The following post is driven by Steve Denning’s work regarding the three laws of business agility. You can read his work here. The purpose of this post is to summarize his points on the law of the network and provide additional insights into how this law translates into business agility.
Network-based organizations excel
The internet has changed the traditional business paradigm and many still don’t realize it. In today’s world, the most robust businesses have been outmaneuvered, outpaced, and routed. Corporations, and their massive bureaucratic organizations, have toppled to start-ups that quickly scaled, and delivered value to their customers. One of the beacons of the new wave of companies, Jeff Bezos, has given everyone else the key to his success — to delight his customers. That idea isn’t new. Companies have had “the customer-first” mantra for decades, but have lost ground to the likes of Amazon, Google, Facebook, and others. One of the key differences is these companies follow the Law of the Network.
Characteristics of a network
Ideas from anywhere (vs. ideas from the top)
Let’s look at some thriving social networks as they are a template for what an organization to emulate. For example, you have YouTube, Twitter, Facebook, LinkedIn. Anyone of these allows its users to publish (current controversies aside). LinkedIn has a feature for anyone to publish an article regarding their profession, service, or industry-related news. Same goes for the other social networks. Anybody, anywhere can generate ideas. Good ideas, for the most part, generate shares or likes allowing that idea to spread throughout the network.
One thing to note, especially from LinkedIn, is that allowing anyone to post wasn’t inherent in their network. That feature was enabled years after its initial creation (it came online in 2014). When they changed that, their users became more engaged on the platform, checked the site more frequently, increasing overall engagement and usefulness of the network.
For your organization to be a network, ideas need to be heard from anywhere in the company.
Communication horizontally and vertically
Another key aspect of a network, which is closely related to ideas coming from anywhere, is that communication is multi-directional. In traditional bureaucratic organizations, communication is vertical. Top level leadership communicates the directives and the lower level employees follow. Employees stay in their lane and perform their agreed-to function. Communication can go upward, but most of the time falls on deaf ears. Initiates of change live at the top in a bureaucratic organization.
However, in a network, communication happens everywhere, at every level, horizontally and vertically. Going back to our social networks, like Twitter for example, anyone can be reached. There are no barriers except for being on the platform. I’ve been able to reach famous actors, talented leaders in various industries, to familiar friends. The only thing that matters is the quality of the content. Horizontal and vertical communication is a key to making Twitter, and other social networking platforms a success.
So, when it comes to your organization, how well does communication flow? Can an intern talk to a CEO? Do teams collaborate and talk with one another? Companies that behave like a network in their communication can move quicker and innovate faster.
Customer is a part of the network
One of the key objectives of Amazon is for the company to delight its customers. This goes beyond the simple “customer-first” mantras that dominated business prior to the internet. Amazon actively incorporates its customers within the network of the company. Customers are are a constant source for feedback. Their needs and desires are actively researched and cataloged as an integral member of Amazon’s network. That doesn’t happen in a bureaucracy. Bureaucracies focus less on tailoring their product to change and fit the needs of their customer, and work more towards meeting quotas, enhancing efficiencies, and following general market trends (which is a lagging indicator).
As a quick thought experiment, walk into any DMV and ask yourself, what would they do if the customer’s needs were placed ahead of the bureaucracy? You would see registration kiosks, online scheduling for inspections, paper-less and online renewals. Instead, you see lines, tired employees, inefficient processes, fax machines, and phones that never stop ringing. No one is collecting information on how they can better service your vehicle registration needs. That’s not even a position or possibility at your local DMV.
Why does it work
In his work, Denning compares the paradigm shift of today with what happened during Copernicus’ time. During Coperniucs’ lifetime, the idea that the earth was the center of the solar system was commonly accepted. The Earth sat in space, while the Sun orbited around it. Everyone knew this and were able to observe this behavior as they watched the sun move across the sky. However, Copernicus changed everything when he discovered that the opposite was happening. The Earth orbits around the Sun. Though this truth cost Copernicus his life, and many people didn’t beleive his discovery, they weren’t able to change the truth.
The new Paradigm
Today, the paradigm shift is similar. Many companies believe that customers revolve around them and their organization is the center of their market. You can point to a number of companies that have died or are dying in the internet age from this way of thinking. Sears, JC Penny, and other big-name retailers just to name a few examples. The successful companies have adjusted to the reality that customers are at the center of everything and that organizations or firms just orbit around their needs, wants, and desires. The better a firm can deliver value, the closer in proximity it comes to the customer. The internet has placed the customer at the center of the market.
In today’s paradigm the massive warships will lose to the agile flotillas.