Collaborative Networks and Virtual Enterprises | YouNetFast

The YouNetFast Series

2010-08-01T10:31:00.002-07:00

Uncovering the Karma of a Network	Establishing Network Ground Rules	Virtual Network Simulator	The Networked Enterprise: 10min VIDEO
The Collaborative Opportunities Dashboard	10 Rules for leading business networks	The power of Serendipitous Collaboration	Innovation Nets. improve product flow
A plan for mobilising a VEN in 6 weeks	A Collaborative Network Maturity Model	Achieve supply chain agility through VENs	A Taxonomy of Virtual Business Networks
VENs allow virtual business scale	Checklist for virtual business networks	The Networked Enterprise (TNE) Reference Card	10 foundations for collaborative networks

Establishing the Network "Karma"

2010-07-21T15:13:00.001-07:00

How to balance personal team member expectations with inputs

Here’s what the leader needs to do – step by step!

Click on this link to see a fully completed karma spreadsheet which you can tailor for your group

STEP 1.
Articulate the VISION for the team (ending with some real concrete specifics)

STEP 2.
Communicate the vision to the team at a Team Session (Workshop 1)
Don’t go into a group discussion on it - that will come later.
Then outline the process you will be following with them (not in any detail) to see where (if anywhere) they fit

STEP 3.
Request they individually email you on their comments in your vision (comments - what they like, don't like, think is missing - not questions!!!!!). Also what specifically they wish to get out of working with you (part 1 of Karma)

STEP 4.
Consolidate this for yourself and see how it looks

STEP 5.
Develop a list of the top 20 tasks which will have to be done to deliver the VISION - group the tasks into the relevant roles (Karma part 2 prep)

STEP 6.
Create the karma spreadsheet you can use to gather and consolidate the info

STEP 7.
Have another team meeting (workshop 2) to present back their comments on your vision (and how you may have adjusted it), their consolidated wants (not identifying individuals) and explain the spreadsheet

STEP 8.
Now request each team member individually indicate what they will take responsibility for on this list by filling out the spreadsheet (Karma part 2 execution)

STEP 9.
Consolidate their inputs (Karma part 2) and see for yourself what the gaps are

STEP 10.
Have a team session (Workshop 3) where you present it to them, along with the consequences, the end request they now go back and make their new "offers" to you and on this basis you will select your team

STEP 11.
Receive their new offers and see if they cover enough for you to fly!

STEP 12.
Assuming they do - have 1-1 conversations with your team members to finalise and commit their new offers

Establishing Network Ground Rules

2010-07-21T14:53:00.003-07:00

It is important for a Team or Network to establish ground rules for how it intends to operate

In my approach to I split this into two:

Ground Rules

Covering in general the negative team member behaviours we wish to discourage – this tool addresses Ground Rules.

Team Culture and Behaviors

Covering in general the positive team member and group behaviours we wish to encourage and adopt. Team Culture and Behaviors are covered in a separate technique.

Applicability
* virtual teams

* cross-functional teams

* collaborative business networks
* virtual communities
* supply chains and clusters

Click here for a spreadsheet of typical ground rules which you can tailor for your group.

1. Objectives

* Ground Rules are the agreed position of the whole team regarding what behaviours are mandatory and what action should be taken if this is not the case (warning and sanctions).
* Ground Rules must be short, sharp, unambiguous and unanimously agreed – otherwise they cannot be enforced by the team.
* A Ground Rules document should never exceed 3 pages of A4 – its better to not have enough than to have too many!
* WARNING: Most teams set the standards too high for their ground rules - these kinds of unrealistic ground rules quickly become discredited as most people don’t comply with them and it can be very hard then to put in any ground rules whatsoever.
* Ground Rules are meaningless if not implemented. This means that warnings and sanctions have to happen early on or else the ground rules are not worth the paper they are written on
* To enable this to happen you need to make it not an embarrassment, or black mark to be warned or sanctions. This is where you can lead by example by letting yourself receive an early sanction for the sake of the team!

2. The Overall Process

Step 1. Conduct Ground Rules Team Session#1
* Allow 90 minutes
* Use the check-list as a means of asking each member of the team their opinion.
* Never do it as a group discussion – you need the individual inputs from every team member.
* An electronic meeting tool which allows everyone to type their answers and see other member’s answers is the best environment for doing this.
* After each answer you should summarise the key themes and ask supplementary questions if you need more details

Step 2. Document the Session
* There are two outputs - the unedited log of what everyone said plus a document which summarises the session question by question and identifies clearly:
a) where the group was in agreement
b) where the group was not in agreement (or answered in insufficient depth to be able to know)
* This second document requires excellent editing skills to ensure it exposes the critical points of disagreement and where there is insufficient clarity/definition. It is a summary and should not exceed 3 pages.

