A model provides a representation of something, which would otherwise be difficult or costly to create. It's usefulness is to allow one to explore why or how something works. The accuracy and level of sophistication of the model defines how useful it is in exploring the intricacies of what it represents. So the model lets one explore:
The model therefore provides a means for the exploration, development, testing, implementation, and evaluation of that which it represents. In the case of an enterprise, this provides a framework for ensuring that the enterprise will achieve its goals and objectives, starting when the enterprise is being created, during its lifespan, or when it is undergoing some type of change.
An enterprise model, as interpreted here, looks at how the various factors affecting the capabilities of an enterprise interact. There are some basic underlying assumptions related to the model, these are:
The enterprise model is based on defining and evaluating a "sphere of influence", and how that "sphere" evolves. It is dynamic in nature, because over time, the sphere of influence changes based on choices made, taking some action, and a change in the environment it operates within.
Every individual or organization has some sphere of influence. The size or extent of influence varies with each individual or organization. Each organization or individual, will over time attempt to extend their sphere of influence to the maximum extent possible. As this sphere is extended several effects may be observed, including competition, mutual cooperation, or specialized niche development. These effects are dependent on the strengths and weaknesses of each individual or group and how these strengths and weaknesses are exploited. These effects are also dependent on personality type, which dictates an individuals personal perspective and relationships to others and their environment. Subsequently, individuals and organizations can be entirely independent or highly interdependent with each other in some way.
The model identifies and explores the things that one can make use of, and how, and how all the various factors interact in order to change a level of influence.
In its simplest form there are two aspects to the model. The first constitutes the components which one has available to work with. The second constitutes the structure in place by which components available can be manipulated.
In another perspective, the components are held together to form a structure which defines the scope of influence.
The components are all the things that one can work with. They provide the building blocks which can be combined in different ways to achieve some objective. At this stage the components can be very broadly defined. Types of components can include, ideas, culture, personality, goals, objectives, money, time, available technologies, geography, demographics, etc. It is important at this stage to recognize that components are those things which one can use to build something. The constructed whole need not be physical, such as a product, but may be wholly cerebral, such as an idea, a service, or a feeling, like happiness.
Structure is the framework within which something is done. It includes the processes required to achieve some result, the organization structure, and the information on which decisions are made. Structure needs to be viewed as the framework within which components are utilized. It can be best viewed as the thing that relates or holds the available components to each other and how.
It is important to recognize, that without structure, there can be no control over a component. That is to say even though one has access to something, such as land, unless one can incorporate the land into some use, it neither has value, nor does it constitute a part of ones influence. In a simplistic sense, it is like having a million dollars in the bank, but if you cannot access it, or do not include it within your plans to make some use of it, you may as well not have it. It has no value to you, nor does it allow you to enhance your sphere of influence. In this context, even a single dollar has greater value if you utilize the dollar for something even something frivolous. This supports the argument that accumulating wealth has no value unless one makes some use of it. Here intrinsic value is considered to have some use, if the dollars provide some level of happiness. That is, there is some relationship existing between the money and happiness, which has been made through some structural relationship. This argues the point that if one had the money but couldn't care less if it was there or not, and had no influence on actions, it would not have value.
The converse of components without structure is also critical. That is without components one cannot have structure. Structure is dependent on the interaction of things. If there are no interactions, there is no structure.
Structure may sometimes be represented by a model or defined by a methodology. Such models or methodologies are a component within the enterprise model and defines how a particular structure works. The model or methodology however does not operate on its own merits. Structure requires fuel, as represented by components, to make them work. In the simplest form this would be like having an organization structure with no staff to fill it. In effect there is no organization, all there is is a model by which staff could be hired and responsibilities assigned.
The model consists of:
Time is important here, because the goal of any organization or individual is to make their sphere of influence as large as possible. This reflects the individuals overall level of influence, or power to do what they want, not necessarily size of the organization. The larger the sphere of influence the more influence an individual or organization has over it's own destiny.
Assuming that one does evolve ones sphere of influence, then the model needs to be able to reflect and support the dynamics of change.
The above begins to establishes a set of principles and a framework for an economic model.
The importance of the model is twofold:
The model reflects all the traditional areas of economics, finance, marketing, human resource management, politics, belief models, personal interactions, etc., which define people, their interactions and how they behave. It does not redefine these, but it does put them into a holistic perspective which is unbiased by any one perspective or approach.
This non-biased perspective is important, because the model should not predicate the answer before the question is asked. For example, financial models will focus on financial solutions, personnel models will focus on personnel solutions. Such biases are generally harmful in evaluating any specific result. This does not imply that these models are not useful, but they come into play once one has decided that the problem, and solution needs to be addressed from a specific perspective.