Yoram Wind, Lauder Professor and Professor of Marketing, The Wharton School, University of Pennsylvania
Panelists, from left: moderator Yoram Wind, Philip Evans, Barbara Meynert and Frederico Sada González.
When asked to view a film in which people wearing different-colored shirts passed a basketball to one another and then to count the times the ball was passed from white shirt to white shirt, participants in one study not only turned in counts that differed wildly, but 50 percent of them utterly failed to notice a gorilla walking through the middle of the room. Moderator Yoram Wind of the University of Pennsylvania described this as an apt metaphor for the failure to recognize problems in any given business in a changing and increasingly "flattened" world.
Held up as the quintessential example to the contrary was the Li & Fung Group, which has achieved a remarkable level of fluidity within a new, "network-centric" business model. At Li & Fung, products are assembled from parts produced throughout Asia in such a way as to maximize comparative advantage by catering specifically to each customer's unique needs. Barbara Meynert asserted that creative resourcefulness makes it possible to create value for the entire supply chain, and ultimately for the consumer. One means toward this end is the utilization of teams for each individual project that share incentives with the customer to be efficient and provide a high-quality product. Another method is the use of local people as "orchestraters" of operations on a region-by-region basis.
All the panelists agreed that for a network-centric business to thrive, it must develop relationships of trust based on financial transparency and fair reward incentives. Philip Evans of Boston Consulting Group noted that these relationships often take longer to form, but that the returns speak for themselves when compared to the traditional management style of the old firm-centric model. Examples cited were eBay and Amazon, and the use of consumer feedback by both to garner the trust of the community that uses their services; a bad review of a book may seem counter-intuitive in the short run, but in the long run, the trust it creates produces extraordinary returns. In the case of Toyota, it was pointed out that shared intellectual property rights facilitate faster technological innovation, compared with a lack of openness in GM.
In addition to fluidity, trust and transparency within a given business, increased efficiency can be found in the network-centric model via the consumer themselves, who in many cases take up responsibilities like design free of charge. The example of threadless.com was presented in this light, where customers design their own T-shirts. Open source software and the success of Linux, in particular, is perhaps the best example of this trend.
While the panel focused for the largest part on these various strategies to increasing comparative advantage within the network-centric model, the starting point for each of the panelists is that the network form does indeed provide a competitive edge. The question, then, becomes one of transition, or what Meynert characterized as a "mind-shift" away from the firm-centric model.
In responding to a question from the audience as to whether or not the American culture of individualism represented a potential barrier to entry into network-centric businesses, Meynert shared the moment when she herself first "saw the flat world" in a group of tech-savvy youngsters. Evans provided the example of Lexus Canada for successful North American network-centric business, but he also acknowledged that mind-shift is not a trivial concern, and not always easily achieved within the existing corporate structure.
Federico Sada Gonzalez of Mexico′s Viitro, S.A. de C.V., described the change in terms of what used to be big fish and little fish. Now, he said, the fastest fish eats them both. Perhaps the gorilla in the room is not a problem with the existing paradigm, but rather our failure to recognize and successfully transition to a better one.
Global Conference 2013
Former Prime Minister Tony Blair, philanthropist Bill Gates and Strive Masiyiwa of Econet Wireless discuss advancing prosperity in Africa.
