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Center for Technology and Innovation Management
Working Paper Series
ISSN: 1667-738X
Working Paper No. 3305
The CeTIM Virtual Enterprise Lab A Living, Distributed, Collaboration Lab
Bernhard Katzy, Hermann Loeh Gordon Sung
CeTIM @ Uni Bw Munich, 85579 Neubiberg, Germany
Bernhard.Katzy@CeTIM.org,Hermann.Loeh@CeTIM.org,Gordon.Sung@CeTIM.org
http://www.cetim.org/wps
info@cetim.org
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Katzy, B.R., Loeh, H., Sung, G., CeTIM Virtual Enterprise Lab 2
Mission of the Working Paper Series
The working paper series of the Center for Technology and Innovation Management aims
at supporting the exchange of ideas and intermediate academic results in the field of
Technology and Innovation Management. Papers included in the Working Paper series
fulfil minimal formal standards only. They are not reviewed, and are not intended to
substitute proper journal publication. In contrast, the working paper is intended to
facilitate the academic process, which by its achievement shall lead to high quality
results.
Subscription:
Subscription to receive a copy of each issued working paper is possible with the editor.
Subscription is free of charge.
Authors Contributions:
Contributions are invited from all academics in the field of Technology and Innovation
Management, regardless of the affiliation of the researchers. Please contact the editor.
Editor:
Prof. Dr. Bernhard R. Katzy
Professor for Technology and Innovation Management
prof.Katzy@CeTIM.org
www.CeTIM.org/wps
Disclaimer:
Working papers are distributed to invite discussion on on-going research. This working
paper is not published and should be considered preliminary in nature. In especially, it
may be subject to revision. Accordingly, it should not be quoted nor the data referred to
without written consent of the author(s). Your comments are welcome and should be
directed to the author(s).
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Abstract
Virtual collaboration is becoming a relevant way of knowledge intensive working. The
paper argues for a distinct research approach to study the interdependence of technical
change and the emergence of new forms of organizing. Technology has advanced to
provide more powerful, richer and more integrated communication functionalities, which
now triggers change in working routines and organisational forms that are required to
make productive use of even further optimized technical possibilities. Our research
approach uses a living laboratory infrastructure to stimulate open innovation processes
for ICT applications and new working and management methods from their productive
application in a social context. It combines development of advanced information
technology applications with rigorous study of fundamental organizational and
management research questions. The paper describes how the Virtual Enterprise Lab
(VE-Lab) at CeTIM has been designed and which facilities it currently offers.
Keywords
Living laboratory, virtual collaboration, virtual enterprise, open innovation, user driven
innovation
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Introduction
Trends like globalisation, accelerating pace of change in markets and increasing
computer use do change how work needs to be organized for high productivity. Only
twenty-five years ago Abernathy & Utterback, (1978) assumed productivity to be
efficiency in operative processes and that therefore a firms focus on productivity gains
does inhibit its flexibility and ability to innovate. Abernathy observed that in the
automotive industry a firms economic decline was directly related to such productivity
efforts. He consequently suggested that a firms ability to compete needs to be
simultaneously rooted in its ability to increase efficiency and also in its ability toinnovative (Hage, 1999).
