How To Harvest Your Business Ecosystem and Network?
Why bother about Business Ecosystems and Networks?
• Why did Apple sue Samsung while it continues to buy critical parts for its winning products from Samsung?
• Why did Google create Android OS for mobile applications, and is now talking about opening its own retail stores?
• Why did Amazon create Kindle when the market is already saturated by other tablets and similar products?
• How did Nokia mobile phone lose its shine?
• Why did Apple build its own retail presence?
• How will shale gas discoveries in North America change the business world and perhaps the geo-political balance in the next 10 years?
If you are as deeply passionate about the world of business and supply chain networks as I am, and enjoy exploring similar questions and coming up with answers that will help immensely in using this wisdom to build your business, then join me.
This article and the rest of the articles in this series are a journey of exploration through the world of business networks that run the commercial world today.
The Story of General Motors (GM) is instructive
When General Motors filed for Chapter XI protection in 2008, it also marked the closing of a chapter in modern commerce. General Motors was seen as the paragon of modern American management theory as popularized by Peter Drucker in the middle of the twentieth century.
It was at this venerable company that Peter Drucker formed his early thoughts about management as a profession, separation of the ownership from management of enterprise, the key functions of management, division of labour, theory of leadership of enterprise, indeed the very concept of the corporation.
His writings were the need of the time, and were picked up by ivy league business schools and corporations alike and formed the basic foundation of management profession.
Indeed there was a time when General Motors and the US commerce were thought of as interchangeable entities with popular aphorism that “what is good for GM is good for America and vice versa.”
Some people still think this is the case. They see the decline of General Motors as symptomatic of a wider malaise in the US economy. Others think that General Motors will rise like a phoenix again to become an industrial powerhouse.
While we do not know what will eventually happen to General Motors, we know that new models of commerce, new industries, new technologies and new ways of solving old problems will be required to build a stronger economy on a global level. All of these will not necessarily come out of one country, one continent or even one region.
Even Bigger Changes are Afoot Today as Business Ecosystems and Networks Reconfigure Themselves
Drucker foresaw some of these changes in his writings on the information age, post-capitalist society and post-industrial man. Prescient as he was, he did not yet fully see majority of the changes that have happened in the last 6 years since his death. The rise of China and India, the global financial crisis, the zombification of the western economies as a result on intense focus on the rapid gains from FIRE (Finance, Insurance, Real Estate) industries, hollowing out of real capabilities are nowhere to be seen in his writings.
However, this is not just true of Drucker, most of the management thinkers, writers, academics and authors can be painted with the same brush.
It is not a surprise that the established thinkers find it difficult to think outside the box. Since the times of Aristotle, Socrates and perhaps even before that (for the history of mankind maybe older than that), new thinking must come from new places – from outside the established order of thinking.
No wonder then that the most innovative companies in the US still choose to locate on the west coast, many of the most successful corporations were formed by the college drop outs and the most successful business models do not even have a name yet.
In this series of articles, we will not only name some of these models, we will study them closely and understand these new methods.
The aim is not to copy or even emulate, but to get deeper understanding of their workings in order to learn how to formulate similar models under different circumstances that your company faces.
At this point you may ask – what entitles me to write this series of articles and book? Let me include a couple of brief biographical paragraphs that will hopefully spur you on to read this series of articles with your full attention to get the best use out of it.
So, why do I bother about Business Ecosystems and Networks?
The forgoing paragraphs might have already signaled to you that I see myself as an outsider. I do not have a Bachelor’s degree, and really started my college education at the age of 29 – both facts helped me succeed immensely in life. At the age of 17 years, straight out of a boarding school in Northern India I joined a merchant marine company as a deck cadet after a brief training.
My first assignment was to go to a shipyard in Japan and work with the ship’s Captain, Chief Engineer and other officers to take delivery of a brand new ship being built there. At this time, due to the severe depression in the global shipping industry I saw many super tankers, worth several millions of dollars, sailing on their maiden voyage straight from the shipyard to the demolition yard.
