Designing a business model for a network company.
C.W. Bronswijk
S1933663
August 2012
University of Groningen
Faculty of Economics and Business
MSc Business Administration
Specialization Business Development
First supervisor: Drs. H.P. van Peet
Second assessor: Drs. J.D. van der Bij
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Preface
This report is the result of my master thesis research at the Revisie Groep. With this
thesis I’ve completed my master Business Development of the faculty of Economics and
Business at the University of Groningen. The research is conducted at the Revisie Groep in
Zwolle. This network company is active in the HRM consultancy and is formed by several
independent professionals. I want to express my gratitude to everyone who contributed to
my master thesis. A special thanks is there for Ben Bekema (supervisor Revisie) and Heleen
van Peet (supervisor university) for their advice and support. Also a special thanks to my
girlfriend for her support and advice during this research.
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Executive Summary
This report provides an analysis and evaluation of the current situation within a
network company of independent professionals, namely the Revisie Groep. The Revisie
Groep is facing problems with their performance and do not generate much business. The
directors of the Revisie Groep want to know how to redesign their business model tot
generate more business. Research methods are qualitative and include interviews, external
case studies as well as literature study. All the interview questions and interview protocols
can be found in the appendix. Results of data analysed show that the business model is not
well designed and that therefore the performance is low. This thesis provides a redesign of
the business model for the Revisie Groep. In this redesign, the marketing and sales interface
is also taken into account. The configuration type of the marketing and sales interface needs
to be changed from hidden marketing to living apart together. The changes in the business
model are within the internal aspects of the Revise Groep and with this changes the
performance should be improved. The meetings of the Revisie Groep need to be improved
and agreements should be written down on paper and should be clear to all professionals.
This thesis is also recognizing the fact that every research has limitations.. The limitations
include: the amount of interviews and the fact that no conclusions can be drawn from four
case studies.
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Content
Chapter 1 Introduction………..6
Chapter 2 Theory………8
2.1 Networks………8
2.1.1 Network organization……….9
2.1.2 Network organization with independent professionals………11
2.2 Marketing and sales interface……….12
2.3 Marketing in PSF’s (professional service firms)……….15
2.4 Business model………..16
Chapter 3 Methodology………..19
3.1 Data collection and data-analysis……….19
3.2 Quality criteria for research……….22
Chapter 4 Short Diagnosis and Analysis………24
4.1 Short diagnosis and analysis……….24
4.2 Cause and effect diagram………..27
Chapter 5 Redesign……….28
5.1 Design specifications………..28
5.2 Conclusions from external case study...32
5.3 Proposed design directions………33
5.4 Actual design………37
Chapter 6 Conclusion and scientific implications ...………41
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6.2 Scientific implications...42
6.3 Limitations and further research………..44
References………46
Appendices………..49
Appendix 1: Interview questions for design specifications……….50
Appendix 2: Interview questions case study……….51
Appendix 3: Interview questions short diagnosis ………...56
6 1. Introduction
Revisie is a company based in Zwolle and is active in the field of HR consultancy. Their business activities in the field of HR services are expanded with new services. Beginning in January 2011, Revisie has acquired Joosten & Partners and they are housed together in Zwolle. With this acquisition, Revisie is entering a different market and therefore their market is new. A few months after the take-over, Revisie has now set the next step in their HR services, forming a network company. This network company is a group of experienced professionals, all active in one or more areas of the HR service and together they form a network company called the Revisie Groep. Together, the group has a common goal: solving HR issues and deliver quality solutions. The Revisie Groep is an unique combination of specialist knowledge and expertise, enabling companies and institutions to be effectively supported in all their HR issues. All the people within the Revisie Groep are independent professionals and specialists in an area of the HR field. The execution of marketing activities of the Revisie Groep, like producing a poster and updating the website is done by the directors of Revisie. The marketing that every independent professional is doing for themselves is not executed by the directors of Revisie. Revisie controls and executes only the joint marketing activities of the network group. As mentioned before, joint marketing activities for the network company are done by Revisie. For the network company, a business model must be designed to execute the internal and external marketing activities. How will this new model look like for the Revisie Groep? There are also some other questions that arise when talking about business models within the Revisie Groep. This study is also investigating the marketing process within the Revisie Groep. What is the best way to design this new marketing and sales interface? How does the marketing process look like and how would they best organize this process?Who sets the requirements for the business market and how will that market demands are met? Where does the customer enter the network company, who has first contact with the customer, who decides who executes the job and who decides how the new job look likes? All these questions are related to the marketing process within the Revisie Groep.The two key issues are how Revisie can organize the marketing process and their business model in a good and efficient way and also achieve a fair distribution of profits among the professionals within the network company (Revisie Groep). Revisie would like to design two things, namely a new marketing and sales interface and a business model for the new market they are entering with the Revisie Groep.
Based on this description the following research question can be formulated:
Which business model should be designed for the Revisie Groep, so that the market can be successfully entered?
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From this question several underlying research questions are derived:
- How should Revisie organize and design the new marketing and sales interface for the new market they are entering with the Revisie Groep?
- How should Revisie organize the internal aspects of a business model within the Revisie Groep?
- How should the profit sharing look like within the Revisie Groep?
The thesis outline is as follows: first, a theoretical framework based on existing literature on this subject is introduced. Then, the diagnosis and analysis of the Revisie Groep is introduced. Then the redesign of the business model follows. Finally the implications of the research for theory and practice are discussed.
