‘The Spider’s Strategy’

Amit S. Mukherjee’s exclusive interviews with top executives at Nokia and Hewlett-Packard and his study of over 500 manufacturing and retail companies show just how networked our world is.

He recounts the story of a fire which broke out at a Philips microchips factory in New Mexico. The microchips of Nokia and Ericsson were manufactured in this factory, and the fire caused a lot of trouble for these two corporations because of interruptions in their supply. Nokia dealt with the crisis effectively by cooperating with its partners while Ericsson lost hundreds of millions of dollars immediately, and by 2004 its revenues declined 52 percent from pre-fire levels. According to Mukherjee, Nokia was able to cope rapidly after the fire at Philips because it already had a network that could solve its supply problems.

In my opinion, networks are both good and bad. The networks are good as in the case of Nokia because Nokia was able to alter its supply process with the support of its network.

The networked business environment is a result of the combined action of three key irrevocable trends: the breaking down of work across time and space, an explosion in the variety of output and the disappearance of traditional boundaries between industries. Companies can outsource any kind of corporate functions: accounting, marketing, design, production and sales. Networks can help break down all this work. Providing an unlimited variety of products is possible again with the support of networks. Any company can move into a new industry with the help of an existing player. So the new networked economy helps companies to adapt to changes and use opportunities more than ever. Mukherjee suggests four design principles -- guidelines for policy rather than a template to stamp out identical sets of tools and procedures. The first principle is “Embed sense-and-respond capabilities within normal plan-and-execute processes.” Without embedding, a company cannot be adaptive. Embedding requires changing work practices, just as becoming truly quality-focused requires making quality the responsibility of individual employees.

The second design principle is “Adopt strategies that promote collaborative action among network partners.” The fragmentation of work will require companies to create win-win partnerships with their partners because no company can succeed while its network is ailing. The third design principle is “Value and nurture organizational learning.” The failure to learn keeps companies from intelligent and effortless adaptation. It impedes both the effective use of prior principles and the interpretation of environmental signals to take action. The last design principle is “Deploy technologies that enable intelligent adjustment to major environmental shifts.” It asserts that companies must invest in technologies that provide visibility, support analysis, facilitate collaboration or enable mobility. Networking for individuals and corporations is important without question; however, it is necessary, not sufficient. Without changing minds and decisions, adaptation is impossible.