It was like seeing a baby being killed at its birth. It aroused in me an intense desire to study the causes of economic cycles – I had already seen the effects. Over the next 3 years – as I circumnavigated the globe multiple times on ships working 12-16 hours a day 6-7 days a week – I spent all my spare time reading voraciously about the economics, finance and modern commerce.
I kept my day job for another 7 years because it afforded me the luxury of working with ports, harbours, stevedores, logistics companies, commodity producers and traders, importers, exporters and various other wheelers and dealers around the world, while earning a good living – enough to put some money aside for what I then considered a proper education.
I travelled to more than 100 countries during these 11 years, rose in rank from a cadet to a Master Mariner with progressively more responsibility and a wider perspective, and saw thousands of different ways of doing similar things in all the different places I visited and worked in. Curiously, all of these ways had some practices worth emulating and others worth discarding. In my spare time I added another pursuit to my economic study – combining various ways of doing things to come up with the most suitable way for the circumstance in question.
These two pursuits had already become my twin passions long before I studies for my MBA at one of the best business schools in Australia and took a job as a management consultant with a highly regarded global top-tier consulting company.
So, why do I bother about Business Ecosystems and Networks?
For the last 22 years I have been a management consultant to the CEOs, boards and top executives in Asia, Australia and other places.
I have focused on empowering corporations on 5 continents to achieve their peak potential – in operations, in strategy, and in all components of their entire supply chains. In January 2000, I co-founded and managed Global Supply Chain Group, a high impact services company made up of supply chain pioneers and thought leaders who work only on selected high impact strategy projects with some of the largest corporations in the world.
I travel 60% of my time around the world for a single passion – creating, configuring, and formulating effective, secure and sustainable supply chains. With that said, let me also use one paragraph to talk about why I wrote this book. With more than 10,000 business books released each year, it is clearly not a worthwhile exercise to add to the cacophony of sound unless I have a meaningful message to convey. The returns are paltry, I already have another book published by a highly respected publisher under my name (albeit with shared credits with another co-author), and I do not particularly relish the long work hours any more.
What then motivated me to spend nearly every spare moment in the past 18 months to write the book The 5-STAR Business Network.
Business is the engine of the society and it will need newer models of commerce to fast track the recovery. Hollowing out of skills out of entire societies without replacing them with another set of useful skills, very high level of youth unemployment (frequently disguised by serious looking play on ipads and tablets), growing economic imbalances risking implosions of unrest, civil commotion or even a great war have all combined to create a very alarming set of circumstances.
Whatever transpires in the short term, eventually the business people will have to lead the way to recovery around the world.
Business Ecosystems and Networks have now become the prime drivers of global economy
It is evident that I am passionate about newer models that work better. In my projects and work around the world, I have noticed that in almost all circumstances there is always some way to make things better.
We only have to look around and see where the guidelines are, what the trends are and which models will suit the trends.
Eleanor Roosevelt (1884-1962) famously said – Great minds discuss ideas, Average minds discuss events, Small minds discuss people. While it is very tempting to discuss just one of the three key ingredients of life – either ideas, or events or even people, in this book we discuss all three because all three of these are inextricably linked. People make events and create ideas.
Ideas create events and help people become successful. And events shape people and give impetus to ideas.
A book full of concepts and ideas but with no stories about people or events would be extremely boring and dry. On the other hand, a book with just chronicles of events or people would hardly be worth bothering to read unless its authors possessed immensely entertaining style of writing (which I do not) and even then would be of little practical value besides entertainment. I mostly use events and people to illustrate ideas and concepts to make them more tangible for the readers.
Primarily, then, this book is about ideas and concepts – yet you will see enough discussion about people and events to be able to use the concepts. Most of the people and events discussed are relatively well known so that background contextual information is already present in the readers’ domain and I do not have to supply it.
