Matakuliah
Tahun
Versi
: J0422 / Manajemen E-Corporation
: 2005
:1/2
MODULE 6 :
Building Networked Businesses
1
Learning Outcomes
 In this chapter, we will study:
 The organization design challenge.
 Networked Organization models are enabled by
Networked Technologies.
 Blueprint for a “Big Small” business.
 What is different between Entrepreneurial
Management Process and Traditional Management
Process?
 Leading and Engaging consist of Hierarchal
Leadership, Entrepreneurial Leadership, and
Networked Leadership.
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Outline Topic
 The Need for New Capabilities.
 Blueprint for a Networked Organization.
 Building Value Networks
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Content
 Building the Networked Business
 “Our dream and our plan well over a decade ago was
simple. We set out to shape a global enterprise that
preserve the classic big company advantages while
eliminating the big company drawbacks. What we
wanted to build was a hybrid enterprise with the …
body of a big company and … the soul of a small
company”
» Jack Welch Former GE CEO
4
Building the Networked Business
 The Need for New Capabilities
 “ABB is an organization with three internal contradictions.
We want to be global and local, big and small, radically
decentralized with centralized reporting and control. If we
resolve those contradictions, we create real competitive
advantage”
» Percy Barnevik, CEO Asea Brown Boveri (ABB)
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The Need for New Capabilities
 “We saw two challenges ahead of us, one external and
one internal… Externally, we faced a world economy that
would be characterized by slower growth, with stronger
global competitors going after a small piece of the pie.
Internally, our challenge was even bigger. We had to find
a way to combine the power, resources, and reach of a
large company with the hunger, agility, spirit, and fire of a
small one.”
» Jack Welch Former CEO of GE.
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The Need for New Capabilities
The Orga niza tion Design Ch allenge
Building the Networked Business
Organization
Complex &
Global
?
Hierarchy
Simple &
Local
Entrepreneurial
Organization
Stable &
Certain
Environment
Dynamic &
Uncertain
Source: Applegate, Lynd a M., Rober t D. Austi n, and F. War r en McF arla n, Corporate I nfor mation Strategy and M anagement . Bur r Ridge, IL:
McGr aw-Hill/Irwin, 2002.
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Chapter 3 Figur e 3-1
The Need for New Capabilities
 Hybrid Organization design
 To improve control and efficiency while simultaneously
enabling flexibility and speed of response
 But, hybrid designs bred conflict, confusion, information
overload, and costly duplication of resources
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The Need for New Capabilities
9
The Need for New Capabilities
 Note
 Although the networked IT infrastructure can provide
important tools, it cannot define the information that
needs to be in the system.
 In addition, while the networked infrastructure can enable
new organization structures and systems, it cannot
motivate people to use the information to make decisions
and take actions on behalf of the organization.
 New organization capabilities are required to execute the
sophisticated network strategies and business models
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Blueprint for the Networked Organization
 Challenge
 Designing, implementing, and constantly evolving the
structure and systems that enable an organization to
executes its strategies and accomplish its goals is one of
the most formidable tasks facing 21st century executives
 Continuous change is one of the most challenging issues
facing the 21st century executives
• Operating and Innovating
• Managing and Learning
• Leading and Engaging
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Blueprint for the Networked Organization
Blueprin t for a “Big-Small” Business
Sample Organizational
Components
Sample Technology
Components
Leading & Engaging
•
•
•
•
•
Human Resources Management
Strategic Alliances
Customer Loyalty
Supplier Loyalty
Partnerships
•
•
•
•
•
HR Systems
Customer Relationship Management (CRM)
Personalization
Communication Infrastructure
User Access Devices
Managing & Learning
•
•
•
•
Planning and Budgeting
Performance Monitoring
Organization Structure and Reporting
Organization Decision Making and
Learning
•
•
•
•
Management Reporting
Decision Support Systems and Tools
Business Intelligence Systems
Data and Knowledge Management
•
•
•
•
•
Enterprise Resource Planning (ERP)
Supply Chain Management
Order Fulfillment
New Product Development
Distributed Information Processing
Infrastructure
Operating & Innovating
• Operating Process
• New Product Development
• Business Venturing
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Source: Applegate, Lynd a M., Rober t D. Austi n, and F. War r en McF arla n, Corporate I nfor mation Strategy and M anagement . Bur r Ridge, IL:
McGr aw-Hill/Irwin, 2002.
Chapter 3 Figur e 3-3
Blueprint for a Networked Organization
 Operating and Innovating
 The operating processes of a firm include all the activities
a firm and its suppliers and partners undertake to design,
build, market, sell, and deliver products and services for
customers, suppliers, and business partners.
 Ability to flexibly adapt to constantly changing business
environment is the key to success.
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Blueprint for a Networked Organization
 Operation and Innovating
 Hierarchical Operations
• Define rigid procedures, top down
 Entrepreneurial Operation
• Company do not depend on well-defined polices and
procedures or structured jobs.
 Networked Operations
• Big-small companies,
• Precision execution and fast-cycled innovation
• Operation is designed to fully exploit the power of both
people and technology whether this assets are in your firm or
in someone else’s.
