
ecutive Information Systems and Decision Support Systems (Power 2007).
According to the author of this paper, the concept of BI can be described
broadly as a mechanism for converting data obtained from different areas of enter-
prise operations into useful information and providing such information to the right
people at the right time in order to support the decision-making process. The basis
of today's BI systems is a data warehouse, due to which managers receive one,
consistent reporting system across the enterprise (Michalski 2009).
The BI solutions consist of: data warehouses, tools for data aggregation and in-
telligent analyses, reporting tools and advanced programmes for the presentation of
information. Multidimensional analyses and data mining are performed by the On-
Line Analytical Processing (OLAP) and Data Mining techniques (Michalski,
Dyczko 2008). With the method of OLAP, data from different sources is stored in
a common format, which allows for analyzing it by means of various tools against
a variety of criteria (Kwiatkowska 2007). OLAP tools enable multidimensional
analyses of data in real time, interactive analyses of trends and relationships.
56 Robert Michalski, Stefan Trzcieliński

Data mining techniques allow for recognizing data dependencies, or patterns,

and for gaining new information which was previously unknown. The process of
discovering significant dependencies takes place by thorough analyses of large
amounts of data using mathematical methods, statistical tools for artificial intelli-
gence – neural networks, genetic algorithms.
BI reporting tools allow for the presentation of statistical data, complemented
with text, tables and graphs thus making them more comprehensible to the recipi-
ents of the reports. They also allow for the distribution of personalized reports
across the enterprise. In addition to these possibilities of data presentation, other,
more advanced reporting tools allow for performing drill-down operations i.e. to
moving from summary information to more detailed data.
Managerial cockpits or dashboards are other systems for data presentation. They
are visualization tools where critical business data is presented in the form of
graphical indicators, graphs, tables; they facilitate and order data making them
more intelligible. Corporate portals are most often used as a platform for data presen-
tation. Managerial cockpits enabling the presentation of key indicators in a graphic
form make that managers focus their attention and time on tasks that have the greatest
impact on taking appropriate and effective decisions. We can say that today's
managerial cockpits are in fact modern management information systems (MIS).

3.3. BUSINESS INTELLIGENCE SYSTEMS

AND DECISION-MAKING – OPERATIONAL BI

The ability to use information is extremely important for each organization that
aims to achieve high performance. Managers are advised to render management
into the process of transforming information into action (Kwieciński 2004). A pre-
requisite condition of a good management in a company is the ability to take deci-
sions that will allow for converting information from a cost factor into a tangible
benefit. In order to support business decisions, BI systems are used. Organizations
that do not use computer systems to support management processes take decisions
based on experience rather than facts.
The surveys conducted by the Gartner Group indicate that the implementation
of BI systems reverses the proportions of time spent on collecting and analyzing
data, and the time needed to develop the decision. Without BI systems in place,
data collection and analyses takes up 70% of the time, and decision-making itself
takes up only 30% of the time. Following the implementation of BI systems, analy-
ses take up 30% of the time, and the decision-making – 70% (Mejssner 2008). As
we can see, the implementation of a BI information system brings tangible benefits
for companies as far as the decision making process is taken into consideration.
 3. From information to decision – business intelligence systems 57

In organizations, management decisions can be taken at strategic, tactical and

operational levels (Simon 2007). Strategic decisions concern future events where
the certainty degree of achieving intended results is low and the level of the associ-
ated risk is high. These are decisions that are complex, unique, and thus difficult to
be programmed, they concern an organization development or survival. Tactical
decisions relate to next year’s events; they are sufficiently structured, usually com-
plex, of a lesser repeatability and programmability degree. They are more likely to
achieve their intended results. Operational decisions relate to events occurring dur-
ing a day, month or quarter; the degree of certainty of their results is very high;
they are largely of a regulatory character, they are generally well-structured, re-
peatable, and thus programmable to a significant degree (Flakiewicz 2002).

Table 1. Characteristics of decision-making levels

Level of decision-making
Characteristics
Operational Tactical Strategic
Complexity small medium large
Ordering high medium small
Uncertainty small medium large
Period of time days, hours months, 1–2 years years
Programmability large some no
Planning decisions rare medium majority
Control decisions most medium few
Source: based on the author's research.

As we have mentioned before, the task of BI systems is to support the decision-

making process at various levels of management. At the strategic level, BI systems
support taking long-term decisions, setting targets and monitoring their realization,
and performing simulation of an organization development. BI systems allow for
forecasting future performance of an organization based on predefined assump-
tions, for performing a variety of comparative statements, concerning e.g. historical
performance, the profitability of individual deals, the effectiveness of distribution
channels, etc. At this level, most information is supplied in an aggregate form and
presented in a graphical form by means of management dashboards mentioned
before. At the tactical level, BI systems help with taking decisions concerning pro-
duction planning, finance, market analyses, marketing, capital management, and
sales. Analytical information enables to optimize future actions and appropriately
modify organizational, financial, or technological aspects of an organization so it
could effectively carry out its strategic objectives. At the operational level, BI sys-
tems carry out ad hoc analyses providing analytical information about current op-
erations of an organization’s divisions, about current financial condition of an or-
ganization, about its sales, cooperation with suppliers, customers, clients, about the
realization of its investments, about production, etc.
58 Robert Michalski, Stefan Trzcieliński

Table 2. Characteristics of the information required at each level of management

Level of decision-making
Characteristics
Operational Tactical Strategic
Reliance on management information systems large medium low, moderate
Reliance on internal information very large large medium
Reliance on external information low medium very large
Degree of generalization of information very low medium high
Demand for up-to-date information very large large medium
Usage of up-to-date information very large large medium
Usage of prognoses small large very large
Usage of historical information large medium low
Source: own study based on Davis, Imhof et al, 2009.

The BI systems that have been implemented so far aim at supporting managers
in taking managerial, mainly tactical business decisions and enabling them to mod-
ify and improve business strategies and processes so an organization could gain
a competitive edge, streamline processes, increase profitability or generally,
achieve objectives set by the management executives (Surma 2009).
Traditional BI tools are generally used to support managers in taking strategic
and tactical decisions, to support their analytical abilities that are necessary to un-
derstand historical data, and to assess future possibilities.

Table 3. Comparison of three types of BI

Operational BI Tactical BI Strategic BI

Business Monitoring and optimiza- Tactical management to Development and
objectives tion of operational business achieve strategic goals analyses of long-term
processes business goals
Scope Business processes Business domain Enterprise
Users LOB managers, operational Business analysts, LOB Executives, business
users (internal and external) managers analysts
Time-frame Days, hours Months, 1-2 years time Months to years
Data Real-time, near real-time, Historical data Historical data
low-latency and historical
data
Mode of Process centric Data centric Data centric
operation User and process driven User driven User driven
Source: Davis et al. (2009).

Nowadays, the decision-making cycle is becoming shorter than it used to be.

The level at which decisions are taken today is quite different from that of the past.
Management and operational staff are beginning to take business decisions, be-
cause value is being created at their level of competence (Barańczuk 2008).
 3. From information to decision – business intelligence systems 59

Operational decisions are decentralized, taken mostly by middle-level manag-

ers, lower-level managers and line employees. Operational business decisions are
made in large quantities each day; they can be both repetitive and versatile. They
are distinctly different from strategic and tactical decisions in frequency of their
occurrence (Raden, Taylor 2007). Nowadays, analyses performed in real time are
gaining in importance. They allow for exercising a greater potential impact on cus-
tomers’ decisions. Therefore, it is necessary to support the decision-making process
at the operational level with an appropriate computer system. In professional lit-
erature, this type of operational support systems for managers and employees is
referred to as Operational Business Intelligence. Operational BI seemingly looks
like a simple extension of the BI concerning operational areas of an organization
but in fact, it requires an entirely new way of thinking, data modelling, designing
and reporting. At the strategic level, in a traditional BI information is addressed to:
members of the Board, the tactical leadership, information analysts, and operational
management and line employees. In organizations, the largest amount of information
reaches the operational level of management, where the majority of decisions are
taken in real time. Since decisions at this level of management are, unlike the other
levels, based on up-to-date data and not only on historical ones, the parameter of
delay gains in significance. Decisions being taken at this level require that the data
should reach decision-makers practically with no delay at all (Davis 2006).
As the operational BI is focused on the day-to-day activities of an organization,
its scope is much narrower than that of the strategic and tactical BI. The task of the
Operational BI is to support data collection, data analyses, and decision-making in
real time. The aim of the operational BI is to reduce delays in a decision-making
process – that is to shorten the time between the occurrence of an event and decisions
taken – in order to obtain quicker and better business decisions (Davis et al. 2009).
Generally, the BI software enables supplying line workers with real-time infor-
mation of an appropriate quality necessary for undertaking managing activities. These
data-driven, decision support systems differ from other DSS and BI systems in terms
of objectives, target users, data delay, detail and availability of information.

3.4. DATA QUALITY AND TIME IN DECISION-MAKING

Today, in many enterprises, data is stored on multiple platforms, applications,

databases scattered throughout different organizational units. There are cases, when
the same analyses are being performed simultaneously by different organizational
units that have access to data coming from multiple sources or when such analyses
are not consistent with each other and their combination would increase their value.
There are also situations when the information systems collect data but analyses of
such collected data are not carried out, and consequently, conclusions from such
60 Robert Michalski, Stefan Trzcieliński

possible analyses that could affect the quality of the decisions made are not drawn.
The process of taking decisions requires that each organization should strive to
obtain valuable and reliable information, and should avoid collecting data and stor-
ing insignificant, irrelevant information. The more accurate information, the higher
is its quality, and in consequence, the management can rely on it to a greater extent
in making decisions. One of the more important issues is the problem of preparing
statements integrating information from a variety of systems used by the company.
Reports prepared in haste with the use of standard tools such as MS Excel, and
report generators which use a variety of sources do not guarantee that the results
obtained this way will be correct, trustworthy, and of a sufficient quality. These
inconveniences can be eliminated by BI systems with which the access to the in-
formation contained in various sources is facilitated by means of an integrated part
of BI systems, namely with data mining and data transformation tools. Thus with
BI systems it is possible to integrate diverse, current, historical and scattered data.
The time when information is provided to managers who are to take decisions
has, beside data quality, a very large impact on management decisions. Economics
has long used the concept of time discounting to compare the present state with
future consequences arising from decisions taken (Simon et al. 1986).
As far as the strategic and tactical levels are concerned, information should be
delivered at the time when there is the demand for it. Whereas, since at operational
levels decisions are taken on an ongoing basis, it is required that computer systems
have a capability of quick or even real-time data processing.
A good example illustrating the role of time in information management is a lot-
tery game. There is no doubt and everyone will agree that the information about the
wining numbers which is obtained after the betting time is worthless. As it can be
seen, time in a decision-making process is a significant factor and if the informa-
tion is not provided at the right time, taking key decisions might be impossible. The
application of BI systems substantially shortens the time needed to perform analy-
ses, allows for the presentation of the current results, which has a significant im-
pact on decision-making within an organisation.

3.5. BUSINESS EFFECTS OF THE IMPLEMENTATION OF BI

Up-to-date, reliable information about organizations’ affairs and their environ-

ment is an important success factor. The introduction of BI systems entails substan-
tial costs and each manager wants to clearly see (potential) benefits brought by the
implementation of such tools. With the implementation of information systems in
organizations, the expectations regarding their abilities to support management
tasks within organizations are growing.
 3. From information to decision – business intelligence systems 61

According to the authors of this paper, the most important benefits of BI appli-
cations in the management of a company are:
– delivery of an up-to-date and comprehensible information to varied recipients
with the possibility of adjusting its content according the recipient needs;
– support for a decision-making process at all levels of decision-making (ranging
from organisations’ managers to their line employees);
– reduction of the time necessary for obtaining information, the right time of its
delivery. and real time of its display (Operational BI);
– improvement of the efficiency of business operations by streamlining business
processes, planning and controlling activities;
– control over production costs (possibility of calculation of a unit of production
cost);
– release of source systems from work load; all analyses and reports are per-
formed on data stored in the data warehouse, not in the source systems;
– detachment of the analytical system of an organization from changes in source
systems; data from source systems are loaded into the data warehouse;
– quick and flexible response to users’ analytical needs;
– uniform arrangement of reports; reduction of work needed for preparing reports
and analyses, harmonization of information systems;
– elimination of erroneous data coming from different source systems;
– delivery of clear, user-friendly, graphical presentation of reports, analyses, indi-
cators.
The benefits enumerated above which come from the implementation of BI sys-
tems seem to be clear and unambiguous. The benefits of the use of BI systems in
an organization positively influence its results, as well as the quality of its product,
and they rationalize its work.
Beside many advantages of the use of BI systems in organizations, there are,
however, some weaker points. They mostly relate to the high cost of purchasing
these types of tools, training their users, and expensive and long-time implementa-
tion. Another drawback of these systems is their sensitivity to the quality of source
data, as well as large requirements concerning IT equipment.

