In Norway the concept of businesses networking, or establishing clusters is well established. There are various financing arrangements provided to facilitate networking between companies, and it is at times difficult to avoid timetabling clashes between the various networking events. But is attending networking events enough to ensure success?
A recent book “The Network Imperative – How to survive and grow in the Age of Digital Business Models” from the Wharton School of Business at University of Pennsylvania is based on the study of 1500 businesses from the S&P 1500 index. The study concluded that businesses that use networks generate more value than traditional businesses. The study included businesses of different sizes and identified four types of business models, with differing value propositions:
|Business models:||‘Asset Builders’||‘Service providers’||‘Technology creators’||‘Network orchestrators|
|Value delivered by:||Through use of physical goods. Make market, distribute, sell or lease physical things. (Physical capital)||Through skilled employees – providing service to customers. (Human Capital)||Through ideas. Develop and sell or licence intellectual property. (Intellectual Capital)||Through relationships. Create a platform that participants use to interact with other network members. (Network Capital)|
|Example companies||Ford, Walmart, Exxon, Boeing||Humana, Accenture, JP Morgan Chase||Microsoft, Oracle, Medtronic, Pfizer||eBay, Uber, RedHat, tripAdvisor|
|Company value compared with turnover||200%||300%||500%||800%|
Of course, all simple classifications of complex systems are open to debate. In many cases a company may have components of several different business models included in their strategy and operation. Simply adding a service to a physical offering may not be enough to fully realise the company’s potential. Including intellectual property and sharing information via networks may give additional benefits. The book makes the point that many of the most valuable components in businesses, such as intellectual capital, can be enhanced through digitalisation and networking. The digital networks allow rapid development and spread of ideas, but they conclude that few existing businesses, based on traditional business models have managed the shift towards digital network assets. The examples given of network orchestrators are by and large companies that were set up to operate in that way from the start.
Perhaps that all feels a bit abstract, with eBay, Uber etc being very different business types than process industry companies. An example closer to home of a company using the power of digital networking is the Statoil Innovate. From time to time Statoil posts a technological challenge that they would like a solution to, and offer a cash prize for the best solution. The competition allows them to gather a lot of innovative solutions, and only reward the best one. Participants compete for the honour of a position on the leaderboard.
Machine learning between ships and icebergs
A recent Statoil Innovate challenge was to develop an intelligent image analysis system based on machine learning algorithms to distinguish between ships and icebergs on satellite images. This was hosted on Kaggle, a website that facilitates businesses to run machine learning competitions to solve practical problems. The community actively share advice on how to ‘tweak’ the code to achieve a good predictability. After developing the software on a training set over a few months, and possibly forming alliances with other participants, the submissions are tested on a larger set, and the accuracy of the predictions used to rank the submissions. The prize of $50 000 is cheap compared with the amount of effort invested by the 3343 teams. (Conservatively estimate 40 hours effort from each team at US$80/hour, = 11 million US$). At the same time the growth of knowledge acquired by the participants through the discussion forum gave them skills for their own businesses or studies. As such the prize money is largely irrelevant and could be replaced by a nice certificate….
Another example of using the power of networking of ideas was a post on LinkedIn by an employee of a dairy products company, who has the task of making a study of the potential of digitalisation for the dairy company. This would earlier have involved a period of literature searching and reading. In this case he made a post on LinkedIn, asking for people to submit practical examples of machine learning in businesses. For each submission he promised to send back a compiled list of the cases received. This was sufficient motivation for a large number of people to send in submissions. Leveraging the power of networking for efficiency improvements.
This comes back to the initial question… is it sufficient to simply join a network, in order to obtain success?. Joining linked in will build a network of people you know, and expand it to include people they know. However, this generates low activity compared with using the network actively. Make a comment on a post and this usually leads to a faster growth of your network and exchange of ideas. Networking is not just about joining, but participating!.
|Northern Research Institute Narvik A.S.|
|(47) 99 252 485|