There was a time, not more than a few decades ago, when if you were General Motors you would attempt to own every part of your business. The assembly lines, the parts manufacturing plants, the stamping units, the ancillary units and even such parts of the business as the software that runs the business, the dealerships that sell the cars, the steel mills or even the mines that produce iron ore for the steel mills. And for good reason - you could not either trust others to savvy enough to produce and send you the material that you wanted when you wanted it, or the margins in each of those businesses were big enough for you to try and own all those operations.
Your business became an insular behemoth - far removed from the customers and moving slowly in a marketplace going through a rapid transformation. Your more nimble competitors with a loose network of aligned companies could easily run rings around you in no time - both in terms of developing and launching new products, as well as producing and selling high quality products at lower prices.
There was a time, not more than a few decades ago, when if you were General Motors you would attempt to own every part of your business. The assembly lines, the parts manufacturing plants, the stamping units, the ancillary units and even such parts of the business as the software that runs the business, the dealerships that sell the cars, the steel mills or even the mines that produce iron ore for the steel mills. And for good reason - you could not either trust others to savvy enough to produce and send you the material that you wanted when you wanted it, or the margins in each of those businesses were big enough for you to try and own all those operations.
In a way, the networks we are talking about in this book are not new at all. Some features, speed, trust building mechanisms, outcomes and science of network creation and harnessing are new - however, similar networks have existed in formal or informal forms through the ages. And each time they have been very effective in creating value for the participants, business community, and society in general. In this chapter, let us briefly visit some of these networks through the centuries and see what we can learn from them. History is our best teacher.
Business Networks have thrived through the ages in various forms; in this chapter we briefly examine six relatively well known business networks from the history.
The pundits declared the basis of valuation as the network effect and left it at that - leaving people to decipher what exactly is the Network Effect and exactly how does it lead to a valuation of tens of billions of dollars.
Business Networks allow the businesses to be simultaneously strong in their core strengths and their own weaknesses - the other members of their business networks make up for their weaknesses.
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Information Technology Systems That Support Great Business Networks 4 Lessons
There is now a rich legacy of systems and knowledge about the systems that enables smarter decision making by understanding all the problems that surfaced in systems renewal efforts. We will hence focus on these problems in the first part of this chapter. In the second part of the chapter, in order to understand the state-of-art systems we will take a very brief journey in their evolution to their current state.
In the initial phase (Pre-1950s) there was no need of any strategy for supply chains. In the decade that followed, supply chain strategy focused only on the overall profitability of the business. Ways to maximize profit were not optimized. Supply chain strategy came into real existence only after the MRP revolution of the 1980s. Companies became aware of the growing material scarcity and hence started optimizing resources.
It is possible to get very technical or details driven when writing a chapter such as this one. However, my endeavor has been to provide as much information as possible in a simple and practical format.
Let us cast our field of vision on modern networks, which now come in a vast array of structures and forms. Depending on the value they provide to the participants some of these networks are successful, while others are quickly replaced by more appropriate network models.
Most CEOs are now familiar with the power of supply networks transformations, and currently in many industries, these supply networks are rapidly undergoing massive transformations as CEOs adjust their business strategies to global realities.
It is a well known aphorism in the circles of architecture that the form follows function. In other words the structure of a particular unit, in general, evolves to facilitate the functioning of that unit. In other words if the form does not match the function then either the structure changes or the function changes over a period of time.
For this reason, this report creates four scenarios of possible outcomes in future; I will only address one of the four scenarios - called Non-State World - which I tend to believe most likely final outcome whether before, or after, one of the other three scenarios.
What is the secret of Amazon's success? What allowed Jeff Bezos to build the largest online retailer in the world, where customers can acquire anything that they desire over the internet.
While a number of companies could be used as a case example to illustrate the concept of 5-STAR Business Networks, Amazon.com is a company which excels in all of them.
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Fire-Aim-Ready Innovation (FAR) - For Efficient Product Development 3 Lessons
While researching the topic of innovation, I was not surprised to note that no other topic besides leadership has prompted more numerous amounts of business books than the topic of innovation.
A value network is the context within which the firm establishes a cost structure and operating processes and works with suppliers and channel partners in order to respond profitably to the common needs of a class of customers. Within a value network, each firm's competitive strategy, and particularly its costs structure and its choices of markets and customers to serve, determines its perceptions of the economic value of an innovation.
Revolutionizing an industry was not on his agenda - though it ended up happening once Michael Dell fully understood and applied the power of the business network he created over a period of time.
$eed-to-$tore efficiency pertains to management of cash flow through the business network in such a way that it allows the entire business network to thrive in a sustainable manner.
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TRANSACTION OPTIMIZATION PROFITABILITY (TOP) - through customer intimacy 2 Lessons
We learned to counteract the current by measuring the ship's position at two different times and using a calculation based on the direction steered and speed of the ship to calculate the current. After calculating what the current was, it was counter-acted in the next time period.
Transaction Optimization Profitability (TOP) moves towards achieving similar results utilizing the power of information technology and business networks.
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Advanced Product Phasing - for Effective Profitability and Innovation Cycle 2 Lessons
In this Chapter we look at the story subsequent to its launch. The second generation Kindle, aptly named Kindle 2, was slimmer, more powerful and featured 2 GB of internal memory. The battery, as well as the keyboard, were enhanced, and the price was reduced.