Flexibility and efficiency as the two far ends of a productivity trade-off for organizing
labour still dominates the discussion for example on the agile, virtual enterprise (Katzy &
Schuh, 1998; Mowshowitz, 1997). Experiments with new ways of organizing are
observable in many of todays highly competitive industries such as aeronautics,
telecommunication, IT and Media, but equally in service industries like finance or health
care. Terms like network organizations, project organizations, or program management
point to the fundamental organizational question how complementary resources can bemarshalled to jointly achieve results (Barnard, 1938). Airbus is one example how such
organizational forms span traditional boundaries and geographies to achieve results
which are bigger than each of the partners could achieve individually. (Figure 1)
FRANCE- Centre Wing Box- Nose Fuselage- Nose LG Bay- Engine Mounts- Sponsons- Rudder- Wing-Fuselage Fairing- Cockpit Furnishing- Ramp
GERMANY- Wing Panels
- Centre Fuselage- Fuselage Furnishing- Pre-FAL- Vertical Tail Plane Box & Assembly- Flaps (with Airbus-UK & FLABEL)- 30% Rear Fuselage - Assembly- 50% Rear Fuselage - Components- Cargo Door
AIRBUS UK- Outer Wing Box- Flaps (with Airbus-GE & FLABEL)
EADS-CASA- Final Assembly Line- HorizantalTail Plane- Engine Nacelle- Flap Track Fairings- VTP Leading & Trailing Edges- Elevators
FLABEL- Wing Leading Edge- Flaps (with Airbus-GE and Airbus-UK)- Flap Track & Mechanism- Main LG Doors
TAI- Forward Centre Fuselage- Tail Cone & top shell on rear fuselage- Paratroop Doors & Hatch Door- Ailerons & Spoilers
A400M Strategic Workshare
Airbus MilitaryPrime Contractor AIRBUS France
EADS France
AIRBUS Germany
EADS Germany
Figure 1: Virtual Enterprise of Airbus[Source: DASA 1998]
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Productivity is the ratio of outcome achieved to input needed. Where the nominator is
fixed as a market defines standards for the outcome, productivity turns into a measure for
the denominator as how effectively work is organized and coordinated between the
collaborating partners. And when the requested outcome changes, productivity turns into
a measure how fast and how well the organization can adapt and fit its relevant
environment. In other words, organizational architecture is a choice to be made to
achieve productivity (Katzy & Sung, 2005). Traditionally there have been two major
alternatives of coordination either through market mechanism between firms or - if
transaction costs become too high - through hierarchy inside the firm, where work is
managed through supervision. The term virtual enterprise in the name of the Lab
indicates that it is designed to search for new organizational architectures with better
productivity for collaboration across firm boundaries.
Obviously, encompassing information and communication technology systems (ICT)
bring about a whole new range of collaboration and coordination mechanism through
easy access to geographically distributed information as well as people. It is the working
hypothesis of the here described research approach that new working practices can go
beyond the foreseeable advantages of adopting ICT technologies to automate existing
working practices. Rather, new technology can be expected to trigger processes of social
dynamics and structuring and thus re-structuring of the social system, which changes
individual behaviour, working norms and governance structures (Giddens, 1979).
The living laboratory is intended to serve as an experimentation and testing platform for
collaborative work that is enabled by the use of ICT. The lab shall give room for social
restructuring processes to unfold and therefore is not a physical room in the sense of e.g.
a chemistry laboratory. Instead it is a technical infrastructure and organizational platform
that allows experimenting new working processes and routines under changing
collaborative settings. State-of-the-art ICT technologies are set-up to stimulate the
emergence of new work routines from which in turn user requirements for further
enhanced ICT technologies are derived that again allow different working routines. As a
Living-Lab, experimentation is not separated from real life organizing, governance of
projects and teams, and the organization or networks of partners. Rapid feedback cycles
stimulate the user-driven innovation process (Hippel, 2005; Morrison, Roberts, & Hippel,
2000). However, fundamental academic research complements the applied dimension in
order to achieve theoretical progress as solid foundation for new work. The living
laboratory research is thus positioned with Pasteurs fundamental-applied research
(Stokes, 1996).
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Enhanced
Theory
BetterExperience
[Donald E. Stokes, 1996]
Fundamental Research
Bohr
Applied Research
Edison
Todays
Theory
VE-Lab
Living Laboratory forFundamental-applied
Research
Pasteur
Todays
Experience
Figure 2 : Research positioning of VE-Lab
The objective of this paper is to present the concepts that guided the design of the lab, its
current settings and facilities. The remainder of the paper is structured as follows: we will
first elaborate on the term Living -Laboratory by reviewing existing definitions in the
literature. We will then turn to future scenarios of collaborative working which we
developed to guide the development of the Living-Laboratory. We will complete the
paper with a summary of the technical concepts including the physical layouts of thelaboratory and equipment for virtual collaboration.
What is the Living Laboratory Approach at VE-Lab?
The term Living Laboratory comes with multiple connotations. It is becoming
increasingly popular for a broad range of scientific settings that range from large gardens
or agricultural areas like the Selman Living Laboratory, to specially fitted flats that offer
the possibility to observe inhabitants with multiple sensors in the MIT PlaceLab, to open
mass user experiments in the Botnia Living Lab and the MobileCity Bremen. The VE-
Lab shares with the above cited labs that it is used for longitudinal experiments in as
much real-life settings as possible.