8 2. Theory
In this chapter, an overview of the relevant theory for this thesis is given. The literature streams which are important for this study are: 'organizational design', 'marketing' and literature about 'network organization'. Another literature stream that can be used in this study is the ‘management and marketing of professionals within a service firm’. There is growing interest in the professional service firms (PSFs) and how they should be managed (von Nordenflycht, 2010, Maister, 1993). A professional service firm is presumed to be different than other firms because they face distinctive environments that demands different management skills (Greenwood et al, 2005). They also differ from other firms because they provide highly customized services and they are highly personalized, involving the skills of professionals (Maister, 1993). The organizational design literature is important because a new organization should be designed and this also calls for a new marketing process. Also the literature stream of marketing is important and should be studied to give an answer on several questions related to the marketing of Revisie and the Revisie Groep. The marketing of services is different because of the characteristics of services. According to the literature the marketing within service firms has shift from acquisition and transaction to relationships and customer retention (Coviello et al, 2006). Finally the literature of business models should be studied because a new business model should be designed for the Revisie Groep. For this master thesis, these are the most important and relevant literature streams which should be able to give answers to the different questions which where formulated in the introduction.
While searching for current literature on the subjects above, not much literature is available for the situation within Revisie. A contribution to the literature can be made to describe which business model is most suited for a network company, how a network company should design their marketing and sales interface and how they should manage their independent professionals. This contribution is based on the existing literature of marketing, organizational design, marketing of professionals and business models. The gap in the current literature is that there is not much academic literature about network companies and their marketing and sales interface. Therefore this study can give a theoretical contribution to the academic literature about network companies with independent professionals and marketing.
2.1 Network
What is a network and what is the meaning of a network organization? A network is an organization of mutual connected goods or persons (Doornbos, 2006). This description of a network is very general and broad. In the literature many other descriptions of a network are given. In the article of Grandori and Soda (1995) the authors emphasize the role of a network as ‘modes of
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organizing economic activities through interfirm coordination and cooperation’. This perspective shows the instrumental role of a network; a network is an instrument to organize activities and the behaviour of the actors within the network are goal orientated (Jarvensivu & Moller, 2009). There is still no unified view on network as a business (Morris et al, 2005). The business networks can be grouped into two different forms namely network of organizations and a network organization. The difference is that a network organization is a collection of autonomous firms or units that behave as a single larger entity, a network of organizations are behaving independently. This thesis is focusing on a network with independent professionals behaving as a single entity namely the Revisie Groep. These independent professionals can be seen as individual and autonomous organizations so it is a network organization. In the next subparagraphs, the network organization will be further explained. Also a network organization with independent professionals will be described.
2.1.1 Network organization
The last decades more and more companies are changing their organizational structures because with their traditional structures they cannot fulfil the markets demands (Miles and Snow,1992). Collaboration and working together in a network is the new way of doing business and the academic literature has growing interest for network organizations (Shuman and Twombly, 2010). Network organizations are different from regular organizations in several aspects. First of all, network organizations use collective assets of several forms within the network. Second, network organizations rely more on market mechanisms to manage their resource flows. These mechanisms are not independent of each other but components within the network are willing to share information and cooperate to maintain their position within the network market. Network organizations also expect a proactive role among participants and not only a contractual obligation like in a network in the construction industry (Miles and Snow,1992) . With this new form of business models companies can provide complete solutions for their customers (Shuman and Twombly, 2010). A network organization can be seen as a system of elements connected through stable relations (Van Aken, Hop en Post, 1997).
There are different forms of network organizations. The forms that are being discussed in this paragraph are the ‘stable’, ‘internal’ and ‘dynamic’ network (see figure 1). These three forms are mostly used for network organizations.
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Figure 1 Internal, Stable and dynamic network (Miles, Snow 1992) The first form is the internal network organization. In this form of network organization there is an internal market created and units are doing business together. The units within the internal network are working on a project basis with other units within the network. After a completed project, a new collaboration is started to work on another project. This is done with an appropriate unit within the network organization. There is central control, and in these organizations the core firm acts like a broker with a (large) number of different companies that participate together in the network. The internal network can be damaged by extensions that overload its internal market mechanisms and by modifications that unbalance the relationships between buyers and sellers. Not only overload can damage this network, also corporate intervention will do that. When the core firm is intervening in the resource flows or transaction prices, the network will be damaged. (Miles and Snow, 1992).
The stable network is best suited for markets that are predictable and stable. A stable network organization exists out of several companies who closely connected through contracts with the core firm. The participating companies in this network are operating independently from each other. The core firm often has long-term relationships with suppliers, who have access to the company's computer system and may be present at private planning sessions. The danger with this form of network organization is that the core firm can obligate the participating firms to fully dispose their assets to the core firm. When that happens, the participating firms are only producing for the core firm and lose their contact with the market. Another potential danger can be that the core firm interferes with internal issues of the participating companies (Miles and Snow, 1992).
Within the dynamic network the focus is on the adaptability of the network organization, because the autonomous divisions in this network are doing business on separate, but related markets. These companies are coupled in for example a short-term production. After this production the companies are separated and can be linked in the future with some other companies to produce goods or services. The dynamic network outsources more. The core firm identifies and assembles assets owned by other companies within the network. The core firm understands the markets and knows the markets needs. The dynamic network can be optimally utilized if, for each position in the
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value chain, a large number of companies are included in the network. A potential danger of this network is when one company is too specialized and therefore can only deliver to one other company. This company is than not delivering any value to the network as a whole. In this network organization companies needs to innovate constantly or other companies within the network, which are innovating, will take over their customers (Miles and Snow, 1992).
2.1.2 Network organization with independent professionals
The Dutch labour market has a large proportion of independent professionals and their amount is increasing. In 2009, almost 5% of the market was independent professional according to the Dutch labour force survey (De Vries et al, 2010). The amount is still growing in 2010 and 2011 according to the study of de Vries et al, 2011. An independent professional is solo self-employed and sells his own knowledge, skills and abilities to other parties (Koster en de Vries, 2011). They rely on their own human capital to provide these services and therefore these people are capital extensive.