• Technology can ensure precision and people can use the
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information in real-time to deal with unforeseen problems
Blueprint for a Networked Organization
15
Blueprint for a Networked Organization
 Managing and Learning
 The management processes and structures of a firm
include all the activities that a firm and its business
community undertake to:
•
•
•
•
•
Plan strategy and how it will be executed
Allocate resources
Organize people into groups and coordinate work
Monitor and measure performance
Adjust strategies, plans, budgets, and organizations based
on learning
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Blueprint for a Networked Organization
 Traditional Management Process
 Driven from top down, incremental goals and allocation of
resources to carry them out.
 Entrepreneurial Management Process
 Planning, decision making, action, and performance
management are informal and ad hoc.
 Ability to respond quickly on the basis of what is being
learned are fundamental to effective entrepreneurial
management
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Blueprint for a Networked Organization
 Network Management Process
 Big-Small most provide assess to a shared source of realtime information on market dynamics, operations, and
performance that enables real-time planning and
performance monitoring.
 Networked management Process
 Improved access to information enables employees,
customers, and partners to invent new ways of working
and to respond quickly.
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Blueprint for a Networked Organization
19
Blueprint for a Networked Organization
 Leading and Engaging
 While management is all about coping with complexity,
leadership is all about attracting and mobilizing the
resources for change
• Leadership involves defining a clear, compelling vision and
ensuring that is translated into a set of actionable strategies
and initiatives.
• Attracting, motivating, energizing, and retaining top talent
inside an organization and within partner, supplier, and
customer networks
• Creates a culture and ensures that values, beliefs and
behaviors are deeply ingrained and reflected in the decisions
made and actions taken
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Blueprint for a Networked Organization
 Hierarchal Leadership
 Emphasis managing complexity and minimizing it.
 Management process overshadowed leadership
 Risk were minimized by centralizing decision making,
segregating activities and structuring work rigidly.
 Entrepreneurial Leadership
 “Create or seize an opportunity and pursue it regardless of
the resources currently controlled”
 Attract, motivate and engage people, partners and
investors in the task of working together to create a clear
and compelling vision that excites and deeply engaged all
involved.
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Blueprint for a Networked Organization
 Networked Leadership
 In the Networked Economy, the free flow of information
throughout the company enhances the ability of
employees, customers, partners, and executives to share
in defining both a clear and compelling vision for change
and the necessary tactical initiatives required to achieve
business goals
 When aligned with incentives and motivations that foster
commitment rather than simply compliance.
 In complex global organizations senior executives cannot
oversee every decision or action taken by empowered
teams. So, it more important for them to identify key
strategic risks – critical success factors – and ensure that
they have effective control systems in place.
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Building Value Networks
 Building the value chain network
 Where Should Activities Be Performed?
 How Should We Relate to Market Participants?
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Building Value Networks
 Building the value chain network
 Where Should Activities Be Performed
Options
Vertical Integration
Selective Sourcing
Virtual Integration
Description
Locate all but the most routine, transaction-oriented activities inside the
firm.
Source selected activities from the outside. Traditionally, sourced activities
were controlled through short-term contracts.
Become part of a network of highly specialized, independent parties that
work together to perform, coordinate, and control value chain activities.
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Building Value Networks
 Building the value chain network
 How Should We Relate to Market Participants?
Basis of
Interaction
Duration of
Interaction
Level of
Business
Integration
Coordination
and Control
Information
Flow
Transaction
Discrete exchange of
goods, services, and
payments (simple
buyer/seller exchange)
Immediate
Low
Supply and demand
(market)
Primarily one way;
Limited in scope and
amount;
Low level of customization
Contract
Prior agreement governs
exchange (e.g., service contract,
lease, purchase agreement)
Usually short-term and defined
by the contract
Low to Moderate
Terms of contract define
procedures, monitoring, and
reporting
One or two way;
Scope & amount are usually
defined in the contract
Partnership
Shared goals and processes for
achieving them (e.g.,
collaborative product
development)
Usually long term and defined
by the relationship
High
Interorganizational structures,
processes, and systems;
Mutual adjustment
Two-way (interactive);
Extensive exchange of rich,
detailed information;
Dynamically changing;
Customizable
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Building Value Networks
Impact of Information Technology on Market Evolution
26
Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.
Chapter 3 Figure 3-7
Evolving Market Structures
Proprietary Capabilities and Infrastructure Create Walls
Inside an Organization and Among Members of a Value Chain Network
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Evolving Market Structures
 Questions that can help executives to evaluate organization
capabilities.
 What are your organization’s core capabilities, strengths and weaknesses
 What operating processes, policies, structures, and systems must be changed to
enable you to operate efficiently
 What management system must be changed to enable you to ensure that the
company is in control yet is able to “learn by doing”
 Is leadership stressed throughout the company. What organizational structures,
incentives. And cultural changes need to be made to enable the company to act
both big and small simultaneously.
 Within which market do you currently participate? How do the market participants
relate.
 Given your current and future strategy, what is the stream that must be
accomplished to develop products and services that create value for all
stakeholders
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Chapter Summary
 Hybrid Organization to improve control and efficiency while
simultaneously enabling flexibility and speed of response.
 New organization capabilities are required to execute the
sophisticated network strategies and business models.
 Continuous change is one of the most challenging issues
facing the 21st century executives.
 Ability to flexibly adapt to constantly changing business
environment is the key to success.
 Improved access to information enables employees,
customers, and partners to invent new ways of working and to
respond quickly.
 While management is all about coping with complexity,
leadership is all about attracting and mobilizing the resources
for change.
 Building the value chain network
 Where Should Activities Be Performed?
 How Should We Relate to Market Participants?
29