3.6. CONCLUSIONS

Up-to-date and reliable information becomes a key success factor in the diffi-
cult, changing and competitive market. Currently, organizations, including small
and medium-sized ones, submit an ever-increasing demand for such information.
Today, not only corporations need reliable, accurate information. Any organization
whose purpose is efficient functioning over a long period of time, must handle an
enormous, chaotic and systematically growing database. In fact, the ability to mine
62 Robert Michalski, Stefan Trzcieliński

information quickly, precisely and accurately guarantees appropriate decisions on

the side of the management executives.
This type of useful information can be provided by advanced analytical systems
and decision support systems called Business Intelligence. The application of BI
tools not only allows for accelerating decision-making processes, but also (due to
the support of artificial intelligence tools) enables to render in-depth data analyses,
explore new business opportunities and to identify factors decisive of an organiza-
tion development. Traditional BI systems are based on historical data and are
aimed at supporting decisions at tactical and strategic levels. Nowadays, there is
a need for supporting decision in the day-to-day operational activities and provid-
ing management and line employees with up-to-date, reliable and real time infor-
mation. In an organization, it is at the operational level that large quantities of day-
to-day decisions characteristic of short response time are taken most often.
It must be remembered, however, that the implementation of BI systems should
address all areas of an organization activity and not just its selected sections. The
flexibility of BI tools is still another issue; BI tools should have the ability to fol-
low the business development and keep up with the processes occurring in the or-
ganization. They should reflect current operation of the company, its current organ-
izational structure, current business objectives. Therefore, the identification of on-
going changes in the organization and updating computer systems accordingly is
a must. Otherwise, users will lose confidence in the information presented in re-
ports and, in consequence, will not use BI system, which in that case will become
a useless tool.
In decision-making process, the role of people cannot be disregarded since it is
they who decide whether information provided by BI systems will be used appro-
priately to manage an organization. It is a human being with his/her intuition, in-
stinct, common sense, experience who plays an important role in the decision-
making process. Managers who have substantial general knowledge, and do not
have the above characteristics are not always able to make valuable decisions.
Computer technology itself is not able to replace managers; it can only help in
transferring large amounts of information into useful knowledge. BI Systems "re-
lieve" managers of performing analyses and processing vast amounts of data com-
ing from the organization and from its environment. They allow for finding de-
pendencies between data by means of artificial intelligence, which otherwise could
be impossible to recognize. Nevertheless, each manager should have this kind of
wisdom that will allow him to use information and knowledge obtained by means
of BI systems and to translate them into valuable decisions in business manage-
ment. In conclusion: computer systems will not replace human beings in the near-
est future in taking decisions. At the operational level, where decisions are struc-
tured, repeatable, information systems enable the automation of decision-making.
The implementation of BI systems in an organization has many advantages, which
are manifested, in the quality of the business information provided and translated
 3. From information to decision – business intelligence systems 63

into more efficient management. The disadvantage of BI systems is their high cost
of purchase and sensitivity to the low quality of the source data.

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Andrzej BORUCKI*

4. CUSTOMIZATION AS A WAY TO EXTEND SOFTWARE

LIFECYCLE

4.1. INTRODUCTION

The last fifteen years have seen a steady rise in corporate outlays on improving
the IT infrastructure designed to support various fields of management. As the
modernization and maintenance of corporate IT resources grew, upgrade and up-
keep projects lost their effectiveness while periods of return on IT investment be-
came ever longer. Enterprises search for ways to get more out of their IT projects
by streamlining their IT architecture management to faster adjust it to changing
environments and own business needs (Afuah, Tucci 2003; ISO/IEC-15939; Rappa
2000). One way to optimize business applications is to customize them. The under-
lying purpose is to extend software lifecycles. Today’s management software de-
signers compete on customization methods. The majority (in particular those serv-
ing small and medium-sized enterprises) see customization as a way to extend the
time of software maintainability which helps finance the development of function-
ality in existing systems and represents a secure source of income. In addition,
software development entails substantial expenses at initial development stages as
software designers need to employ unique tools and methods. Thus, software life-
cycle is critical for IT project effectiveness.
A number of terms have emerged to describe methods of adding software func-
tionality in a way that is more responsive to individual client/user needs (Borucki
2008; Highsmith 2007; ISO/IEC IS 24756). The most common of them are cus-
tomization, localization, individualization and personalization. Although frequently
used as synonyms, these terms are far from interchangeable
Customization is a process of adjusting software design to client preferences
and needs. There are many ways to customize software. Two of them are in com-
mon use:

*
Poznan University of Technology, Poland.
66 Andrzej Borucki

1. The provision of software whose individualized property mix (unique function-

alities) have been achieved by modifying a standard off-the-shelf package logi-
cally and physically. The approach inevitably entails manipulating software
source code.
2. The fitting of a standard software package with configuration sets that custom-
ize it to user needs. Software users may define their desired settings (as needed
for a given field of work) either by themselves or with the help of a designer
thus modifying the software to meet their needs and business demands.
Localization involves software conversion to embrace another country’s termi-
nology, comply with its business laws and any other applicable regulations. Local-
ization incorporates adjustments of software functionality for conformity with relevant
accounting and tax laws and the development of local language documentation.
Individualization is a process of adjusting software to the needs and expecta-
tions of a single user. The goal is to produce customer value designed to fit a se-
lected user in a specified market segment. The programming company engaged to
individualize software is to deliver a value mix not available among off-the-shelf
products offered on market or one that clients would not be able to obtain with
a ready-made package.
The key to software individualization is ensuring it is integrated with the data
processing systems used in the external business environment (by suppliers and
clients). Software is individualized to clients’ specifications but without their active
involvement in software development.
Personalization of software is a process of automatically modifying user menus
to client needs based on pre-entered data sets. Personalized software contains con-
figuration sets containing variables and parameters. Once users enter their identifi-
cation data (or passwords), their software settings are automatically individually
modified to offer access to selected software functions. A case in point is a con-
figuration allowing a single individual access to selected software functions. For
instance, debt collection officers will gain unlimited access to all financial and
accounting functions so they can issue dunning letters and interest notes but will
receive no access to document posting functions.

4.2. SOFTWARE CUSTOMIZATION METHODS

The central IT system design tool is a software development method selected

for a given project.
The best software development method is selected by a number of criteria, the
most critical ones being project size, project complexity and the degree of in-
volvement of the future user in software design (Cushman, Rosenberg 1991; Davis
1993; Dorfuman, Laplante 2009; Stallman, Greene 2005).
 4. Customization as a way to extend software lifecycle 67

Project team leaders prefer the so-called light customization methods:

• whose design is human-factor-oriented as they allow for software engineer crea-
tivity,which are more adaptive then predictive meaning that IT designers go
through a system life-spiral in the iteration process as they develop successive
prototypes and then verify them against updated requirements
• which are non-linear meaning that the ultimate structure of a programming pro-
ject may be defined only partially at project launch and fine-tuned through the
feedback loops at successive stages of development.
In design practice, IT systems are customized by either evolutionary or incre-
mental development (Borucki 2008; Davis 1993; Laplante 2009).
In these methodologies, project success depends mainly on how effectively the
creative contributions of individual designers can be coordinated and tapped and
how closely and how well the project team is able to work with clients, e.g. through
joint steering committees. Cooperation between designers and clients makes the
final product significantly more acceptable to customers who gain a sense of hav-
ing had a substantial say in its development.

4.2.1. Evolutionary development

One way to create software is through evolutionary development. The method

involves the production of a preliminary operational version of software whose
main functionality solutions are to be approved by the user. At this stage of devel-
opment, designers gather input from future users to incorporate it into subsequent
versions. A flow-chart of evolutionary development is given in Figure 1.
Evolutionary development allows for customization during software develop-
ment. As successive intermediary versions are presented to clients, the provider
moves ever closer to a match between the software and the clients’ individual
needs. As shown in many deployments, the method is well-suited for small as well
as large software development projects. In practice, two modes of evolutionary
development are adopted:
1. Software design begins with the requirements that are best recognized by the
software engineers, e.g. those already used on other projects or those pertaining
to core functions that meet key business needs of the future user. The literature
refers to such products as “research development”,
2. The other approach, described as “making and discarding prototypes”, involves
the development and delivery to client of a software prototype which is then ex-
perimented on to define the final functional specifications. The client actually
receives a number of successive prototypes, some of which are discarded upon
preliminary assessment. The method is often used in developing modules for
large software systems.
68 Andrzej Borucki

Specify requirements

Anylyse existing systems

Redefine requirements

Select system

System evolution
Specifica- Deve-
tions lopment

Approve system

Deploy new system

Fig. 1. Customization by evolutionary development

Both modes of evolutionary development rely on the incremental development

of software specifications to allow the future user to come to a gradual understand-
ing of designer intentions and to assess the functionality solutions they submit
against their expectations and the business model in place in their enterprise.
Our practical experience shows that evolutionary development helps eliminate
a deployment knowledge gap between system engineers and users which is rather
common on IT projects. The gap is a prime reason for software customization fail-
ures.

4.2.2. Incremental development

Incremental development of software is a helpful customization tool as it:

– helps involve the client in every design stage,
– allows clients to defer certain software functionality decisions (at least for cer-
tain modules) until they gain fuller knowledge and experience from testing the
outcome of another development increment.
 4. Customization as a way to extend software lifecycle 69

As indicated by its name, the incremental development method entails design

by successive “increments”, each of which may be seen as a separate project. An
incremental development flowchart is given in Figure 2.

Specify requirements

Define increment requ-

irements

Create increment

Define increment

Integrate increment

Verify and validate sys-

tem

Approve system

Fig. 2. Customization by incremental development

In the initial phase of software development, the client shows the designers
which functional specifications to incorporate into a given increments. Each incre-
ment follows the complete process of cascade development made up of needs defi-
nition, design, deployment, testing, integration and tests on the aggregate of all
increments. Each increment should deliver an orderly version of the functional
requirements previously specified by the future user who should also indicate
which functionalities are to be given priority.
The critical functional specifications should be delivered in the initial incre-
ments. The designer’s task here is to work closely with clients helping them to
define such increments.
Software customization by incremental development is the most effective ap-
proach that guarantees a significantly longer software life cycle. Our studies show that
this brand of customization may help extend software life by over a dozen years.
70 Andrzej Borucki

By the incremental development method, the clients receive, early in the proc-
ess, the portion of the system they care most about so they can test it to learn about
the system, describe their satisfaction with the designer’s approach to services and
functions and define the next increment, i.e. another list of system functionalities to
be delivered in that increment.

4.3. USE OF AGILE SOFTWARE DEVELOPMENT METHODS

FOR CUSTOMIZING SOFTWARE

The term agile software development describes the ability to produce software
quickly in response to fast-changing requirements (ISO/IEC-15939). The require-
ments model incorporates functional, non-functional, area, system-related and user-
related requirements. Changes in requirements, which result mainly from a com-
pany’s altered business model (Afuah, Tucci 2003; Timmers 1998), lead to modifi-
cations in the way the model, i.e. databases and applications and consequently
changes in IT infrastructure, are implemented and deployed, as shown in Figure 3.
The key driver of change in a company's business needs is its environment
which directly affects a range of management processes.

Fig. 3. Evolution of the corporate IT architecture model resulting from customization

The business model is a central component of any corporate IT architecture. It

contains a verbal description of IT structure and the critical economic factors used
by all businesses to define their long-term survival strategies (Afuah, Tucci 2003;
Borucki 2005; Borucki 2006). Software customization is a process in which exist-
 4. Customization as a way to extend software lifecycle 71

ing business software is adjusted to meet current company management needs in

both the long and the short-term. The underlying purpose is to adjust management
support applications to grant managers easier access to software functions that
guarantee quick and accurate operational, tactical and strategic decisions to secure
a lasting competitive advantage in a given market segment.
The need for quick adjustments of management software to perform current
business tasks is a major challenge for IT system designers. The place of customi-
zation processes in the software lifecycle is shown in Figure 4.

Fig. 4. The spiral model of software development through customization

The most common model of software development through customization is the

spiral model (Borucki 2008). In order better to meet the challenge, IT system de-
velopers have reached for CASE tools designed to create system documentation at
each stage of development by means of a standard predefined for a particular de-
velopment method. Such stages range from pre-deployment analysis to the de-
ployment of a full-fledged IT architecture model. The documentation developed for
a given method shows which design work is to be performed at each project phase
and how to document it to increase the chances of successful completion. Another
reason for the use of CASE by designers was to take advantage of measuring tools
that allow for quick and relatively accurate work estimates and effective communi-
cation between designers and designer teams. Most IT projects are one-off ven-
tures. The choice of a particular tactic is seen as vital for running them in a struc-
tured and consistent manner. Such documentation helps to document progress (and
72 Andrzej Borucki

prepare bills of quantities) as well as to develop designs at the maintenance phase

of the software lifecycle. Another anticipated advantage of completing full design
documentation was the added capacity to manage human resources, especially at
times when unforeseen events arise. Unfortunately, the practice of applying rigid
software development rules has killed creativity as processes and tools take prece-
dence over technical solutions and client satisfaction. The most painful effect of the
use of rigid methodologies by software designers was (and continues to be) slug-
gish designer response to the need to modify software functionality by way of cus-
tomization, in particular where software is customized in response to business
model readjustments. The author’s long-time experience in project management
goes to show that the success or failure of a software design project depends on the
design team’s ability to respond rapidly to change, particularly when inspired by
application user. Our research [6] distinctly demonstrates that the lifecycle of soft-
ware used by a given client ties closely to designer flexibility and response time in
the process of software development. The research findings are partially shown in
Figure 5 which presents the software lifecycle at times of software customization.
Note how IT infrastructure (hardware and software) gain value from the moment
customization projects commence.

