Business Network Transformation: Strategies to Reconfigure Your Business Relationships for Competitive Advantage
Jeffrey Word, Editor
Jossey-Bass/John S. Wiley & Sons (2007)
A “must have” combination of compass, GPS, tool kit, and operations manual for BNT
Whatever their size or nature, all organizations have business relationships. In recent years, it has become increasingly more difficult to establish and then nourish them, especially given the reduction of direct human interaction (i.e. face-to-face and voice-to-voice) in combination with the increase of indirect human interaction (e.g. email and texting). What we have in this volume is a collection of eleven essays whose authors explain how to devise and hen execute strategies to reconfigure business relationships for competitive advantage. As the book’s editor, Jeffrey Word, explains in the Introduction, “This book is about the evolving nature of global business and the ways that a company’s network of relationships (with suppliers, customers, and other partners) is being reconfigured to derive competitive advantage and increased profitability.”
More often than not, this means an organizational transformation within a global transformation, “into dynamic and orchestrated business networks in which each entity is focused on its key differentiation while collaborating with others [including former as well as future competitors] in its network to deliver higher shared customer value, speed of innovation, and cost benefits.” Companies have no choice but to seek out within and (yes) beyond their competitive marketplace for new or better ways to serve their end customer.
The most appropriate business model is perhaps best described by Henry Chesbrough in his seminal works, Open Innovation (2003) and Open Business Models (2006): “A business model performs two important functions: it creates value and it captures a portion of that value. It creates value by defining a series of activities from raw materials through to the final consumer that will yield a new product or service with value being added throughout the various activities. The business model captures value by establishing a unique resource, asset, or position within that series of activities, where the firm enjoys a competitive advantage.”
Having thus established a frame-of-reference, Chesbrough continues: “An open business model uses this new division of innovation labor – both in the creation of value and in the capture of a portion of that value. Open models create value by leveraging many more ideas, due to their inclusion of a variety of external concepts. Open models can also enable greater value capture, by using a key asset, resource, or position not only in the company’s own business model but also in other companies businesses.”
To those who have relatively little (if any) prior experience with business network transformation (BNT), I suggest that they first read and then re-read Word’s brilliant Introduction and the first chapter, “Transforming Your Business Network” co-authored by Philip Lay and Geoffrey Moore, before proceeding to the other material. This approach will provide a frame of reference for Marco Iansiti and Ross Sullivan’s discussion of “Business Network Transformation in Action in Chapter 2, and, a solid preparation for the information and advice that follow in Chapters 3-7 on how to achieve these strategic objectives:
• Creating superior customer value (Mohanbir Sawhney and Ranjay Gulati, Pages 39-57)
• Shrinking core while expanding periphery of the relational architecture (Gulati and David Kletter, Pages 59-95)
• Achieving and sustaining product leadership (N. Venkatraman, Pages 97-121)
• Driving collaborative success on global networks (John Hagel III, John Seely Brown, and Gautam Kasthurirangan, Pages 123-150)
• Leveraging profitability and competitive advantage with operational excellence (Randall H. Russell, Pages 151-177)
The material in the first two and remaining four chapters is of comparable scope, depth, and value. Readers will appreciate the fact that at the conclusion of the 11 chapters, rather than a formulaic summary of key points or checklist of “action steps” to be taken (albeit devices that can also have value), the author or co-authors of each suggest what is most appropriate for a conclusion to the given material. For Chapter 8, Chesbrough offers “Practical Lessons for Business Network Innovators”; for Chapter 9, Jeffrey Dyer concludes with suggesting a process by which to identify underperforming business partnerships; for Chapter 10, after explaining the role of IT in BNT, Andrew McAfee shares his thoughts about “Betting on the Next Wave” as he poses “three simple questions” he urges his reader to consider when defining appropriate IT initiatives; and at for the conclusion of Chapter 11, Lay and Moore also pose several questions, in this instance to help management teams to determine when and where to start “their BNT journey.”
Again, I presume to suggest to those who have relatively little (if any) prior experience with business network transformation that they first read and then re-read Word’s brilliant Introduction and the first chapter co-authored by Lay and Moore before proceeding to the other material. Ultimately, of course, each reader must determine what is of greatest interest, relevance, and value. Also, with all due respect to the quality of the advice offered throughout the volume, the reader must also determine which of it to follow and then, key point, how to execute it in the given organization.