One of the issues when studying independent professionals is to define them as a group. They share several aspects of business owners and they also have characteristics of employees (Koster en de Vries,2011). As a result of this issue, existing studies are discussing the definition of the independent professional and not other topics. Many different terms are being used in the studies like quasi employees, sole traders and autonomous workers. This thesis is not discussing the definition and takes the definition as described in the study of De Vries, Bangma and Vroonhof(2010). This definition is being used because it captures the main elements of the independent professional. They stated that there are three main aspects of an independent professional;
- Solo self-employed work at their own account and risk; - There are no other people involved in running the business;
- The main service of the self-employed is its human capital. The business provides knowledge, additional capacity, experience of the owner, but no goods.
An independent professional runs his own business and uses human capital. To get external resources (with low transaction costs) a good position in networks is pivotal (Koster&Vries, 2011). This is especially true for independent professionals. They are relying more on external networks for resources for production. To perform economically well a good network position is vital for an independent professional. To gain this network position they are connecting in different types of networks. The types of networks that are being distinguished in many studies are ‘social’ and ‘professional’ networks. The social network helps independent professionals to start their business
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and secure resources (Dahl and Sorenson, 2009). The social network contains people who are supportive but they are not generating business. The professional business network contains customers and business partners of the independent professional. The focus of this thesis lies on the professional business network of the independent professional. The motives to interact in a professional business network are ‘scale’ and’ scope’ (Perrow, 1993). Finding sources to generate business is important for independent professionals, for example if they need extra capacity when a job is too big for them. For all these issues a business network can be useful. Finally, cooperation with the network in acquisition of new business can be a motive. A network organisation is thus a business network and can be used for all the above reasons (Koster&De Vries, 2011).
In summary, this paragraph explained a network organization with independent professionals. This is an organizational form that has growing interest in academic literature. The last decades more of these organizational forms are developed and the expectation is that their amount will increase. The network organization with independent professionals like the Revisie Groep, is organized as a dynamic network. Within the dynamic network the focus is on the adaptability of the network organization, because the autonomous divisions in this network are doing business on separate but related markets.
2.2 Marketing and sales interface.
In a market orientated organization effective interfaces are required to create optimal value for customers (Slater and Narver, 1994). To create this marketing and sales interface several studies stated that a horizontal organization with cross functional teams is required (Biemans and Brencic, 2005). A successful interface requires efficient formal coordination and a supporting culture. An open dialogue between individuals of all departments is improving the effectiveness of the interface. (Biemans and Brencic ,2007). Marketing and sales both want to serve customers, with marketing focusing on building a brand name in the marketplace and sales on containing the customers and closing sales. There should be a good working marketing and sales interface between both, but in practice this is absent (Biemans and Brencic, 2007). The differences between marketing and sales are expected to be heavier in emerging markets. In emerging markets companies are more focused on sales and the firm is in the first stages of development. That means that not all organizational processes are fully designed and operating efficiently. Also, there is not a well designed interface between marketing and sales in these markets.
The marketing sales interface in a business to business (B2B) firm, like the Revisie Groep differs from a business to consumer (B2C) firm. This has to do with the marketing in both firms. The characteristics of marketing in both firms influence the interface and its outcome (Biemans
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et al, 2010). The marketing in a B2C firm is organized differently than in a B2B firm. In the existing literature many studies do not distinguish between both kinds of firms. Most of the studies are focused at companies where sales and marketing exist as separate and well defined functions. (Biemans et al, 2010). In small B2B firms like the Revisie Groep marketing and sales are not separate departments but are done together. The size of the firm, their market and their products and services is causing that marketing and sales are not separated. This is also shown in other B2B firms. In their article, Biemans, Brencic and Malshe (2010) describe four different configurations for a marketing and sales interface in a B2B firm, namely: ‘hidden marketing’, ‘sales-driven marketing’, ‘living apart together’ and ‘marketing-sales’ integration. The first configuration has the most similarities with the situation within the Revisie Groep because within the Revisie Groep there is no clear distinction between sales and marketing. The marketing and sales activities are done by one of the directors of the Revisie Groep. Therefore, details of hidden marketing will be described briefly, followed by a short explanation of the other three configurations.
Hidden marketing
In some B2B firms, marketing could not be identified at first sight within the firm. In these firms, marketing was not absent but hidden and marketing activities were done by the manager. The strategic decisions and marketing issues are handled by the same person. The firms with a hidden marketing interface are relatively small and sales orientated. The focus of the manager is on sale and achieving the monthly goals. There was no effort to develop marketing plans for these firms. The reason for that is that these plans do not improve the performance of the firm and the company is too small for a marketing manager. The communication in these firms is informal and ad hoc, there were no processes to store and share knowledge. The market information is not collected and only gathered by individual customers and not shared within the company. In this way no information about market segments or markets in general is being collected. The collaboration is easy to achieve in these small firms, because all employees know the important customers. The quality of the marketing sales interface is depending on the individual employees and their interpersonal relationships. The firms themselves feel that they are doing marketing even though they lack resources to create plans and programs. (Biemans et al, 2010). The hidden marketing is the configuration interface that is mostly seen in small service firms. These small service firms adopt many marketing skills to survive in the dynamic and competitive market (Hultman& Shaw, 2003).
Sales-driven marketing
In this configuration firms have an embryonic marketing function and a very strong sales orientation. In these firms the marketing function was typically a spin-off from the sales department
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(Biemans et al, 2010). The execution is done by one or two individuals within the firm and their focus is on supporting sales and less on developing strategic marketing plans. Firms with a sales-driven marketing interface did not have much collaboration between marketing and sales. The sales department is not seeing the added value of a marketing department for the firms success.
