Putting Networks to Use…in and for the organization

August 26, 2010 by  

In all the discussions in recent weeks here on the growth of networks and organizations, it is hard to say which came first—the human or the technological connection. The shift to a knowledge economy has made it more and more attractive to connect and automate using IT and networking technologies. The rise of new forms of networking such as social media is actually fueling the trend. Probably some of the most interesting trends are the situations where the concept of networking is changing the whole vision of the business. If you begin to see your organization as a network, then the world literally opens up to you.

An example of this is the “two-sided market” network which has used to explain markets where platform providers serve as a connecting node between two kinds of stakeholders. Examples include Microsoft and/or Apple who are an intermediary between consumers and application developers. Another example is Monster and CareerBuilder who serve as a connection between employers and job seekers. 

The concept of networked business models has also been applied very effectively in the nonprofit sphere. We became aware of this approach to achieving social goals through a paper by Jane Wei-Skillern and Sonia Marciano. They document how the small, networked organizations can accomplish much more than large nonprofits that do all the work themselves. They contrast two models within the organization Habitat for Humanity. The typical Habitat program in a country builds around 200 houses per year by focusing on fundraising, staffing, and programming. But the program in Egypt takes a different tack. It works through existing community organizations and averages around 1,000 houses per year. This approach puts the mission at the center of operations and is willing to cede some control in the process.

A final example of networked business models that has been used frequently in recent years is Al Queda, which was deliberately designed as a decentralized system of cells linked primarily by ideology. Our friend, Ken Jarboe at the Athena Alliance blogged in 2007 that it was ironic that the U.S. response to this networked business model was to “rearrange the bureaucracy” by creating the large Department of Homeland Security.  This can almost be seen as a battle between centralized and decentralized control.

Adapted from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization by Mary Adams and Michael Oleksak.

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