Tuesday, June 1, 2010
Competing Networks: A Holistic Approach to Competition
Who competes today? Is it the stand alone organisation or is it the network of organisations?
The question is pertinent as success in today's 'Glocal' environment is dependent on the relations with suppliers, customers, partners and stakeholders. Companies don't compete with each other but its their collaborative networks which compete with each other. The success of Toyota is not of the Toyota Motor Corp. alone but the success of its network of suppliers, dealers, and other partners. The strength and relationships within networks gives the competitive edge in today's world. A good example of this would be the 'Standard Wars' like that of 'VHS' and 'Betamax' or that of recent 'HD DVD' and 'Blue-ray'. The winner was not the best technology but the one who had the network to sway the whole industry in its favour.
The competing networks are not entirely independent of each other and tend to have overlaps when they share some resource to common benefit. The overlap/sharing works to the advantage for both competing networks. Its very common to have automotive ancillaries who supply to various companies. Mobile companies share their patents with each other for a fee. Sometimes companies may even support each other out of necessity. Apple provides MS Office compatibility on its PCs and so does Google on its Google-Docs..
How far these networks reach out to? Does it go beyond the supply chain and technology partners? The answer would be Yes, if one closely examines the business environment of today. One would find examples of oil companies enjoying patronage of governments. An FMCG company engaging with environmental activists for CSR and public relations. The 'Buzz' network of die-hard customers and critics developed by a company to market their offerings. Affiliation of companies with regulatory bodies and personnel to influence new regulations for the industry. Also a network may include not so holy relationships like that with influential intermediaries for customer acquisition or with mafias for land acquisition or for ensuring safety and success of businesses.
After above discussion, one might agree that considering organisations as competing entities is a narrow view in today's dynamic and interconnected world. By considering itself a stand-alone competing entity, a company will not be able to leverage the competitive strength which comes from a strong network of organisations and influential bodies. In addition, a company would also have to be mindful of the network of which its a part of and take steps to strengthen its position within the network and the network itself.