Interesting read, networks apply not only to people but to organizational entities as well.
As the recent financial crisis has showed so dramatically, networks exist everywhere. Global inter-linkage of loans and mortgages -- which were intended to distribute risk -- actually ended up spreading it far and wide. Similar network-based impacts are at work in fields as diverse as information security and supply chain management. But while networks create new risks, they also generate new opportunities, write Paul R. Kleindorfer, Yoram (Jerry) Wind and Robert E. Gunther in their new book, The Network Challenge: Strategy, Profit and Risk in an Interlinked World (Wharton School Publishing). In an interview with Knowledge@Wharton, Kleindorfer and Wind discuss the themes of many of the 28 essays in their book.
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Knowledge@Wharton: That's great. To take just one final question. Jerry, I wonder, based on everything that you and Paul have said, how can organizations redesign themselves and change their approach to lead in a networked world?
Wind: It's a great question. That's really the challenge. I think, first of all, hopefully they have to challenge their current mental models. Because most firms -- there are obviously exceptions: P&G is becoming more of a network organization because of the open innovation; Li and Fung is set to evolve as a network company, but with few exceptions -- most companies, their management, their structure, their thinking is very firm-centric. So that's a challenge to the mental model of the firm-centric versus the network one. Both Paul and I hope very much, that the book will help people challenge this mental model by bringing in concepts and findings as well as methods from diverse fields and suggesting some specific areas for publication. I think this will help in this area.
Now having challenged the mental model, so what do I do next? [If] I buy your argument and I believe that network thinking is what we need, then my suggestion: At least identify those areas that will allow you to leverage your current resources and expertise, moving from a firm-centric to a network-centric [approach]. In my view, this is typically in the areas of establishing consumer networks, leveraging them in terms of getting consumers, schools of designers, schools of producers, core marketers to consumers as advocates and promoters of your product and services. The other major area would be in the open innovation area. But let a firm identify the big opportunities they face and try to identify and design an experiment of doing it.
I'll give you a quick example of a company doing it right now that developed a very large technology platform internally. The projection, if you look at development, [is that it] will take them another four years to try to fully develop it to be able to go to market. It's crazy in today's environment to wait another four years after they have been already five years in development of a pharmaceutical product. So they are moving now into an open architecture and creating a social network of their employees in other divisions, customers, and developers to join and basically understand the platform and start developing products and services on the platform. So I think companies should engage in these experiments. And assuming the experiments, hopefully, will work, they will learn from this and be able then to move and expand [the process] further into the firm.
Harnessing Networks to Create Value and Identify New Opportunities - Knowledge@Wharton
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