Increasing volatility, uncertainty, complexity and ambiguity (VUCA) can no longer be mastered with the rigid structures of the past. Collaboration takes place across borders, wherever you look. The related structures are constantly changing and subsist on self-organizing actors who build, use and eventually resolve the necessary relationships. The result is a more or less dense network. Aside from today’s needs, where everything is just one click away, there are some arguments in favor of and against the use of networks.
The following ProCons affect not only networks but all types of communities.
The benefits cover more than just the economic interests of the companies.
Competence advantages The network draws its strength from the purposeful connection of resources and capabilities. The participants’ intrinsic motivation provides the network with a long-term advantage ahead of other forms, which on the one hand require a lot of setup time and on the other hand never have comparable access to this amount of competencies.
Information advantages The actors provide a lot of information. This includes experience and knowledge about different markets, customers, products, technologies and, above all, business processes. By sharing this information (push vs. pull), they reach all network participants at a relatively high speed.
The actors already provide a variety of resources – material and immaterial goods and especially people. Contrary to other forms of organization, the network offers an adjustable openness that makes it possible to expand resources faster. Just the use of these resources of the actors provide means that otherwise would have to be procured with much effort. In addition, this tool is usually better suited that is brought by the craftsman.
Social advantages Getting to know like-minded people is a huge advantage for the actors. The sense of community offers an environment in which you can expect more pleasant working conditions and a trustworthy cooperation due to the same interests.
Economic advantages Looking at the entire network, there are many savings for the company. Cost advantages arise when the actors already bring additionally to their commitment many resources that do not need to be purchased. The combined competence accelerates the business and reduces the risks. Practicing self-organization in a network avoids delays caused by a hierarchical structure with its long decision-making and communication paths.
Against networks speak especially apparent extra efforts, unpredictability and the difficult control.
Even with all the advantages, networking requires active involvement of its members. The open procedures and the lack of centralized control require other efforts of the participants, which are perceived at first glance as additional expenses. However, much higher overall savings can be made for the company.
Even with a lot of engagement in disseminating information, there can be more double work in the self-organized network than in a tayloristic organization. The lack of control can lead to a competition for the best idea that would be wasteful.
Increased communication effort The multiplicity of actors increases the coordination effort, which can even not be avoided with agile approaches. New insights and experiences simply have to be shared, absorbed and processed. This effort is the price for a lot of advantages.
Cooperation issues Of course, because of the variety of characters, there will not only be sympathy, but also antipathies that can burden collaboration and trust and eventually lead to an increased need for mediation. This makes team building an important exercise.
Lack of control A strong driver for the formation of a network is the intrinsic appeal for each participant. Leadership could quickly disturb. At the same time, a network also needs a direction. Without centralized control, the network might take longer to reach an agreement.
Information loss The open structure of a network and the frequent participation of individual members in different networks automatically lead to the leakage of information. Lack of secrecy could endanger the network.
Bottom line: Although many aspects speak against creation and participation in a network, you have to face the fact that a VUCA world creates new conditions that function in a way that cannot be covered by traditional approaches. The competence, information, resource social, and economic advantages are arguments for the use of networks. At the same time, appropriate measures have to minimize the risks.
The search for digital transformation affects many areas of the business. In the context of the delivery of goods and attendances as well as in the generation of revenue and income, traditional notions of the corporate world dissolve.
Size no longer sets the range
Knowledge is not only available to the financially strong ones
Collaboration does not need the common superstructure of a company.
Society and politics no longer provide a sense of belonging and social security to citizens.
Opinions are controlled with new resources
The new normal is the loud otherness
The own filter bubble reinforces ethical principles
A look at the dimensions of digital transformation shows that we are already in the middle of change.
The following dimensions require rethinking in corporations as well as in politics – at the latest now! Digital transformation will be possible as soon as obsolete conditions are abandoned – e.g., the preference of long-term frame contracts, high entry barriers for small companies in the purchasing departments, lack of access to financial means, and bureaucratic overload through institutional requirements.
Scaling for all The use of economies of scale was previously reserved for large companies. To keep the price for the means of production low, significant quantities had to be accepted. Digital components cost almost nothing – even if long-established providers still charge according to the number of users. New payment models also allow small companies to use the latest solutions. Now, these new entrepreneurs still have to be freed from the bureaucratic burden of the old economy by providing new terms and conditions for these micro-corp partners in the purchasing and HR departments.
Limitless cooperation The services today are complex since they are composed of many building blocks. The differences in local or national circumstances that have to be considered are made possible by modules and interfaces that fit together because they are standardized. The mandatory cooperation and the distribution of income need reliable contract frames.
Increasing acceleration The virtual proximity of all those involved, who are only one click away, leads to a staggering speed. Established, static approaches and formal, hard-wired decision-making can no longer compete. This gives unbureaucratic, agile companies a head start. But it can only be achieved if the legal and internal framework conditions are correspondingly de-bureaucratized.
“Soft” capital Since physical assets no longer count in digital markets, “soft” capital comes to the fore – data, knowledge, software, relationships. The critical key players are the computers, networks, and particularly the staff, who are stuck in drilled procedures and rules and can be located anywhere in the world. This requires the replacement of a rigid corporate approach with networks that can quickly concatenate and dissolve again.
Homeless values The values of a company are situated in the cyber-wonderland. There are no governmental boundaries or affiliations. Since national laws and regulations lose their effectiveness, we need in the medium term supranational legislatures and tax authorities to take over these tasks. In the meantime, the values are moving back and forth in the twilight zone – always looking for loopholes in laws to increase their earnings. Assets are no longer dependent on physical values but on the ability to create something new.
Network for all The low efforts needed to set up a network enable everyone to build their information bubble. Over time, there will be powerful creative clouds due to the participants and their networking. This wisdom of the crowd, which is available for free, means the end of many expensive research sites.
Multi-sided business models Due to the diverse market, it is increasingly difficult to find the right partner. For this reason, corporate models will evolve that specialize in the mediation between producers, their suppliers, and customers. Proven, close cooperation will dissolve in favor of spontaneous, time-limited, needs-oriented interest groups. The mediator role can be exercised by those who bring the relevant partners together and earn a living from it.
Site loss The classic location and headquarters disappear or change from glass palaces to one site among many. The corporate headquarters will be located where it is most skillful without being officially registered because the biz takes place in cyberspace. Accordingly, there will no longer be permanent staff with their representatives and regulated employment relationships. Legislation, state power, and jurisdiction will adapt to international challenges to prevent location nomads, who are constantly on the run from responsibility and other duties.
The point in time when the digital transformation is over depends on how quickly and skillfully large companies respond to these new developments. At the same time, government agencies are challenged to create the appropriate framework conditions to make these new developments exploitable. It is not the question of whether but when the parties act. In the meantime, the pioneers of these developments will forge ahead on the Internet and enforce their approaches.
The digital transformation has been going on for a long time. Like the frog in the Boiling Frog Syndrome, the world is heating up due to increasing digitization and networking. The dimensions are
the scaling for all
the limitless collaboration
the increasing acceleration
the “soft” capital
the homeless values
the network for everyone
the multi-sided corporate models and
the loss of the site.
Bottom line: For the sectors of the economy and society, this requires an immediate rethinking to control the exploited free space that is so far unregulated by companies. This applies to tax havens as well as to the providers of illegal businesses in the Darknet. The dimensions of digital transformation are the basis.