“The term ‘extended enterprise’ represents the concept that a company is made up not just of its employees, its board members, and executives, but also its business partners, its suppliers, and even its customers. The extended enterprise can only be successful if all of the component groups and individuals have the information they need in order to do business effectively.” (Information Builders).
The extended enterprise is alive and well. Businesses are concentrating more and more on their core competences and outsourcing all other activities. This results in such businesses being very dependant on their suppliers of both product components and services. This has proved to be a good thing. According to Smith and Reinersten (1995), as much as 80 per cent of a product’s value can be purchased from suppliers.
Key to the Extended Enterprise is trust and information sharing - the latter being greatly facilitated by advances in technology and, in particular, the web. This bodes well for rural based businesses with the appropriate technological infrastructure. The expertise that exists within rural businesses can become part of an extended enterprise. The need for geographic proximity to all parties in a business relationship are quickly diminishing - we need only look to the successes many companies in Ireland have had in outsourcing manufacturing to places as far away as India.
So my advice to rural based businesses, not only do you have to be very good at what you do, you also need to have the technology to allow you to integrate with other businesses. If you don’t currently have the technology then work hard at ensuring you have the capacity to absorb the technology if the opportunity arises.
Information Builders: http://www.informationbuilders.com/extended-enterprise.html
Smith and Reinersten (1995), ‘Developing Products in Half the Time: New Rules, New
Tools,’ John Wiley and Sons Inc.
The latest newsletter from TechSearch.ie provides a nice summary of the key points from their recent conference on “Innovating the Business Model - Using Open Innovation to grow your business in new directions”, with the keynote speaker being none other than Professor Henry Chesbrough (author of the excellent book “Open Innovation: The New Imperative for Creating and Profiting from Technology“).
The key points are:
Good ideas are widely distributed. If you accept that not all the smart people work for you, then you can recognise the need to open up the search for useful external ideas.
Financial Managers must “play poker as well as chess” in that they must not dis-regard the potential value of projects which may fail conventional commercial assessments.
Consider the need to Connect & Develop (C&D) as well as Research & Develop (R&D). To manage Intellectual Property (IP), we need to access external IP to develop our own businesses and we need to profit from our own IP by putting it into other business models.
Business Model innovation is just as important as Technological innovation.
Working in an Open Innovation environment requires an enormous level of trust between partners – it’s critical to maintain and guard this trust.
By securing Global partnerships, smaller companies can scale globally.
In terms of evolving new business models, managers need to challenge themselves to “think outside the box”
Why are some people good innovators and others not? Can one choose to be an innovator? What are the characteristics of an innovator? The people over at Think Simple Now have summarised some of the habits of innovators from Scott Berkun’s book, “The Myths of Innovation“.
They are:
Persistence
Remove Self-Limiting Inhibitions
Take Risks, Make Mistakes
Escape
Writing Things Down
Find Patterns & Create Combinations
Curiosity
For me it starts with escaping - limiting your thought process by your imagination only.
Recently I gave a talk to a group of, rural based, micro-enterprises entitled “Getting more from your business through technology”. I had 20 minutes in which to say my piece. Here were my main points:
No one knows your business like yourself. It is difficult, nay impossible, for anybody to tell you how to get more from your business through technology without them first understanding your business model (especially in just 20 minutes).
Are you clear on how you compete? Are you following a low cost strategy or a product/service differentiation strategy? Why? How do you seek to create and sustain a competitive advantage? If you know the answers to these questions then you can start determining how to get more from your business through technology.
Know your value stream, that is, be clear as to how you add value to the customer. Seek out technologies that either
help you increase the customer value you provide or
help you provide new customer value.
Technology is generally a means through which customer value can be provided. Customers value the products of technology and not usually the technology itself.
Develop a technology strategy which focus on realising your business strategy through, technology assisted, customer value creation. Don’t over document such a strategy.
Continuously ask the question “How does this technology add customer value?”.
The use of technology is, for most businesses, no longer optional. Ignoring technology is akin to ignoring your competitors and your customers.
Areas in which technology can assist you create customer value:
Marketing e.g. web site, blogs, online advertising, email
“As a doctor and researcher, Hans Rosling identified a new paralytic disease induced by hunger in rural Africa. Now the global health professor is looking at the bigger picture, increasing our understanding of social and economic development with the remarkable trend-revealing software he created.” (TEB Web site)
Below is a recording of a talk he gave at TED 2007 entitled “New insights on poverty and life around the world”. This is one of the most enjoyable presentations I have watched in a long time and is a great demonstration of Dr Rosling’s (now Google’s) way cool statistical software.
Irving Wladawsky-Berger, vice-president of Technology Strategy and Innovation at IBM, writes a very interesting blog entitled Business, Innovation and Survival. The blogs describes some of Irving’s experiences with regard to IBM and innovation. For me, it’s core message is that successful innovation isn’t simply about a good idea. Indeed you could be sitting on the best idea/technology in the world but if your organisation hasn’t a culture of innovation then realising your innovation is next to impossible.
So your an inventor but are you an entrepreneur? You can develop the technology but can you commercialise it? Lets say we’re talking about a computer game here (an apt example seeing that Tipperary Institute is the home of Robocode Ireland) and lets assume that the game you have developed is actually really good. So where do you go from here?
