Below, the pattern "Integrator" is analyzed based on co-occurrence, in order to get insights into how this business model pattern is applied in combination with other patterns within the firms we studied.
Integrative Model
With an Integrative Business Model, the focus broadens to complete integration of multiple programs and services in order to improve customer service, increase participation, and support data-driven policy and decision making. In addition, the mission and operating model of the organization is supporting a shift to whole-person and family centric service design. Strategically and operationally, the enterprise bolsters family centric outcomes through seamless, cross-boundary collaboration. Information technologies support enterprise-wide back-office processes, as well as front-office innovations such as individualized client services focused on self-sufficiency, improved health outcomes, and social inclusion.
Diagnostic Metrics & Checkpoints:
- Outcomes & Impact Design: The enterprise is activating an outcomes model that connects desired impact to overall community priorities and expands the focus to include cross-agency outcomes, metrics, and real-time situational awareness.
- Organizational & Practice Design: The enterprise is establishing new governance structures, management and operating processes, and data and analytics that focus on and help employees support and drive customer-focused outcome goals.
- Systems & Technology Design: The enterprise is implementing an integrated, single-view system for case management across programs and organizations and enabling service collaboration and outcome tracking by customer and by aggregate.
Look to the State of Ohio, New York City and Spain for prime examples of the move to an Integrative Business Model. In all three places human services systems faced similar challenges - skyrocketing demand and spending, silo-based services, and cumbersome technology – all of which led to suboptimal outcomes and value. In Ohio the Office of Health Transformation was established to oversee strategic planning and budgets on key initiatives including modernizing Medicaid, streamlining health and human services, and engaging non-profit and private sector partners. A key strategy was integrating state and local silos into an 11-agency Health and Human Services Cabinet that publishes an integrative health budget. As a result, an outcomes-oriented mission has taken hold, with local health districts utilizing shared services and creating health plans by region, officials utilizing data and analytics to shape policy, and sectors working together to track performance measures.
Spain has moved to increase human services collaboration and integration in order to respond to the surge in demands from the lingering financial crisis. The reform plan touches the entirety of public administration, and brings forward a new vision and model for the Spanish welfare system – one that is more integrated and efficient, more sustainable and outcomes-oriented, and more responsive to citizen needs. Spain’s strategies include increasing coordination and integration across all administrative levels to reduce duplicities, using analytics and technology to evaluate public policies, and squeezing savings out of the integration of health and welfare services. Since 2008, Spain’s efforts have saved more than $21 billion (Euros).
For their move to integration, New York City health and human services (HHS) officials focused on performance management and data analytics by launching HHS Connect, a system integrating 35 programs across 15 agencies. A new outcomes model represents HHS Connect priorities, impacted client groups, and outcomes, and is used for every HHS initiative. Today, each initiative must pay for itself through measurable outcomes and metrics such as savings, reduced headcount, or greater productivity. In addition, citizens get a one-stop online shop for multiple program eligibility and online benefits access, and a worker portal allows staff to see metrics and analysis across agencies.
https://lnwprogram.org/
The 3 business integration models: Horizontal, Vertical, and Matrix
Summary : Of the three business integration models: Horizontal, Vertical, and Matrix, matrix is the most powerful but also the most difficult to execute... The matrix integration model is new. Samsung has built it. With it, Samsung has accomplished a major innovation in business infrastructure models.
Of the three business integration models: Horizontal, Vertical, and Matrix, matrix is the most powerful but also the most difficult to execute.
The matrix integration model is new, so don’t be surprised if you haven’t heard it before. I named it to put a label on the business structure Samsung has built. With it, Samsung has accomplished a major innovation in business infrastructure models. Before we get to that, a few definitional notes are in order. The horizontal and vertical integrations are well known and generally provide a better defensive position than being in a single market.
The horizontally integrated business model is perhaps the oldest known. It is a method where your business focuses on a single customer class and moves horizontally outward along a single link in the supply chain to provide complementary products to that customer class. Grocery and Department Stores are probably the earliest models in this class, which evolved out of street markets in the 19th century.
Customers come to the horizontal company for the convenience of one-stop shopping and the brand promise of consistent quality and delivery. In the era of mail order, Sears & Roebuck rose by being a brand you could trust. Suppliers hand over sales responsibility to the horizontal model because that’s where the customers are and it allows them to focus on making their product, while outsourcing the task of selling. The horizontally integrated company benefits because moving horizontally unlocks margins trapped in competitive suppliers, which are pushed down a tier in the supply chain.
Applied Materials, KLA-Tencor, and Tokyo Electron are good examples of horizontally integrated tech companies. Both were built on the basis of a good product and then branched out horizontally with more solutions, as they became brands you could trust. Like someone in the nineteenth-century West ordering from a distant Sears, the semiconductor industry encountered the same trust issues as it went global in the nineties. Hence the rise of Applied, KT, TEL, and others.
