How Does an Enterprise Operate?
Part 1: Production and Coordination

In an earlier blog, I discussed the two perspectives of Enterprise Modeling: the functional model is stakeholder specific and shows the behavior of the enterprise, whereas the construction model is objective and shows the structure of the enterprise. Then, you might ask, what is the structure or construction of an enterprise? Or how exactly does it operate? In order to ask these questions, we first have to look at the basic components that constitute an enterprise.

Enterprises are (techno)social systems and the main components are (social) human beings. These ‘employees’ perform activities, such as attending a meeting, sending an e-mail, or manufacturing a piece of clothing. In general, there are two distinct kinds of activities that human beings can perform.

First, and most importantly, employees produce `things’. Making an investment decision, creating a report, and archiving a document are called production activities. The result of a production activity is a product. This product can be either tangible or intangible. Examples of a tangible product include (the creation of) a car and a piece of hardware. Examples of an intangible product include that you have been transported from your house to your holiday destination, that your house is insured against fire, the transfer of goods or money, and that education has been provided.

You may have noticed that these products are all formulated as if they were already produced. However, they can be used to formulate the desire or wish that the product exists in the future. For example, I would like my membership of the tennis club to start next month.

Expressing such a wish or desire is the second kind of activity that happens in enterprises: coordination. This is where the customer and supplier interact or communicate about the product to be produced. As a result, production is ‘surrounded’ by coordination, as shown above.

Production and coordination, performed by the two human beings involved, form the core of an enterprise’s operation. In a next blog, I will explain these components in more detail.