Fig. 5. Impact of customization on infrastructure value during software lifecycle

 4. Customization as a way to extend software lifecycle 73

For the above reasons, the true problem and challenge faced by software design
firms is to manage projects to ensure they satisfy long-term client needs. In many
of the investigated cases (Highsmith 2007), software designers who frequently
interacted with software users and rapidly responded to modification needs effec-
tively extended the lifecycle manyfold. Those whose interaction with users was
more limited (for whatever reasons) and whose reaction to change was sluggish
experienced significantly shorter lifecycles.
The authors of the Agile Software Development Manifesto devised 12 princi-
ples in an attempt to define a paradigm for developing software whose distinguish-
ing feature is the so called agile programming used in its development which dif-
fers significantly from the common variety of software development (Beck, Andres
2006; Highsmith 2007). The approach focuses on:
1. Client satisfaction. The software designer’s top priority is to satisfy the cli-
ent by delivering, as soon as possible, software that meets the current requirements
imposed by the company's business model.
2. Changeable needs. One must accept that needs will change even if defined
late in the design process. Software designers should not shy away from clients
ordering software modifications who then change their minds and redefine previ-
ously agreed requirements. The design team should strive to develop a flexibly
structured product in anticipation of new demands. The ability to build software in
an environment of frequently changing needs is a powerful asset of programming
firms that will definitely set them apart from other providers of such IT services.
A design team that is open to change will be more likely to recognize the problems
and expectations of future software users. Agile software development prolongs
software lifecycle. Combined with customization, the approach offers program-
ming firms a substantial revenue potential as software is a product that generates
customer loyalty. The longer customers use a given product, the stronger their at-
tachment.
3. Frequent delivery. In keeping with the above rule, software developers
should divide the product delivered to their clients into increments (by the iterative
software development method) which represent successive software versions. Each
such version builds on its predecessors. Early versions should focus on the most
challenging and controversial functionalities. Frequent delivery of software incre-
ments allows designers to verify the extent to which their product meets client
needs. This mitigates the risk of project failure and helps tighten the relationship
with future software users.
4. Closer to business users. The key prerequisite for the success of IT projects
is to work closely with future users at each stage of software development. By rec-
ognizing business problems and learning about a client’s business model early on,
designers can define software increments in response to client needs. What is more,
business and programmer jargons are “tribal languages”, as it were, imbued with
technical terminology that stands in the way of communication between the two
74 Andrzej Borucki

parties. Close cooperation between programmers and business clients alleviates the
problem.
5. Reliance on talented and well motivated members of the design team. IT
project managers often believe that designer effectiveness depends primarily on
their technical skills and working time management. To increase designer effec-
tiveness, managers seek to standardize design procedures and processes by using
CASE tools and pressurizing their people to work longer and more efficiently even
at the expense of product quality. Such an approach to designer work stems from
the fact that many managers graft their human resource leadership practices from
production floor. The common claim is that a well-managed design team can be
changed in mid-project without compromising project completion. The authors of
the Agile Software Development Manifesto disagree suggesting that the way to
effectively manage personnel is to allow designers to adopt an individual working
style. Bear in mind the basic fact that each employee has its own unique personal-
ity which needs to be recognized in project implementation by ensuring the design-
ers are personally satisfied.
6. Talking and “osmotic” communication is the best way to exchange in-
formation among design team members. The authors of the agile software de-
velopment approach believe that one-to-one conversation is the best way to ex-
change information within the design team. Documents and other written matter
may only supplement oral messages. One should therefore arrange shared space in
the workplace for team members to meet and freely exchange information.
7. The key measure of design work progress is properly working software.
The software delivered to client should come in well thought out increments that
contain functionalities needed to support business processes. Such an approach will
help assess progress in satisfying the needs of future software users. Hence, design
project progress is measured by the number of functions that meet client expecta-
tions rather than the size of documentation or the number of source code lines.
8. Continuous and sustained software development at a steady pace. Agile
designs are suited for frequently changing requirements – their development meth-
odology is adaptive rather than anticipatory meaning that product development is
iterative (and follows e.g. the spiral pattern). Each iteration ends with the produc-
tion of a prototype to be verified against an updated requirements model. The work
should continue at a steady pace over a long term to ensure the resulting software
meets high quality standards.
9. Technical perfection. Agile projects are not linear meaning that early on in
design development some of their components are not sufficiently recognized. As
a consequence, care for technical details will help develop a source code to the
highest quality standards.
10. Simplicity. Agile software development is suited for small and simple pro-
jects by the rule of “tailor-making” to meet current needs. One should develop
customized designs in response to the clients current business needs while remain-
 4. Customization as a way to extend software lifecycle 75

ing open to change and retaining scalability to allow for easy modifications of both
the software as well as the system’s logic model documentation (e.g. in UML).
11. Self-organizing design teams. Successful agile design must allow for the
creative working style of each designer and creative client relations. Agile devel-
opment designers should themselves assign tasks to individual team members and
decide how to approach them in the best way. The team members should rely on
mutual osmotic communication. This will ensure equal access to project knowl-
edge for each team member. Each designer should be allowed freely to comment
on the work-in-progress while taking responsibility for the total team work.
12. Continuous improvement of organization, operating procedures and
team communications. Agile design requires continuous adjustments of teams to
changing client demands. A team’s ability to adapt to new working conditions is
pivotal for project success.

4.4. CONCLUSIONS

An Agile Software Development Manifesto was announced on February 11–13,

2001 in Snowbird, Utah, USA. A Manifesto meeting was attended by 17 people
who signed the document – the people were Ken Beck, Mike Beedie, Arie van
Bennekum, Alistair Cockbum, Watd Cunningham, Martin Fowler, James Gren-
ning, Jim Highsmith, Andrew Hunt, Ron Jeffries, Jon Kern, Brian Marick, Robert
C. Martin, Steve Meller, Ken Schwaber, Jeff Sutherland and Dave Thomas. The
authors of the Manifesto sought to change the existing rigid rules of forcing soft-
ware developers to apply a prescribed method for drawing up design documenta-
tion in software design practice.

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Joanna KAŁKOWSKA*

5. CONCURRENT ENGINEERING VIRTUAL TEAMS

5.1. INTRODUCTION

The main principle of Concurrent Engineering is shortening the cycle of prod-

uct introduction to the market. In order to achieve this stage, many specialists are
engaged in the realization of different phases of this cycle (Bullinger, Warschat
1996; Clausing 1994; Ion 1994). Such a situation naturally forces teamwork (Tang
et al. 1997). Professional literature is the evidence of a close relationship between
these methods (Smith, Reinertsen 1991; Hartley 1992; Syan, Menon 1994; Salo-
mon 1995).
At present, concurrent engineering as well as virtual teams are widely presented
in theory and management practice, however, still little attention in literature is
dedicated to the problem of concurrent engineering virtual teams (CEVT).
The paper presents some outline results from the literature review and research
carried out in Polish manufacturing companies concerning the issue of concurrent
engineering. Within this scope the author confines herself to presenting only the
problems concerning teams, such as the synthesis of virtual teams definitions, some
principal characteristics of concurrent engineering virtual teams and finally, the
example of a concurrent engineering virtual team model.

5.2. VIRTUAL TEAMS – SOME THEORETICAL BASES

One of the basic drives for virtual teams is striving to connect the unique spe-
cialists knowledge from different multifunctional areas in order to solve the prob-
lems which exceeded the competences of individuals or mono-competence groups.

*
Poznan University of Technology, Poland.
78 Joanna Kałkowska

Durate & Synder as a drive for virtual teams appointed „reaction to business re-
quirements or as a result of programs that introduce new ways of working” (Du-
rate, Synder 2001, p. 4).
According to J. Bal & P.K. Teo, the increasing globalization, need for collabo-
ration between different specialists, advanced information technologies are the
basis to create a virtual team (Bal, Teo 2000, p. 349). A coincident view is also
presented by M. Haywood. This author additionally highlights merges, acquisi-
tions, outsourcing as factors which contribute to the implementation of virtual
teams (Haywood 1998, p. 3).
Virtual teams are focused on solving given problems and achieving specific re-
sults by taking into consideration certain disparate conditions for team members’ col-
laboration than the traditional functioning of teams (Wyrwicka 2003, p. 181).
Early definitions of virtual teams were to contrast virtual and face-to-face teams
and therefore focused on physical dispersion and technology-based interaction
(Maritins et al. 2004, p. 807).
The literature studies include the idea that the virtual team can be defined on the
basis of pointing to the opposites to the traditional team in which the communica-
tion is of a direct character and the members collaborate in a synchronous and co-
ordinated way in a given place. It is worth to point out that territorial dispersal and
time restriction do not fully describe the characteristics of a virtual team (Wyr-
wicka 2003, p. 180).
Among the first researchers who announced a formal definition of a virtual
team were Lipnack and Stamps1. They stated that a virtual team is „a group of
people who work interdependently with a shared purpose across space, time, and
organization boundaries using technology” (Lipnack, Stamps 1997, p. 6–7). How-
ever, by contrast with traditional teams, virtual teams can work according to the
dispersed area and different space-time.
Also many other researchers who are interested in virtual teams characterize its
definition in a similar way2. These definitions are usually differentiated stylisti-
cally. However, all of them pointed out commonalities like: geographical and area
dispersal, focusing on achieving a common aim, using advanced information tech-
nologies while working (Haywood 1998, p. 3; Lipnack, Stamps 1997, p. 7; Mar-
tins et al. 2004, p. 805–806).
M. Haywood characterized a virtual team in a similar way but she also defined
a virtual team as a distributed team. This author thinks that this kind of team is
created only when one or more team members are geographically separated from
the other members and following virtuality conditions, the subsequent factors need
to be fulfilled:
– skewed working hours,

1
Jessica Lipnack and Jeffrey Stamps are the founders and presidents of The Networking Insitute
in USA.
2
Compare Durate, Synder (2001, p. 2), Haywood (1998, p. 3–4).
 5. Concurrent engineering virtual teams 79

– temporary or matrix structures,

– team members are selected form different organizational units or from different
organizations (Haywood 1998, p. 3–4).
J. Bal & P.K. Teo reffered in their article to the opinion of Henry and Hartzler,
which states that a virtual team is a team whose members solve problems and make
decisions jointly and are mutually accountable for team results (Bal, Teo 2000,
p. 348). However, J. Kusar states that a virtual team is in a form of computer soft-
ware and provides other team members with required data (Kusar et al. 2004, p. 6).
On the basis of literature review, in order to summarize the term virtual team, it
can be stated that the virtual team is a group of specialists geographically and or-
ganizationally dispersed who use advanced information and telecommunications
technology and strive for solving complex problems in companies.
According to several definitions of virtual teams, the four most common charac-
teristics are as follows:
– members are geographically dispersed;
– teams are enabled by groupware;
– members are driven by a common purpose,
– success requires collaboration across time, space, and organizational boundaries
(Bal, Teo 2000, p. 349).
Based on these characteristics, several challenges emerge. People who are glob-
ally dispersed are often of different nationalities, meaning that the virtual team will
bring together diverse people who are in various locations. The inclusion of geo-
graphically distant members creates a new problem as well: dealing with different
time zones, which can result in significant obstacles when trying to implement real-
time collaboration within a virtual team (Nedelko, Potocan 2007).
The essential feature of a virtual team is competencies synergy because the team
members are selected for task realization on account of their hierarchy and simul-
taneous desirable skills and knowledge they possess. The knowledge and skills of
virtual team members allow for faster task execution as well as modern information
technology enables an uninterrupted information flow.
M. Wyrwicka refers in her article to the opinion of Ch. Scholz, who distin-
guishes the following virtual team features:
– lack of constancy of workers allocation to their work place,
– team line-up is subordinated to carry out specific projects,
– the team is dissolved once the goals are achieved,
– team members declare collaboration independently, organize their work and
manage with their time and knowledge,
– intensive interaction with the use of different media results from the need of
information exchange and individual learning processes,
– the usage of synergy effect of members who come from different cultures while
collaboration (Wyrwicka 2003, p. 181).
80 Joanna Kałkowska

Virtual teams can be also characterized by other aspects such as:

– the use of a range of interactive communication technologies and the lack of
a substantial decrease in face-to-face communication,
– distance over space and time, comprising aspects of geographical distance and
time zones,
– crossing organizational boundaries,
– diversity of team members in terms of national, organizational and/or functional
culture,
– vague membership definitions and instability of membership (Junemann, Lloyd
2003, p. 182).
Virtual teams are a natural consequence of creating virtual organizations. A vir-
tual organization is a temporary configuration of partners working together for
achieving bargain goals (Trzcieliński, Adamczyk). Taking into consideration the
narrow meaning of a virtual organization, the same way the virtual team is defined.
A team is an organization, and a virtual team is a temporary configuration of organ-
izational units (in that case organizational units are understood as team members).
The literature concerning a virtual team distinguishes many types of virtual
teams. One of the categories is a team division dependent on the character of the
tasks which are carried out:
– A virtual design team – consists of people employed in different organisational
units of the company. The team is created to carry out comprehensive tasks for
the customer by referring to all company’s processes and resources to fulfil all
customer needs.
– A virtual specialists team – consists of workers possessing high knowledge and
core competencies which cannot be collected in a traditional unit. That is why
they create a virtual know-how net involving the whole company. In this way
the dispersed knowledge is connected only for the effective use to solve local
problems concerning overburden with different tasks.
– A sleeping team – created to carry out homogenous tasks for which it is impos-
sible to define the time realisation. These tasks appear in case of some events
such as client complaints. The team members are known in advance. The team
awakes while specific problems arise. (Gach 2002, p. 20).
Another classification of virtual team types concerns a division depending on
members orientation. On that basis the following can be distinguished:
– task oriented teams – in the first stage of team existence the quick growth of
productivity is observed, however the concomitant conflicts resulting from cul-
ture differences contribute to the reduction of trust and members disperse. It
causes the team efficiency to decrease,
– task and interpersonal relation oriented teams – the initial period of team exis-
tence is focused on training aiming to develop interpersonal contacts and over-
coming culture differences. It causes lower productivity in the initial stage of
team functioning, however, the productivity is higher than the productivity of
the task oriented team (Gach 2002, p. 22).
 5. Concurrent engineering virtual teams 81

Next, Lipnack & Stamps (Lipnack, Stamps 1997, p. 42) present virtual teams
classification with reference to organization, time and space, however time and
space are treated as connected areas (Table 1).

