1. HAMK University of Applied Sciences seppo.niittymaki@hamk.fi
Performance measurement in business networks; TOWARDS MANAGEMENT AND LEADERSHIP MODELS FOR RUSSIAN BUSINESS NETWORKS.
Seppo Niittymäki
HAMK University of Applied Sciences
In detail:
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

2. Research Questions, Approach and Research Methods
1. What are the main features of management and leadership models and Performance Measurement Indicators (PMI) used at present in Finland ?
2. How should these models and PMI be adjusted to Finnish Companies in Russian business environment?
3. Constructive approach.
4. In STROI Network project both qualitative and quantitative methods were applied, 129 interviews were reported and 64 answers for quantitative questionnaires were received. Selected quotes of interviews and answers for surveys are used in this presentation.
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

3. Different Approaches of Research in STROI Network Project
Finnish
researchers`
approach
3. Joint
approach:
Triangulation
Qualitative
Constructive
Approach
Constructive
Approach
Business
Practices
Quantitative
2. Russian
researchers`
approach
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

4. The development trends in performance measurement (Kulmala and Lönnqvist, 2006).
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

5. Uniqueness of the Russian Market (Basic comments by Prof
Uniqueness of the Russian Market (Basic comments by Prof. Alex Settles (ASe), HSE Moscow, additional comments by the author and other experts mentioned.
Different motivations (ASe)
Company Rautaruukki: Bonus motivates more in Russia
Differing traditions in management both Soviet and post-Soviet (ASe)
Prof. Olga Tretyak: Power shrinks, when costs are saved ...no tradition in cost saving
Russian tradition of authoritative leadership equaling “effective” leadership (ASe)
Naulapää (2000) and company NCC`s experience
Lack of team building tradition – hampers network formation
Konecranes interview, “why they don`t ask neighboring room instead of calling Finland”
Extensive informal networks
positive and negative aspects for firm
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

6. Cultural differences between Finland and Russia (Sources: www
Cultural differences between Finland and Russia (Sources: and Russian researchers Yu&N. Latov (2003) and A.Nautov (1996), which are presented with white arrows according to Filinov et al 2009)
PDI, Power Distance
IDV, Individualism
MAS, Masculinity
UAI, Uncertainity Avoidance
LTO , Long Term Orientation N/A
White Arrows: Score results
given by Russian
researchers according to
analysis of their own.
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

7. Russian Finns Direction of future development
Management and Leadership styles in Finnish-Russian Business Networks according to authors experience and interviews (Expressed as an application of Blake& Mouton -model) Source for basic model: (Nov 19, 2009)
LEADERSHIP OF NETWORKS: CONCERN FOR PEOPLE
Country club,
relations
most
important
No efforts to people
Network leader
Direction of
future development
Russian
Middle of the Road (Politician)
Finns
Erikoinen tarjousneuvottelu:
“Olin kerran sopimusneuvottelussa johon oli kutsuttu minun lisäkseni myös kilpailija. Kilpailijani lupasi kaikenlaista hyvää halvan tarjouksen päälle. Tilaaja kuunteli kohteliaasti ja lupasi harkita asiaa. Kun kilpailija oli poistunut minulta hyvältä kumppanilta kysyttiin mitä tarjoan vielä tämän päälle, jotta kauppa olisi sinun?”
Lähde: haastattelu, Marina Weck 2009
MANAGEMENT OF NETWORKS: CONCERN FOR TASK
No efforts to tasks
Authoritarian style; money talks
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

8. Topologies of Business Networks (VTT)
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

9. STROI project perspectives: Main success factors
Networked company’s main targets for business in Russia
Trust-building in inter-organizational relationships; Supplier/
Customer relationships management
Performance Measurement in the networked company; PM in the network
P1: Business sector for a networked company
P2: Common vision of the network
Description of the business network
P6:
Measuring network performance
P3: Competence of human resource
Development relationships in the network; HRM in Russia and Finland
P4:
Internal development
Working environment (Learning organization); Network growth; Decision-making in a networked company
P5: Customer orientation and marketing
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

10. Balanced Score Card -structure of the Stroi Network -project
Business Sector
Vision of the Business Network
Customers
Internal processes
Finance
Learning and growth
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

11. 3) The Network Score Card (NSC) approach (Järvenpää, 2009)
Financial indicators (growth, profitability, network value)
Customer perspective
(Efficiency, flexibility, productivity, innovation, learning, etc.)
Network processes
Network’s operating models
(control)
Network culture (trust, community, interaction)
Network resources (e.g., know-how, relationships)
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