Fundamental research at VE-Lab focuses on longitudinal work studies and organizational
(psychological) experiments. Mainstream analytical experiment methodologies focus on
the test of a small number of variables with control of all other parameters to allow for a
good statistical sampling and the isolation of the impact of each individual factor. Instead,
the real-life settings of the living lab target the interdependence of multiple influences
over time, which affect individual behaviour and labour skills, working routines on teamlevel and overall coordination of the organization. Typical VE-Lab research settings are
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thus operated as one large experiment, with the objective to observe new pattern of work
and organizing that emerge from changed behaviour of those who use the VE-Lab for
their work and over time get accustomed to its advanced technical infrastructure and
changed organizational structures.
The contribution of the VE-Lab is to provide possible scenarios of how collaborative
work could look like 10 or 20 years ahead. Fundamental research allows understanding
through concept development and reflection the wanted and not wanted effects of such
developments. The purpose of living lab experimentation is to use the full social setting
for observation and to establish new concepts and theories.
More application oriented research strives for quick conceptual learning cycles from fast
and direct feedback by the participants and their involvement in user-driven iterative
cycles of technology development (Hippel, 2005; Morrison, Roberts, & Hippel, 2000).
The role of VE-Lab in this process is to provide a common platform for technology users
and technology developers and facilitate direct cooperation between the two.
However, the better this user driven process works, the larger is a tendency to develop
idiosyncratic solutions for individual users, not general insights and results. In order to
avoid this shortcoming, VE-Lab will combine the three research methods, user driveninnovation experiments with external validation experiments and organizational change
experiments:
User driven innovation experiments: researchers and experimenters bring
typical business scenarios into the setting of VE-Lab. For example, product
development teams exercise working routines like project planning, brainstorming
and concept development, or distributed project meetings. They change their ways
of working. Technology providers customize information systems to the changing
needs of the experimenters until a mature situation of productive working hasbeen reached. A number of prototypes and pilot versions of software applications
are made available within VE-Lab by technology providers who derive insights
for their development roadmaps from these early application test experiments.
External validation experiments: Conceptual insights and explorative theories
need to be generalized from the specific settings of VE-Lab to general explanation
of a broad range of organizational situations. A second research step therefore is
empirical studies of organizations that are not related to VE- Lab to verify the
concepts and theories that resulted from the user driven innovation process. Next
to the development of well founded research insights, these studies are equally
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meant to provide feedback for the further development of VE-Lab and its
installations.
Longitudinal organizational change experiments: Not only different ways of
working and organizing as they are developed in the VE-Lab are relevant objects
of study. The third type of study focuses on organizational transformation
processes of how organizations implement the new organizational forms and how
their members adopt appropriate working routines and individual skills. Such
studies will use the Lab infrastructure over a prolonged period of time both
locally on campus and remotely as training environment. Application and
information services can be provided into the users host organization. Such
design provides the chance to collect detailed data for an evolutionary perspective,
e.g. how do project members change their behaviour over time due to higher
proficiency in the use of the new ICT.
A further dimension of the Living-Laboratory approach is the application of both the
technologies and the organizational concepts of the virtual enterprise at the research
institute CeTIM in its research operations as part of a continuous self-trial. To this end,
CeTIM lives in the laboratory. Its roughly 25 members have culturally diverse
backgrounds with more than six different native languages and nationalities, are
geographical distributed across five countries and are distributed in affiliation with some
members being at the same time also members of other organisations. Most CeTIM
projects and activities are undertaken in collaboration with other academic and industrial
partners. CeTIM does not have any fall-back systems or an alternative operative
infrastructure to its VE-Lab infrastructure. The experimenters thus regularly work in
advanced cases of virtual organisations to develop first hand understanding of the
technological possibilities as well as the practical and social challenges.
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Figure 3 : Federated working principle of CeTIM
Virtual Enterprise Scenarios
The design of the VE-Lab has been based on scenarios of virtual enterprises (Katzy, Loeh
& Zhang, 2004). The scenarios were established in a scenario development process
through literature research, review of software concepts and designs, and user workshops.
Insights were condensed to three complementary scenarios of future organisations as a
global networked firm, regional cluster and enterprise networks, and professional
communities (Figure 4).
Service
provision
Regional clustersand enterprise
networks
Professional
communities
Global Networked Firm
Figure 4 : Guiding Scenarios of Virtual Organising
In the global networked firm scenario, large global groups will offer global branding,
marketing and sales and global distribution channels. Their main business model is based
on organising global coordination infrastructures that allow high degrees of functional
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outsourcing. Smaller firms and individuals operate in regional networks as suppliers to
the global groups. Flexible project oriented teams or mixed service team will be
supported through highly automated, standardized processing systems. Literature presents
Dell, Cisco or Nike as role-models of such global firms.