Table 1. Virtual teams including space-time and organizational and area distance
(source: Lipnack, Stamps 1997, p. 42)
Organizational and area distance
Spacetime
Same Different
Collocated
Same Collocated
Cross-Organizational
Distributed
Different Distributed
Cross-Organizational

Durate & Synder reffering to Mittleman & Briggs present the virtual team divi-
sion on account of a permanent membership (Durate, Synder 2001, p. 5–8). This
division is presented in Table 2.

Table 2. Virtual teams according to Durate & Synder, Mittleman & Briggs, Bal & Teo
(source: Bal, Teo 2000, Durate, Synder 2001, p. 5–8)
Types of virtual team Description
Consist of individuals who collaborate to achieve common
Networked teams purpose. Such teams frequently cross time, distance and organ-
izational boundaries. Membership is diffuse and fluid with mem-
bers rotating on and off the team as their expertise is needed
Such teams frequently cross time, distance and organizational
Parallel teams boundaries. It has distinct membership that identifies it from
the rest of the organization. The members typically work
together on a short-term basis to make recommendations for
improvement in organizational process or to address specific
business issues
Project/product Team members conduct a project for customers for a defined
development teams period of time. Such teams also cross time, distance and or-
ganizational boundaries. Their tasks are usually non-routine,
and results are specific and measurable. They exist longer
than parallel teams and have a charter to make decisions not
recommendations. Membership is inconsistent but is more
clearly delineated from the rest of the organization
Work/ production teams Perform regular and ongoing work. Such teams usually exist
in one function. Membership is clearly defined and can be
distinguished from other parts of the organization
Management teams These teams often cross national boundaries but they almost
never cross organizational boundaries
Action teams Such teams offer immediate response, often in emergency
situations. They cross distance and organizational boundaries
82 Joanna Kałkowska

The concept of virtual teams is more and more popular in management theory
and practice. In modern companies the knowledge is an essential element to
achieve competitive advantage. The quality of carried out tasks and duties depends
on workers’ experience and skills. The tasks to solve are very often difficult and
require the collaboration of specialists from different areas and even from different
parts of the world while solving. The modern information and telecommunications
technologies allow to create the so-called „virtual team”. Virtual teams are created
to carry out specific tasks and they are formations functioning within a frame of
a virtual organization. In accordance with it, the work in a virtual organization,
which consists of teams and a dominant coordination mechanism, is mutual ad-
justment of partners (Trzcieliński 2003, p. 134). It relies on achieving the coordina-
tion as a result of informal and direct communication of team members.

5.3. VIRTUALITY OF CONCURRENT ENGINEERING TEAM

T. Miller & W. Berger describe concurrent engineering team as an Integrated

Product Team whose members represent all of the technical core and support func-
tions and organizations that are critical to developing a product (Miller, Berger
2001, p. 30). They also think that well-selected team members are able to meet the
expectations and – as a team – to be responsible for the risk connected to product
development and optimization.
Integrated project teams concentrate on the application of resources to achieve
project goals, functional organizations, in turn, shift their focus to people, proc-
esses, knowledge, and technology management (acquisition, training and develop-
ment). This team is composed of empowered members, that is, people who are
qualified to do the work and are able to speak and act for their organizations. They
are authorized to make binding decisions and commitments on behalf of the or-
ganization they represent. The team members are accountable for the eventual suc-
cess or failure of the entire product (Miller, Berger 2001, p. 30–31).
Miller and Berger distinguish the following characteristic keys of CE teams:
– Involve customer and suppliers early and consistently,
– Produce product or service with clear task entry/exit criteria,
– Possess clear set of objectives and metrics,
– Possess complete resources to ensure success,
– Are a cross-functional team working toward product given goals,
– Employ integrated, concurrent decision-making,
– Employ planned integration with other teams toward system goals,
– Are empowered to make decisions within specific product or service goal,
– Ensure good two-way communication with leadership,
– Have product-related financial responsibilities and accountability,
 5. Concurrent engineering virtual teams 83

– Raise and resolve issues early,

– Understand team dynamics and resolve disagreements reasonably (Miller, Ber-
ger 2001, p. 31).
Other features of concurrent engineering teams are distinguished by P. G.
Smith. They are the following:
1. Concurrent engineering teams must deal with the inherent uncertainties of inno-
vation,
2. A broad range of professional skills is needed, including engineering, market-
ing, manufacturing and finance,
3. Most of the involved members are professional knowledge workers.
The attributes mentioned above make concurrent engineering teams particularly
challenging to set up and manage (Smith 1998, p. 440).
Furthermore, the concurrent engineering teams should have the following char-
acteristics:
– they consist of up to ten members,
– members choose to serve on the team,
– members serve from the beginning to the end of the project,
– members participate in the team full time,
– members report solely to the team leader, and the leader reports to general man-
agement,
– key-functions like marketing, engineering, manufacturing are included in the
team,
– members are co-located within conversational distance of each other (Smith,
Reinersten 1991; Smith 1998).
According to Yauch C.A, a concurrent engineering team is a product design
team which has been touted as a way to get a product to the market more quickly
and with higher quality and reduced manufacturing and material costs (Yauch
2007, p. 21).
On the basis of the literature review as well as research carried out in selected
companies, the author of this paper worked out her own – many-criteria typology
of concurrent engineering virtual teams (Kałkowska 2003, p. 188–190). The typol-
ogy is as follows:
– On account of the changeability team line-up. The team line-up can be constant
or changeable. Both cases can concern concurrent engineering. If the product
development process cycle is short, the team line-up will be constant. If the cy-
cle is long, the line-up can be changeable and will depend on tasks carried out
in a specific time zone. „The permanence” of the team line-up also depends on
the complexity of product advanced technology. If the product is technologi-
cally complex than the team line-up can be expanded of the customer and co-
operant. In all cases the hard core of the team will constitute constructors or
technologists. The „mobile” part of the team will consist of the following spe-
cialists: marketing, finance, production, quality and procurement.
84 Joanna Kałkowska

– On account of team permanence. The team can be of permanent or temporary

character. In case of concurrent engineering the team permanence will depend
on the quantity of the new production launch. If there is no new production run-
ning in the company, the team life cycle will be relatively short. It will be de-
termined by product development activities. If there are many production proc-
esses running the labour intensity of product development activities is relatively
high, the team is fully overloaded in a long time period, the team will work rela-
tively permanently. This particular form of a permanent team of concurrent en-
gineering can be an “action team” named “sleeping team” by U. R. Muller
(Muller 1997). Such a team usually has homogenous tasks to perform but it is
difficult to define how much time the team will need to carry out those tasks.
Muller highlights that carrying out those tasks depends on some conditions and
the team starts working while such conditions are observed, e.g. a customer
complaint concerning bad product quality. In that case, the team is dealing with
the problem in compliance with a previously established plan.
– On account of the tasks scope one can distinguish teams working on new prod-
uct development or on existing product modification. In a case of a concurrent
engineering team such modification can concern changes in construction or
technology process.
– On account of the work place. The team members can be transferred from their
organizational units to solve the problem while working in one room (after solv-
ing the task the team is dismissed and individual specialists return to their units
or become members of a new team). The team members can also work in their
units (simultaneously carrying out their normal duties). Especially such units
can be placed in a large geographical dispersion. This case concerns specialists
who work in different divisions of international corporations as well as custom-
ers and suppliers who can also be members of a concurrent engineering virtual
team. Members’ localization is closely related to communication which is a condi-
tion of information exchange. The communication is assured by information
technologies. The concurrent engineering team is focused on effective collabo-
ration between its members aiming to introduce a new product to the market
quickly. Such collaboration is possible due to the usage of interactive tools fa-
cilitating data exchange between team members. Information infrastructure is
an engineering application enabling modeling of goods. Owing to specialist
software (e.g. CAD/CAM – 2D, 3D), it is possible to substitute a physical pro-
totype by a computing model. These models can be easily simulated, which al-
lows for shaping geometry of products as well as predicting the details of its ex-
ploitation. Information technologies in concurrent engineering assure simultaneous
access to data bases to make a parallel design of team members possible.
– On account of the team leader. The team leader can be designated either by the
team or by the technical manager. On conditions of concurrent engineering the
“changeability” of the team leader is characteristic. The leader can be desig-
nated either in every phase of the concurrent product design cycle or on account
 5. Concurrent engineering virtual teams 85

of the arising problem. For instance, if the problem concerns faults in the design
which appeared while product exploitation, then the constructor specialist will
become the leader.
– On account of team members’ competence. If the team consists of organiza-
tional units representatives with different competencies, the team is cross-
functional (interdisciplinary). This case is characteristic for concurrent engi-
neering virtual teams carrying out complex and diverse tasks. In the case of
relatively easy and homogenous tasks, the team can consist of members with the
same competencies.
– On account of the members’ scope of qualifications. Such a team can be charac-
terized by relatively high decision autonomy. However, the team can also have
consultative qualifications and then the prepared solutions will require accep-
tance or have to be agreed with other teams. It means that the team decision
autonomy will be limited.
Putting together the features of concurrent engineering teams (CE) with the fea-
tures of virtual teams (VT), the following relations can be easily noticed (Figure 1):
1. The concurrent engineering team line-up can be changeable, which is a charac-
teristic feature for virtual teams.

FEATURES OF CONCURRENT ENGINEERING TEAMS

Tasks Team Team Work Members Team Decission

scope Line-up permanence place competencies leader autonomy

Team of Constant Permanent Team Monofunctional

members Constant
new production team team team Small
running line-up located
together

Changeable
Modification team Temporary Distributed Interfunctional
team line-up team team team Big
Changeable

Team
cheangeable Team Geographical Core Heterarchy
structure temporarlines disperse competencies

Haywood, Haywood, Haywood, Wyrwicka, Gach,

Trzcieliński Trzcieliński Lipnack i Stamps, Trzcieliński
Trzcieliński
Wyrwicka

FEATURES OF VIRTUAL TEAMS

Fig. 1. Relations of concurrent engineering teams and virtual teams. Source: own study
86 Joanna Kałkowska

2. The concurrent engineering team can be of temporary character, which is

a characteristic feature for virtual teams.
3. The concurrent engineering team can work in geographical dispersion, which is
a characteristic feature for virtual teams.
4. The concurrent engineering team consists of representatives of different compe-
tencies, which is a characteristic feature for virtual teams.
5. The team leader of the concurrent engineering team can change and collabora-
tion coordination of team members is carried out according to hierarchy super-
vision to a low degree rather than according to mutual adjustment; such heterar-
chy coordination is a characteristic feature for virtual teams.

5.4. MODEL OF CONCURRENT ENGINEERING VIRTUAL

TEAM – AN EXAMPLE

CE teams are characterized by a variable internal structure of the team (recon-

figuration of the team), team temporariness, local distribution (different location of
team members), accepting people with key competences as team members – these
are virtual teams. Such a team is exemplified in Fig. 2. This team model also in-
cludes detailed activities of new product development process (Table 3, column 3)
supplemented with the desirable professional competencies3.
The team consists of fourteen members who were representatives of different
specializations, functions and competencies like construction, production, tooling
service, quality and procurement. The representatives of the customer and deliverer
are also involved in the team. Other eight members constitute a changeable – re-
configurable team line-up. That team is distributed and is of a temporary character
and the durability of its existence depends on tasks complexity which the team has
to perform. The team distribution mainly concerns the customer’s and deliverer’s
representatives. In case of the team members being recruited from company organ-
izational units, the virtuality scale depends on the localization of those units.

3
This model was studied on the basis of a concurrent engineering model which includes detailed
activities of a new product development process. This concurrent engineering model was created on
the basis of additional research conducted in industrial companies as literature evaluation. Next, this
model was supplemented by different kinds of necessary competences which can be associated with
the departments involved in carrying out the new product development process (Kałkowska,
Trzcieliński 2007). The model in this paper is only limited to present the example of the concurrent
engineering virtual team. For better understanding of the model, the detailed phases of product devel-
opment process carried out by the team are presented in a Table 3.
 5. Concurrent engineering virtual teams 87

TT-k,TT,TK,
TT,TN,NJ,PP TT TT-k,TT,TN,PP TN,TT
TN,HZ,FF,SU TT,HZ

WTPP 2
2.1. 2.2.
2.3.
2.6. 2.4.
2.5.