Step 3. Include review comments
* Circulate both documents to the participants (typically with the full transcript as an appendix to the summary) and request comments.
* Where a comment is a simple non-contentious clarification or a correction update the document accordingly.
* Where a comment is contentious or represents a further elaboration on what was said at the meeting include it in the document in a way with makes this clear.
* Re-circulate the updated document.

Step 4. Conduct Ground Rules Team Session#2
* Allow 90 minutes.
* Work through the document again question by question.
* Request quick confirmation from team on all agreed questions – don’t open these up to discussion.
* Request more discussion on other points to try and identify an agreed position.
* If discussion is not productive after a 5-10 minutes maximum identify two extreme positions which cover both ends of the argument and if necessary do an informal vote
* Don’t try and wordsmith the document as a group – capture the key points and word-smith later

Step 5. Document the Session and Reissue Revised Document
* Where necessary in this version identify two options on points which are not yet agreed and request people indicate their preference.
* If the group is split then leave both options in the document for review later – it generally becomes obvious which will work best.
* Publish the final document as Version 1.0 with the date – a living document.

Step 6. Schedule Regular Ground Rules Discussion Items
Ensure a Ground Rules item is included in one full team meeting per month
The discussion should be:
Are we having any compliance issues - If yes:
* Is it a misunderstanding?   Or
* Are the Ground Rules unrealistic in this area and require change?                 Or
* Do we need to implement the agreed warnings and sanctions?

3. Checklist

1. Trust Damagers
What will damage trust?

2. Trust Destroyers
What will destroy trust?

3. Conflicts of Interest
What are the most likely scenarios to arise and how should they be handled?

4. Team Boundaries/Member Types
What are the boundaries of the team and types of member participation (e.g. Core, Reviewer, Expert, Other)

5. Information Sharing
Where will we be transparent and where will we be private?

6. Issue Resolution
How will we resolve issues/conflicts and what will be the main stages in this practice?

7. Conflict Resolution
How we will resolve conflicts between members and what will be the main stages in this practice?

8. Decision Making Practices
Strategic, Wide Operational(affects most project members), Narrow Operational(affects only a few project members)

9. Meetings
What will be the teams meetings? Purpose, frequency, attendees and channels (face to face, phone, online)

10. Induction/Mentoring/Buddying
How will we handle new team members joining?

11. Communications Tools
Which tools will we use for which type of communications (urgent, important) and
“Reply by” Times

12. Sanctions
What sanctions will we employ and how will we agree them?
Red Card/Yellow Card,Penalty Points

13. Other

4. A Worked Example/Supporting Spreadsheet
This example is based on the scenario of a collaborative business network of independent companies.

These Ground Rules are a lightweight non-legally binding mutual agreement between all the members of the virtual business network. They define the minimum set of acceptable behaviours and processes to be followed by all existing and future members of the network. They will be added to and changed as required.

Ground Rule 1 – What will damage member Trust
a) not open and inclusive
b) not really adding any value in terms of meeting participation or opportunities brought
c) careless around handling confidential or proprietary information
d) not properly managing important internal commitments such as tender responses

Ground Rule 2  - What will destroy member Trust
a) not delivering their quality, requirements or timescale commitments in customer projects
b) misleading other members about their capabilities or capacity
c) trying to poach other members staff
d) bidding against the cluster in ways which other members consider unreasonable
e) deliberately misusing confidential or proprietary information
f) repeatedly damaging trust (as per ground rule 1)

Ground Rule 3 – Conflicts of Interest
a) cluster competition with core member business
It is the intention of the network to develop collaborative business which is outside the core business of the individual members. If an opportunity arises for the network with a customer of another member company then this must discussed with the member company before any decision on making a network approach/bid is made.
b) companies with the same competencies
Bids and projects will be resourced purely in terms of member capabilities/capacities (not “turns”) for satisfying the given customer requirement and if 2 or more members declare an interest which they cannot collaborate on then we will have a simple internal competition process administered in a fair and independent way (see under Bid Management Process)

Ground Rule 4 - Information sharing, transparency and privacy
The following should be openly and accurately shared between members (but not associates):
a) All Opportunities which are shared should be shared with all members (equality)
b) Member Capabilities and weaknesses (this is a mandatory membership pre-requisite)
c) Network Project and Quality Status reports
d) Outcomes of successful bids
The following should be private (unless the owners of the information decide otherwise):
a) Specific network bid pricing and margin details (only to bid team members)

Ground Rule 5 - Issue and Conflict Resolution
We agree the following issue resolution and escalation process:
STAGE 1 - The members try and sort it out themselves – if they cant they request…
STAGE 2 - Neutral mediation involving the Cluster Leader (or another party acceptable to the conflicting members) – if this does not resolve it then…
STAGE 3 - Cluster formally notified of issue and tabled for a full cluster meeting (either a normal scheduled one or an exceptional one depending on the urgency).
STAGE 4 - This meeting will require a quorum of members present (see next rule) and the outcome will be final.