The regional network scenario is strongly driven by business architects, entrepreneurial
brokers who identify market opportunities and develop business models for each business
case that brings a set of network partners together. In a matching process skills and
resources are configured on a project basis to fulfil the specific business needs.
Collaboration web portals and real-time communication systems will be typical ICT tools
for supporting project activities within the network. Wireless Leiden and Virtual Factory
are role models of such kind of regional network.
The professional community scenario emerges from the rapidly increasing number of
independent knowledge workers, experts and small teams that provide highly specialised
and flexible services to regional networks and global firms. The organisation of such
communities will very much be membership driven with specific rules and working
practices that members adopt and the development of authority amongst the peers which
is based on merits and seniority of the members.
Each scenario incorporates a set of strong trends. We do not expect future industrial
organizations to follow any one of the scenarios in its pure form. The intention rather is
to help understand future developments from combining elements of all three organising
scenarios.
Technical design principles and facilities of the VE-Lab
The VE-lab is distinct because it is designed to study selected key features of virtual
organizations, which we summarize as the technical design principles: federation, robustconnectivity, concurrency, virtual presence, and low-cost:
Federation describes controlled collaboration amongst entities in the network, which
maintain a degree of autonomy even when they are integrated to serve common and
shared objectives. The VE-Lab architecture (Figure 5) is therefore not designed as
integrated enterprise architecture, but on the basis of a federated service architecture i.e.
there is no centralisation or hierarchy of systems and locations, but systems can route
information flexibly corresponding to the changing organisational set-up. While many
current systems are still influenced by the single-company, hierarchical structure, all newsystems implemented at VE-Lab support the federated design principle.
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MicrosoftExchange
Server
SIEMENS-MicrosoftOpenscape Presence-
Based Real TimeCommunication server
ArelConferencing
Server
VE-forum
Server
Microsoft
ExchangeOutlook
Microsoft
WindowsMessenger
SIEMENS
VoIP
Arelvideo/audio/data
conferencing
VE-forum
Collaborationwork space
Siemens Huskyasynchronous Data
Microsoft .NetApplication
SIEMENS OpenscapeSynchronous Voice
Figure 5 : Federated IT Architecture of VE-Lab
Robust connectivity How effective a virtual enterprise can operate very much depends
on how well the collaborating entities are connected. Robust connectivity describes the
concept that organizations can learn to live with different degrees of network availability.
For the purpose of experimenting a range of different networks are available at VE-Lab.
On the one extreme VE-Lab uses the unsecured open-source regional wireless network of
Wireless Leiden. It is one of the largest outdoor WiFi-networks in the world with over
fifty network nodes that cover the whole region around Leiden in Netherlands with about
200.000 inhabitants. On the other extreme VE-Lab at the University BW Munich isconnected via highly secured high-speed fibre connection. Intermediate connections
include ISDN and 128/768 kBit DSL connections, as well as mobile GPRS and UMTS
connectivity. The aim of providing such range of different connectivity is a feasibility test
of distributed virtual collaboration of entities that are connected through different types of
commercially available or prototyped infrastructures. For the time being we expect
conditions of changing prices and availability and reliability of networks to persist.
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Figure 6: Connectivity through Open Source WIFI Networks of Wireless Leiden
Concurrency describes the possibility of synchronous collaborative activities at
distributed locations with real-time interaction. VE-Lab offers various technologies and
modules for real-time communication such as Skype, MS Messenger, the Arel Life
Communication Platform for data, voice, and video conferencing system, and the
Siemens OpenScape VoIP communication platform.
Figure 7 : Example of real time presence in multimedia conferencing
Virtual presence transfers the organisational principles of collocation, visibility and ad-
hoc exchange to the virtual space. Individuals can collaborate on the basis of availability
and connectivity rather than where they are or what devices they use. Technically,
presence-based communication (Figure 7, left side) is based on detecting seamlessly the
best communication channel and routing intelligently and transparently for example
telephone calls or other real-time interactions to the appropriate device. It is the aim to
allow studies on how virtual presence mechanisms can replace traditional organizational
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concepts that are based on location, for example in building trust, social cohesion, or
coordination.
Low cost of ICT systems is another important design principle that ensures that all
technologies of the VE-Lab are affordable for small and medium sized companies and
professionals. Therefore, business models for setting up and providing collaboration
infrastructures are of concern.
Physical Locations of the VE-Lab
The VE-Lab provides physical locations in Munich (D), Leiden (NL) and Fribourg (CH)to experiment the different scenarios of collaboration between individuals and groups.
