Network-Centric Strategic Planning Nik Mohd Hasyudeen Yusoff CEO and Thought Leader, Inovastra Competitiveness Through Innovation and Strategy

Agenda Network-Centric competition Leveraging on network of like-minded partners Issues in competing using network-centric strategy Cultural changes in applying Network-Centric strategy Case studies of the application of network-centric strategy Concluding thoughts

Network-Centric competition

Leveraging on network of like-minded partners

Issues in competing using network-centric strategy

Cultural changes in applying Network-Centric strategy

Case studies of the application of network-centric strategy

Concluding thoughts

Network-Centric Competition Change is something that organisations and enterprises have to contemplate with all the time Politics, Economy, Society, Technology, Environment are change drivers which affect the dynamics in the marketplace The pace, frequency and impact of change would require strategic response from organisations and enterprises

Change is something that organisations and enterprises have to contemplate with all the time

Politics, Economy, Society, Technology, Environment are change drivers which affect the dynamics in the marketplace

The pace, frequency and impact of change would require strategic response from organisations and enterprises

Network-Centric Competition Your Business Your Customers Your Customers Your Customers Your Suppliers Your Network Partners Your Competitors Your Competitors Economy Environment Technology Society Politics

Re-configure, Re-invent, Re-think Re-configure your value chain – what is your unique selling proposition ? Re-invent your business model – how do you structure your business to interact with business partners and suppliers to offer your USP to your clients? Re-think your business process – could it be done differently in a more effective and efficient manner which add more value to clients? Network-Centric Competition

Re-configure, Re-invent, Re-think

Re-configure your value chain – what is your unique selling proposition ?

Re-invent your business model – how do you structure your business to interact with business partners and suppliers to offer your USP to your clients?

Re-think your business process – could it be done differently in a more effective and efficient manner which add more value to clients?

Network-Centric Competition An enterprise vertically structured Market 1 Market 2 Market 3 Direct present Vertical Integration? Direct present Direct present

Network-Centric Competition An Enterprise leveraging on network Market 1 Market 2 Market 3 Direct present Network- Centric? Network Partner Network Partner Service Platform Owner

Network-Centric Competition Clients Problems Business Services Firm 1 Business Services Firm 2 Sorry, no capability Yes, we have solutions! Knowledge provider Subject Matter Expert Business Services Firm 3

Network-Centric Competition Network-Centric Competition Principles 1 – Adapted from the Principles of Network-Centric Innovation, The Global Brain, Nambisan and Sawhney Principles of Network-Centric Competition 1 Description Examples Shared goals and objectives Common goals bring network members together Customers community Shared “world view” Common assumptions, mental models Open Source Community “ Social” knowledge creation Interaction among members as basis of value creation Inventor networks Architecture of participation Systems, mechanisms, processes to participate Open source community

Network-Centric Competition Management Features Leveraging on like-minded partners Network-Centric Elements Features Network leadership Orchestrating the behaviour of network members and network activities in creating value to clients Network governance A clear articulation of the roles and responsibilities of the members in the network Supporting infrastructure Knowledge management, project management, technology platforms, business tools etc which are core to the USP of the network Intellectual property management and value appropriation protocols Cover how intellectual property is developed, owned and shared as well as the value created through the use of the IPs are shared

Leveraging on like-minded partners Business Services Firm Business Partner Business Partner Existing Clients New Clients New Clients Existing services based on existing capabilities New services based on partner’s capabilities New services based on newly acquired capabilities New services to new clients based on partner’s capabilities New services to new clients based on partner’s capabilities and new distribution channels

Issues in competing using Network-Centric strategy Could an enterprise build strategic relationships with like-minded enterprises to serve common customers or markets? What would bind these enterprises together? Who should lead the network? What are the reasons for this right of leadership? How would the members of the network benefit from the network? How should an enterprise structure itself internally to be effective in the network?

Could an enterprise build strategic relationships with like-minded enterprises to serve common customers or markets?

What would bind these enterprises together?

Who should lead the network? What are the reasons for this right of leadership?

How would the members of the network benefit from the network?

How should an enterprise structure itself internally to be effective in the network?

Cultural changes in applying Network-Centric strategy Leadership – willingness to share strategic issues and rely on network partners based on agreed parameters Team – ability to understand the strategic relationship and execute plans holistically, need to do away with “Not Invented Here” and “We Know Everything” syndromes Internal processes and procedures need to be change to accommodate the network-centric strategy – training and re-training needed

Leadership – willingness to share strategic issues and rely on network partners based on agreed parameters

Team – ability to understand the strategic relationship and execute plans holistically, need to do away with “Not Invented Here” and “We Know Everything” syndromes

Internal processes and procedures need to be change to accommodate the network-centric strategy – training and re-training needed

The Big-4 accounting firms are competing on Network-to-Network basis Global leadership but innovative structure to accommodate various domestic regulation Offers diversified range or services and some do not identify themselves as accounting practices but just by their brands Experts need not necessarily reside in all firms but could be brought into the picture from various offices and jurisdictions Share knowledge-base, intellectual assets, business platforms but RISKS are confined to respective jurisdictions Case studies of the application of Network-Centric strategy