12. Main aspects of the network performance measurement (Sivadasan et al
Main aspects of the network performance measurement (Sivadasan et al., 2002; Westphal et al., 2004)
Reliability of the partners
Flexibility or the ability to respond adequately to a changing environment
Commitment to the network
Measuring whether materials, information or resources are delivered in the agreed cost, quantity, quality and time. There are also trust-related aspects of reliability, such as keeping information confidential when agreed, and no advantage is taken of the partners’ problems.
Measuring information and knowledge sharing, decision synchronization and incentive alignment among members of the network
Identifying the ability of network members to absorb problems of other partners, and coping with them
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

13. From Balanced Score Card (BSC) to Network Score Card (NSC)
Business Sector
Vision of Business Network
In Finland: purchasing department
Russia: gifts and services
Customer
In Finland: competition
Russia: relationships
BSC
NSC
Network
processes
Finance
Internal processes
Networks operating
models
Learning and
growth
Network
Resources
Network
Culture
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

14. A Model for Planning and Implementing Strategy in Project Business
PESTE
Forecasts
Targets
P1:
Business
Sector
Performance
P6:
Finance
Sector
Scenario
Country
P5:
Customer
orientation
P2:
Network
Vision
P4:
Internal
development
P3: Human
Resources
Measurement
Demand
Indicator
Indicators
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

15. Common Dimensions of Performance Measurement
P1: Business sector
P2: NW Vision
P6: Finance
P5: Customer
P4: Development
P3: Human resources
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

16. Six most important factors for each perspective
Six most important factors for each perspective to be measured can be identified from these results: 1) Company reputation (2), 2) staff turnover (6), 3) work satisfaction (9), 4) trend of productivity (13), and 5) profit of a product (20) and 6) punctuality in delivery times (23). However there are more almost as important factors such as 7)customer satisfaction, 7) work satisfaction, 8) development and appraisals, 9) return on capital employed, 10) profit, 11) number of reclamations, 12) confidence and trust, 13) common development and knowledge sharing. Results are based on web-robol survey in between May 28 to June 25 in 2009 for STROI Network Management Group. Survey included 24 questions, 7 completed answers were received. Interview results are based on 9 interviews within Finnish companies in autumn Question were the same without 5 additional questions on the basis of earlier survey. Additional question were concerning market share of network, innovations from customers, ability to for network and liquidity.
Six most important factors for each perspective
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

17. 14 most important factors to be measured on the basis average values
Six most important factors for each perspective to be measured can be identified from these results: 1) Company reputation (2), 2) staff turnover (6), 3) work satisfaction (9), 4) trend of productivity (13), and 5) profit of a product (20) and 6) punctuality in delivery times (23). However there are more almost as important factors such as 7)customer satisfaction, 7) work satisfaction, 8) development and appraisals, 9) return on capital employed, 10) profit, 11) number of reclamations, 12) confidence and trust, 13) common development and knowledge sharing. Results are based on web-robol survey in between May 28 to June 25 in 2009 for STROI Network Management Group. Survey included 24 questions, 7 completed answers were received. Interview results are based on 9 interviews within Finnish companies in autumn Question were the same without 5 additional questions on the basis of earlier survey. Additional question were concerning market share of network, innovations from customers, ability to for network and liquidity.
14 most important factors to be measured on the basis average values
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

18. Most important factors to be measured.
Reliability according to method triangulation with two different methods:
Red circle: difference more than 20%.
Green circle: difference on results less than 20%.
Web-robol
Interview
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks

19. P4: Internal Development P5 Customer Orientation
The Most Important 14 Factors to be Measured in Different Perspectives (P1-P6) on the Basis of Triangulation of Different Datasets (Interview and web-robol survey)
P1: Business Sector,
1 company reputation
P2: Network Aspects
2 punctuality of delivery times
3 number of reclamations
4 confidence within network
5 common development and
6 streamlining activities
P3: Human Resources
7 staff turnover
8 work satisfaction
P4: Internal Development
9 trend of productivity
P5 Customer Orientation
10 growth of turnover and
11 order book change
12 profit of a product
P6: Finance
13 return on capital employed
14 profit
Seppo Niittymaki, Moscow, April 8th 2010 Performance Measurement in Business Networks