Figure 8: VE-Lab Munich building layout
Rooms are designed by zones that support different collaboration needs:
configurable individual working zones (blue areas)
group meeting rooms, which are each equipped with (yellow areas)
o Two electronic interactive white boards each
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o Video, audio, and data conferencing clients, and a suite of collaborative
tools
o Professional web-based group video conferencing and room microphone
and speaker
Computer and servers rooms (red areas)
Social and informal idea exchange zones (green areas)
Conclusion
We designed the VE-Lab as a living lab for fundamental research in distributed and
virtual collaboration. It is based on an open architecture for experimentation and
development. The Lab accommodates collaborative research projects and is supported
and used by the research institute CeTIM as well as its academic and corporate partners.
Current research projects focus on the following research questions:
What are drivers for productivity of information workers?
What skill profile leads to personal effectiveness of project leaders in virtual
projects?
What dynamic capabilities drive productivity of collaborative product
development of tiered supplier networks?
References
Abernathy, J. M., & Utterback, W. J. 1978. Patterns of industrial innovatoin. Tech. Rev.: 40-47.
Barnard, C. 1938. The functions of the executive: Harverd University Press.
Giddens, A. 1979. Central Problems in Social Theory: Action, Structure and Contradiction in Social analysis.
Berkeley, CA,: University of California Press.
Hage, J. T. 1999. Organisational Innovation and Organisational Change. Annu. Rev. Sociol: 597-622.
Hippel, E. V. 2005. The future of innovation: The rise of the creative consumer, Economist.
Katzy, B. R., & Schuh, G. 1998. The Virtual Enterprise. In A. Molina, J. M. Sanchez, & A. Kusiak (Eds.),
Handbook of Life Cycle Engineering: Concepts, Methods and Tools: 59-92. Dordrecht: Kluwer
Academic Publishers.
Katzy, B.R., Loeh, H., & Zhang, C. 2004. Virtual Organising Scenarios. In. L. Camarinha-Matos & H.
Afsarmanesh (Eds.), Collaborative Networked Organizations: 27-40. Dordrecht: Kluwer Academic
Publishers.
Katzy, B. R., & Sung, G. 2005. Engineering Productivity and Collaboration Systems-A Review of Six YearsResearch at the International Concurrent Enterprising (ICE) Conference. Paper presented at the 11th
International Conference on Concurrent Enterprising, Munich, Germany.
Morrison, P. D., Roberts, J. H., & Hippel, E. V. 2000. Determinants of User Innovation and Innovation
Sharing in a Local Market. Management Science, 46(12): 1513-1527.
Mowshowitz, A. 1997. Virtual Organization. Communications of the ACM, 40(9): 30-37.Stokes, D. E. 1996. Pasteur's Quadrant: Basic Science and Technological Innovation: Brookings Institution
Press.
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Recent CeTIM Working Papers
3305: Katzy, B. R, Loeh, H., Sung, G., The CeTIM Virtual Enterprise Lab A living,
Distributed, Collaboration Lab
3205: Loeh, H., Concurrent Product Development and New Communication
Technology A Research Framework
3105: Katzy, B. R., Sung, G., Engineeting Productivity and Collaboration Systems
A review of Six Years Research at the International Concurrent Enterprise (ICE)
Conference
3005: Katzy, B. R., How to Make Innovation Happen?
2905: Dissel, M., Verwijs, C., Sales Communities: A Dynamic Capability Perspective
on Community Routines
2805: Katzy, B. R., Ma, X., top-management commitment in corporate change
programs
2704: Katzy, B. R., Zhang, C., Loeh, H., Reference Models for Virtual Organizations
2604: Loeh, H., Zhang, C., Katzy, B., Modeling for Virtual Organizations
2504: Katzy, B. R. Van den Hoven, J., Igl, G., In PrincipleTowards an Open
Architecture for eGovernment Identity Management
2404: Katzy, B. R., Sung, G., Serrano, C., Managing Virtual Projects: A Benchmark
Study of collaboration Tools
2304: Dissel, M., Katzy, B. R. Managing Complex Product Innovations in Dynamic
Environments: A Case from the Telecommunications Equipment Manufacturing
Industry
2204: Katzy, B. R., Marcel, D., Integrating Research Methodologies in Managing of
Technology: Getting the Best o Both Worlds?
For earlier paper and full reference please refer to www.CeTIM.org/wps.
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