Living apart together
In this marketing and sales interface both departments where established functions with their own identity and jobs descriptions. But in this interface the sales department is providing the marketing information from the customers. Both departments are having formal and informal contacts to provide information to each other. In this configuration the marketing is making long term plans that go beyond supporting sales activities (Biemans et al, 2010).
Marketing-sales integration
The final configuration is the marketing and sales integration. In these firms marketing and sales are separate and independent but working closely together and have complimentary roles within the firm (Biemans et al, 2010). The main difference with the previous configurations is that both departments are responsible for several tasks. They are working close together and create plans for the future and for daily activities. Firms with a marketing and sales integration seem to correspond closely to the description of firms that enjoy a constructive and harmonious marketing and sales interface (Biemans et al, 2010).
When companies are developing and growing also the marketing and sales interface is changing and will look different. The ultimate goal is to create a marketing and sales integration interface for a firm. With that interface they can quickly react to changes in the market and create optimal value for their customer(Biemans et al, 2010). The firm is not only fulfilling the short term needs of their customers but also has plans and programs for the future. Marketing and sales are integrated and not working separated from each other. This situation should be the ultimate goal when a firm is growing and changing.
Also important in this thesis is the marketing of the independent professionals within the B2B firm. The next paragraph will tell something about marketing and independent professionals.
2.3 Marketing in PSF’s (professional service firms).
In this chapter first the marketing in a professional service firm will be discussed followed by the marketing of independent professionals. The subject of this thesis is about a network company with independent professionals and how it should be marketed.
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The marketing of professional services is an interesting topic in the academic literature. The statistic figures show that services are import for the economy in several countries. For many decades, authors are writing about how to market professional services. (Kotler and Connor 1977, Gummesson 1978). There are many theories in different literature streams which describe how professional services need to be marketed. But not many researchers investigated how service firms practice marketing on a detailed level (Sweeney et al, 2011). Coviello et al (1997) is an exception as they developed the marketing practices classification within professional service firms. The following marketing practices are defined;
- Transaction marketing (managing the marketing mix to attract and satisfy customers). - Network marketing (developing interfirm relationships to coordinate activities). - Interaction marketing (face-to-face interpersonal interactions).
- Database marketing (technology-based tools to target and retain customers). - E-marketing (using the internet and other interactive technologies).
The marketing practices in professional service firms (PSF) that are described above are interrelated and do not preclude each other (Coviello et al, 2002). There is a general agreement that networking and interaction marketing has more positive outcomes than traditional marketing approach. However, research is shown that many professional service firms emphasize more transactional marketing than network and interaction marketing in B2B firms. (Coviello et al, 2002). This is surprising because these firms are service orientated and are expected to use the information from their relations to make decisions and take action (Coviello et al, 2006). While in the Coviello et al (2002) study they also found that in B2B firms the relational marketing was dominant. In the study of Sweeney et al (2011) it was found that relational practices are most practiced but transactional practices were also important. (Sweeney et al, 2011). These findings suggest that marketing practices likely to be pluralistic and more practices are often being used in the same firm (Sweeney et al, 2011). As stated above, the marketing practices in professional service firm vary depending on the industry and the market. Also the impact of the different approaches varies from industry to industry (Sweeney et al, 2011).
In academic literature there is not much information about marketing practices of PSF’s. Coviello and colleagues also call for further study among PSF’s in different industries. Understanding these practices is important for several reasons. The sector is a significant part of the western economies and the sector is rapidly growing over the last years. Also the PSF has many challenges with practicing marketing because of the unique characteristics of the service, market and organization.
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In this thesis the marketing practices in a PSF is studied and with that knowledge our understanding of the marketing practices in PSF’s is improved. The firm is a B2B firm and is working with individual professionals. It is a network organization with independent professionals. The marketing activities within this firm are within the forms that are described earlier in the paragraph. The importance of relational and networking marketing within a PSF is obvious. The independent professionals are using their network to generate leads and sales for the network group. If one combines all the networks of the independent professionals one creates an enormous network with a great business potential and a potential to create transaction marketing.
2.4 Business models
A business model according to literature is essential for a company’s success. According to many authors, companies often fail despite the presence of market opportunities, talented entrepreneurs, adequate resources, and novel business ideas. A possible cause, mentioned by Morris et al. (2005) is the underlying model driving the business. In the academic literature there are many definitions for a business model. In the paper of Osterwalder (2005) it is stated that the business model concept must head in the following direction:
A business model is a conceptual tool containing a set of objects concepts and their relationships with the objective to express the business logic of a specific firm. Therefore we must consider which concepts and relationships allow a simplified description and representation of what value is provided to customers, how this is done and with which financial consequences.
In general, a business model is a tool that provides a clear representation of the entire company or business and all the concerning elements. With a business model you understand, describe and predict the activity of buying and selling goods and services and ‘earning money’ of a particular company (Osterwalder & Pigneur, 2005). This is a very broad definition of a business model and embraces many directions in many research fields. A review of the literature shows that some authors use the term to explain how a company does business (Galper, 2001 and Gebauer and Ginsburg, 2003) and other authors are explaining the business model and the conceptualization of it (Osterwalder, 2004). With these two interpretations there are several elements in a business model. In the article of Osterwalder (2010) the authors are defining the most common building blocks among business models. They used the literature to define all these elements. Business models incorporate, according to Osterwalder and Pigneur (2005) four key elements, which give a clear indication of the complete business of a company or individual project. These four elements exist out
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of nine blocks that are illustrated in table 1 below. An extensive description of all these elements is not necessary for this thesis because not all elements are being used in the redesign.
