Do Business Well

• At the operational level, another challenge for marketers with regard to Web-based inter-organizational networks is that customer communications do not necessarily involve just one customer talking toone enterprise. Decisions need to be taken on where responsibility lies for particular tasks, to avoid duplication and customer confusion. To provide the kind of service that improves the chance of customer loyalty, companies need to co-ordinate their partners and vendors and customers through extranets that facilitate the sharing of information across company boundaries. Kalakota and Robinson (1999) suggest considering partners and vendors to be part of the firm’s extended enterprise, and this means sharing customer communication issues with everyone in contact with the customer through integrated applications such as customer service, field service, sales and marketing. This is the most critical issue currently

facing ‘clicks and mortar’ firms in developing a successful Internet strategy. Such open policies of information sharing mean that a whole host of issues have to be addressed concerning the ‘ownership’ of customer data, notwithstanding the technical difficulties inherent in integrating computer systems belonging to different organizations through an extranet.

While there are undoubtedly many firms that have an established tradition of successful inter-organizational networking, recent Internet developments have made such initiatives increasingly central to e-Business strategy. According to a special report on business and the Internet in The Economist,

The first and most crucial shift in thinking is to get away from the idea that any business is more or less a free-standing entity. The objective for large companies must be to become e-business hubs and for smaller ones to ensure they are vital spokes. The companies involved must be willing to bring suppliers and customers deep into their processes and to develop a similar understanding of their business partners’ processes. That implies a degree of openness and transparency which is new to most commercial organisations.

This warning is endorsed in the same publication by Symonds:

The ability to collaborate with others may be just as much of a competitive advantage as the ability to deploy the technology. Certainly the technology matters, but getting the business strategy right matters even more. And that may mean not just re-engineering your company, but reinventing it.

Kalakota and Robinson believe that the business design of the future will consist of a flexible network of relationships between firms, customers and suppliers creating ‘a unique business organism’ (1999: 18). Such structures enable resources to be pooled and hence generate economies of scale, with each network member contributing its particular expertise. It might be argued that these strategies are not new, and represent little more than the outsourcing of non-core activities to reduce costs. Kalakota and Robinson, however, argue that enthusiastic protagonists are going much further: changing corporate cultures, accessing key skills and implementing sophisticated technological systems in a manner that no individual firm could achieve alone.

At an early stage of the Internet era, Tapscott (1995) predicted the creation of competitive advantage in a digital world through collaboration, as networks of enterprises generate efficiencies for the benefit of all parties. In his most recent work he is unequivocal about the value of such networks, which he terms ‘Business webs’ or `B-webs’:

Business webs are inventing new value propositions, transforming the rules of

• competition, and mobilising people and resources to unprecedented levels of
• performance. Managers must master a new agenda for B-web strategy if they
• intend to win in the new economy.

Turner (2000) also emphasizes how the development of the information economy (in particular, the transition from ‘market-places’ to ‘market spaces’ without the need for physical contact) is pushing firms towards organizational structures based on networks. As a final example of how networking strategies are transforming organizational structures, Anders (2000) describes how Wells Fargo Bank is a creating synergies by teaming with a number of small Internet firms. The bank prefers to learn from the new mindsets and high energy levels of such enterprises, rather than smothering creativity by trying to foster innovation within its own bureaucratic structures and the associated slow decision-making systems. It is a `win—win’ situation, because from an Internet firm’s perspective, valuable credibility can be obtained through association with a trusted brand in the banking world.

The main point to take away from this section on partnerships is that the commercial benefits of the Internet go far beyond speeding up and automating a company’s own internal processes. It is the ability to spread efficiency gains to the business systems of suppliers and customers that is becoming critical. The ability to collaborate effectively with others may be just as much of a competitive advantage as the ability to deploy the technology.

Possibly related posts: (automatically generated)
Networked organizations: the importance of business partnerships Part 2

• Networked organizations: the importance of business partnerships Part 1
• Mobile commerce & Internal communications
• Internet Banking Strategies
• E-commerce Branding as part of Integrated Marketing Communication Strategy
• The Digital Divide
• Web Business Network Marketing in a world of new customer expectations
• Business Financial Thumb Up rules, don’t Break the Bank
• E-business: Twenty-one Principles to win hearts and Wallets
• Shifting Tactics from Boom to Bust
• The future of E-Marketing

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