Finding Intellectual Capital through Value Chains in Education

Bornemann, M., & Wiedenhofer, R. (2013). Intellectual Capital in Education: A value chain perspective. Intangible Assets consulting

Bornemann and Wiedenhofer (2013) examine the value chain principle, which is a modified version of the supply chain as coined by Michael Porter, to gauge the impact of value chain principles on educational institutions within Austria. The paper examines educational institutions from elementary through higher education and their tie to political/regulatory bodies. Unlike business, educational institutions seem to be far more bogged down in standardization and regulation, losing aspects of the drivers that often help businesses move to the forefront (innovation, creativity, value add and process improvement). With application of certain business principles, Bornemann et al (2013) posit that there are opportunities to build parallels between institutions to find the right set of processes drivers to create success.

What was most interesting in this study is the authors looked at Austrian educational institutions from elementary to higher education as segments of the chain instead of independent of each other. More commonly, authors seem to focus on one level of education instead of across the range which presented interesting perspectives.  By examining across the educational chain, there is opportunity to build experiences that, from the earliest educational level, better prepare individuals for success and achievement. Within their interpretation of intellectual capital, Bornemann et al (2013) assert that this is the distinction that sets institutions apart: the individuals we produce are our product and the better that product, the more successful the institution.

The authors made use of 12 case studies collected between 2011-2012 that examined intellectual capital among Austrian schools. Their assertion based on that data is the creation of a value chain of schools with the learner as this developmental “product” that will add new value throughout each educational experience. They align the case studies with data from the auto industry as the supply chain example to prove their assertions.  Within this, the authors found areas of similarity and differences and used those to help build connections for their model. Challenges that presented themselves in the research included:

  • Definition of individual sets of drivers of Intellectual Capital which are relevant for each individual institution while simultaneously allowing for consolidation into a larger framework.
  • Definition of connecting drivers of Intellectual Capital that establish not only relations but support procedural exchange in order to optimize parts and later the whole value chain.
  • Definition of an appropriate scale with inter-subjective and auditable measures that support comparability and bench-marking. This, however, is clearly of secondary priority.

The majority of their assertion aligns with the idea that the intellectual capital and relational capital (the relationship building internally and externally that adds or detracts from success)  will be part of the differentiator in making the value chain connections work across institutions. How can the relationships between these institutions be connected as they align to processes and outcomes? Again, using the auto industry as the example, the authors assert that the segments with which students move through their education would be similar to the building/production of a car.  Building experiences that fit that segment of the “production” before then moving the individual into a connected segment would make up the chain. The focus would not be so industrial, of course, but would instead focus on value add, as part of the value chain and efficiency of costs and services for an optimal experience.

Thinking through the application of this to my own setting of graduate business education, I can see the correlation between this model and the one in the reading. At a smaller scope, I don’t see this as an application across the educational levels but instead more focused on building undergraduate programs that grow into the graduate programs to create a value-add for a student who wants to move from undergraduate to graduate programs.  Further, within the graduate programs themselves, taking on the business approach to how the individuals learn as well as interact with services and programs would become a major focus.

Transparency with the students would add some value in building the relational capital in that modelling the processes after business approaches should appeal to the business students going through them. The students should be able to draw parallels between their learning and the ways in which they are receiving services in the hopes that it influences their experience and understanding of their curriculum.

The use of the case studies combined with the examples from the auto industry applied a clear picture and methodology to the reading. Still most interesting is the design of a value chain from elementary through to higher education. A model of that size seems, to me, almost too ambitious but does make sense in the idea of connecting the educational experience from early education to higher education. The ability to align this type of system relates back to some of the challenges presented, specifically the challenge in finding drivers that work within the context of the institution but can then connect to the larger framework. Finding that balance would require institutions with similar approaches and perspectives that could easily align. Where this could most be relevant is the community college level into undergrad and graduate programs. There may even be parallels with high school in that a school, charter or academy, could be aligned to link itself to specific institutions. Pulling this all the way down to the elementary level becomes more challenging. I think the challenge lies in creating a system that can cross borders – do institutions different areas, cities or countries align? Not sure if that is possible within the U.S. educational system but perhaps Austria has the system to support this.

Overall the paper adds value to the idea of the application of value chain to education. Although taken from its own slant as it relates to education in Austria, there are connections between how this can apply to graduate business education and influence a new model based on efficient, value added and customer focused experiences and processes. The addition of intellectual capital as a method of analysis becomes one more way in which the model could take shape within a college of business.