Table 1. Nine Business Model Building Blocks If you combine all these elements and conceptualize the business model you get an overview of a business model. In figure 2 below you can see how all the elements are related to each other. In the centre of the figure the product or process is positioned, which is interrelated to all other aspects. The internal aspects concerns, the resources necessary, the agreements with other parties and the activity the organization executed internally. The external aspects, also known as ‘customer interface’, include; criteria of the target group, the relationship with the customer and the linkage between the innovation and the customer. The final element is the financial aspect and consists of costs, revenues and profits. This thesis is focusing on the redesign of the business model and the marketing and sales interface to create a better performance of the Revisie Groep. The most important elements of the redesign will be lying in the internal aspects of the business model. Also the marketing and sales interface is designed within the internal aspects.
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Figure 2. Conceptualization of the business model (adapted from Osterwalder &Pigneur 2005) Short summary of the literature streams
The literature that is being used for this thesis can be defined in several streams. The first literature stream that was discussed was about network companies. This stream is being examined and explained beginning with a general network organization and ending with a network organization with independent professionals. This academic literature stream about network companies is still growing but there aren’t many authors writing about network companies with independent professionals. The thesis is adding knowledge to this stream of literature. The literature of network companies is followed by the marketing and sales interface literature. This subject is being discussed and this stream is also growing in academic literature. There are different configurations of interfaces and they are discussed. The one that has the most similarities with the Revisie Groep is explained briefly. There are still areas of research for marketing and sales interface, for example within the business to business area that needs to be examined. The third literature paragraph was about marketing activities within PSF, the most common activities are transactional, relational and network marketing. These activities are important when working with independent professionals and are improving the firms performance. The final literature that is important is about business model and how to design a network group. In this paragraph the elements of a business model are being explained. This elements need to be taken into account with the redesign of the business model.
19 3. Methodology
This chapter describes the methodology used for this thesis. The thesis started with an introduction about a network company called the Revisie Groep. From the introduction several research questions where formulated. The first paragraph describes the most suitable research cycle for this thesis. After that, an explanation of the data collection and data analysis will be given.
Research cycle
The most suitable cycle for this study is the adapted reflective cycle from van Aken (2009). Not all stages of this cycle can be executed for this study. The stages for the reflective cycle are: academic interest, business problem, data analysis, (academic) solution and reflection. Based on an earlier discussion about this thesis not all of these stages should be followed carefully during this study. For this study only the phases academic interest, data analysis, (academic) solution and reflection are executed. The explained situation in the introduction can better be described as a business opportunity. Therefore it is hard to create a cause effect diagram and therefore we start this study with a description of the situation. After this description a cause effect diagram is made. With this cause effect diagram the problems of the Revisie Groep will become clearer. After the description and the cause effect diagram the data analysis will follow and further investigation of the academic literature on the subject. To deliver a good solution for the problem of this study the adapted reflective cycle should be followed properly. When deviating from the planned stages of the adapted reflective cycle the risk exists that the results of the study are of low quality. Also the reliability and validity of the study will be lower when deviating from these stages. The result of this study will be a solution and redesign of the business model that can be implemented by Revisie. In particular attention is paid to the marketing and sales interface of the network group.
3.1 Data collection and data-analysis
In this paragraph it will be explained which methods are being used to collect data for this thesis. Also the analysis of the data will be briefly explained in this paragraph.
Data collection
The data collection for the short diagnosis is done by doing open interviews. The two directors who are directly involved in the Revisie Groep will be interviewed for this phase and the results are described further on in this thesis. Also, for the design specifications six independent professionals are interviewed that are active in the network group are executed. The questions for these interviews are added in appendix 1. For the redesign phase, literature about network groups
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and business models is being studied. Secondly, an external case study is executed at other network groups. The questions for the external case study can been found in appendix 2. The people that are being interviewed for the design specifications are directors and six of the independent professionals within the Revisie Groep. With this information a cause and effect is being made which can be useful for the design specifications and redesign.
Qualitative methods are, according to Van Aken et al. (2009), most suited for exploration the causes and effects, as the validated research questions can be used as starting points for the interviews. The only drawback of qualitative research in the determination of the business problem is the risk of generating results that are superficial opinions by the interviewees. As mentioned before, the short diagnosis of the Revisie Groep is based on the two open interviews with the directors of Revisie. In appendix 3 the questionnaire for these interviews is placed. After finishing the interviews with the two directors that set up and designed the Revisie Groep, the problems becomes clear. Besides the interviews with the directors, also six members of the Revisie Groep are being interviewed to obtain information. This information is being used for the design specifications and the actual redesign. For the design specifications also the independent professionals within the Revise Groep are being interviewed. The questions for the interviews are being prepared and are stated in the appendix 1. After the collection of the data at , managers and professionals, the actual redesign and analysis of the data can be started. For the actual redesign an external case study is executed among four other network groups. With all this information a redesign is proposed to the directors and the six interviewed professionals. This redesign is being evaluated during a meeting and after this meeting the actual redesign is being designed.
Case study
The qualitative case study is an approach to research that explores phenomenon within it is context (Baxter&Jack,2008). There are two key approaches in academic literature that guide case study methodology. The first approach is by Robert Stake (1995) and the second by Robert Yin (2003). For this thesis the approach of Robert Yin is being used. According to Yin (2003), a case study should be considered when: how and why questions need to be answered; you cannot manipulate the behaviour of those involved in your study; you want to cover conditions because you believe their relevant for your study; or the boundaries are not clear between the phenomenon and context. For this study a case study is conducted because how and why questions need to be answered for the Revisie Groep. When (re)designing a business model and the marketing and sales interface, a literature research is done. Besides literature research, also a multiple external case study is conducted. Four other network groups of independent professionals are being examined. The information from this multiple case study can be used in the redesign for the Revise Groep. The
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questions in this case study are being focused on the business model and the marketing and services interfaces of these network groups. In appendix 2 the questions are being placed followed by a short summary of the interviews.
