Outsourcing and the Networked Business

Last night, I attended the Association for Strategic Planning’s meeting at Suffolk University. The guest was Amit S. Mukherjee, author of The Spider’s Strategy: Creating Networks to Avert Crisis, Create Change, and Really Get Ahead. Amit gave a great talk showing the history of productivity leaps in business (he made the case that weapons manufacturers often lead the way). He, like us, sees the beginning of a new era of business roughly a decade ago.

So it was fun to open my file this morning for the next installment of excerpts from our book. The next topic is about the kind of shift that Amit described last night. And there is more to come in the coming days about what this means to managers. Maybe we can get him to comment along the way….

Today a lot of the work done for organizations is no longer done inside the organization by its own employees. Instead, partners with greater expertise or more efficient operations take on an aspect of your organization’s work. A big driver of this trend has been the differing costs of labor across the globe. During the past couple decades, countries like China grew their manufacturing base while information technology jobs went to countries like India. In intangible capital vocabulary, this converted internal human and structural capital into relationship capital.

Outsourcing has actually been around for a long time. In a course we delivered for mid-level information technology managers, we used an article about the outsourcing of IT jobs called, The End of Corporate Computing, by Nicholas Carr. Carr made an analogy between current trends in the IT market and the shift that occured when companies started purchasing their power from external suppliers in the early 20th century. One of the drivers of this shift was the efficient allocation of capacity. Carr points out that most corporate data centers use less than half the computing capacity of their computers. It’s not just the capacity; it is also about the work to maintain huge numbers of machines. This was an early call for the increased efficiency of what is now called cloud computing—solutions hosted on servers that can be managed more efficiently than can thousands of standalone personal computers.

All this is to say that the job of the manager has clearly migrated from being an internally-focused role that worked within a strict hierarchy to one that focuses on maximizing the effectiveness of the entire network of an operation. The makeup of your corporate knowledge factory and its many subsidiary networks can and will change over time. 

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

Networks: A Question of Control

As with so many other aspects of knowledge assets, there are both bottom-up and top-down aspects to networks. There are many who study networks that see them as analogous to self-organizing, living systems that occur in nature. If you believe this, then you believe that organizations can organize themselves. There is a lot of truth to this and it makes sense to dig in, using the approaches we outline above to understand how a network is working organically so that interventions are effective. But it is unrealistic to believe that businesses will become completely self-organizing in our lifetimes, if ever. Read more

Putting Networks to Use…in and for the organization

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. Read more

Mapping Personal Networks

Another way to approach network analysis within your intangible capital knowledge factory is to zoom down to the level of individual workers.

One of the common ways of using this kind of map is to identify and find patterns in the interaction between groups of employees and/or groups of external people. This kind of analysis can be used to identify critical sources of knowledge, the “go-to” people to find information or solve problems. It can also be used to understand the knowledge exchanges that happen—who helps connect people together, who helps solve problems and those with specialized knowledge.
Read more

Use Value Network maps to understand how your organization works from the bottom up

We usually look at organizational networks at three levels. The first (described as a knowledge factory) is at a strategic level, built on the high-level inventory of an organization’s intangible capital. Today, I’ll talk about the next takes the perspective of the knowledge factory down one more level of detail (third perspective, personal networks comes tomorrow).

This perspective looks at the roles people play in your organization. This is the Value Network methodology described by Verna Allee in The Future of Knowledge (still one of my favorite books on the knowledge economy and why I pursued certification in this methodology*).

This approach involves mapping a network where a specific task or process occurs. The nodes in this network are “roles.” A role speaks to the specific function that a person is playing. This is not their title on an org chart—it is usually more descriptive—such as advisor, buyer, designer, marketer, mentor, partner, problem solver. It is common for a person to serve in more than one role. Read more

Thinking about your organization as a network

The Internet is one huge network. But it is also the platform on which many smaller networks can be formed. Your organization exists in and through a lot of these smaller networks as well as the meta-network of the internet. Read more

Networks and the Organization: An Historical Context

The ability of people and organizations to connect with each other and to form networks moved into hyper-drive with the rise of the über network of our time, the Internet. Peter Drucker, one of the leading management thinkers of the last fifty years, highlighted the importance of the Internet by putting it into historical context.  Read more

IT Equals IC: Networks in the Organization

In my past couple posts, I have been talking about mapping networks as the new organization chart.

The concept of networks in the organization is not new. Human beings have always found ways to connect with each other through tribes, associations, work groups and many other types of networks. What is new is the speed and ease with which networks can be formed thanks to information technology (IT). It can be hard to separate the history of the technologies that have enabled the growth and capture of knowledge from the knowledge itself. Nowhere is this relationship more clear than with networks. IT helps us create powerful connections between people and organizations. And these connections, these relationships take on a life of their own. Read more

Horizontal or Vertical: two views of the organization—which is right?

An image that we have used over and over again in recent years to explain the managerial implications of  the knowledge era is depicted in this graphic. It is an abstraction of the organization chart. Like an organization chart, the triangular figure is wider at the bottom where there are more people at the bottom working in units or on projects. There is a management level that connects the “worker” to the corporate or executive level. As you will see throughout the coming chapters, the shift to the knowledge era is necessitating greater emphasis on the bottom of this triangle.  Read more

Pirate Bay and the Power of Networks

Umair Haque struck again on the economics of the knowledge economy. In a quick post on the prosecution of Pirate Bay, a file sharing site:

Set up a torrent tracker, get fined, go to jail. Go to work for a bank, destroy the economy, profit…That’s everything that is wrong with the economy in two sentences: the ongoing inability of today’s leaders to deal with 21st century economics.

This set off a firestorm leading to a follow-up post on “why the war against file-sharing in unwinnable.” Whether you agree with him or not about where we are today , his fundamental point is dead on.

21st century economics are radically decentralized. Wars against networks are unwinnable [by orthodox organizations]..only networks (or markets or communities)…can fight other networks. Read more

Next Page »