Call It A Clan, Call It A Network, Call It A Tribe, Call It A Family. Whatever You Call It, Whoever You Are, You Need One.
Jane Howard, "Families"
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.
There was only one thing wrong with this picture. 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.
Business Networks Are More Important Than Your Business Infrastructure
Eventually, realizing the truism inherent in the folk wisdom of farmers when they say that you do not have to own the cow if all you want is the milk, you would investigate ways of carving out parts of your business into independent entities that can be run as loosely aligned network of businesses, similar to what your competitors had evolved into.
This is not a book extolling the virtues of Kieretsu or cheobols or similar exotic sounding Japanese or other Asian business structures. It is, however, useful to take some lessons from the evolution and success of these business networks.
Over the past several decades, both the global economy as well as the business structures have evolved dramatically to such an extent that now most businesses have no recourse but to create business networks akin to those mentioned above.
So what is the magic of these business networks?
Why are they so important? What makes one business network better than another one?
Is there a way to systematically assess, measure, report upon and improve and monitor the quality of your business network? What outcomes should you expect out of a well tuned business network? These are some of the questions we will answer in this book.