TT-k,TT,PP WTPP 3
3.1.
TT-k,TT,PP 3.2.
3.3.
TT-k,TT,PP WKPP 3
TK-k,TK,TT,
TN,PP,NJ,HZ 3.1.
3.2.
3.3.
TK,TT,PP, WTPP 4
TN,NJ,HZ 4.1.
4.2.
TK-k,TT-k, 4.3.
TK,TT,NJ,HM,CU
DP,DT,TT,
TK,TN,NJ,PP TT,TN DP,DT,TT-k,TT,TK-k,
TT,TN
Functions/ TK,TN,PP,NJ,CU,
Core competencies SU,HM,HZ,FF,

DT
DP
TK-K
TT-K
TK
TT
TN
PP
NJ
HZ
HM
FF
CU
SU
Phases of
new product
development cycle

WTTP2 – Technology development for production; WTTP3 – Technology of production organization; WKPP3
– Construction supervision on production; WTTP4 – Technology supervision on production;
1.1., 1.2., etc. – detailed activities (table 3, column 3);
DT,TK,TT, etc., - symbols of professional competencies of activities executors

Fig. 2. The virtual team realizing construction and technology process works connected
with the production launch. Source: own study
88 Joanna Kałkowska

Table 3. Construction and technology process works connected with the production launch
related to the concurrent engineering virtual team presented in figure 4 (source: own study)
Product devel- Required profes-
Product development process phases and activities (construction and technology process works

opment process Product development process detailed activities sional competencies

phase

3.1 Analysis and construction problem solving TK-k, TK, TT, TN,
Construction concerning production series PP, NJ, HZ
supervision
3.2 Introducing the changes in construction TK, TT, PP, TN,
on production
documentation in starting production phase NJ, HZ
(WKPP3)
3.3 Exploitation parameters estimation of new TK-k, TT-k, TK,
products TT, NJ, HM, CU
connected with the production start)

2.1 Establishing the scope of own and outsourc- TT-k, TT, TK, TN,
ing production HZ, FF, SU
Technology
2.2 Analysis of construction technology TT, TN, NJ, PP
development
for production 2.3 Study on technological processes TT-k, TT, TN, PP
(WTPP2)
2.4 Normalization of laborious technological TT
operations
2.5 Study on consumption materials norm TT, HZ
2.6 Design of special additional tools for the shop TN, TT
3.1 Establishing organization of production forms TT-k, TT, PP
Technology of
production or- 3.2 Design of production structure TT-k, TT, PP
ganization
(WTPP3) 3.3 Study on standards for production control TT-k, TT, PP
stream
Technology 4.1 Analysis and solving technological problems DP, DT, TT, TK,
supervision on concerning running production series TN, NJ, PP
production
(WTPP4) 4.2 Implementing changes in technology docu- TT, TN
mentation while production
4.3 Technology supervision on special additional TN, TT
tools for the shop

5.5. CONCLUSIONS

There is abundant literature concerning either a concurrent engineering team or

virtual teams but it is difficult to find a literature study concerning concurrent engi-
neering virtual teams. The convergence of team features presented in that paper
allows to state that concurrent engineering teams are of a virtual character. The
awareness of that characteristic can be a supporting factor in concurrent engineer-
ing teams dissemination.
 5. Concurrent engineering virtual teams 89

The paper has analysed two problems concerning teams: virtual teams and the
virtual character of concurrent engineering teams. The deliberations were mainly
based on literature review and partly based on research conducted in industry. As
a result, the model of a concurrent engineering virtual team was presented. How-
ever, it is important to verify the presented model on the basis of teams which car-
ried out new product development process activities in one of the researched com-
panies concerning introducing a silencer to the market. These teams consisted of
fourteen members who were representatives of different specializations, functions
and competencies. The five members constituted the constancy team line-up. They
were specialists of the following functions: construction, production, quality and
procurement. The representatives of the customer and deliverer were also involved
in the team. Other members constituted a changeable – reconfigurable team line-
up. That team was distributed and was of a temporary character and the term of its
dissolution was set up by the time delivery.
The case of a virtual team, briefly presented in this paper, is typical for concur-
rent engineering. Since the concept of virtual teams is at present widely known, the
problem of concurrent engineering virtual teams still requires further research.

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Aleksander JURGA*

6. PARADIGMS OF A VIRTUAL ORGANIZATION

6.1. INTRODUCTION

The end of the previous century, and the beginning of the 21st century in par-
ticular, is the period of turbulent changes in the surroundings of the functioning of
firms. The changes have been caused, inter alia, by globalization and internation-
alization of the market, the advancement of information and communication tech-
nologies (ICT) in favor of new possibilities of product sale, the blurring of the hith-
erto traditional roles of customers and suppliers, shorter and shorter cycles of prod-
uct life, the emergence of modern capital markets, tightening local and interna-
tional competition, as well as political instability perceived through the prism of
both local, international, and global markets. The growing dynamics of these
changes has led to downgrading classical models and strategies of management
associated with “mechanistic organization”. As these models were based on a rela-
tive stability of the surroundings, which was expressed on the assumption that both
the organization has one goal that all participants want to achieve and that a pro-
found division and routinizing of work is necessary, as well as a narrow specializa-
tion of roles, concentration of decision powers at the highest level of management
and depriving the executive level of decision freedom. The qualitative changes
occurring in the activity of economic units ruin the real importance of the past
paradigms of firm functioning. In management sciences, both in the phase of scien-
tific research as well as in practical application, there has currently been a concen-
tration of new phenomena such as, inter alia, economy based on knowledge, on
learning organizations, network organizations (Ching et al. 1996, p. 183). These
phenomena generate and support the development of new principles of organiza-
tion and management such as:
– delayering and flattening organizational structures,

*
Poznan University of Technology, Poland.
92 Aleksander Jurga

– forming goal teams of high autonomy,

– creating agile and flexible organizations oriented to the exploitation of market
opportunity,
– full computerization of information and communication management processes.
For this reason, in order to meet the challenges in the face of rapidly changing
principles of running business and to realize their goals efficiently and effectively,
contemporary enterprises are forced to change the orientation of their functioning
from mechanistic models towards organic models of organizational structures.
The organic structure is characterized by high creativity in achieving the in-
tended goal. Features such as, inter alia:
– the ability to predict and react quickly to the occurring changes in the unpre-
dictable external environment,
– a narrow scope of hierarchical control related to the decentralization of power
and a low degree of formalization,
– horizontal communication of a large number of direct contacts among the part-
ners forming the structure,
– free flow of information constitute the basis of the organic model of manage-
ment. One of the models of organic organization is represented by a virtual or-
ganization.
It is necessary to emphasize that a practical realization of this concept of orga-
nizing an enterprise was made possible due to the rapid development of informa-
tion and communication technologies (Horton, Smith 1996, p. 7; Lipnack, Jeffrey
1997, p. 95–102, Müller-Lietzkow 2003, p. 2). Telecommunications technologies in
a virtual organization of an enterprise play the role of a nervous system connecting
particular links of the virtual organization. At the same time it supports the creation
and shaping of mechanisms for the coordination of running business processes and is
a vital instrument supporting the functioning of a virtual organization (Trzcieliński,
Jurga 2008, p. 215; Sören et al. 2006, p. 53).

6.2. A VIRTUAL ORGANIZATION

The term “virtuality” is used more and more commonly in relation to various
aspects of the modern world. For instance, one can come across the following
terms: virtual reality, virtual library, virtual communication, a virtual operator or
virtual memory. The word virtual comes from two Latin words: virtualis meaning
effectiveness and virtus, that is, power (Tokarski 1981). However, it is often used
as a synonym of such terms as unreal, illusory, invisible, conceivable, plausible.
This term can then determine something that meets the basic features of an object,
yet which does not exist in reality. On its own, virtuality does not mean anything. It
takes on a meaning only in relation to a specific object, i.e. a virtual product, a virtual
 6. Paradigms of a virtual organization 93

enterprise, a virtual reality, virtual communication, a virtual operator or virtual

space (Jurga 2007, p. 19). The term itself was derived to the contemporary lan-
guage from the term virtual memory1 functioning in computing science and mean-
ing the size of memory which the computer user has at their disposal irrespective of
its physical size (Kisielnicki 1997, p. 24).
In relation to the form of organizing an enterprise, the term “virtual” was used
for the first time at the beginning of the 90s of the previous century (Davidow,
Malone 1992). Virtual organizations, and actually organizations whose organiza-
tional structure is virtual, constitute business units which are nonexistent formally.
It means that they are not subject to registration, they do not possess one common
localization, administration, premises although they perform the functions of real
economic entities (Grudzewski, Hejduk 2002, p. 40). In a virtual organization,
there is no clear management center or formalization, and the relations between
partners who are inter-related by common business are characterized by high
autonomy (Hopej 2003, p. 168).
The concept of establishing a virtual organization in order to run a business ac-
tivity emerged as a result of (Skyrme 1998, p. 25):
– Globalization of the market of suppliers and clients
– A rapid development of information and communication technologies
– Demand for a quick creation or storing material, financial, technological, per-
sonnel resources, etc. which enable the exploitation of a market opportunity,
– The adjustment of methods of action, as well as the division of competences
onto proper units (positions) existing in the organizational structures of various
partners forming a virtual organization.
A virtual organization means a modern form of organizing business based on
“key competences center”, including the ability to form a common strategy based
on a vision and mission and being in accord with strategic assumptions of particu-
lar partners (Grudzewski, Hejduk 2002, p. 93). In the virtual form of organizing an
enterprise some structures which are necessary for its efficient functioning exist in
its surroundings and do not constitute an integral whole. Frequently the realization
of such tasks as research and development, procurement, production, logistics,
marketing, sale are realized by separate autonomous entities. Cooperation between
these entities is held on the basis of structures functioning according to the rules of
alliance, joint ventures, consortiums, outscoring contracts, or cooperation between
firms named as partners (Grudzewski, Hejduk 2002, p. 44). Such structures are
created for the time necessary to realize a particular venture. A virtual organization
is not static and institutionalized, which is characteristic for traditional organiza-

1
Virtual memory – is a programming as well as computer technique of managing operational
memory RAM allowing for allocating memory to numerous processes, releasing and allocating it
again in the amount larger than the real quantity of memory physically installed in the computer by
means of transferring data from the recently unused RAM memory to mass memory (i.e. a hard disk)
(Kiełtyka, Smoląg 2003, p. 130).
94 Aleksander Jurga

tional structures. It has a casual structure; it is characterized by large dispersal, is

changeable, unclear. Its elements often make transient mutual relationships. Be-
cause of this, it is called amorphous. It is founded mainly on competences, specific
key skills, experience and knowledge of its partners. Its character is of a dynamic
configuration, depending on the needs and presently realized goals. The possibility
of changes in the configuration of partners increases the chance of development of
the virtual organization through bigger flexibility of action and gaining new com-
petences. This phenomenon of partner switching consists in winning over a more
suitable partner without violating stability of the whole undertaking (Mowshowitz
1999, p. 12).

6.3. FEATURES OF VIRTUAL ORGANIZATION

A virtual form of organizing business based first and foremost on communica-

tion-computing network links distinguishes itself with high flexibility. Virtual or-
ganizations’ flexibility of functioning contributing to their gaining advantage over
market competitors results directly from the characteristic features of this organiza-
tion. Below there are features of a virtual organization described most frequently in
the related literature (Teichmann 2004, p. 92; Sönke et al. 2003, p. 6; Scholz 1997,
p. 16–18; Jägers et al. 1998, p. 69–74; Czop, Leszczyńska 2002, p. 299; Płoszajski
2001, p. 36):
– Geographical dispersal. Information and communication technologies enables
cooperation between different economical subjects irrespective of their physical
location. In connection with this, a virtual organization may be composed of
partners randomly dispersed geographically. Modern information and commu-
nication technologies makes it possible to overcome negative results of a large
distance area, time, social and organizational span between partners.
– Key competences of participants in a virtual organization. In a virtual or-
ganization the selection of partners occurs because of their required skills which
would guarantee the realization of the intended venture. The key competences
may be related, inter alia, to the technologies and services, systems of manage-
ment, specialized knowledge, skills, etc. given at the disposal of a virtual or-
ganization. Connecting key competences of different partners leads to the emer-
gence of two beneficial phenomena. The first is obtaining the effect of synergy,
whereas the other is creating a non-material value by a virtual organization.
Connecting key competences of different partners is in favor of achieving
a market success and gaining the position of the leader in a particular branch.
– Reconfigurability of a network of partners. The tasks fulfilled by a virtual
organization are of an occasional character. It means that this type of organiza-
tion enables exploitation of the present market opportunities. The configuration
 6. Paradigms of a virtual organization 95

of virtual organization partners is fluent and flexible. Identifying a market op-

portunity becomes an impulse for a quick connection of partners and the ad-
justment of the organizational structure to the needs of the venture carried out.
– Temporariness of the organization. The cycle of life of a virtual organization
is determined by the cycle of realizing a particular venture undertaken in order
to exploit market opportunities. Following its completion, a dissolution of the
virtual organization occurs or its reconfiguration enabling undertaking a new
venture.
– The union of independent firms. A virtual organization consists of organiza-
tional units between which there are usually neither legal nor organizational
correlations. The reason for their temporary alliance into one commonly acting
organization is the integration of competences and resources of cooperating
partners so as to exploit market opportunities.
– Heterarchy. Due to the fact that a virtual enterprise is a dynamic, multilateral
and changeable organization, its structure is flattened in comparison to the “tra-
ditional” enterprise, and no hierarchical correlations occur between equal part-
ners. A virtual organization is based on heterarchy which lacks the dominant
link. The extent of flattening the organizational structure and its formalization
depend, inter alia, on the size, the time of task realization, the number of coop-
erating partners and their competences. What we deal with in heterarchy is de-
centralization of power promoting the necessity of making independent deci-
sions by particular units of the virtual organization.
– Trust. In a virtual organization, which is characterized, inter alia, by change-
ability and independence of partners and temporariness of their relationships,
mutual trust between partners is a very important factor. Trust requires honest
and cooperative behavior of network partners, in accordance with mutually ac-
cepted principles and norms (Fukuyama 1999, p. 34–40). This feature of a vir-
tual organization manifests itself in the fact that cooperating units renounce de-
tailed agreements and regulations for the sake of a greater flexibility. Tradi-
tional agreements are most frequently replaced with a frame business agree-
ment. Trust is often treated as the basis for creating a virtual organization.
– Focus on the customer. In order that a virtual organization could identify and
exploit market opportunities effectively, it should carry out current monitoring
of changing trends, needs and expectations of customers. The selection of part-
ners and the way they are combined into a virtual organization is subordinated
to the fulfillment of the customer’s needs with a simultaneous achievement of
business goals . In order to ensure obtaining customers’ satisfaction it is neces-
sary to adjust the offer in terms of product quality, prices, the scope of service,
the value added to their needs and demands.
– “Transparency for the surroundings”. Considering a virtual organization
through the prism the final customer, one must notice that it is perceived as one
whole by the surroundings. The customers, as a general rule, do not know how
many partners constitute such an organization, where it is located, what its fi-
96 Aleksander Jurga

nancial and material resources are, and what its real philosophy, mission and vi-
sion are (Müller 1997, p. 76; Perechuda 2000, p. 177).
– Common access to resources. One of the reasons of creating a virtual organi-
zation is the possibility of collecting and then exploiting resources necessary for
an effective realization of a venture such as: information, knowledge, technol-
ogy, raw materials, machine park, systems of management, etc. What is of spe-
cial importance among these resources are the non-material resources (knowl-
edge) possessed and used by particular partners of a virtual enterprise. Individu-
ality and uniqueness of these resources frequently determines the selection of
partners and a competitive advantage of the virtual organization over the tradi-
tional form of organizing enterprises.
– Sharing costs and risk. Due to the fact that a virtual organization is created by
autonomous partners, the costs and risk related to realizing a venture are dis-
persed onto everyone. This feature is particularly important in the case of small
businesses, which would not be able to undertake the realization of the set eco-
nomic ventures on their own.
The features presented above are an essential factor in gaining a competitive
advantage of a virtual enterprise over the companies running business in a tradi-
tional way.

