External interdependence risks

The external interdependence analysis was done based on the E2E process model-ling, and the interviewee’s comments related to the possible weak points of the case company’s growth strategy. The E2E process flow’s ability to increase the under-standing of the dependencies between different stakeholders in the ecosystem proved to work well while analysing the external interdependence risks. The identified risks fell into five categories: financial, incentive, regulative, technology and leader-ship.

INCENTIVE AND FINANCIAL RISKS

The case company has many external stakeholders in its ecosystem, such as sup-pliers and logistics providers. To deliver the goods to its customer, the case com-pany’s external stakeholders need to co-operate and show a performance of a re-quired level. Especially time and quality are very important for the case company. In other words, the case company is dependent on the performance of its external stakeholders. The analysis of the E2E process revealed that in some process areas there is a process-related incentive risk in the external stakeholder’s and case com-pany’s interface.

Some of the case company’s stakeholders are required to deliver quality documents for the case company which are verified in the case company’s double-phased veri-fication process. The analysis revealed that discrepancies can be found from the quality documents during both verification phases. Meaning an additional delay for

the case company’s usability of stakeholders’ deliverables. This delay in general can then have negative effects to the performance of the whole E2E process. Addition-ally, the case company carries the financial risk of the possible defects in between the quality documents’ first and second check point. Since the case company’s ob-jective is to grow, it is highly probable that the number of found discrepancies during the second check point will increase. Thus, the amount of pending goods and the case company’s financial risk will grow. Since the processes are interlinked with each other, the pending goods will also affect to the throughput time of the whole E2E process.

LEADERSHIP RISK

The case company’s ecosystem is large and highly complex. Since the market envi-ronment is still rather young, the whole industry scope is under a rapid development.

As discussed already earlier, the success of the case company’s process is depend-ent on the successful collaboration with all relevant external stakeholders. Due to the changing environment, it is highly important that the stakeholders’ and the case com-pany’s processes are evolving to the same direction.

Talmar et al. (2020) say that for the company to succeed in the market, numerous other ecosystem actors need to have developed their innovations matching with the company’s service or product. Expressly, the case company’s processes, and their improvements need to align with the ecosystem actors’ processes and their process improvements. According to Adner (2006) it is relevant for the company to evaluate whether it is more convenient for the case company to move its own business down-stream or updown-stream and reduce the dependency to its external stakeholders. Mirror-ing Adner’s thoughts to the case company, the analysis showed that its external stakeholders are mostly moving to the same direction or are following in the footsteps of the case company. In some areas, it would still be beneficial for the case company to evaluate how much it should improve the processes internally, and which pro-cesses would be wiser to shoulder for its partners. Especially the areas which are not in the core of the case company, the E2E analysis and interviews revealed that the case company could leverage its partners’ expertise and knowledge better. Ad-ditionally, the case company should evaluate the financial risks of focusing into op-erations which are not in the core of the company when there is an option to shift the risk to the external stakeholders for whom those operations are in the core of their business.

According to Krause et al. (2007) when organizations engage in knowledge ex-change, combine resources and invest in relation-specific assets with their partners, a supernormal profit can be derived for both exchange parties. In other words, the case company’s management should analyse the benefits of its external partners’

economies of scale and evaluate the risks between internal development and shoul-dering the development to its partners for whom those operations are in the core of their existence. Since, the case company is still highly dependent on its external stakeholders, not collaborating with them enough decreases the case company’s abilities to affect to their process development’s alignment with the case company’s processes. Since the steering and guidance of external stakeholder collaboration should come from the management, this observation can be categorized as a lead-ership related interdependence risk.

TECHNOLOGY RISKS

The case company’s E2E process has many systems and system interfaces which are developed to the needs of the processes. The systems enable a more transpar-ent and trackable dataflow and make both the process improvemtranspar-ent and analysis easier for the case company. As the industry and the case company’s processes are still rather young, it is important for the case company to ensure flexibility between its systems and processes. In some areas of the modelled E2E process, the process improvement is currently executed more from the perspective of the systems rather than from the needs of the processes. This poses both a technological and financial risk for the case company, since it makes itself dependent on the external system providers’ systems already before the processes are mature enough to be standard-ized. Thus, the case company is bound to model its processes to the frame of the systems which is not necessarily the best way to execute the processes. In other words, the systems are actually making the process executions more difficult and complex rather than making them flow more efficiently and error free.

Overall, it is important for the case company to evaluate its dependency to the system providers and of which direction their whole E2E process is currently going. Espe-cially the evaluation, whether the system providers are flexible enough to answer to the case company’s growth strategy and developing market environment, is highly important.

REGULATIVE RISKS

The case company’s market environment is rather young and developing rapidly. It is interdependent on the laws and regulations which partly differ between different

market areas. Due to the young age of the market environment, laws and regulations are revised and modified quite often. This has a direct effect to the case company and to its processes. Additionally, different market areas have different regulations and partly also different operational definitions. This makes the operating environ-ment even more complex for the case company and its processes.

Since the case company has no other choice than to be interdependent on its market areas’ regulations, all changes happening in the regulations pose a possible risk for the case company’s E2E process. The E2E analysis revealed that already now a recently made regulation is forcing one of the case company’s process steps to func-tion in a longer time cycle that would be necessary. This process is prone to changes, and due to the revised regulations, the workload to execute the process changes has increased significantly. To relieve their workload the process is usually executed at the end of the accepted process time window. This increases the lead time and de-creases the efficiency of the process. Since the case company has an ambitious growth strategy and the competition in the market is increasing, it is worthwhile to evaluate the competitiveness of the current, finetuned process. Moreover, it is im-portant to understand that an inefficiently executed process poses a risk for the whole E2E process chain which is as efficient as its weakest functioning process step.

Another regulation risk is related to the operative differences in different market ar-eas. Currently e.g., market specific operational definitions force the case company to execute some of its process steps twice, since the achieved results differ for different market areas. Similarly, different market areas have different reporting systems and operating models to which the case company has been forced to modify its systems and processes.

All in all, the case company is interdependent on its market areas’ regulations and needs to mould its processes to fit with them. Modification itself does not necessarily pose a risk for the case company, but not considering the interfaces of different mar-ket areas’ processes do. The more complex the case company’s process structure gets, the more difficult it will be to change and improve it. Not considering the process modifications’ affects to the case company’s growth strategy, increases the regula-tions related interdependence risks for the case company.

4.4 Integration risks

For the case company to succeed in its market environment, it needs to make sure that all stakeholders positioned between the innovation and the final customer are

operating in a way that benefits the case company’s innovation. If the stakeholders’

processes, which stand between the company and the customer, do not support the company’s innovation, it will be extremely difficult for the company to succeed in its market environment. (Dattée et al. 2018) E2E process modelling provided a good base for the assessment of the case company’s internal and external integration risks. The internal integration risks were viewed from the perspective of different stakeholders’ current capabilities and possible discrepancies in the process inter-faces. The external integration risk assessment focused more to the different maturity levels between the case company and its stakeholders and market environment.