SCOR Model: Efficiency mapping educational processes

Supply Chain Council, Inc. (2010). Supply Chain Operations Reference (SCOR) Model Overview          Version 10.0. Retrieved from

When thinking of a supply chain, most people outside of a manufacturing industry don’t quite know what this means. Supply chain, at its most basic form, is essentially the chain of events that lead to the production of a product, inclusive of delivery to a customer. The customer could be anyone from a grocery store to an individual depending on the product. Within the supply chain process, many firms and organizations have different ways in which they approach the production of their product. As our society has evolved, supply chains have begun to encompass other “products” including digital products as well as services (items without tangible products). Supply chain has become a function in firms, large and small, encompassing different processes, procedures and tactics.

With that in mind, many organizations began to develop set guidelines as good benchmarks for supply chain. One of those is the Supply Chain Council (SCC). The SCC was founded in 1969 as a consortium of organizations focused on peer-led research and analysis of the supply chain industry and what best practices could be developed for organizations.  Since 1969, SCC has continued to evolve and grow, including new organizations in their scope and research. One major outcome of the establishment of the SCC was the Supply Chain Operations Reference (SCOR) model, which is the “world’s most widely accepted framework for evaluating and comparing supply chain activities and their performance” (SCC, 2010, p. 2).  Now in version 10, the SCOR model has continued to serve as a benchmark for many firms. Professors within W. P. Carey that teach supply chain have referenced this many times in conversation with our students.  The benchmarking allows firms to easily understand what may or may not be working or what direction the firm would need to go to make a specific process or action work with company strategies, particularly as it may compare to the performance of other firms (SCC, 2010, p. 3)

From a visual perspective, the model looks like:


At the most basic level, the model considers the different stakeholders (supplier’s supplier, supplier, the organization, customer both internal and external and then customers of those customers). This is then broken into the basic functions that go into those relationships and then aligned with planning (SCC, 2010, p. 4). By following this model, SCOR should solve 5 key challenges:

  • Superior Customer Service: right product for the right price at the right time
  • Cost Control
  • Planning and Risk Management
  • Supplier/Partner Relationship Management
  • Talent

By solving those challenges and implementing the model, firms should be able to better launch services or products, have better linked processes to strategies, clearer direction for organizational growth and other benefits (SCC, 2010, p. 4). The model is further designed to better provide metrics and data that can be used to recognize trends and other organizationally important information (SCC, 2010, p. 6).

With the application to education in mind, although we are not producing a product per se, higher education institutions provide an array of services to support individuals through their educational experience. Many of the supply chain challenges listed above are directly applicable to higher education as we seek to provide value-added and outstanding service, cost control to our processes, better planning and risk management, relationship management (from vendors to federal groups to organizations to individuals) as well as attraction and development of talent (whether it be attracting top learners to top administrators and faculty). As institutions, we need to think of how we can improve our own processes and programs in the face of increasing competition, whether it be other institutions, professional organizations or even internally between programs. Competitiveness will not go away and the more that technology evolves, the more opportunity individuals will have to connect to knowledge from institutions in different parts of the world.

In direct application to graduate business programs within W. P. Carey, I see a correlation between some of the founding principles of this model and process improvement. Business schools are continuously evaluated on their performance, their outcomes and their rankings. It is a continuous battle to remain as a top tier school so approaches that could help add value to what the school can do become of the utmost importance. The biggest challenge here will be aligning this model to processes and strategies as well as getting buy-in from all key stakeholders who must help make change happen.

In other posts, I have reviewed different models and approaches to how supply chain principles could have value for higher education institutions. The SCOR model sets a good baseline for where supply chain models can go and in what ways they may add impactful improvements to a process chain. Supply chain models seem to reflect that as many elements of the SCOR model seem to crop up in other models that exist.

Overall, the document comes across very technical as you would expect for a process model guide but the design and integration aspects are easily displayed and explained to help firms understand. The document, being a founding model, does not reference other work but does build upon its own growth through its versions by continuously improving upon the process. What is most helpful about the document is that it does come at the approach from a general perspective. Although no application examples are provided using an industry, I feel this will allow firms to best think of how this could work within the organization and the strategic direction of that organization.

The SCOR model presents a good catalyst for higher education organizations for consideration in change. By looking outside education to other industry examples, higher education may find innovations that were not considered before that allow them to create sustainable, innovative, creative and engaging processes, experiences and organizations. Doing so should offer the opportunity for continued growth and success.

Review of Value Chain in Higher Education

APA Citation:
Dori, M., Nadi, M.A., Yarmohammadian, M.H. (2012). A Review on Value Chain in Higher Education.
Procedia – Social and Behavioral Sciences, 46, 3842-3846.