6.4. CREATOR OF A VIRTUAL ORGANIZATION

A virtual organization is established in response to the appearing market oppor-

tunities. The basis for its creation are, inter alia:
– Orientation towards exploitation of market opportunities.
– Demand for quick creation or collection of such resources as material, financial,
personnel, etc., enabling the exploitation of a market opportunity.
– The need for connecting and co-sharing technological resources, adjusting the
methods of action and competence division onto proper units (positions) exist-
ing in the organizational structures of different partners constituting a virtual
organization (Grudzewski, Hejduk 2002, p. 47).
– Aggregation of competent partners who enable the achievement of goals for
a virtual organization.
The “organizer” of a virtual organization is the creator, that is to say, a firm
which is based on forming virtual relationships, and which at the same time does
not have sufficient resources enabling realization of a venture whose realization it
is arranged for.
Among the most important tasks of the creator are (Franke, Hickman 1999,
p. 124–125):
 6. Paradigms of a virtual organization 97

– Preparing the project of a business venture in response to the emerging market

opportunities.
– Determining basic tasks and processes.
– Recognizing necessary key competences.
– Picking partners on the basis of an analysis of their key competences.
– Division of tasks and processes between the participants of a virtual organization.
– Determining resources and the scope of information flow.
– Ensuring access to common resources.
– Monitoring and coordination of actions.
– Controlling the realization of the venture as a whole.
– Supervising financial settlements.
– Creating a coherent image of the virtual organization.
The selection of partners, which aims at the creation of a virtual enterprise by
the network creator, can take place (Fig. 1):
– Among the hitherto existing group of partners
– Among the hitherto existing group of partners and new firms,
– Exclusively among new firms.

B
Creator

A Pool
Creator

Pool

C
Creator

Pool

Fig. 1. The place of the creator in a virtual organization. Source: Own project on the basis
of (Faisst, Birg 1997, p. 10; Faisst 1997, p. 3; Zoche, Joisten 2004, p. 15)
98 Aleksander Jurga

In Fig. 1, there have been firms placed – in a conventional way – in the circle
named “pool”. The firms either constituted or presently constitute a virtual organi-
zation.
As for the organization of type A, both the creator and the partners who consti-
tute it are placed inside the pool. The pool is composed of autonomous partners
who either cooperated with each other in the past or still remain in co-operational
relationships. The advantage of this type of organization is that it is formed by
partners who know each other. It promotes establishing mutual trust and under-
standing undertaken business activities. However, due to little rotation of partners
and continual mutual cooperation, such a virtual enterprise may lead to the trans-
formation of a virtual organization into an institutionalized one (Trzcieliński 2007,
p. 114).
The virtual organization of type B consists of firms placed within the pool and
its surroundings, Such a situation can occur mainly in three cases:
– When there is a lack of partners with specific competences within the pool.
– When the competences of the organization of type A are not sufficient.
– When due to its own scarce resources the organization of type A is unable to
meet the current market demand.
The organization of this type may transform into the organization of type A if
the external partner becomes a permanent part of the pool.
The organization of type C can be treated as the original form of a virtual or-
ganization. It is formed by partners who have not cooperated with each other be-
fore and have been connected by no business relationships. Accordingly, mutual
trust of partners is limited. Whether in the future partners in the organization of
type C will transform into the organization of type B or A may depend on the suc-
cessful realization of the business venture.
The paradigms of a virtual organization besides the fundamental principles of
its creation are related to its life cycle.

6.5. THE MODEL OF LIFE CYCLE OF A VIRTUAL

ORGANIZATION

6.5.1. The phase of identification

Forming, functioning and dissolution of a virtual organization can be treated as

processes falling on consecutive phases of its existence. In the subject-related lit-
erature one can come across various models of life cycle of a virtual organization
(Faisst, Birg 1997, p. 11; Strader et al. 1998, p. 75–94; Hoogeweegen 1998,
p. 1077). For instance W. Faisst and O. Birg distinguish five phases of the cycle of
existence of a virtual organization. They are:
 6. Paradigms of a virtual organization 99

– Identification of market opportunities.

– The selection of competent partners.
– Determining the rules and principles of cooperation between partners.
– Doing an operational activity.
– Dissolution of an organization or its re-configuration.
Many authors incline towards dividing the life cycle of an organization into four
phases, which are made up of the following:
– Identifying market opportunities.
– Forming a virtual organization.
– Operational activity.
– Dissolution of the virtual organization.
On the basis of the research related to the subject literature and observation of
the functioning of enterprises forming virtual organizations it seems legitimate to
accept the four-phase model of the life cycle of a virtual organization (Jurga 2007,
p. 33), presented in Fig. 2:

Hibernation

 Searching for market opportunities

State of awaiting 
wyczekiwania  Analysis of chances and risk
Expiry of process operation 
 Selection of opportunity
Ending operational activities 
Searching for and diagnosing the
market, opportunities, market
chances

Planning the chain of values

Estimating, calculating costs and
profits
Disintergration,
Decomposition Conversion Identification Creating
Operational Formation,
Realization   Searching for, identyfing
activity designing competent partners
Management of finance 
 Selection, veryfying and
Marketing  approving partners
Control systems 
 Creating, forming connections

Project Management between partners

Financing and control
Forming capital, funds

Activation of marketing
Flow of materials and information
activities
Designing rules and strategies

Activation

Fig. 2. The life cycles of a virtual organization. Own project work

100 Aleksander Jurga

The phase of identification of marketing opportunities can be divided into the

following three stages:
– Searching for market opportunities. This stage consists of current monitoring
situations in various units of the surroundings, as well as new trends, the scope
of activity of competitors, behavior of buyers, and searching market niches, etc.
– The analysis of chances and risk of undertaking a venture in order to exploit
these opportunities. High unpredictability of a market situation increases the
risk of failure to accomplish an economic venture. The risk is identified with
a potential threat in achieving expected benefits. At this stage it is recom-
mended that an economic analysis of different variants of the venture including
the estimation of costs, technical and financial possibilities, the quantity of par-
ticular resources and potential benefits be carried out.
– The selection of a venture whose accomplishment has the biggest chances of
success. Most frequently particular stages of the phase of identification are exe-
cuted by the creator of the network organization. However, in certain situations
which concern first of all the realization of ventures on a large scale and require
incurring large expenditures, or which are carried out in particularly changeable
market conditions, the creator may commission carrying out an economic
analysis by an external company specializing in this field.
The acceptance of an emerging market opportunity implies the second phase of
the life cycle of a virtual organization, which is the formation of an organization.

6.5.2. The phase of the formation of a virtual organization

In the phase of formation one can distinguish the following stages:

– Searching for and identifying partners with competences proper for the reali-
zation of a particular venture. This stage begins with defining competences nec-
essary to carry out a specific task. Next, precise criteria of selecting partners are
determined on the basis of which a preliminary identification of companies is
carried out.
– The selection of partners. The final selection of partners occurs in accordance
with the criteria accepted earlier. They can include competences, reputation,
image, the estimated costs related to the inclusion of partners in the “organism”
of the virtual organization. At this stage it is necessary to define the roles of par-
ticular partners in the network. At the same time the creator sets the rules and
strategies of the venture in order to formulate one common business policy.
– Forming a system of connections (interrelations) between partners of a net-
work character based on developed information and communication systems. It
is aimed at ensuring fluent communication in the network. Moreover, what oc-
curs in this stage are the target specifications of the ways of financing and rais-
 6. Paradigms of a virtual organization 101

ing capital, the system of managing the flow of information, the way of distrib-
uting goods, and access to the data bases.

6.5.3. The phase of operational activity of a virtual organization

Following the completion of the process of design and formation, a virtual or-
ganization enters the third life cycle named the phase of operational activity. In this
phase there are a number of processes related to preparing, realization and manag-
ing the operational activity of an organization. The realization of a venture consists
in proper completion of specific tasks by particular partners of the organization. It
is important that these tasks be realized in due time and meet specific quality re-
quirements. In this phase proper management of finance is of vital importance so as
to ensure financial liquidity of the organization and to execute the assumed market-
ing strategy including product, price, distribution and promotion policies. To some
extent, it is the network coordinator who supervises the realization of an opera-
tional activity of a virtual organization. In practice, all partners are responsible for
the effectiveness of the performed task. That is why it is extremely important to
ensure effective communication, clear and unequivocal formulation of the tasks
and schedule of their completion. Moreover, the relations between partners of a vir-
tual organization should be characterized by a high degree of trust.

6.5.4. The phase of disintegration of a virtual organization

Following the venture completion, for which the virtual organization had been
formed, there is the phase of disintegration (Arnold, Härtling 1996, p. 5). Depend-
ing on the gained experience, the effectiveness of the accomplished venture, the
emergence of new market opportunities, etc., the decomposition may consist in:
– A total disintegration of a virtual organization. In this case, the organization
ends its activity once and for all.
– The transformation of the organization into the state of hibernation in awaiting
a new market opportunity to present itself.
– Reconfiguration of the organization in order to undertake and execute a new task.
Reconfiguration may consist in changing the rules of the present partners, re-
placing or including new partners in relation to the need for specific competences.
The phases of the life cycle of a virtual organization proceed from one to an-
other dynamic state in which it can be found. These states are: creation, activa-
tion, decomposition, hibernation.
The long duration of the whole life cycle of a virtual organization depends on
the magnitude, kind and complexity of the venture for which it has been founded,
102 Aleksander Jurga

as well as on the stability of the opportunity because of which the venture is under-
taken.
To sum up, it is necessary to emphasize that the creation and functioning of vir-
tual organizations has numerous advantages, but it is also burdened with certain
drawbacks. A synthetic formulation of advantages and drawbacks of a virtual or-
ganization is presented in table 1.

Table 1. Advantages and drawbacks of a virtual organization

Advantages Drawbacks
The use of the effect of synergy due to Instability of action, temporariness, tran-
connecting the best key competences sience
economic entities
Intangible organizational membership of
The possibility of cooperating with part- managers and personnel
ners who would never meet each other
under the circumstances of a traditional A company may simultaneously partici-
organization pate in virtual organizations competing
with each other
Following common policy of different
partners within the scope of activity of an The danger of a sudden disintegration of
organization the organization as a result of one partici-
pant’s or several participants’ abandoning
Integrating dispersed resources and com- the task being performed
petences
Difficulty in collecting liabilities from the
Effective use of information and computer originator of failure of the venture
networks
The lack of a clear code of conduct, lack of
Flexibility of organizational rules liberat- legal regulations as to mutual responsibil-
ing creative attitudes among personnel ity of firms and responsibility before cli-
ents
Lowering the costs of venture realization
The necessity of overcoming psychologi-
Using modern methods and techniques of cal reluctance related to the change in the
management system of transaction realization
Reaching and coping with the needs of
new clients
Source: Own project work on the basis of (Sokołowska 2004, p. 359; Kisielnicki 1997, p. 34).

Despite the presented advantages and benefits resulting from the arrangement of
virtual organizations and running business activity by them, they are accompanied
by certain limitations and drawbacks. The basic weakness consists in the fact that a
virtual organization may raise doubts about its credibility as an institution which
does not possess a concrete localization and a legal form. In order to avoid this, it is
necessary to ensure recommendations and precautions and to convince clients ob-
taining material and non-material values produced by a virtual organization that its
products are under the same rigors (full service with and after guarantee, support of
a help-desk type, or a possibility to file claims related to the failure to deliver mu-
 6. Paradigms of a virtual organization 103

tually signed business contracts) as if they were produced by traditional economic

organizations.
Among the advantages resulting from virtual organization of business activity
one can list the following:
– The increase in technological potential; as a result of joining and mutually sup-
plementing competences and resources,
– Limiting the costs of development and avoiding the necessity of undertaking
large investments,
– Intensification of activity in order to compete in the scope of technology, qual-
ity of solutions, and completion of goods produced by this organization,
– The increase in precision of business planning in connection with combining
different key competences which are vital for the functioning of a virtual or-
ganization,
Flexibility and possibility to react quickly to the emerging market opportunities.
Moreover, besides competences and resources, partners of a virtual organization
bring into its ranks such crucial values for it as: own experiences, knowledge of the
market and habits existing in it, and knowledge of clients’ behavior. It encourages
designing, analyzing and selecting the most effective solutions to the goal pursued
by a virtual organization, and for the achievement of which it is created.
Intensive development of virtual organizations in the modern world makes clas-
sical models and management strategies associated with a “mechanistic organiza-
tion in large measure no longer up-to-date. The thesis that in the forthcoming years
the share in the market of clients and suppliers will increase for organic organiza-
tions seems to be rational, the sign of which are the paradigms of a virtual organi-
zation.

