Building Business Networks
by Ben Gilchriest and Eamon Fenwick
Getting started and making business networks real
In today’s business world, companies are increasingly looking beyond traditional corporate boundaries to take on more systemic challenges, like sustainability, social inequality, and climate change. What does this mean? It requires a re-think of the entire system and working together across companies and value chains to create a network of businesses to provide solutions. In other words, a business network.
Complexity is inherent in tackling these challenges, as the inter-relationships, positive and negative feedback loops, and information flows can be vast. Our instinct, when faced with this type of complexity, is to rush headlong into trying to understand what we’re dealing with. To borrow from process reengineering, that means: map everything out, find the flaws, and then fix them.
For challenges that are a fit for a business network approach, the sheer scale and number of connections makes this impractical and a pathway to frustration. It’s more helpful to learn from systems thinking concepts rather than process mapping ones and begin not with understanding but defining. We need to ask specifically: “What are we solving for?”. The key is to sharpen this from a stratospheric definition, like “improve sustainability outcomes”, to a specific goal that can be grasped. For example, reducing the carbon footprint and increasing the re-use and recycling of a major component of a product, like the battery in an electric car.
The answer to this informs the next question: “Who’s involved?”. The most important step here is to identify who the main nodes are in the network, not just within your company but across the value chain, and, subsequently, what the main exchanges of value are between them. This has the secondary benefit of uncovering who has the greatest influence on the flow through the system as well as reasons to get involved, revealing fellow network pioneers with whom to collaborate and make the network real.
With collaborators in tow, the design can begin. It’s important to think beyond the usual internal boundaries when doing so and focusing more on what’s needed to deliver the goals through cross company collaboration. In this design stage, keep in mind that this is fundamentally different to partnering, where, while there is collaboration, connection points are centered on integration and handing over from one organization to another. In a business network, value flows need to be designed with the outcome of the network front and center, abstracted from who owns the specific data or process flow. The goal of the business network must come first.
Concentrating on the value exchanges between participants is the magic ingredient to solid business network design. The best way to get started is with a minimum viable network, or MVN. Like a cartoon artist trying to find the minimum number of lines to make a form recognizable, the MVN is the fewest number of value exchanges needed to test whether the network is viable. Once this is in place, capabilities can be added and new opportunities that have yet to be thought of will emerge as the network grows.
Which brings us to the last key take-away: In the design phase, let go of the constraints of IP and data ownership and security. Not to say that these aren’t important — they are essential and are commonly key sources of value — but bringing them in too soon will crush the design and constrain the potential for innovation and impact across the network. Trust that there are many ways in which these can and will be solved for later.
Tackling systemic challenges is not straight-forward, but this doesn’t make them insurmountable. Breaking the process down in this way helps to untangle complexity, to make the problem accessible and the first steps to be made clear.