The first step when conducting a case study is to determine the type of case study. Yin (2003) categorizes case studies as explanatory, exploratory, or descriptive. He also differentiates between single, holistic and multiple case studies (Baxter&Jack,2008).The type of case study for this study is a descriptive study. For the redesign four network groups are being described and looked in real life context.
Data-analysis and design
The data-analysis will be done by carefully looking to the obtained data through interviews. There are several data obtained with interviews for different purposes. For the short diagnosis the data is being analysed and a cause effect diagram is designed. For the design specifications the data is being collected and the results are put in a design specifications table. For the external case study the interviews are used for the redesign of the business model of the Revisie Groep. Besides interviews, also the different literature streams that are important for this thesis will be examined. As described above the final source for data analysis is an external case study at four network companies. As in any other qualitative study the data analysis will depend on the type of case study. As described above this study is conducting a multiple descriptive case study. In the book of Yin (2003) five techniques for analysis are being described; pattern matching, linking data to propositions, explanation building , time series analysis, logic models and cross-case synthesis. For this study the technique of explanation building is being used. A danger with the analysis phase is that each case would be treated independently and the findings reported separately (Baxter&Jack,2008). This is not the purpose of a case study. In this study therefore the four network groups are being examined together and looking for similarities between them that are useful for the redesign of the Revisie Groep. The analyse of the case study is done to look to the elements of a business model in relation to a better performance. In the interviews the opinions about network companies is being asked, including opinions about their business model and how they perform. With this information different design directions can be discovered for the Revisie Groep. A summary of the case study can be found in chapter 5 of this thesis.
The three sources for design direction are thus; literature, people involved in the network group and the case study. After the data analysis design directions are described and the actual redesign can be started. The different design directions will be tested if they match with the design
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specifications that are stated. After that an evaluation will take place with the involved people within the network company. After this session a final redesign will be explained.
3.2 Quality criteria for research
According to Van Aken et al (2009), research projects can be evaluated on several quality criteria. The most important quality criteria are controllability, reliability and validity. Further in this paragraph these criteria are explained.
Controllability
The controllability of a research is an essential criteria because it is the foundation for the evaluation of validity and reliability (Van Aken et al, 2009). The controllability of a research is the degree of reproducibility of this research for other researchers. This researchers can check if they get the same results when executing this research. To increase the controllability of this research a description of the research method is required. Also the results of the research should be described as precise as possible. The description of the research method is done earlier in this paragraph and increases the controllability of this research. In this thesis the controllability is thus guaranteed through extensive explanation of the research method earlier in this thesis. Also the questions of the interviews are being placed in the appendix and can be overlooked. Also a short summary of the interviewed people for the external case study is placed in the appendix.
Reliability
The second quality criteria is reliability. Reliability seems easy to grasp but is hard to define (Van Aken et al,2009). The results of a research are reliable when they are independent of the particularly characteristics of that study and can be replicated in other studies. The literature about this subject recognizes four potential sources of bias; the researcher, the instrument, the respondents and the situation (Van Aken et al,2009). The results of a research should be independent of the researcher, the respondents, the measuring instrument and the situation in which the study was carried out. A repetition of the study should yield the same results. To determine the reliability of a measurement is to repeat it (Van Aken et al,2009).
In this thesis several biases can occur that need to minimalize. The first bias is the one of the researcher. To increase the reliability of this research different sources are used. The first one is the researcher. The researcher is aware of the fact to stay less biased as possible and make no interpretations from literature or interviews. The researcher tries to stay objective and tries to make independent conclusions and recommendations.
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The second bias is the one of the respondents. This bias occurs if respondents answer questions in the way they think the questioner wants them to answer rather than according to their true beliefs. To prevent this bias open interviews are being held and open questions are being asked. In that way the respondents provide answers that is their beliefs. Also the respondents that are being interviewed are diverse to increase the reliability. The interviewed are direct involved in the network group namely the independent professionals and the directors from Revisie. These different respondents prevent that personal interest are taking into account during the research. Not only the founders and directors of the Revisie Groep are being interviewed but also professionals within the network. This will prevent that only an internal look is given on the actual redesign.
The final bias that can occur is the instrument. The only instrument that is being used in this thesis are interview questions that can be found in the appendix. Because the instrument in this thesis is small, the bias of instrument plays a minor role in this thesis.
Validity
The final quality criteria is validity. Validity is the third major criterion for the evaluation of research results. A research result is valid when it is justified by the way it is generated (Van Aken et al, 2009). There are three types of validity described in the book of van Aken et al (2009) namely; construct validity, internal validity and external validity. Construct validity concerns the quality of the measurement instrument in relation with the meaning of that instrument. To increase the construct validity the methods used in this research are evaluated with the supervisor of the university Groningen and directors within Revisie. Internal validity concerns conclusions about the relationship between phenomena. The results of a research are internally valid when conclusions about relationships are justified and complete (Van Aken et al, 2009). Internal validity is being established in this research by doing several open interviews within the Revisie Groep and looking from multiple theoretical perspectives. External validity refers to the generalizability of research results and conclusions to other people, for example companies or other researchers. External validity is often less important in business problem solving projects, because these projects focus on one specific problem. As this research is focused the Revisie Groep business problem it is difficult to draw general conclusions. The only thing that can be useful for other parties is the scientific implication. This can be used for other cases than the Revisie Groep.