The area of inquiry I would like to examine is the application of Supply Chain principles to graduate business education within universities. Supply Chain, or Value Chain as it is now more commonly called, has primarily been focused on manufacturing environments in which a set product is being produced through a series of processes. Examples of this could be within the auto industry and the production of a vehicle. In recent years, the application of Value Chain principles has begun evolving its application to other industries that are not producing a tangible product such as car but may be impacting a service or the development of some specific outcome. Value Chain has begun its application to areas such as digital services, customer service supply chains and other areas. With this idea in mind, there are application possibilities within the educational Value Chain in the series of processes and actions that lead from the admission of a graduate business student through graduation of that same student. Along this progressive chain, there are a series of activities and interactions that a student will go through. Actions could be everything from enrollment in courses to purchase of materials to course completion to filing for graduation.

Much of the processes along this chain are often disconnected from each other due to silos within departments and administrative units, mismanaged for various reasons or are impacted based on different factors, perhaps even the student themselves. Much like any industry, universities must examine their process chains to ensure that the continued progress of the learner is not impacted by the processes themselves.

The article by Dori, M., Nadi, M.A., Yarmohammadian, M.H. (2012) examines the application of Value Chain, within the higher education context. Dori et al (2012) examine the competitive factors within higher education that require new ideas to creative competitive advantage (p. 3842). Factors impacting education can be competition with other universities, decreased funding from Government sources and even management challenges within the institution itself (p. 3842). Much of the research examines the different scholars who are completing research in these areas and the different application models that can be applied. Primarily, the article focused on the Porter Value Chain Model which looks at the process from a primary activity and support activity model while considering the factors associated with those activities. Factors in this model include infrastructure, internal and external influences, financial composition and the production piece (Dori, et al., 2012, p. 3843). The Porter Model primarily looks at the business enterprise and less of the social service enterprise such as an institution so the research also look to those scholars who posit a value chain model designed specifically for higher education.

One model examined is that of researchers van der Merwe and Cronje (2004) that looks at the process chain from a higher level perspective as it relates to desired outcomes (p. 3844). Less focused on the micro level, this model is represented by a 4 step process that includes: defining the outcome or scope on which the value chain will focus, identify a requirements elicitation methodology that focuses on the identification of the high-level processes within the application domain, identify the high-level processes within the application domain and use the high-level process model developed to derive the sequence of processes needed, to achieve a predefined outcome (Dori et al, 2012, p. 3845).

Overall, the article was well put together and provided a good analytical consideration of the arguments around the application of value chain for higher education but did lack some deeper insights. Great from an analysis perspective of the examination of the research landscape but little suggestion in the way of what other ways this methodology could be applied or what model made more sense (Porter versus the Educational model). This would have added some value to the piece that I felt was missing. In some ways, though, that was valuable as I had to draw more of my own conclusions about the value of the different models. The various perspectives were valuable but I found myself leaning more towards the Porter Model due to a bit more inclusion of the micro factors that inhibit success within the chain.

From a critical perspective around organization and other key areas, the article was well organized but did suffer from a few minor grammatical errors. The lack of argument did somewhat inhibit the flow although the article as more of a review, per the title, may have been the authors intentions. Perhaps a follow up piece could include examination of the models to draw some of their own conclusions and add value to the field of research.
Despite the authors’ lack of argument or suggested model, the reading did give me ideas to assist in my own analysis, specifically around some of the factors mentioned in the Porter Model (Dori et al, 2012, p. 3843). What stood out for me was some of the business enterprise ideas that could apply, particularly the financial structure and the organizational infrastructure. Although business focused, much of business school is often designed like an enterprise yet lacks some of the organizational infrastructure needed to make that successful. Organizational infrastructure is significant in that success cannot happen until the structure is in place to support the efforts and ideas being developed and used. Individuals supporting those structures will continue to suffer. The model is relevant but the human factor has to be considered in how they can make the model successful.

Further research studies here would be relevant around application in a real-world model. Using a graduate business program as an example, a further study could develop more key insights on not only how the model could be applied but in what way improvements or enhancements could be added taking into account a forum of individuals (students, professors, administrators) who contribute to some of those processes and outcomes.
This has further implications also for taking on a more humanizing approach to application of the model. In my personal opinion, I feel some of the supply chain models may take on too much of a process oriented approach, forgetting the individuals who may make up that process both at the process driver level and the process outcome level. By adding some of those perspectives more readily into the research, I feel it offers up a more humanizing approach that may be more effective in the end for consideration of the stakeholders involved. Further research on my part will need to be done to see what other researchers are examining in this area.