Five Factors For Managing In An Uncertain World: PART II – Networks & Networking

Networking has always been key to success, whether we are talking about the broad networks of the sales rep., or the highly selective expert groups of the researcher or academic. Networks offer contacts, influence, ideas, inspiration – and today they have taken dramatic new forms because of technology.

In a recent McKinsey survey (issued January 2nd, 2008), executives identified ‘increased technological connectivity’ as the #2 business trend for 2008 – and the resulting ‘ubiquitous access to information’ as their most pressing challenge. Yes, MOST pressing – more significant than talent, regulation, competitive pressures, economic downturns.  And the reason for this is that networked technology changes the economics of knowledge.

Much of what we know will ‘commoditize’. Sharing of experience, access to data will become far easier. Those who prosper will be the companies and individuals who turn that wealth of information into innovative and high-value market understanding, approaches and offerings. They will use networked resources to be faster, better and more consistently creative. They will use networked technology to offer superior customer experiences and services.

Networking drives the need for new behaviors and methods, new attitudes to the performance of work and a new definition of our personal value and responsibilities.  

So where do most corporate employees stand on this issue? Are we embracing the opportunity that technology offers, or resisting the changes it implies? As always, the answer is mixed; but the evidence suggests that those responsible for ‘commitment management’ (contracts professionals, sourcing, legal) are towards the back end of this particular curve. Of the three groups, Procurement is probably the most comfortable with technology and most likely to use it for research. Lawyers have always been networkers, but have tended to do this in physical forums and only within their own immediate ‘brother / sister-hood’. However, the new generation is spreading into virtual networks and making avid use of the internet; and a few will even converse with non-lawyers! 

That leaves the contract and commercial managers, who risk being left behind in this race for knowledge. Some are convinced that sharing is innately bad (they believe they have a monopoly on good ideas); others are terrified of any technology; and many aren’t sure what they can share, or who to share it with (they have never had a ‘professional community’ in the past).

So what is it that executives see and how might this impact their expectations? How can communities like ours respond and help top management address the networked knowledge challenge?

At one level, we can use networking to spot trends as well as habits. And we can use that information to suggest changes in policy, practice, business terms and offerings. We can use technology to collect internal data – but more exciting, we can also gather external data. It isn’t just a matter of using the internet (though that is a start). Blanket internet use is very inefficient – so managed networks are generally offering more immediate value. Blogs can be one source – but social networks are another. For example, IACCM (www.iaccm.com) has provided a range of tools for its members – such as the worldwide ‘communities of interest’ that enable peer communication and research; or the ability to build personal networks based on comprehensive member search facilities. You want to know about contracting practices in the Ukraine? You want to understand the typical approaches to negotiation in Taiwan? You want to explore trends in liability limits in the telecoms industry? Then these networks and tools offer immediate answers.

Unfortunately, today’s technologies generally demand a significant change in working methods and invariably expose us to much greater visibility in terms of output. Many people find this threatening. It may also take time to learn – so arguments about efficiency regularly fall on deaf ears. And maybe an ageing community (the average age for senior staff in Procurement and Contract Management is 45+) simply feels it can outlast the pressure for change.

Looking from the outside, I am disappointed by the slow adoption of networked technologies and networked thinking by our community. It is an area that offers dramatic opportunities for leadership. As the McKinsey study reveals, executives need answers to this revolution. Those answers will come from the groups that have the courage to adopt and explore the exciting potential of networked technology and networked behavior. It isn’t just a matter of preparing contracts on-line, or measuring compliance and savings. Networking opens the world to our vision and transforms the way we can interact in the formation and management of our trading relationships.

Back in 1937, in his seminal work “The Nature of the Firm”, Nobel-laureate Ronald Coase set out the economic principles that underlie outsourcing. He demonstrated the inefficient nature of the integrated enterprise and how the true entrepreneur would choose to orchestrate contracted relationships, rather than employees.  In 1937, the only inhibitor to that vision was the lack of appropriate technology.

Seventy years on, the picture has changed. Technology is networked and supports the formation of networked communities and knowledge. Competitiveness is no longer about integrated enterprises, but is instead a battle between superior supply networks and trading partners.

That should mean the time for our community to flourish is upon us; our ability to form and manage those supply networks and trading partnerships should put us at the forefront of corporate strategy and execution. But will it? The answer depends on our willingness to adopt networking, to form networks, to extract networked knowledge. Where do you stand?