e.Transforming and Creating Value

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 e.Transforming and Creating Value 

• Mét_at_organisations
• Organizations Models That Create Value
• Denis Ettighoffer, CEO, Eurotechnopolis Institut
• XIIème GLOBAL FORUM
• SHAPING THE FUTURE
• Washington DC, October 2002

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 Les machines humaines sont invisiblement
liéesLes ressorts qui en font mouvoir
une,montent les autres Montesquieu
Human machines are invisibly linked. The
springs which make one move wind up
others Montesquieu
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Summary

• 1. Questions on the Creation of Value
• 2. Impacts of the Network on the Digital Economy
• 3. The Met_at_organisations has very specific
  structure or model, to create value
• 4. Neteconomy and Value Creation
• 5. Are you ready to Compete by on the basis
  Organizational models?

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01
Some useful questions on the creation of value
These are relationships between the components of
a value chain which produce intangible value a
pile of 4 million bricks is not worth as much as
the Duomo of Florence.
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What creates the most value A 50 employee
company, or ten 5 employee companies?
01
One 50 employee company
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What creates the most value One 50 employee
company, or a network of ten 5 employees
companies?
01
A stand alone company loose values 1.8 per
year Cluster companies create more value (double
margin, revenus, jobs creation
A network of ten compagnies
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Networks Clusters Companies Met_at_organizations
02

• Global productivity gains shared by partners
• Growing IT demand to facilitate business
  exchanges
• Development of services and systematic products
  pull at the demand of cooperative networks
• Development to substitute to change a supplier
  is easier than to change organization
• E.fertilisation Intensive Exchanges of ideas and
  knowledge
• Between 1984 et 1992, the isolated SME lost 270
  000 jobs, while the network companies create 300
  000 jobs

6,700 clusters in 1995 (20,000 enterprises )
630 clusters in 1980
Development of clusters in France
37 of SME jobs in France
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The Neteconomie forces companies to adapt to
radical changes in the value chains
02

• The Net, facilitates, putting companies   plug
  and play  for collaboration in networks
• Major increase of per capita value creation
• It favours formidable productivity gains won by
  interdependant costs
• It is a source of  e.fertilisation  unique in
  history

• Internet favours a connected and interdependant
  economy we can talk about Collaborative Economy

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Two trends on value creation
02
The systemic economy is about automation of
intercompany transactions. The collaborative
Economy or e.Fertilisation is characterised by
the intensity of the exchanges of inter-firms
knowledge.
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The organizations in networks have an ideal tool
to crush the costs and reduces the need of capital
02

• Reduce Delays
• Reduce Immobility
• Reduce Stocks
• Reduce Buying Costs
• Reduce Administrative Costs
• Reduce Financial Needs

This is a systemic model

• Result a HYPER PRODUCTIVE SYSTEMIC

cOSTS
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Met_at_companies are made up of ecosystems creating
value outside hyper- productivity
02

• MCI alliances 1996 with more than 100 companies
• According to John Sculley, President Apple
  Computer
• Fedex Xerox

• A profit evaluate by the president at 500 million
  dollars per year.
•  One dollar created by Apple makes two or three
  others for its partners 
• SubstituteGrowth of trades exchanges in
  comparison with revenue, 60 à 70 between 1990
  and 1995.

This is a collaborative model
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The chains organizations or Met_at_organisations
have very specific structures, or models
03

• Professional Virtual Communities play in the
  Neteconomy by loose integration and low
  cooperation (A)
• Federation of enterprises to form a metacompany
  (B)
• Communities of entreprises organized as
  meta-networks strongly integrate with cooperation
  subject to functionnal constraints (C)
• Selecting the mode of  networking  in a value
  chain will be critical for the long term
  development of a company

Executives must decide!!
Tight Integration/ High Rigidity
Metanetwork
Metacompany
Virtual community
Loose Integration/ High Flexibilité
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Met_at_companies Collaborative Networks of
Professionnal Communities
03

• Co-development to ease access to techniques or
  knowledge (cross fertilisation)
• Co-production to get economies of scale and adapt
  to just in time production
• Co-distribution or co-go-to-market to broaden
  product portfolios and access news markets
• Collaborative networks to create combined value
  are slowed down by egocentric/intranet focused
  firms

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Neteconomy and Value creation
04

• New potential for long term growth due to the
  explosion of intangible exchanges (despite short
  term problems)
• Discovery of news layers of profit generation.
• No effect on the fundamentals of wealth creation
  but it stimulates the traditional economic system
• It also favors the intangible pollination due to
  the incorporation of intelligence in the products
  and the services

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The measurable impacts of neteconomy in USA
04

• Profit Improvement of margins the share of the
  profits results of Internet went up from 10 in
  98 to 14 in 99 thanks to productivity
• Employment growth 1,6 million to 2,5 millions
  between 96/99 of which 400 000 for the e.commerce
  ( 150 000 estimated in France, approximately one
  million from there 2005)
• More Important share of growth the SME The ten
  biggest companies only cover 27 income which
  limits the speculative bubble effects of the
  economy
• Effects of the doubly three the margin, the
  growth rate and the creation of employment
• Effects of the creation of companies One company
  in 3 set up on the neteconomy didnt exist in
  1999
• Source Graduate School of Business, University
  of Texas, Austin ( 1999)

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04
Neteconomy Productivity
 
 
Performances of the two categories companies
investing in the NICT
 

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In the competitive environment, an option is to
fight with Organizational Innovation
04

• Value chains and value nets are new options
• Investment will favor or blame organizational
  models (not just the executives)
• The organisational intelligence is embedded in
  the softwareAre we to wards  off the shelf 
  organizational models?
• The Velcro Company , the art of systematic
  alliances allows to gain a strategic advantage
• The hyper-productivity systemic is the
  reflection of economics field It can become an
  instrument of domination of this field

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The art of the  combination  becomes strategic
to create a collaborative economy
04

• Virtualization metamorphoses the traditional
  economy models
• We create value by favoring intense exchanges of
  competences among organizations
• This implies to compensate a weak functional and
  technical integration with a strong culture of
  cooperation
• The new art of wealth creation demands the
  willingness to focus on partnerships as much as
  on productivity gains

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Imagination in Action
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Neo-Taylorian company of the 80. Economic logic
founded on the accumulation of material capital
Virtual Company of the 21st century. Economic
logic Logique économique of co-production founded
on collective accumulation of immaterial capital

• The fear of innovation is one the first reasons
  for e.Transforming failures

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Ready to compete on the basis of organisational
models?
05

• The network changes the rules of the competition
• The organizational deficit becomes the first
  reason of the loss of chance in the
  international competition
• The most innovative companies that create and
  shape the new models on these meta-organisations
  will yield more wealth
• The competitive differentiation derives more and
  more from the organizational model (business
  design)
• We are in the century of networks who is to win?
  Millions of jobs are at stake