Value, however, can also be intangible, for example, when volunteer work enables care services or cultural creation unavailable in this quality on the market. Value is then designated, for example, via the required input (i.e., the amount of work) (for a critical exploration of value concepts, see Mazzucato, 2018).
Figure 1-11: Illustrative Process Chain
Besides the necessary steering of process activities (coordinating capacity and quality, etc.), the following aspects of value creation processes are of interest from a management perspective:
– Value chains tend to be restructured on an ongoing basis. Environmental changes (e.g., new technology or changed prices for input factors) mean that activities need to be carried out differently or that value chains may even need to be reconfigured. For example, “print on demand” makes stocking spare parts unnecessary.
– [42] Value chains tend to become increasingly differentiated and specialized as a result of the underlying “economies” (e.g. economies of scale).
– Additional value (e.g., boosting the attractiveness of a region by creating jobs and paying taxes) is created beyond primary value creation (Figure 1-12).
Figure 1-12: Differentiation of an Organization’s Primary and Additional Value Creation.
A process view of a company helps to optimize interactions between individual processes across functions. Porter’s (1985) basic process model of a company distinguishes primary and supporting activities. The former focus on the value creation process, while the latter establish the prerequisites (Figure 1-13).
Figure 1-13: The Value Chain
Source: Porter (1985, p. 37)
[43] For complex projects (e.g., purchasing a subsidiary) but also for complex service processes (e.g., recruiting a new executive, installing manufacturing machinery), process planning models are developed with the help of different techniques.
So-called “service blueprints” are often used to represent to-be processes (ideal situation). This normative design instrument is used to show various levels as well as a so-called visibility line. At the top are the customers or the physical points of contact with them (Figure 1-14).
Figure 1-14: Illustrative Service Blueprint: The Example of a Public Trade Fair
Source: Wiedmann and Kirchgeorg (2018, p. 56)
[44] Process maps, for example, can be used to show as-is (i.e., real) processes. These descriptive recording instruments enable empirically recording processes (i.e., as existing in reality) and displaying them as a process diagram (Figure 1-15). These process maps provide the basis for continuously improving such sequences of activities, because they illustrate the interdependencies of these activities.
Figure 1-15: Illustrative Example of a Process Map (ITEM-HSG Project Documentation)
Source: Rüegg-Stürm and Grand (2020, p. 83)
1.6 Types of Companies and Organizations
[45] How the management tasks described above are prioritized and performed, and how the corresponding questions are answered, depends not only on the environmental context but foremost on the type of organization. Various criteria (Figure 1-16) can be used to typify organizations (based on Rüegg-Stürm & Grand, 2020, p. 36; Thommen, Achleitner, Gilbert, Hachmeister, & Kaiser, 2017, p. 25).
Figure 1-16: Various Criteria and Their Categories Used to Typify Organizations
Source: based on Rüegg-Stürm and Grand (2020, p. 36); Thommen et al. (2017, p. 25)
[46] The type of organization and, above all, its economic (i.e. profit) orientation, significantly impacts the performing of management tasks and the force fields arising in the process. This is exemplified by the weighting of individual stakeholder interests.
Besides the differentiation according to the dominant environmental sphere, distinguishing organizations by profit orientation — “for profit” versus “not for profit” — is very important. Private companies seek profit, mostly directly or indirectly. They use their profit to compensate the risk capital needed, for example, to pursue risky innovation activities (e.g., when listed pharmaceutical companies research, test, and launch new drugs). Nonprofit enterprises mostly pursue social goals (e.g., NGOs operating in the field of development strive to combat poverty, while private foundations promote cultural projects). Not-for-profit companies are often financed by return on capital and donations, but also by their service fees (e.g., project services) or subsidies. In order to raise funds, they must document their success in attaining their goals in order to attract potential funders. For example, in 2019, the Bergwaldprojekt foundation had a total of CHF 1,726,754 in donated funds, which it invested in mountain forest conservation projects for 12,275 working days (Varinska, 2019).
Cooperations between public and private organizations are called “public-private partnerships.” Typically, such organizations often involve profit-seeking and nonprofit-seeking companies coming together. For example, the cooperative members of the Swiss Society for Hotel Credit include the hotel industry, the banking sector, the federal government (the most important member), and individual cantons. The Society grants subordinated loans to promote the hotel industry in regions with seasonal tourism. Such loans are granted in the interests of the public sector (i.e., the regions benefiting from funding), or of the hotel industry and the lenders.
Another important typification structures companies according to size. Large companies are usually more differentiated and have various management levels, whereas microenterprises (e.g., startups) are often managed directly and personally by a team. Thus, the management structure, management culture, and degree of formalization of management vary greatly — and also result in differences between the flexibility and agility of companies.
[47] The different legal forms of organizations provide different conditions for financing and growth, but also imply different requirements for management structure. While a simple partnership is usually managed by the owners, corporations are characterized by the separation of ownership and management, thus placing special demands on corporate governance. In most countries and cases, stock corporations have a two-tier system, in which a board of directors/supervisory board represents the owners/stakeholders while executive directors/management/board of directors run the company.
Figure 1-17: Typical Phases of Company Formation as an Example of a Possible Corporate Cycle
Source: Grichnik, Brettel, Koropp, and Mauer (2017, p. 239)
Today, the distinction by phase in the business cycle is also important. Thus, newly founded companies can be distinguished in terms of different start-up phases (Figure 1-17). While direct management (by the founding team) is possible both in a preparatory phase and immediately after a company’s founding, management will need to be transferred to more formal structures as the company grows. Whereas in the founding phase, for example, the founding team selected personnel itself, thus enabling selection to match personal values, this task is later performed by a specialized HR department.
[48] Thus, the demands on management, management structures, and managers vary depending on the type of company. However, companies change their structure not only