24 4. Short Diagnosis and Analysis
For the short diagnosis of the problems of the Revisie Groep two open interviews are done. The interviews are done with the directors of the Revisie Groep. In these interviews a close look on the problems and situations within the Revisie Groep is done. In this paragraph the most important causes are being described followed by a cause effect diagram.
4.1 Short Diagnosis and analysis
There are not many customers for the Revisie Groep.
The Revisie Groep is on the market for almost a year but not many products and services are being sold. They are offering the companies the solution for every problem on HRM. With the expertise within the Revisie Groep every problem for a HR manager can be sold. Before offering their service to the customer an analysis of the problem(s) of the customer is made. They can analyse the different problems within a company and suggest a solution. For this solution they make use of the professionals within the Revisie Groep. These products or services from the Revisie Groep are not much sold to the customers according to both directors. They say that the market and customers are not finding the Revisie Groep and there is no interest in their products or services. When talking about the causes for this failure the interviewed directors state that in the market that their active on, customers are looking for concrete products or services and solutions for their problems instead of a solution for everything what the Revisie Groep is offering. The market is focussing on actual products or services and that is where customers are looking for to solve their HRM problems. Both directors of the Revisie Groep are saying that potential customers are not contacting the Revisie Groep and asking for an analyse of their problems. They say that the market is more interested in concrete products or services.
Difficult to manage the independent professionals
Another problem that the Revisie Groep is dealing with, is to manage the group of independent professionals. The directors concluded that independent professionals are busy most of the time, with doing their business and not putting much effort in the Revisie Groep. The professionals are visiting the meeting of the network group and find those meetings very useful and interesting. In their daily activities the independent professionals are not really promoting the network group and are not looking for opportunities to create turnover for the group, is what the directors are concluding. The professionals are focusing on their own business and market their own products and services according to the directors. The directors also say that the input the professionals are offering for the meetings is not as much as expected. The directors are having
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difficulties to manage the professionals in such a way that they would put more effort in the Revisie Groep. When the independent professionals are talking to customers they can promote the Revisie Groep if that customer has a problem that the independent professional can’t solve. Every independent professional should use their own network to create turnover for the Revisie Groep but this is not happening. The directors want the meetings to be more focused on how to sell services and products together as a group. The meetings are now having a more informal character and are focussed on sharing knowledge and networking. This attitude of the professionals will lead to performance problems of the Revisie Groep. If there is not enough effort of the professionals, not many leads and business are generated. The intention of the Revisie Groep is to generate business together and this is not much happening now according to the directors.
The product/service offering is not clear to the customers
As mentioned before, the offering from the Revisie Groep is not clear for customers and the market according to the directors. They stated that the market they enter are HRM managers within large companies that face difficulties with their personnel. These HRM managers can be helped with every staff problem but also with preventing problems. The interviewed directors think that the situation is that HRM managers are only looking for clear products or services when facing problems. They are not interested in an analysis and a total solution for their HRM problems, is the conclusion of the directors. So therefore, the Revisie Groep is not having much contact with their market and their potential customers. The directors believe that the causes for failure are lying in the offering from the Revisie Groep and they try to work on clear product offering. The partners within the Revisie Groep should look if they can offer a clear product of service with another partner from the Revisie Groep. With this new offering they can promote the Revisie Groep and create turnover.
The meetings of the Revisie Groep delivering not much business
The meetings of the Revisie Groep should be every two months and are organised by the company Revisie. Sometimes the meetings are cancelled because many professionals can not come to the meeting. Before the meeting every professionals is being asked to deliver input for the meetings. This can be cases or questions which can be talked about and sharing knowledge about this subject. According to the directors the input of the meetings are most of the times done by Revisie themselves because the professionals are not delivering any input before the meetings. The meetings are being led by the directors of Revisie and they are making the agenda and are leading the discussions. In a meeting they talk about the situation in the Revisie Groep and also plans for the future. The directors tell the group about the new ideas and plans for the future. Also information about for example the new website is being shared by the directors. Every professional can make
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comments on the decisions and there is a dialogue possible. After this information from the directors, a real life case is presented. This case is about a problem with HRM within a company. The case will be discussed with all the professionals and every ones expertise and knowledge is being used. The meetings are being closed with informal meeting to know each other and to network. During the meetings with the Revisie Groep there is no intention to create turnover with each other. The meetings are focused on sharing knowledge and networking and not on generating turnover for the Revisie Groep. This is also clear in the results of the Revisie Groep because not much turnover is generated. The directors say that they are aware of that and are looking for a new model to organize the Revisie Groep in which the focus is more on sales and making turnover. The meetings are not improving the performance of the Revisie Groep and the directors want this to change in the future.
There are no agreements about financial aspects of the Revisie Groep
When talking about generating turnover within the Revisie Groep, the directors told that there were no clear agreements about the financial aspects of the Revisie Groep. Both directors stated there were no agreements about profit sharing when a customer is doing business with the Revisie Groep. Also the directors say that there are no financial bonuses for generating a lead for the Revisie Groep. So there were no agreements made for the Revisie Groep about the financial aspects of the group. The planning is to do this in the future and also make clear to the professionals that creating turnover is important for the Revisie Groep.. Also other agreements are not being put down on paper and signed by the whole Revisie Groep. The reason for this is that the directors do not want to make rules and in that way take away the professionals their freedom. They believe that the motivation should come from themselves and not from agreements made on paper.
The ambition is to grow and generating more turnover together
The situation within the Revisie Groep is now that it is not working as planned a year ago but that the concept of a network company is being kept. The ambition is to grow as a network company but that there are questions about how to organize this concept. There is not a clear idea about the business model and internal interfaces. The independent professionals stated that they are willing to stay within the Revisie Groep but the directors think that their current input is not enough to create turnover.
