Building the Network Economy: Capabilities and Organization

1
Building the Network Economy Capabilities and
Organization

• Module 2

2
Chapter 3 Building Networked Business

• Characteristics of large organizations
• Characteristics small organizations
• Need for new business design big-small
• Blueprint for a networked organization
• Building value networks

3
Characteristics of Large Organizations

• Functional operations
• Several levels of management
• Top-down approach
• Tight control
• Slow to react

4
Characteristics of Small Organizations

• Informal processes
• Few levels of management
• Bottom-up approach
• Empowered employees
• Fast to react

5
Need for New Business Design

• Organization environment interaction
• Environments are dynamic and uncertain
• Large firms must respond quickly to local needs
• Intelligence cannot be centralized
• Organizations need to have a global focus
• Small firms must act big to survive in global
  economy
• New business design big-small
• IT infrastructure and organization design

6
Blueprint for a Networked Organization

• Three categories of business design
• Operating and innovating
• Managing and learning
• Leading and engaging

7
Sample Business and IT Components

• Business components
• Operating and innovating
• Comparing large, small, and networked designs
• IT components
• Enterprise systems
• Supply chain management
• Order fulfillment
• Distributed real-time processing infrastructure

8
Sample Business and IT Components

• Business Components
• Managing and learning
• Comparing large, small, and networked designs
• IT Components
• Reporting systems
• Decision support tools
• Business intelligence systems
• Knowledge management systems

9
Sample Business and IT Components

• Business components
• Leading and engaging
• Comparing large, small, and networked designs
• IT components
• Human resource systems
• Customer relationship management systems
• Collaborative tools
• User access devices

10
Building Value Networks

• Locus of activities
• Vertical integration, outsourcing, virtual
  integration
• Relationships with market participants
• Transaction, contract, partnership
• Evolving market structure and relationships
• Structure and relationship interaction
• Emergence of B2B and C2C markets

11
Chapter 4 Making the Case for Networked
Businesses

• Economies of scale and scope
• Comparing industrial and network economies
• Prioritizing IT investments

12
Economies of Scale and Scope

• Economies of Scale
• Produce, distribute products/services faster,
  better, and cheaper
• Economies of Scope
• Ability to leverage existing business
  infrastructure to produce and distribute new
  products/services and launch new businesses

13
Comparing Industrial and Network Economies

• Industrial economies
• Built on internal economies of scale and scope
  (ESS)
• Technical innovations enabling ESS in production
• Focus on organization
• Network economies
• Built on external economies of scale and scope
• Technical innovations improving ESS in
  distribution
• Focus on community

14
Prioritizing IT Investments

• Benefits from investments in infrastructure
• Type I benefits (functionality and flexibility)
• Benefits from doing business on a network
• Type II benefits (commerce, content, community)