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Edmund PAWŁOWSKI*

7. DESIGNING THE ORGANIZATIONAL STRUCTURE

OF A COMPANY. A CONCEPT OF MULTIDIMENSIONAL
DESIGN SPACE

7.1. INTRODUCTION

Designing of organizational structures has been a subject of scientific research

since the very beginnings of the organization and management science. Classic
organization theory includes the models and principles of construction of func-
tional (F.W.Taylor), line – staff (H. Fayol) and bureaucratic structures (M. Weber).
Max Weber (1947) initiates sociological theory of organizational structures.
Meanwhile, economic reality forces in the 30's an introduction of divisional struc-
tures. It is one of the examples of practice anticipating the science. The 50’s, 60’s
and 70’s were dominated by a strand of sociological organizational theory closely
connected with a systems theory. The objective was to construct a general organ-
izational theory and to verify it with a use of sociological empirical research.
A new, extended interpretation of organizational structure was introduced (Pugh at
al. 1963), empirical research was undertaken on the conditions of organizational
structure and its influence on the effectiveness of organization's functioning (Zey-
-Ferrell 1979; Mreła, Panków, Kostecki 1980; Mreła 1983). Sociological strand
focused on theoretical aspects, explained the essence of organizational structure
and its context variables. Attempts to transform this theory into algorithm and prin-
ciples of organizational structure designing were made, among others, by P.N.
Khandwalla (1977) and K. Mreła (1980). The second contemporary research strand
was the empirical – system strand. A methodological base was a general system
theory and interdisciplinary use of achievements of engineering, economic and
social sciences. The research was inspired by both theory and practice but a com-
mon trait was a vision of practical utility of created explanatory models and design
tools. A general methodologies of organizational design were elaborated (Nadler
*
Poznan University of Technology, Poland.
108 Edmund Pawłowski

1967; Trzcieniecki 1979; Stabryła, Trzcieniecki 1980; Hammer, Champy 1995;

Manganelli and Klein 1994; Muthu et al. 1999), as well as detailed methodology of
organizational structure design (Niekrasz 1968; Slezinger 1972; Mreła 1972, 1978;
Marzantowicz 1973; Pietrowski 1977; Stabryła, Trzcieniecki 1980; Mintzberg
1983; Haus 1983; Boszko et al. 1983; Kerzner, Cleland 1985; Pawłowski,
Trzcieliński 1986; Butler 1991; Schlesinger et al. 1999; Nalepka 2001; Galbraith et
al. 2002; Daft 2004; Nalepka, Kozina 2007; Stabryła 2009). An supplementary
strand is represented by various postulates and design principles regarding organ-
izational structure directly or indirectly which were reached during other research.
A particular place is occupied by contemporary concepts and methods of manage-
ment. Their implementation has significant influence on changes in organizational
structure and therefore on methodology of structure design.
To sum up, the knowledge of organizational structures has been developing:
– multiaspectual – from different perspectives – systems theory, economic, socio-
logical, technical sciences,
– on different levels of abstraction (from very general ideas to detailed normative
recommendations (ex. Normative of hiring workers in the units),
– on different level of complexity (from complex methodological approaches (ex.
methodology of A. Stabryła, H. Mintzberg) to simple, individual guidelines or
rules (ex. defining the extent of administration).
Some design methods were given their own names such as subject and object
method, from below and from above method, diagnostic and prognostic method,
indicatory method, internal and external method, reengineering, in such way em-
phasizing their characteristic dominants. Other are known by the names of their
authors, such as G. Nadler method, H. Mintzberg method or A. Stabryła method. In
the set of methods we can distinguish subsets of approaches: similar (for example
the G. Nadler method – Ideals and prognostic method of J. Trzecieniecki), oppos-
ing (for example from below and from above method), complementary (engineer-
ing and process management method). For many other pairs of methods it is very
difficult however to define the ground for comparison (it mainly concerns the com-
plex approaches). Methodological diversity of approaches, width (subjective) and
depth (detaility) of methodology aggravates their systemization. Literature of the
subjects shows two research gaps: cognitive and engineering.
1. Cognitive gap: Lack of complex classification of organizational structures de-
signing methods. There exist partial classifications, explaining the differences
mainly for selected pairs of opposing approaches. For most of other pairs, dif-
ferences and similarities are not described. Lack of complex description is an
obstacle in defining empty subsets (blank spots) and the directions of further
development of methodology of organizational structures design.
2. Engineering gap: lack of complex classification aggravates the rationality of
selection of a method in particular design situation. Ambiguity of similarities
and differences aggravates complex, aggregated use of achievement of various
methods.
 7. Designing the organizational structure of a company. … 109

While seeking answers for the following research gaps I set a hypothesis that
a hitherto knowledge of designing organizational structures may be arranged in
a multidimensional space encompassing various aspects of designing process. Each
of the methodological approaches to designing – represented as a point in this
space – describe its characteristics and define the “distance” from other ap-
proaches. Multidimensional capture of design process has engineering value; it
creates the foundations for rational selection of methodological elements in design-
ing and for construction of the complex design chart for particular design situation.
The objective of my research is an elaboration of multidimensional space of or-
ganizational structure design, systematizing the hitherto knowledge in this area of
research. The plan of research activities included:
– laboration of the concept of design space,
– operationalization of the space – by defining classification criteria in particular
dimensions,
– verification of classification utility on a set of analyzed methodological ap-
proaches,
– development of a methodology of using the multidimensional space with the
level of detail relevant to the engineering design methodology.
A research method is an comparative analysis of literature of a subject and de-
sign case studies as a verification of constructed general models.
This elaboration includes the results of research regarding the first two tasks:
Conceptualization of multidimensional design space and operationalization of di-
mensions.

7.2. A CONCEPT OF DESIGN SPACE

Accepting the space in which the designer operates as a starting point, we can
distinguish two areas determining his design latitude. 1) situational conditioning,
2) knowledge of design structures and methodology (Figure 1).
Situational context includes external and internal conditions of organizational
structure and company’s strategy. Typical internal conditions are the following:
company’s size, operational processes technology, available technical and opera-
tional competencies of personnel and company’s history and organizational culture.
External conditions are defined by the range of activity (local, national, global) and
the level of environment changeability. Organizational strategy is a part of overall
company’s strategy. Organizational strategy is particularly influenced by the fol-
lowing: owners’ goals, company’s mission and vision, competitive strategy, type
and scope of implemented concepts (methods) of management.
Methodological context defines a border line between intuition and experience
of a designer and rationality of designing decisions backed up by knowledge. De-
110 Edmund Pawłowski

signer’s knowledge includes both cognitive and engineering knowledge. Cognitive

part gives answer to a question: What is an organizational structure, what does it
depend on and what does it influence. An engineering part answers a question –
how to do it? How to shape a structure and how to use theoretical knowledge in
practical design solutions.

Fig. 1. Organizational structure design system. A context of situational and methodological

conditions. Source: personal elaboration

In both the above mentioned area I search for relatively separate methodological
aspects shaping designer’s rationality. Cognitive knowledge appear to be coherent,
at least in respect to the subject of research. However when we look for differences
in design methods we notice first of all the differences in interpretation of an or-
ganizational structure as such. If the scope of the notion is different so will be the
scope of the subject of design. Therefore the interpretation of a structure is the first
aspect differentiating the design methods. Following that track I found several doz-
ens of further cognitive aspects regarding the typology of structures, their condi-
tioning, mechanisms of transformation etc. Using such a large number of criteria
on one level is however not very applicative. That is why I suggest to transform all
remaining cognitive aspect into the “design principles” – as the second aspect of
design space. Such reasoning is close to very many design approaches: theory is
useful only as much as I can use it in practical design. In this aspect, differentiating
 7. Designing the organizational structure of a company. … 111

or integrating the design methods, the common or unique design principles result-
ing from cognitive research will be used. A logical middle element in a cognitive-
-engineering chain is modeling. The same cognitive content can be expressed with
a use of different languages and methods of modeling of structural phenomena.
Likewise, the methods of presentation of design results comprehended as design
documentation, and further as some other internal organizational documentation of
a company, may vary. Methodology of structure modeling is the third dimension of
design space. Fourth and fifth dimensions are related directly to the design meth-
odology. This methodology is created on two levels of abstraction: a) general or-
ganizational level – understood as a methodology of organizational design, (con-
cerning not only the designing of a structure but also all other organizational as-
pects) and b) detailed level – understood here as algorithms and procedures of or-
ganizational structure design. To recapitulate, the suggested space of organizational
structure design is described by five dimensions:
1. Interpretation of organizational structure,
2. Methodology of organizational structure modeling,
3. Methodological approach to organizational design,
4. Procedures of organizational structure design,
5. Principles of organizational structure design.
I enlarge fifth dimension, which primarily concerned only rules resulting from
the theory of organizational structure, by adding structural principles suggested by
modern concepts and methods of management.

Fig. 2. A concept of multidimensional space of organizational structure design.

Source: personal elaboration
112 Edmund Pawłowski

A method of organizational structure design is therefore identified by five char-

acteristics as presented on Fig. 2. Depending on the level of complexity or simpli-
fication, the method may include all five characteristics, only some of them, or
even only one. For example the methodology of H. Mintzberg (1983) or A. Stabryła
(1991) includes all five dimensions, and “a from below” or “from above method”
are simple methods referring to fifth dimension (design principles).

7.3. OPERATIONALIZATION OF DESIGN SPACE

Conceptual dimensions of design space do not constitute homogeneous sets yet

and require further qualitative analysis. The objective of operationalization is to set
operational criteria in each dimension with the detail level allowing for unambigu-
ous interpretation of a given design method in design space. In the first place we
will discuss dimension one and five combined and then we will move on to the
remaining dimensions.

7.3.1. Operationalization of dimension 1:

interpretation of organizational structure,
and dimension 5: principles of organizational structure design

Logical chart of operationalization of those dimensions is presented on Fig. 3.

7.3.1.1. First dimension of design space

Most often, the definitions of organizational structure refer to the systematic

approach: Organizational structure is a set of organizational units and relations
between them. We can take into consideration different range of organizational
characteristics and various grounds of relations between them. Depending on how
wide those ranges are, the content of a notion “organizational structure” may be
smaller or larger. Interpretation of organizational structure is historically shaped
by two approaches: classic and contemporary. Classic approach concentrates on
grouping the organizational positions into organizational units of higher complex-
ity level (sections, divisions, departments, etc.) and on defining organizational rela-
tions between them (hierarchical, functional, informational). A presentation of such
structure is an organizational chart and areas of responsibility and authority to
make decisions and orders. Such approach was suggested by the classics of organi-
zation: F. W. Taylor, H. Fayol, M. Weber. Such approach is also dominant in prac-
tical management.
 7. Designing the organizational structure of a company. … 113

Fig. 3. Operationalization chart of first and fifth dimension

A new approach appeared within a so called Aston concept in the 60’s.

