1 module 6 : building networked businesses matakuliah: j0422 / manajemen e-corporation tahun: 2005...

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MODULE 6 :Building Networked Businesses

Matakuliah : J0422 / Manajemen E-Corporation

Tahun : 2005

Versi : 1 / 2

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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

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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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Building the Networked Business

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/I rwin, 2002.

Org

an

iza

tio

n

Simple &Local

Stable & Certain

Dynamic & UncertainEnvironment

Complex &Global

Entrepreneurial Organization

Hierarchy

??

Chapter 3 Figure 3-1

The Organization Design Challenge

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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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Info

rma

tio

n R

eq

uir

em

en

ts

Simple &Local

Stable & Certain

Dynamic & UncertainBusiness Decision Making Environment

Complex &Global

Local Intelligence

Centralized intelligence Shared intelligence

Hierarchical Organization &Mainframe Technology

Networked Organization &Networked Technology

Entrepreneurial Organization &PC & LAN Technology

+

+ +

Networked Organizational Models are Enabled by Networked Technologies


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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


Sample Organizational Components

Sample Technology Components

• Human Resources Management• Strategic Alliances• Customer Loyalty• Supplier Loyalty• Partnerships

• Planning and Budgeting• Performance Monitoring• Organization Structure and Reporting• Organization Decision Making and

Learning

• Operating Process • New Product Development• Business Venturing

• HR Systems• Customer Relationship Management (CRM)• Personalization• Communication Infrastructure• User Access Devices

• 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

Leading & Engaging

Managing & Learning

Operating & Innovating


Blueprint for a “Big-Small” Business

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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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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 information

in real-time to deal with unforeseen problems


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PrecisionExecution

Fast-CycledInnovation

Entrepreneurial

Hierarchy

Networked

PrecisionExecution

Fast-CycledInnovation

Entrepreneurial

Hierarchy

Networked

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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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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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Network Management Process Big-Small most provide assess to a shared source of real-

time 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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Networked

Efficiency &Integration

Learning byDoing

Entrepreneurial

Hierarchy

Networked

Efficiency &Integration

Learning byDoing

Entrepreneurial

Hierarchy

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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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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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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 the value chain network Where Should Activities Be Performed?

How Should We Relate to Market Participants?

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Building the value chain network Where Should Activities Be Performed

Options Description Vertical Integration Locate all but the most routine, transaction-oriented activities inside the

firm. Selective Sourcing Source selected activities from the outside. Traditionally, sourced activities

were controlled through short-term contracts. Virtual Integration 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 the value chain network How Should We Relate to Market Participants?

Transaction Contract Partnership Basis of Interaction

Discrete exchange of goods, services, and payments (simple buyer/seller exchange)

Prior agreement governs exchange (e.g., service contract, lease, purchase agreement)

Shared goals and processes for achieving them (e.g., collaborative product development)

Duration of Interaction

Immediate Usually short-term and defined by the contract

Usually long term and defined by the relationship

Level of Business Integration

Low Low to Moderate High

Coordination and Control

Supply and demand (market)

Terms of contract define procedures, monitoring, and reporting

Interorganizational structures, processes, and systems; Mutual adjustment

Information Flow

Primarily one way; Limited in scope and amount; Low level of customization

One or two way; Scope & amount are usually defined in the contract

Two-way (interactive); Extensive exchange of rich, detailed information; Dynamically changing; Customizable

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Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.

Impact of Information Technology on Market Evolution


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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?

1 module 6 : building networked businesses matakuliah: j0422 / manajemen e-corporation tahun: 2005...

Documents

networked business slide

new organization capabilities

networked organization

networked leadership

engaging slide

new organization structures

networked infrastructure

new capabilities abb