Living Networks – Chapter 3: The New Organization – Free Download and Commentary
Download Chapter 3 of Living Networks on Emerging Technologies
Every chapter of Living Networks is being released on this blog as a free download, together with commentary and updated perspectives since its original publication in 2002.
For the full Table of Contents and free chapter downloads see the Living Networks website or the Book Launch/ Preface to the Anniversary Edition.
Living Networks – Chapter 3: The New Organization
Leadership Across Blurring Boundaries
OVERVIEW: The boundaries between organizations are blurring as technology reduces the costs of transactions. It is becoming essential for companies to work closely with their customers, suppliers, and partners, however this involves very real risks. In this world leadership is required to take whole industries and supply chains into new ways of working based on transparency, collaboration, and sharing value. Those that embrace the networks and lead the way forward will reap the greatest rewards.
Chapter 3 of Living Networks – Commentary and updated perspectives
From the original writing of Living Networks I felt that the issues raised in chapter 3 were at the heart of what the living networks are about. The key concept here is that of ‘blurring boundaries’, something we are experiencing across every domain of society and business, including organizations, industries, and countries.
A quotation I discovered since writing the book, and have used extensively over the last years in my presentations, expresses this perfectly:
“Finite players play within boundaries; infinite players play with boundaries.”
This quote comes from the delightful and wise book Finite and Infinite Games by James Carse, which looks at how we either limit ourselves or open ourselves to infinite opportunity in our lives. While it was published in 1986, its messages are more relevant than ever today.
The example I used of Corporate Executive Board as a listed company that creates value from and for its network of corporate members still stands out today. There has been a gradual shift to network business models, but it is early yet. As I wrote, it is necessary to reconceive what organizations are about:
The art of management is now about positioning the firm to extract value from its participation in a
broad economic network.
In the chapter I identified four risks that were holding back executives from creating value across boundaries:
* Information loss
* Systems security
* Reputation
* Ability to extract value
These themes are echoed in the draft Enterprise 2.0 Governance Framework I created earlier this year. Arguably Enterprise 2.0 is a specific manifestation of the same issues that have been at play in business over the last decade. However it is bringing to the fore fundamental issues of business structure that go far beyond the impact of technology.
Because of these risks and the massive inertia that is present in any large system, leadership is absolutely required to shift organizations, industries, and business ecosystems. In the book I used examples including Herman Miller, XBRL, and Ingram Micro. Looking over the last five years, Google is perhaps the most obvious example of industry leadership, primarily in how it has offered open interfaces to many of its applications. In the process it has created vast momentum to openness, making it very hard for any participants in related markets to implement closed business strategies.
Industry information standards have come a long way over the last years, but still have much further to go. XBRL still has great potential today, however progress has been disappointingly slow. RosettaNet has created much value over the last years, but it could have been much greater than it has. However today new industry standard initiatives across real-world sectors such as real estate, manufacturing, and distribution are transforming how value is created.
Industry standards grow by layers. XML has provided a platform for a series of initiatives and approaches to sharing information. Today we are entering a new phase, with standards such as OpenID, DataPortability, Microformats, and others potentially establishing a platform for data and identity to be moved freely across applications and locations. Given the past five years experience, we can expect immense value will be created. But we can also expect it to be often a frustratingly slow process.
I have since expanded considerably on my original four recommendations for providing leadership in a network economy, including on information sharing policies and building transparency.
The same recommendations still apply. In the big picture, we are still in the early stages of a vast trend to blurring boundaries in business. The simple fact is that those who provide the leadership necessary for these changes will create and take far more value than their followers.