A broader approach is based on the assumption that an organizational structure
includes everything which limits the freedom of behavior of organization members.
Each of the limitations was called a dimension of organizational structure. Aston
concept suggested five dimensions: configuration, centralization of decision mak-
ing, specialization, standardization, formalization (Pugh, Hinnings 1976, p. 3).
Comparing classic and astonian interpretation we notice two new dimensions of
Aston concept: Standardization and formalization. This difference is important
because the subject scope of design also changes; by adding those two dimensions
we focus not only on structurization of organization's elements but also on struc-
turization of activity and behavior of organization's members. In the literature of
the subject we can also find three dimensional approaches including: 1. specializa-
tion, 2. coordination, and 3. formalization as “a bureaucratic space”, as well as 1. co-
hesion, 2. combination potential, and way of activization as “a joint space” (Strategor
1996, p. 281, and 396). Different list of six dimensions propose R. L. Daft (2004, p.
18): 1. formalization, 2. specialization, 3. hierarchy of authority, 4. centralization, 5.
professionalism, 6. personnel ratios. To recapitulate, an operational expression of
organizational structure interpretation are the dimensions of organizational struc-
ture.
114 Edmund Pawłowski

7.3.1.2. Fifth dimension of design space

The principles of organizational structure design originate from the following

areas:
1. Knowledge of regularities of construction and transformations of organizational
structure.
2. Knowledge of relations: strategy – structure.
3. Knowledge of organizational structure conditioning and its influence on the
organization’s operating effectiveness.
4. Concepts of organization’s management.
I suggest to group the regularities of construction and transformation of organ-
izational structure into five classes:
1.1. Relations between the dimensions of organizational structure.
Empirical research indicate a low internal coherence of organizational struc-
ture (Mreła 1983, p. 69–118, Mreła, Panków, Kostecki 1980, p. 53–81). Weak
relation between the structure’s dimensions allows to formulate a rule of exis-
tence of large number of potential structure variants and significant freedom of
designer in creating those variants. Concurrent to this reasoning is a contin-
gency approach in organizational science. Such course clearly opposes the sys-
tem-normative approach which postulates typical structural solutions. Empirical
research from the 80’s (Mreła 1983) has not been later repeated on such scale.
There is no proof that contemporary organizations are genetically parallel to
those from the 80’s. It seems that this research strand has not yet been finished
and so the design principles resulting from it may still change in future.
1.2. Principles of construction, division, consolidation and development of organ-
izational units.
The knowledge from this area is vast and the principles resulting from it refer
to: interpretation and classification of organizational units, rules explaining the
mechanisms of growth, divisions and reconsolidation of organizational units
(Boszko 1973, p. 23–31, Mintzberg 1983, p. 46–65, Stabryła 1991). Individual
authors create in this area their own, internally consistent methodological con-
cepts. They are different and it seems that they do not contradict one another.
They explain different aspects of the same phenomenon. It is difficult however
to find an approach that would use a combination of those principles.
1.3. A cause-result correlation in internal transformations of organizational structure.
As much as changes in internal and external organization’s environment are
a primary cause triggering the process of adjusting the structure to those
changes, they still do not explain the mechanisms of further changes within the
structure. We see those mechanisms in form of many intuitive design postu-
lates. Their systematization and scientific explanation is given by S. Trzcieliński
(1999, p. 29–47). Introducing a new function to an organization, its abandoning
or limiting, as well as the change of the technology of its execution or labor
consumption are considered as secondary factors of structural changes. A ty-
 7. Designing the organizational structure of a company. … 115

pology of those transformations and the effectiveness criteria of organizational

units functioning became a cornerstone for creation of engineering principles
of association (merging) of functions into the complexes corresponding with
areas of organizational units operation.
1.4. Typology of structural relations and mechanisms of internal and external coor-
dination.
There exists at least between ten and twenty different typologies of internal
structural relations. Most frequently mentioned are hierarchical and functional
relations and next to them the informational, technical, cooperational and
other. An example of their systemization is a classification of A. Stabryła
(1991) and A. Nalepka and A. Kozina (2007), who distinguishes two classes of
relations: Hierarchical (including imperious and regulational relations) and func-
tional (including operational, advisory and informational relations). As typical
mechanisms of internal cooperation in the structure there are: diagonal and
horizontal cooperation. Concepts of fuzzy structures (also called an organiza-
tional architecture), initiated by network and virtual structures, require addi-
tional mechanisms of external coordination, which classifications are still de-
veloping.
1.5. Typology of structural forms.
It appears that this is the most frequently and profoundly described part of or-
ganizational structure theory. Classifications of structures and their character-
istics are usually similar. Therefore I do not expect to find significant differ-
ences between contemporary designing methods. However to explain the dif-
ferences in the design principles proposed by classic and contemporary ap-
proaches, this aspect may be very important. Such reasoning might be caused
by contemporary classifications of structures distinguishing the following
structures: classic and contemporary, mechanistic and organic, rigid and flexi-
ble, close and open.
Knowledge of relations: strategy – structure
A thesis of strong influence of strategy changes on the changes in organiza-
tional structure is one of the contemporary paradigms of organization. This thesis
formulated by A.Chandler (1981), was time and again confirmed by other authors
(Fouraker and Stopford (1981), Mintzberg (1983), Thompson and Strickland
(1993), Trzcieliński (1999), Nalepka (2001). First observations of such relations
were in regard to the changes in products strategy and its influence on a structure,
and in particular, how the products diversification forced the introduction of divi-
sional structures and decentralization of management (Chandler, Fouraker and
Stopford). Later the research regarding other aspects of a strategy was undertaken.
My target is to organize this aspect with regard to all strategy levels and their varia-
tions and to find regularities that could be transformed into the design principles.
This organizing should encompass the following levels: corporation, business units
and functional. It should also consider internationalization and globalization of
business.
116 Edmund Pawłowski

Knowledge of internal and external conditions of a structure and the struc-

ture’s influence on effectiveness
Empiric research showed that enterprises functioning in different internal and
external conditions have different structural solutions. Such structure-creating vari-
ables include: environment variation, vertical dependence of other organizations,
size of an organization, used technologies, horizontal affiliation with other organi-
zations (suppliers, customers). Although everybody agrees that these variables are
important, the results of various empirical research and their interpretation are not
concurrent. K. Mreła (1983, p. 152) analyzing the Aston conditioning model of
organizational structure, states that the research does not prove that it is possible or
reasonable to formulate theses about coexistence of particular pairs of contextual
and structural characteristics. They refer to ranges of reality on higher level of gen-
eralization, such as: inconsistence of structural characteristics, loose relations be-
tween organization and environment. S. Trzcieliński represents a similar view:
organizational structures are conditioned by many factors and none of the research
provides their full list. The dimensions of organizational structure are a subject of
synergetic influence of various factors (Trzcieliński 1999, p. 18). From the design-
ing perspective, the knowledge of organizational structures conditioning has pri-
mary importance. Designers’ expectations can be modeled in a simple table: on one
side a list of internal and external conditions of a company, on the other the corre-
sponding structural solutions, which in those conditions promise the highest or-
ganization’s effectiveness. Such table does not exist however and there are no
prospects for its creation in the nearest future. A major research problem is: scale
of research, representative sample selection, synergetic influence of independent
variables. Additionally, the problem is complicated by the ambiguous results of
research on the correlations between the structure and effectiveness of the organi-
zation. Expecting that the structures themselves will influence the effectiveness is
excessively optimistic; we can’t ignore such obvious factors as attitudes, qualifica-
tions and motivations or workers (Mreła 1983, p.165). More general explanation of
this phenomenon may be found in a theory of open systems where one of the char-
acteristic is equifinality (Bertalanffy 1984, p. 167) and which particular case is that
the same behavior may be achieved by systems with different structure (Mynarski
1979, p. 16). If the same organizational result (for example: effectiveness) can be
reached with a use of different structures, then a table, matching the structures with
conditions, mentioned above becomes even more complex. To sum up, the knowl-
edge of organizational structure conditions and its influence on organization’s ef-
fectiveness is very wide from a theoretical perspective. From this knowledge we
draw design principles and guidelines at various levels of generalization but it will
be hard to prevent from the internal contradictions. Those contradictions, and se-
lective preference of some relations, may be a base for differentiation of design
methodology.
 7. Designing the organizational structure of a company. … 117

Strategies and concepts of management and the rules of organizational

structure design
New approaches to company’s management, known under the names of modern
methods, concepts, strategies and philosophies of management, were not evoked by
the issue of organizational structures but have significant influence on them. The
area of interest includes such concepts as: Agile enterprises, Lean management,
Knowledge management, Outsourcing, JIT, CIM, TQM, TPM, Supply chain man-
agement, Team based working. Within these concepts a numerous postulates are
formulated referring to structural solutions, such as:
– Creating organizational units focused on subject (e.g. product) and process
structures
– where it is impossible:
● Implementation of interfunctional management
● Creating processes’/products’/clients’ managers,
● Using matrix or project structures
– Implementation of network and virtual structures in external business,
– Introduction of internal virtuality,
– Replacing vertical coordination mechanisms with horizontal coordination
mechanisms,
– Total decentralization of standardized operations and centralization of its super-
vision,
– Strategic importance of information technology,
– Strategic importance of soft factors and standardization.
Not all of those principles can be used simultaneously in one project. Their
segmentation may be a methodological distinguishing feature in organizational
structure design.

7.3.2. Operationalization of other dimensions of design space

methodologies of modeling and designing of organizational structure

7.3.2.1. Second dimension of design space: Methodology of organizational

structure modeling
Modeling occurs on every stage of creation, both cognitive and engineering. We
have to use models as forms of simplification of excessive complexity. A model is
a set of elements and relations between them defined with purpose and from a de-
fined point of view. Diversification of research goals and points of view diversifies
the created models of a structure. Modeling of organizational structure is done on
three levels:
– Universal cognitive level, explaining the general notion of organizational struc-
ture; an example of a model here would be a selection and interpretation of
structure dimensions and general correlations between them;
118 Edmund Pawłowski

– Operational cognitive level, provides answers to questions which classify the

subject of research and explain the properties of particular classes;
– Engineering level includes the structure models used in company’s organiza-
tional documentation.
First level of modeling has already been taken into account in the first dimen-
sion of design space: interpretation of organizational structure. On operational cog-
nitive level the models are being created, which transformation leads to creation
a variety of types of organizational structures. For example a H. Mintzberg model
(1983, p. 11) , which distinguishes in a structure five typical parts: Strategic apex,
Middle Line, Operating core, Technostructure, Support Staff. By altering the pa-
rameters of those elements we can model different types of structures, such as
Simple structure, Machine bureaucracy, Professional bureaucracy, Divisionalized
form, Adhocracy structures (Mintzberg 1983, p. 153).
Engineering level creates models used in presentation of particular design solu-
tions. These are the process structuring models (ex. function hierarchy tree mod-
els), organizational charts models, models of functions’ allocation to organizational
units (ex. Hijmans competencies tables), models of description of organizational
positions.

7.3.2.2. Third dimension of design space: Methodological approach

to organizational design

Methodological approaches to design are defined by current paradigms of or-

ganizational design. The first distinguishing feature could be classic and system
science paradigm. It divides the design methods into classic and system. This di-
versification is currently of lesser importance, as all currently published methods
declare a system approach. A second paradigm is a starting point to design. It di-
versifies the diagnostic approach (accepting as a starting point the existing state,
which has to be improved) and anticipative approach (where the starting point is
the target state of an organization). Both the above approaches are being con-
stantly developed. Diagnostic approach, originating from classic organization the-
ory (F.W. Taylor, H. Le Chatelier), further developed in United States and Ger-
many during the research of work methods, has currently a number of detailed
methodologies aiming at a diagnose of organizational structure (Mreła 1972, 1978;
Stabryła, Trzcieniecki 1980; Stabryła 1991; Nalepka 2001). Anticipative approach,
originating in the IDEALS methodology, was presented in the 60’s by G. Nadler
(1967), modified in the 70's in J.Trzcieniecki prognostic method (Trzcieniecki
1979), and continued in the 90’s in Reengineering (Hammer, Champy 1995). Third
paradigm is an orientation of design subject. Designing may be oriented at static
(structure) or dynamic (process) aspects of an organization. Perception of a process
is dual: Classic, focusing on the functional improvement of organizational units, or
modern – process, focusing on procedural apprehension of entire process passing
 7. Designing the organizational structure of a company. … 119

through entire organization. Such perspective explains the differences between two
anticipative methods: IDEALS method (oriented at functional approach) and Ham-
mer’s Reengineering (oriented at process approach). On the other hand we can notice
that two reengineering methodologies, having a common part – process approach, are
different in the paradigm of design starting point; Hammer’s methodology is anticipa-
tive and Davenports' is diagnostic (Davenport 1993).
Fourth paradigm is a level of design standardization. We can distinguish two
approaches: Standardized and casual. First reflects the system-normative strand
and assumes aiming at standardization of design activity, which may refer to:
– subject of design (standardization of process, organizational units, functions
realization procedures)
– design procedures,
– design tools (mainly IT tools).
A particular case of such approach are module methods of organizational de-
sign; ex. Buschardt’s method, MOSIP method (module organization of company’s
information system – Pietrowski 1977.) Second approach – “casual” is a derivative
of situational theory of organization (Contingency approach).
Particular design methods and techniques are less important here. Crucial as-
pects are philosophy, strategy to solve the problem in a given situation based on
the designer’s knowledge and intelligence. The above deliberations are summa-
rized in a chart of methodological approaches to designing presented on Fig. 4.

Fig. 4. Methodological approaches to organizational design – as a third dimension of design

space
120 Edmund Pawłowski

7.3.2.3. Fourth dimension of design space: Procedures of organizational

structure design

A detailed, operational expression of a design method is a procedure. It system-

izes design operations and their order. We can use a wide range of such procedures,
which can be arranged based o the complexity and detaility into the following
classes:
1. Complex – general procedures; include the description of entire design process
divided into several steps and their general explanation.
2. Complex – detailed procedures; include the description of entire design process
in form of a multistage compound design algorithm,
3. Partial – general procedures; refer to a certain fragment of design structure de-
scribed in a general manner, for example a distribution of business processes or
aggregation of functions,
4. Partial – detailed procedure; refer to a fragment of design process, but they offer
a detailed solution to this design problem.

7.4. CONCLUSIONS

Designing of organizational structure is defined in various ways; has various

semantic range, various complexity and detaility. The knowledge of structure de-
sign is mainly developed by comprehensive research creating consistent cognitive-
engineering systems. We cannot overestimate however the value of fragmentary
models, techniques and rules, resulting from narrow research or being a side effect
of other research, as well as the results of generalized practical experiments. We
should not underestimate them because they are so many, and part of them has
significant cognitive and practical meaning. In this work I attempt to present as
wide as possible the issues of organizational structure design. This wide view re-
sults in a problem of systemization of great variety of ideas. It is not a problem to
compare the concordant and opposing views, but it gets problematic to find an
order in incomparable ideas. For the classification suggested here I use a name of
multidimensional design space of organizational structure. I suggest to describe
this space in five dimensions:
1. Interpretation of organizational structure.
2. Organizational structure modeling.
3. Organizational design methodology.
4. Organizational structure design procedures.
5. Principles of organizational structure design.
Suggested interpretation of design space is currently in a process of detailed
verification. The results will confirm or force changes in this concept.
 7. Designing the organizational structure of a company. … 121

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