How do you create value today?
What’s the best way to scale an enterprise?
How do you grow a company faster than ever and scale with lower cost?
It’s all possible if you leverage the network.
That’s how companies like Amazon, Airbnb, and Uber have succeeded against the odds.
In The Network Imperative: How to Survive and Grow in the Age of Digital Business Models , authors Barry Libert, Megan Beck and Jerry Wind argue that it is the way companies create value. And today, the best way to create value is through scalable and digitally networked business models – like Amazon, Google, Uber, Airbnb – that leverage networks of employees, customers, and suppliers.
Create a Virtual Network
For those not yet familiar with your work, what’s the network imperative?
The network imperative is recognizing that today’s most valuable companies are virtual networks that rely on digital platforms. This leading edge, new business model is emerging in every industry: Amazon and Alibaba in the retail industry, Match.com and Tinder in dating, Facebook and Instagram in Social Media, LinkedIn in professional resumes, Airbnb and Homeaway in room rentals, Uber and Lyft in shared car services, as well as the NYSE and NASDAQ in the financial sector.
What did your research show in terms of the financial results of “network orchestrators” versus the other 3 business models?
These business models – which we call Network Orchestrators – are more about orchestrating resources, be it insights, relationships, cars, homes, and skills rather than owning them. In addition, they scale based on the a flywheel effect , e.g. the more people, services and interactions there are on the network, the more others will join and make available their assets – whether that’s friends, photos, resumes, cars or homes.
5 Steps to Become Network Centric
Would you briefly describe the PIVOT model?
Our research indicates that all organizations have dormant, virtual networks of either employees, customers, prospects, suppliers, investors or alumni that, when combined with a digital platform and a clear incentive system to share what they have, what they know and who they know with others, can apply network orchestration to their business model. To help incumbents transition from firm centered (where they focus on what they make, market and sell) to network centric (where they orchestrate what others have and create peer-to-peer connections), we created a 5 step process called PIVOT. The 5 steps are:
- Pinpoint your current business model (e.g. which of the 4 business models are you? Asset builder, service provider, technology creator or network orchestrator?)
- Inventory all your assets both tangible (e.g. plant, property and equipment as well as money) and intangible (brand, intellectual capital and relationships as well as interactions and big data).
- Visualize your future digital platform that connects your network of people or things.
- Operate your new digital network and virtual platform alongside your existing business and protect it while it grows, experimenting along the way to find the sweet spot that insures its success.
- Track using new big data metrics such as engagement, sentiment or interaction along with traditional financial measures to see how your network is doing and the value it creates.