27 4.2 Cause and effect diagram
When we combine all the information from the short diagnosis the following cause and effect diagram can be made. This diagram is based on the information both directors are stated in the interviews
No clear business model no financial agreements
No clear marketing and sales agreements
Product/service offering not clear
Little input professionals Low performance Revisie Groep
Professionals do their own marketing
When we generalize the above diagram the following cause effect diagram can be made.
Business model not good Little input professionals
No financial agreements
No marketing sales interface
No internal agreements Low performance
28 5. Redesign
5.1 Design specifications:
In this paragraph the (re)design specifications will be outlined. The goal of the redesign is to provide an outline of a business model which is beneficial for a network group of independent professionals. An important element within the redesign is the redesign of the marketing and sales interface.
The design objective of this redesign is:
Redesign the business model and marketing and sales interface to increase the rate of business of and within the network group of professionals.
After the definition of the goal of the redesign the functional specifications need to be determined. In the book of Van Aken et al. (2009) the following specifications are being defined:
Functional requirements: The core elements of the redesign to make the business model successful.
User requirements: These are requirements concerning the functioning of the business model from the perspective of the user.
Boundary conditions: These requirements have to be fulfilled otherwise the model is not possible/successful.
Design restrictions: These are requirements concerning model itself. It is the preferred solution space.
In the table at the end of this paragraph the main specifications are being listed and classified among the four types of specifications as described earlier in this paragraph. The table is based on the interviews that are done with people who are involved in the network group. First a short summary of these interviews will be given.
Short summary interviews
For the design specifications, six interviews have been conducted with different people within the network group. Two interviews are done with the directors and founders of the network group. They stated that the recent business model of the network is not generating much business. They believe that this is caused by the network that is not offering clear products or services to the market. They are offering custom made products that are based on the wishes of the customers. But customers are not responding to this kind of products or services according to both directors. The network
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group with all the different professionals is not generating business and not commercial enough they stated. The new business model of the network group should be more commercial and generate more business in and for the network group. The directors want the network group to be smaller and intensive. Another important element that both directors are mentioning is to make financial agreements together when there is a customer or a lead. The final point both directors are willing in the new business model is that they can develop new products of services within the network group.
For the design specifications also a member of the network group is interviewed. He is an independent professional and is a labour lawyer. He is helping people when they are having conflicts with their employer. He is member of the network group from the start. He named the atmosphere and the informal contacts with the members are positive aspects of the business model. His main objection in the current model is that there is no business and not much money is generated. He believes that when the network group is going to develop together new products and services this will increase business. He also stated that financial agreements should be made between the members of the network group. An important element for him is that he keeps his independency and he don’t want to be in an formal enterprise like a BV of V.O.F. Sharing the costs of the marketing is not a problem for him when he can discuss the marketing tools the network group is going to use. He want to work together based on equality and therefore also the cost of the network group. Leaning on one company or professional is not the right way to do business together he stated.
The fourth interview was done with a female professional. She is a health and safety expert and helps employers and employees with this in their working environment. The positive points of the business model she refers to, are knowledge sharing during the meeting and discussing cases. A negative aspect is the fact that not everyone is actively participating in the network group to generate business, according to her. There are not much commercial professionals in the network group that are generating business. She thinks that there are different expectations about the network group among the members. In the new business model the focus should be more on sales and everyone should look in their network and customers for business for the network group. An important element that she mentioned is that in a network group together you can solve customer problems that you can’t do by yourself. She thinks that agreements should be made but not on a detailed level. Only some general agreements about the financial aspects is fine by her. She also wants to be independent and sees participating in the network group as a marketing tool for her company. According to the point of product and services developing she is not very enthusiastic. She only wants to do that after a quick check if the market wants that. She don’t want to develop something that cannot be sold to potential customers.
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The fifth interview was with female professional within the Revisie Groep. She is a career coach and is helping people who facing troubles in their career. She talks with people and is giving them support and advice. She thinks that the positive points of the business model are lying in the personal contacts with all the professionals. She finds it very interesting to talk with all this different expertise’s and learn from each other. She also thinks that the participation of some professionals can be improved. During the meetings some professionals are not delivering much input in the discussions she stated. In the new business model she wants that the input from all the professionals is the same. She thinks that also other professionals can sometimes organise the meetings so that they deliver more input. The aspect of sales is also important for her and she wants that to improve in the new business model
The last interview was done with also a female professional. She is a psychologist and helps people with troubles at work. She stated that the Revisie Groep is an unique concept for independent professional and very interesting for her to generate business. She stated that the focus can be more on generating business and leads for each other than on discussing cases and sharing knowledge. The meetings of the Revisie Groep could be different organised to achieve more business together and perhaps create interesting services together.
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Table design specifications
Specification type: Redesign specification:
Functional requirements 1. The key requirement of the redesign is to generate more business for and within the network group.
2. The redesign should keep the possibility open to develop products and services together.
3. The business model should allow the professionals to active participate in the network group.
User requirements 1. The redesign of the business model should be clear to all professionals and consider the interest of the different professionals. 2. The redesign should provide clear description of the marketing and sales interface.
3. The professionals want to work together in a open and informal atmosphere.
4. The redesign should provide a clear business model structure. The business model should provide clear financial agreements.
Boundary conditions 1. The professionals - also want to do their own marketing and sales. 2. For the professionals is it one of their marketing tools.
Design restrictions 1.The cost of the redesign must be divided amongst the professionals. 2.The network group does not have a office.
3.The professionals should keep their authenticity and do not want to create a formal enterprise such as a BV or V.O.F.
