Most firms today are excited if they manage to launch a single successful innovation in the rapidly changing marketplace. They find it difficult to imagine, let alone implement, major innovations happening over and over again on a sustained basis.
In my last three articles, I delineated what’s involved in achieving continuous and sustained innovation. It means generating a fundamentally different way of thinking, working, and being throughout the entire firm. It’s a paradigm shift from the traditional management still practiced in most public companies, as shown in Figure 2 below.
In those articles, I have called this other way to take advantage of the “skill networks”, despite the fact that “ecosystem organizations” and the “culture of innovation” are also labels that I and others have used. (No single label has been agreed, there is a convergence in development in the substance of what is involved.
The first article addressed How Networks Of Competence Are Crushing Hierarchies Of Authority. The second article explains the reasons for Understanding Why Networks Of Competence Crush Hierarchies Of Authority. The third article focuses on the business implications of How Networks Of Competence Achieve Superior Competitive Advantage
The 3 articles describe the force of the forceful action of the summit and the maintenance of innovation continues in a way that happens and happens in the maximum form of non -unusual control today: the hierarchies of authority (Figure 2).
Figure 2: Traditional management: A hierarchy of authority
Even in corporations that are basically skill networks, the hierarchy has an important role. The transition to skill networks is not to abolish the hierarchy. In fact, a hierarchy is mandatory to establish and maintain the skills network.
Nor do the articles suggest that networks alone are responsible for the enhanced performance. In fact, sustained innovation means generating a uniform culture that also requires a passion for creating value for stakeholders particularly customers, autonomous self-organizing teams, and a whole set of processes that are radically different from the standard processes in hierarchies of authority (Figure 4 below).
The articles either demonize those who are the main hierarchies. It is just that the hierarchies in which they are located temporarily move enough for today’s global. They want to perceive why and move on.
Nor is it recommended that a company can pass temporary and without problems because it is basically a hierarchy of authority to what is basically a network of skills. The record shows that it has been for years of effort and, even with this effort, good fortune is not guaranteed.
However, when they succeed, the effects of the company are surprising. For example, since 2002, Amazon has implemented skills networks to create multiple mutual companies, adding retailers, cloud computing, autonomous cars, hardware and PC software, supermarkets, videos, music, publication, films production, customer electronics , Virtual Electronic Books readers, voice -controlled non -public assistants, tablets, televisions, AI and more.
From the early 2000s. Google followed a similar model. During the following decades, he created several companies, adding research, online advertising, cloud computing, PC software, quantum it, electronic commerce, customer electronics, artificial intelligence, emails, navigation and mapping, cloud computing, Internet navigation, video exchange, operating systems, cloud garage, linguistic translation photo garage, videooléphony, smart house protection, smartphones, portable technology, musical transmission, video, automatic learning API, API of AI CHIPS , Quantum PC, autonomous cars and smart cities (Sidewalk laboratories) and Transformer models (Google Deepmind).
Similar results are now occurring in other sectors, including manufacturing, (NVDA, TSLA. BYD), technology and gaming (MSFT), retail (WMT) pharmaceuticals (LLY), entertainment (SPOT), cosmetics and beauty (LVMH, ELF). private equity (KKR, EQBBF) and agriculture (DE).
Having an effect on the life of other people’s maximum was positive. These corporations have shown that they can innovate faster, function more effectively, mobilize more resources, draw more talents and use it more effectively, download benefits for consumers faster and at a decrease charge and collect more budget for new efforts. As consumers, we have basically followed their products and services, which have replaced our way of working, our form of play and, in fact, how we live. Although no one can expect the future, replacing is the maximum that it will probably continue.
Staff participation in those organizations of all sizes is above average, and the company effects are striking (Figure 3).
Figure 3: Companies with a Sustained Innovation Track
The consequences of these performance gains require attention. In his book, Everybody Wants to Rule the World (2021), business analyst Ray Wang predicts that that by 2050, the global marketplace may comprise around 50 giant duopolies. In each market, there may be only one or two dominant giants. In effect, Wang foresees that the same economic and technological forces that created today’s digital giants will inexorably work its way throughout the whole global economy.
Wang argues that we all need to “understand the digital giants’ DNA, how they operate, why they continue to build exponential barriers to entry, and where their next foray will take them.” In business, the rise of duopolies, says Wang, “represents a life-or-death challenge for your company—no matter what sector you’re in or how long you’ve held a secure position.” In the public sector, regulators need to understand them to effectively regulate them, as well as deploy the new management upgrade their own activities.
Wang points out that “the maximum popular commercial word of the virtual transformation of the 2010s”.
But I had no paintings for maximum companies. We did everything you need, “Wang wrote. ” We have remodeled business models. We have replaced the commitment. We intended to win. And yet, only a few of us cross the final line. It is no longer enough to suddenly adopt virtual transformation.
It turns out that the existing advertising frenzy with the AI perspective will be attached to a path. Massive investment, but notably few corporate winners.
The new game, Wang says, implies popularity that the ultimate vital asset in the virtual age is knowledge. The winners are already and will continue to be the ones who must use the knowledge in what Wang calls data-driven virtual networks (DDD networks).
DDD Networks “applies those large loops of virtual comments to all their interested parties (visitors, employees, suppliers, partners) and uses knowledge -based data to mitigate risks, identify new opportunities, operational efficiency, anticipate visitors requests and advertise dynamic prices. »
“For example, Google can dynamically adjust the advertising costs based on the popularity of a search or commitment term in a subject. Amazon can identify routes and markets to expand based on logistics costs and benefits margins. “
The rise of controlled corporations because networks of competition are basically not just a theory. This is the living truth of the largest and fastest corporations in the economy and is very likely to increase in importance.
While all existing winning corporations have failures that deserve regulatory attention. The perspective for customers, talents and shareholders offers exciting society as a whole.
And read:
How competition networks achieve a higher competitive advantage
Understand why heavy authority hierarchies networks
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