The Big-4 accounting firms are competing on Network-to-Network basis

Global leadership but innovative structure to accommodate various domestic regulation

Offers diversified range or services and some do not identify themselves as accounting practices but just by their brands

Experts need not necessarily reside in all firms but could be brought into the picture from various offices and jurisdictions

Share knowledge-base, intellectual assets, business platforms but RISKS are confined to respective jurisdictions

Boeing 787 Dreamliner project: Boeing (network leader) assembled global partners it trust to create the plane, from concept to production Designs and development not only outsourced to partners, they made financial investment as well Part of the strategy to shift Boeing from being a manufacturer to a designer and assembler of airplanes Facilitated by a sophisticated virtual Global Collaboration Environment system Trust and shared understanding developed across all members of the network Case studies of the application of Network-Centric strategy

Boeing 787 Dreamliner project:

Boeing (network leader) assembled global partners it trust to create the plane, from concept to production

Designs and development not only outsourced to partners, they made financial investment as well

Part of the strategy to shift Boeing from being a manufacturer to a designer and assembler of airplanes

Facilitated by a sophisticated virtual Global Collaboration Environment system

Trust and shared understanding developed across all members of the network

Salesforce.Com – Leader in software as a service Salesforce.Com offers CRM system and provides the platform for external developers to build applications on The network leader is Salesforce who own the technology and make decisions on the platform Partners develop applications that compliment the core CRM and manage their on IPs Case studies of the application of Network-Centric strategy

Salesforce.Com – Leader in software as a service

Salesforce.Com offers CRM system and provides the platform for external developers to build applications on

The network leader is Salesforce who own the technology and make decisions on the platform

Partners develop applications that compliment the core CRM and manage their on IPs

Li & Fung – world largest sourcing company which does not own a single factory It assumes itself as a “network orchestrator”, working with more than 8,300 suppliers serve by more than 70 outsourcing offices in more than 40 countries and territories Li & Fung develops and manages networks and designs and manages specific supply chain to meet specific customer needs Case studies of the application of Network-Centric strategy

Li & Fung – world largest sourcing company which does not own a single factory

It assumes itself as a “network orchestrator”, working with more than 8,300 suppliers serve by more than 70 outsourcing offices in more than 40 countries and territories

Li & Fung develops and manages networks and designs and manages specific supply chain to meet specific customer needs

The principles applied by Li & Fung in orchestrating network are: Design and manage networks – competing through networks, the best supply chain will win Control through empowerment – empowerment, trust, training and certification to bind the network together, entrepreneurship is encouraged Create value through integration – bridging borders and leveraging on company’s value and intellectual property across the network Case studies of the application of Network-Centric strategy

The principles applied by Li & Fung in orchestrating network are:

Design and manage networks – competing through networks, the best supply chain will win

Control through empowerment – empowerment, trust, training and certification to bind the network together, entrepreneurship is encouraged

Create value through integration – bridging borders and leveraging on company’s value and intellectual property across the network

Case studies of the application of Network-Centric strategy InnoCentive – an open innovation community which provide solutions to tough business, science and product development Launched by pharmaceutical giant Eli Lilly, a match making system links experts to unsolved R&D problems, allowing link to global experts without the need to hire them This approach recognises the fact that not all the smart people in the world works for a particular organisation

InnoCentive – an open innovation community which provide solutions to tough business, science and product development

Launched by pharmaceutical giant Eli Lilly, a match making system links experts to unsolved R&D problems, allowing link to global experts without the need to hire them

This approach recognises the fact that not all the smart people in the world works for a particular organisation

International Enterprise Singapore iPartners programme Encourages Singapore companies to band together in pursuing international projects This would allow the consortia to: Combine resources Provide holistic solutions to customers Achieve economic of scale Lead by anchor companies which act as network leader and orchestrate the activities of the network members Aims to secure more than $3 billion in the next 5 years Case studies of the application of Network-Centric strategy

International Enterprise Singapore iPartners programme

Encourages Singapore companies to band together in pursuing international projects

This would allow the consortia to:

Combine resources

Provide holistic solutions to customers

Achieve economic of scale

Lead by anchor companies which act as network leader and orchestrate the activities of the network members

Aims to secure more than $3 billion in the next 5 years

Concluding thoughts The dynamics in the present challenging business environment call for a flexible, yet, effective approach in value creation Competition has shifted from corporations to networks Strong network orchestration ability by network leaders is key in ensuring the effectiveness and sustainability of the network Network-centric competition opens enterprises and organisation to new possibilities for value creation

The dynamics in the present challenging business environment call for a flexible, yet, effective approach in value creation

Competition has shifted from corporations to networks

Strong network orchestration ability by network leaders is key in ensuring the effectiveness and sustainability of the network

Network-centric competition opens enterprises and organisation to new possibilities for value creation