Occasionally I had to use events from case studies based on our work – only because we could not find a well known event illustrating the concept. I do not make apologies for that or for disguising some data or names of the entities for obvious reasons of confidentiality.
Business Ecosystems and Networks have also been my passion since I started specialising in supply chain management in 1996
Every couple of decades powerful juxtaposition of the trends leads to unique and revolutionary way of commerce. Contrary to the portrayal by the gushing accounts and adulations of the commentators, most pioneers merely stumble on the these trends by a process of trial and error. Other companies,
the more nimble and hungry ones, follow the pioneers closely and build strong businesses in their lead. More established companies then follow suit and try and recover lost ground using their financial muscle and market power sometimes succeeding and sometimes failing in this. Many other companies are so caught up in hubris of their past success or internal politics or some other such attention sapping device that they fail to move at all, or move too late, often with disastrous consequences.
Chronicles of such disasters would perhaps be more instructive than the starry eyed accounts of success.
As Daniel Coyle points out in his book The Talent Code, the only way to succeed massively is by failing repeatedly at progressively more complex smaller tasks till you master them.
However, most writers and authors persist with the formula that has succeeded since the first bard told stories of the victories in war, and I have no doubt that we will continue to see many starry-eyed accounts of success for centuries to come.
It is difficult not to get caught up in the current of adulation that surrounds a particular company at a point in time. Any such apparent adulation in this book is despite my effort to be objective and cognizant of the cyclical nature of success.
As defined earlier, the aim of this book is rather more solemn. It is to take a wide and deep perspective on business trends, define the useful trends as seen from user perspectives, and come up with useful information for the business executives and managers.
The biggest trend sweeping the world – business and non-business – today is Business Ecosystems and Networks. Just last week Facebook has announced its IPO filing, valuing the company at $100 Billion. Analysts, pundits and business school professors are still debating what entitles it to that kind of valuation when many others with similar business model – Orkut, Myspace and a plethora of wannabes – have failed to monetize the eyeballs to any great extent. It is not even validated how many of those numerous Facebook accounts are authentic.
Business Ecosystems and Networks are yet to realise their full power
Other contenders to high valuation – LinkedIn, Twitter and a few others – do not command the stratospheric valuation claimed by Facebook. LinkedIn was valued at merely $9 Billion, while Twitter languishes at the third place among the winning triad at mere $8 Billion. These high valuations, whether justified or not, inspire awe and wonder. How can a company which has no products, no customers, no suppliers, no manufacturing processes, no warehouses and no logistics command a valuation roughly equivalent to 10% of the GDP of the entire continent of Australia.
By what magic is the projected cash flow so high or the risk adjusted cost of capital so low that this company that did not even exist 10 years ago is suddenly more valuable than roughly 95% of the corporation in the USA – many of them earning billions of dollars of steady cash every year for decades if not centuries.
Our purpose, however, is not to justify or critique the valuation of these social networking enterprises. It is to look at the power of the networks in the business world. Here we will discover a set of business networks even more valuable than those mentioned above.
In fact these business networks, rarely recognized at first, are so valuable that not a business can exist without one in today’s world. Unfortunately, most executives and CEOs fail to harness the full potential of this network adequately.
This book is about The 5-STAR Networks that run the modern business world. Is your company fully reaping the rewards of the effort put into all the activities within the company? Are you happy with the results – sales, profits, costs, competitive positioning, new product pipelines, supplier performance and other myriad details of your company’s business?
This book is for every executive, every CEO, every manager and every management student – no matter which business they are working in, and which part of the business they are working in. I can scarcely think of a business situation in which at least some of the concepts of this book will not lead to a massive and positive shaking up of the status quo.
After all progress is all about shaking up and discarding the tired, old and obsolete ways of thinking and doing things. Business Ecosystems and Networks are fast becoming the new way of doing things.