First things first, having a really good game (even the best game ever) isn’t worth diddly squat unless you can actually commercialise it. You basically have two choices, go it alone or find a partner. Going it alone will require you to develop business skills (namely marketing, sales and finance) and getting your hands on a lot of cash. This is what is known as the closed innovation model - doing it all yourself. The other option is finding a partner that will commercialise your product for you. This is known as the open innovation model, where companies acquire your technology and commercialise it. This is a model that is being used more and more by companies today as they realise that they can’t possibly come up with all the good ideas and that they need to be open to accepting ideas from outside their company. Selecting the right partner isn’t easy. Some potential partners will show high interest, then stall (which Guy Kawasaki, in his book Art of the Start, calls “S-H-I-T-S” tactics). Why would a potential partner use such tactics? For a number of reasons but mainly due to the fact that they like your idea, they don’t want the idea going anywhere else but they don’t have the time/resources to do anything with it just now. If they can stall you long enough the value of the idea may lessen and with it its potential threat.
So what’s the moral of the story? Know what you know, know what you don’t know and know what you need to know. Be patient and prudent. Plan for failure, that’s not the same as planing to fail but if you do fail then learn from it and move on. If you want to make money from your game their is a time at which you will have to concentrate less on the game and more on the gaming business. Remember there is no such thing as a free lunch. Believe in your abilities, get help where necessary, and if you make millions, which I genuinely hope you do, remember who gave you this advice.
A popular business adage is “if you can’t measure it, it doesn’t exist” (I’ve also heard it extended with “and if it doesn’t exist you can’t manage it”). I’ve regularly heard business consultants recite this when they are justifying the need for key performance indicators in relation to a set of objectives.
Anyway, the same holds true for the TippSoc community blog. I have noticed that, according to the TippSoc home page, I regularly have 1000+ “hits” on my blog. But what exactly constitutes a hit? Where are the hits coming from? What percentage of hits actually represent “eyeballs”? If I can’t answer these questions, and I can’t, it means I can’t measure what is being asked of me, and if I can’t measure the number of visitors to my blog then they don’t exist.
So what next? We at TippSoc need to measure who/what is visiting our blog site, when they are visiting our site, how often, what do they read, what do they have for breakfast? Has anyone any ideas how best we can do this?
Today, I read an interesting article in the Irish Sunday Independent by Roisin Burke entitled ‘Adapting and surviving: Reports of the demise of Irish manufacturing have been exaggerated, but the nature of the sector is changing here as it is everywhere.’. Roisin correctly identifies a shift in the manufacturing sector and states that the “manufacturing is no longer a function in isolation and is becoming integrated with other areas such as customer and technical support, supply chain management and research and development to produce complete product lines…Companies will become extended enterprises, which are flexible and responsive to customer needs.“. So what are extended enterprises?
Extended enterprises have, according to the researchers Browne and Zhang (1999), have three main characterisitics:
Manufacturing organisations concentrate on their core business and technical activities and outsource all other non-core activities.
Manufacturing organisations establish long tern relationships with key customers and treats them as key business partners.
Methods, business processes and technology are available to support business activities that cross traditional enterprise boundaries. These methods particularly support supplier-customer integration through the interchange of commercial and technical information, seamlessly and effectively.
The extended enterprise is a collection of organisations working together, all concentrating on their own core competences, in the sale of a product. What brings them together is an increased focus on customer service and a knowledge that modern day customers demand more than just high quality customisable products but clear advantages from the intangible services and accessories that come with the product (such as customer support, finance, recycling, etc). For example, car dealers, car manufacturing, finance companies all coming together on the car lot, through the embodiement of the sales person, to offer you everything you need to purchase a car.
Why extended enterprises are of interest to me is because extended enterprises achieve competitive adavantage through the integration, using technology, of information and the efficient flow of products, goods and services between the organisations involved in the enterprierse and ultimately to the customer who purchases the “extended product” (the product is extended with such services as customer support, finance options, etc). It is the use of technology in such a way that is of real interest to me. Organisations can start to become extended only if they enable external access, to collaborating partners in the extended enterprise, to their key information systems. This allows everyone in the enterprise, i.e. other organisations, to use everyone elses systems so as to improve the sale of the product. Web services offer great potential in assisting organisations to become more integrated and mobile and wireless technologies (such as RFID) promise to improve the efficiency of information flow.
Browne, J. & Zhang, J. (1999) Extended and virtual enterprises - similarities and differences. International Journal of Agile Management Systems, 1, 30-36.
Addition 8/1/07:
Irving Wladawsky-Berger has just posted an interesting blog on this subject
A recent report from the Economist Intelligence Unit (EUI) suggests that many EU companies are favouring an open approach to innovation. “In the past, companies tended to invest in in-house R&D and ring fence their ideas and technologies, believing it to be the best way to protect and benefit economically from their IP. However, in today’s information-rich environment, many believe this approach to IP protection and business to be obsolete, favouring instead a more open approach to innovation, where ideas flow in and out of companies.”
Why are some people good innovators and others not? Can one choose to be an innovator? What are the characteristics of an innovator? The people over at 