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The New Economy and Partnering
The new economy is opening borders and boundaries, enabling and requiring more interaction and information exchange among people and organizations. Such interaction requires organizations to develop effective partnerships and partnering competencies.
There is no dispute that the world and all that’s in it is becoming more open and accessible as a result of advancing information technology. We are in the midst of the next historical iteration of the digital revolution. We are moving toward a seamless world in which people have unlimited access to each other and to the knowledge that fuels the engine of human progress.
While the industrial revolution automated and systematized the work of physical labor, the information revolution has automated brain work, or intellectual labor. Searching and finding, computing and sorting, assigning and assembling, purchasing and forecasting – these are examples of functions that used to be accomplished by humans but are now aptly handled by machines.
We can view the digital revolution and the Internet as the democratization of information, at least to the extent that people around the world have access to a PC and an ISP. Computing devices and the price of Internet access will continue to fall (the cost of access has already reached zero via NetZero.com). In the knowledge economy, this means that every technology-literate person in the world has access to the “means of production.”
In a world that is connected and integrated by networks of information and knowledge, every person in the new economy holds the potential for generating new ideas and coming up with better structures, processes or systems for designing, producing, marketing, selling and distributing goods and services.
There is, of course, a continuum of creativity and innovation. On the one end of the spectrum, we have the individual employee or entrepreneur who can leverage the tools of production to improve a small business, a particular process or relationship with an individual customer. On the other end, we have the business function, department or team that can access and leverage systems, technologies and bodies of knowledge to transform entire functions and, ultimately, organizations.
The operational point is that partnering intelligence and skill are critical competencies in the new economy where, relative to the industrial world, the means of production are open and accessible and the barriers to entry are not as severe. In the information economy, every interaction with a customer is an opportunity to expand the relationship and make another sale. Every strategic alliance is a hotbed for further mutual growth and development. Every employee is an ongoing source of creativity and new ideas for commercial gain.
The structure and mechanics of how we produce and consume are changing. In the information economy, organizations are much more like networks than hierarchies, with leadership at the center and employees organized around that center. Some have likened this to a human server-browser model, wherein management functions as a server enabling employees who function as browsers, or specialists who bring their experience to bear on improving key business relationships.
In this model, the leader is a facilitator and roadblock remover, enabling the connection of employees, systems, suppliers and customers into one seamless entity or dynamic. As this network structure takes hold in organizations, people, and the effectiveness of organic human relationships, are increasingly driving business success.
Hewlett Packard CEO Carly Fiorina has said that her company’s future success depends on its ability to build a business based on partnerships. She says HP is going to partner with people to create an innovative new company, and the way HP will do this is to open itself to all its suppliers, all its competitors, all its customers – working with them to bring innovation back to HP.
This “open” systems approach is very much a new source of competitive advantage in a marketplace changing so quickly that it penalizes rather than rewards secrecy. Sun Microsystems, for example, has implemented its community source technology licensing model to “balance the needs of organizations needing to innovate rapidly in order to grow with the needs of those organizations to leverage a community’s expertise while maintaining proprietary advantages.”
Essentially, Sun offers open access to source code among community members who have joined that community by agreeing to a license. Such a community source code licensing model allows member organizations to organically develop their mutual interests and build a network of capabilities around an initial technology infrastructure. The effects of such an approach, according to Sun, include closer ties between development groups in different organizations, the rapid spread of influence based on shared commitment to the technology, increased innovation and quality and reduced risk for those who participate.
Says Sun’s web site: “In the last few years there have been remarkable changes in the computer industry largely spurred by the Internet, the Web, and by alternative forms of business. For the first time we have seen business strategies based on giving away products as rapidly as possible, we've seen Open Source gain a large measure of success, and we've seen collaboration where common interests play a strong role.”
While technology is clearly a source of competitive advantage in the new
economy, the way people collaborate in leveraging that technology is even
more important. In other words, relative to industrial-age technology,
information-age technology is highly dependent on the people who use that
technology to create value for customers and the
The tools of the new economy are so powerful that their application is only limited by the imagination and creativity of the people who employ them. Contrary to intuition or popular belief, technology fosters rather than replaces human interaction. While it improves the productivity of brain work, it also creates linkages and connections that make more brain work possible.
In this sense, new technology brings people together and establishes the fertile soil for smart people and smart partners to collaborate for commercial gain. Now, for example, customers can check their credit card balances, wireless phone use minutes and bank statements on line. They can buy and sell stocks on the Web, purchase books and groceries, see a picture of their brother’s newborn baby girl on the delivering hospital’s website. These are examples of how service organizations are partnering with Internet-based systems solutions providers to improve relationships with customers.
In the B2B realm, equally exciting developments are underway, the latest of which include web-based procurement systems that allow suppliers, customers and even competitors to join forces in achieving increased purchasing power. B2B systems are creating a truly seamless integration of customers and suppliers. There is a continual blur between the products and the components that make up the product.
On every front, the boundaries outside and within a business are blurring. As data and voice transmission technology expand (ie. bandwidth), the volume, speed and quality of business interaction will increase, ultimately driving toward the day when the needs, wants and expectations of shareholders, customers, employees, suppliers and regulators will become an integrated whole. Such acceleration and integration increases the requirement for effective interaction at an individual, function and organizational levels.
Leading educators tout the “seven intelligences” developed by Harvard’s Howard Gardner in the late 1960s. They say that students possess varying degrees of verbal, logical, visual, kinesthetic, musical, interpersonal and intrapersonal intelligence. Inasmuch as the intelligence associated with each of these enables people to excel at their respective aims, partnering intelligence (closely related to interpersonal intelligence) enables people to excel at forming and sustaining effective partnerships.
No one would argue that smart, educated people (people with verbal and logical
intelligence) are a key factor in creating competitive advantage in the world’s
top companies. Research, in fact, has corroborated the hypothesis that
there is a strong positive correlation between education and performance.
One such study was conducted by McKinsey & Company, which studied 77 large
US companies in a variety of industries. McKinsey found that people
in high-performing companies were
The logical hypothesis is that we find a similar correlation between other forms of intelligence and high performance in a business environment, most notably partnering intelligence. In other words, smart partners contribute to high performance inasmuch as smart people do. In fact, we can forecast that partnering intelligence will gain significance as we transition from a closed, analytical, left-brain organizing principle in business and society to an open, creative, right-brain orientation.
Harry S. Dent, author of the The Roaring 2000s, has pointed out that the information and Internet economy has greatly reduced the costs associated with marketing and distribution, much as the production line improved the productivity of physical labor. He has suggested that while the industrial revolution automated physical labor, the information revolution has automated left-brain work.
Now with increased left-brain productivity, we are ready to exploit the next frontier of competitive advantage: the people who create productive business partnerships by generating new ideas, leveraging technology, connecting systems and otherwise finding new ways to serve customers and grow the business. Now is the time to anticipate this shift and begin preparing people in our organizations to be smart partners.
Essentially, as the new economy unfolds, partnering intelligence will leapfrog up the economic food chain. As technology brings people together in ways and to an extent previously unimaginable, a smart partner will be worth as much or more than a smart system. As the world becomes increasingly wired together, people and the relationships they forge will become a new source of competitive advantage.
Many more articles in Partnering & Alliances in The CEO Refresher Archives