Mike Splinter took the horizontal model even further at Applied by using the company’s core technology to expand horizontally into new customer bases, such as Solar PV. This is risky, because a company needs to build a new sales and marketing front-end structured to build the deep customer relationships for sustainable business. The technology is the easy part. The risk is that either you fail in the new market or that success comes at the cost of failure in your existing market. So, you only have a one-in-three probability of success. Mike managed to accomplish the move without dropping one for the other. One could argue that Applied had already moved horizontally outside to displays, but there was a difference: it was Applied’s same customers who had shifted over to the display sides of their business to solve defect issues. They then pulled Applied in, making it a tactical, not strategic, move. In contrast, the move to Solar PV was very strategic and required Applied to build entirely new relationships.
But while the horizontal model unlocks margin traps to each side, it leaves traps vertically above and below in the supply chain. The advantage of this is that customers and suppliers will not see the horizontal company as a competitive threat. While they could see it as a threat to margins, the benefits and efficiencies gained by working with a horizontally organized company typically outweigh any threat. The latter is because the primary profit advantage of the horizontal company is in pricing and negotiation. If one product line is threatened by a competitor or lower demand the horizontally organized company can respond with lower prices, using profits from stronger products to offset the variance. It can also do the reverse when conditions are the opposite. It uses open horizontal lines to strengthen weak points along the line, giving it a strong unified front. As a result, horizontal competitors are typically known as ruthless negotiators, because of their monopsonistic position. Wal-Mart is a primary example of this.
The vertically integrated business model is more modern, evolving in the early twentieth century, most notably at the Ford Motor Company. At its height of vertical integration Ford processed sand into windshield glass and iron ore into steel. The classic example of vertical integration in technology is IBM, which ruled the computing market for most of the twentieth century. With it, vertical margin traps are eliminated, but horizontal ones remain with competitors. The vertically integrated company competes horizontally. For it, strategic and tactical advantage in the product are critical core strengths. It is price agnostic up and down the supply chain, since there are no vertical margin traps.
Customers come to the vertical company for its expertise and consistency of service and supply. In the era of the big mainframe, computers were expensive corporate investments in which companies had little internal experience. Switching often resulted in what was called a ‘forklift upgrade,’ because it took a forklift to remove the old computer and put in the new one. These were complex and painful transitions. IBM, with its control of the supply chain, could be trusted to make a computer transition as risk free as possible. Moreover, IBM could be trusted to service it quickly and always have spares readily available so capital was not trapped with lots of downtime. They were so trusted that it became common to hear the phrase, “nobody ever got fired for buying an IBM.” More recently, IBM reinvented itself by transitioning the vertical model to the IT services sector.
The semiconductor equipment business was once highly integrated vertically and even part of the semiconductor industry itself. It did not stay that way because few equipment companies had the unit volumes to get to the economies of scale needed for an efficient vertical model. In the case of the semiconductor industry, even design and manufacturing broke away into that fabless and foundry sectors.
The Matrix Integration Business Model combines both vertical and horizontal integration vectors. It pushes the margin traps to the outside of its vectors, forming strong defensive fronts that become like fortress walls.
The advantage of the Matrix Integration Business Model is that it can use interior lines of profit direction to focus resources on the hottest areas of competition and/or opportunity. Product development and partnering are the most critical core strengths for this model. The reason is that competitors, customers, and suppliers will all see you as a competitive threat. So you need a strong core technical strength and the partnering skills to convince both customers and suppliers that while you compete with them, it’s worth their while – and even necessary – to partner with you.
Samsung developed this model by using their IC core manufacturing strength to focus product development outward. They were once Nokia’s largest subcontractor for cell phone manufacturing. When Nokia abandoned them, they had developed the ability to successfully enter the handset business at the low end. They then levered this entry point all the way to smartphones. Working with Apple to supply flash and foundry ICs, they were able to respond to the emergent tablet market far faster than other electronics companies.
At this writing, two-fifths of Samsung’s workforce is workforce dedicated to R&D. They have extremely high RoR (Return on Research), leveraging both internal and external innovation sources. By 2010, they were second only to IBM in patents registered that year.
The Matrix Integration Business Model is still too new to know if it will stand the test of time. Most never thought Samsung would be able to pull it off in the first place because of the unwritten 20th century rule that you never compete with your customer. But this is the 21st century and the rules of partnering are far more complex and political. It’s very much like renaissance Italy, in which Machiavellian principles and relationships are the rule of the day. If the world changes, Samsung could find itself against a strategic alliance much like Napoleon did, as the fragmented royalties of the continent were aligned by Britain against him.
