End Of Competition, The: The Impact Of The Network Economy. C N A Molenaar

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СКАЧАТЬ traditional organisational structures are still preventing most companies from looking for talented staff outside the boundaries of their organisation. This makes it difficult for companies to tackle evermore complex challenges. Many platform companies allow people outside their payroll to offer their expertise in new ways. Network organisations concentrate on orchestrating tasks rather than on the ‘ownership’ of full-time workers. Whereas Marriott hotel employs large numbers of staff to realise its value proposition of ‘accommodation for a guest’, Airbnb uses external hosts to provide the same value proposition. Human Resource Management shifts, as a result, more and more towards community management (Choudary, 2015).

      Technological development is evidently no longer a supporting activity, but is essential in the optimisation of the platform and its functions. Platform companies still have other supporting tasks but these are increasingly losing relevance.

      Shouldn’t Investments be Made with a Long-Term Vision?

      Traditional companies are mature, often having grown during the second and third industrial age, whereby ownership, control, independence and supply chains were important. If these companies are taken over, it is often due to profit and returns. Private equity groups want to make the companies more efficient and effective, and then sell them off entirely or piecemeal, at a profit.

      In some cases, the company profits are reinvested if this leads to an increase in value (therefore higher returns in the sale). Sometimes the company profits are creamed off by charging the investment to the company, which then has to pay interest on this (or perhaps even pay off this debt). Whatever the case may be, these investors use their expertise to realise a return on their investment through greater efficiency and increased value. If the scope to realise this is longer than four years, these investors start to feel uneasy as they would prefer to invest in new promising objects, anywhere in the world.

      The investors involved in the new start-ups are not interested in shortterm profits. They believe in the great opportunities for growth of these companies and are convinced that a long-term investment would provide better results. What’s more, they are often investors who have already made an investment and successfully divested it (often through a stock market flotation, a so-called IPO). As a result, they have substantial investment portfolios. Quickly selling the company again (with profit) would only lead to the problem of looking for another promising project. Staying put and growing along with the traditional project is therefore a better option. These new entrants have a longer term commitment and vision, which results in more stable and lasting growth. At investment level, there is a conflict between the traditional companies that are focused more on profits and the new companies that are looking to increase value (through growth). The new investors are focused more on the long-term effects. What’s more, the new companies only have a short history and limited ‘legacy’, as a result of which they can straightaway use the latest technologies. The management are creative, flexible and often young leaders who respond more quickly and in an unorthodox manner to the market conditions and buying behaviour. The growth of these new companies is partly at the expense of the more traditional companies. This is typically a friction in a transformation period (from the Third to the Fourth Industrial Revolution).

      Many start-ups have emerged in America. The conditions for this were clear and were as follows:

      • a concentrated area where the developments took place (Silicon Valley); this provided a concentrated supply of good personnel, as well as a concentration of investors who were keen on investing in new technological companies based on a long-term vision;

      • a large home market that enabled testing among a relatively large group, thereby not risking any further damage in the market should the start-up fail;

      • a good business climate where success is appreciated and failure (bankruptcy) is accepted;

      • a competitive business climate.

      On top of this, America had come out of the Second World War unscathed. The war production actually helped to initiate strong economic growth, making America the world leader. As a result, it gained a head start on many other countries that had to build up their economies once more and where spending power of companies and families had to return once again.

      The Growth of the Network Economy, Technology or Human Behaviour?

      China and America benefit from a growing network economy. This will lead to new prosperity and employment as well as connections on a global scale. This development not only is facilitated by the technology but also needs to be accepted (and adopted) by companies, governments and consumers. This network economy has to form part of the changes that are taking place in the behaviour of consumers and companies.

      Technology facilitates and stimulates this development

      Technology facilitates change. Technology was initially used in developments to realise greater efficiency, but these days technology is used much more often for connection and communication purposes. Technology is also used to carry out analyses, which helps to bring about a better bond between users and suppliers (commitment and loyalty).

      • New methods, such as scrum and micro-services, ensure for a speedy development.

      • Modifications of systems, other applications, are based on network facilities.

      • The cloud ensures that everyone has access to the desired data at any time and place and that everyone can communicate regardless of where they are.

      Although the application of these technological developments has been growing for decades now, it is only in the last few years that we can speak of a convergence, where developments are influencing one another. Both the application and the acceptance have greatly accelerated, in part of course due to the technological possibilities, partly through the economic necessity particularly of China and America and due to the global acceptance by companies and individuals as well.

      Products were increasingly no longer made specifically by one single factory; rather, production involved the assembly of various components to form a single product. This not only greatly reinforced the mutual dependency involved in the production but also stimulated specialisation. From a legal point of view, a factory was still an independent entity, but not necessarily when it came to its activities. A factory would sometimes receive semi-manufactured goods, which would then have to be processed further and then sent elsewhere in the world to be finished off and sold to a particular market. This network manufacturing process is also supported by information and communication. Each link in this process is independent yet connected with another link for further processing. And so a chain of independent units, nodes, is created that together formed a single entity. This is the basis for the network economy (Figure 3).

Figure 3. The network structure, independent entities (nodes) are connected.³

      The buying behaviour (consumers and companies) is changing

      A second development is based on the behaviour of buyers. The behaviour is increasingly individual, and consumers are becoming more assertive and better informed. What’s more, thanks to the Internet everyone has access to sources of information and communication. The penetration of smartphones is above 80% in all age groups. In addition, the old purchasing barrier to online shopping no longer exists; it is just as easy to buy in СКАЧАТЬ