By G Dan Hutcheson https://www.chiphistory.org/
What are Business Integration Models? | Examples of business integration models
What is Business Integration?
Business integration refers to all the linkages that exist between various activities and processes of a company in such a way that value is added. In a nutshell, business integration models are those management accounting tools that enables business managers to link various activities and processes of an organization for maximum productivity.
A chef for example mixes different ingredients to make delicious meal that we all eat and lick our fingers. Same applies in business settings where business integrator scientifically connects different components of a business into a functional profitable venture.
A lot of people tend to view business integration as all about IT just as many people see Accounting Information System as purely ICT activities. Information technology is only a tool used in the arsenal of tools that helps a business achieve business integration and not an end on its own.
Our aim today in this post is to discuss the available business integration models and how a small business can effectively utilize them for optimum benefits.
We will be discussing the two most popular business integration models that any enterprise can easily adopt.
Types of Business Integration Model
The two common business integration models are McKinsey’s 7s and Porter’s value chain. These are briefly discussed in the following sections of this write up.
What is McKinsey’s 7s?
McKinsey is a management consulting company that have been around since 1920s. McKinsey’s 7s framework is a management model that was developed by two McKinsey’s employees in late 1970s. For a business to function seamlessly, all 7 components of the 7s must aligned and mutually reinforcing.
The focus of this framework when it was introduced was to boost structure in a firm but events of reality has overtaken this idea and this framework is now more suited to coordinating things which is same as integrating different business processes.
The McKinsey’s 7s provides a framework of linking people, operations, strategy and technology with the sole aim of pushing towards organizational goal. The 7s of McKinsey is classified into two broad groups – The Hard and Soft Factors
Hard factors
Hard factors or elements are those things that are easy to be identified by the management accountant and are easily influenced by the management.
Strategy: a strategy is simply how things are/or should be done in order to achieve competitive advantage. Strategy is made or broken at the operational level. Strategy is a major component of this business integration model; this is so because companies will be floating aimlessly without a proper strategy.
Strategy links to other components of the business integration model is such a way that no one is in doubt of what the strategy of the business is.
Systems: these are formal often documented procedures for performance appraisal including employee reward system. They are tools and technical infrastructures that go a long way in helping employees achieve their potentials. Here, linkages should be established between systems like linking the purchase system with the finance system for example. Good examples of systems are contained in Management Accounting Control Systems. A company can also establish a link between procurement and quality management system.
Structure: this is the organizational and reporting structure of an entry. It deals with how departments are set up to ensure that the business as whole is fully integrated. Reporting should be made in such a way that value is added to the receiving department or individual.
Soft factors
Soft factors are those intangible hard to quantify important facets of the model that must be handles with care in order to achieve desired business integration. Four of such factors are identified within McKinsey’s framework.
Shared value: this is the hub of events that influences all other factors. It is the culture and norms of an organization. Shared values reflect the belief of a company and have a direct link to the mission and vision statement of an organization.
Staff: here, emphasis is on talent management. Staff members have to be optimally motivated. By optimal motivation, we mean not spending too much to get the best out of your staff.
Skills: the organizations ability to do things well. Skills reflect on the overall performance of the going concern. Skills ensure that technology for example is used to crate and add value to the bottom-line of a company.
Style: the way that top officers in the organization chooses to run the business. The nature and industry that a business is in will determine what management style it should adopt. What matters is that whichever management style that is adopted should be able to ensure goal congruence.
What is Value chain model?
Porter’s Value Chain model is a sophisticated model of business integration that aims to reduce non value adding activities. It looks at how business activities and processes are organized with the sole aim of finding and eliminating redundancies. This could be likened to Six Sigma which has proven its worth and has taken the center stage.
The value chain model views a business as series of interlinked activities and processes rather than sets of independent departments. The central theme of Porter’s value chain model is that each activity within an organization should add value (make product as cheap as possible) to products and services passing through it so that positive customer experience will be guaranteed.
Porter categorizes processes into two main groups as: Primary and Secondary.
The primary activities include: Inbound logistics, Operation, Outbound logistics, Sales & Marketing, and after sales service
While the secondary activities are: Procurement (which in my opinion should be a primary activity), Technology development, Human Resource Management, and Firm Infrastructure.
These headings in the value chain model are self explained so I will not make this article longer by explaining them. However, I need to point out that Swim lane that exist between each of these activities should be reduced to the barest minimum so as to ensure seamless integration of things.
Conclusion
How one views a business integration does not really matter. What matters is that business processes are linked in the most effective, efficient and economic way for the sole purpose of achieving organizational goal. When combined with the potency of management accounting control system, business integration model delivers above and beyond results for the organization. Anything short of this is not a business integration model.
https://accountantnextdoor.com/
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