Ground Rule 6 - Decision Making
Voting Arrangements
* 1 Company – 1 Vote!
* Companies can submit proxy votes to be cast on their behalf – must be submitted on the web-site – not verbal
Day to Day Decisions
Are the responsibility of the Network Leader who will use the web-site to get opinions and keep people informed
Operational And Strategic Decisions
Will require full Cluster Meetings. Any decision must require 60% of total existing company membership who are in “good standing” to be in agreement for it to be carried. A member is in “good standing” if they have fulfilled all the joining obligations and have not been, nor are under pending consideration for expulsion from the network (Red Card – See Ground Rule 8).  The Network Leader is the sole arbiter of whether a company is in good standing membership

Ground Rule 7 – New Members
a) We want to attract new members
b) They need to meet defined criteria
c) They need to be acceptable to existing members
d) They will need mentoring and looking after
We have also agreed:
a) Criteria for potential new members = whether they bring new capabilities or capacities to the network – no geographical restrictions
b) Under what circumstances can a new membership application be rejected – any member can veto the membership of a potential new member provided they have a valid reason (in their mind) which they explain to a meeting of the other members?

Ground Rule 8 – Sanctions
We need a caution system for a member who has damaged trust
a) We need to allow a member on caution to address the issues
b) We need to be able to expel a member who has destroyed trust
We will use a Red Card/Yellow Card System – Yellow Cards will remain in place for 3 months and if a second Yellow Card is received in this period then Red Card (expulsion).
* If issues are addressed the Yellow card will be wiped at end of 3 months.
* If issues only partly addressed the Yellow card may be extended for a further 3 months.
* A member will have no loss of privilege whilst on a yellow card (e.g. Web-site access, Voting…)

Ground Rule 9 – Business Development
Each Member should
1. Bring leads to the network
2. Integrate the network into their marketing (e.g. website links)
3. Share knowledge
4. Get to know the other members and what they can do

Ground Rule 10 - Unforeseen situations
We will add to these Ground Rules as and when required to address unforeseen situations. Any changes must be formally agreed by all members

The Networked Enterprise: New VIDEO

2010-07-21T00:39:00.000-07:00

15-minute video of me (Ken Thompson) introducing the concepts of The Networked Enterprise (TNE) and Virtual Enterprise Network (VEN) at an event "Connecting Innovation" in Brighton (UK) organized by Use8 (The User Experience Society).

Watch the video "Collaborate for New Business"

Watch Charlie Leadbeater "Enjoy, Talk,Do: The New Consumer Culture"

Video interview with me "Connecting Innovation"

Web-based Virtual Enterprise Network Simulation

2010-07-21T00:36:00.000-07:00

A few years back I developed a simulation to expose key dilemmas in the incubation stage of Virtual Enterprise Networks. I used a powerful simulation-building tool called ithink from Isee, the newest version of which now allows deployment of simulations over the web. So here is the online version!

To run the VEN simulation

To access my previous articles on the topic

The Collaborative Opportunities Dashboard Tool

2010-07-21T00:34:00.000-07:00

One of the hardest things for a group of companies to do is to find some quick-win low-risk area where they can build trust by working together BEFORE they embark on something major. The Collaborative Opportunities Dashboard Tool allows companies to quickly explore a dozen practical ways to work together with the goal of meaningful results in 12 weeks or less.

Click to run The Collaborative Opportunities Dashboard Tool (requires Flash).

My powerpoint was converted to flash using the excellent (and free) ispring tool.

Leading collaborative business networks - 10 rules for success

2010-07-21T00:32:00.001-07:00

When you are leading or facilitating any kind of collaborative business network or venture you need to know that these are very different kinds of team than you encounter inside organisations. These are "bioteams" so-called because each team has a life of its own and the normal team "command and control" simply does not work. To be successful you need to know The Ten Rules for herding cats!

RULE 1. Working with groups of independent business leaders is like herding cats - on a moonless night!
You can't make them go anywhere they don't already want to go - or do anything they dont already want to do. You can only make it easier for them to get here in a way which brings the others along with them and you can also try to stop them trying to go to places which "won't end well"!

RULE 2. "Perfect" is the enemy of "Good enough"
You just cannot make a business owner/manager do anything they don't want to do - believe me I have tried! Even if you somehow manage to bully and push your (right) idea through be prepared to provide ALL the energy and resources to make it happen.

RULE 3. Only 1 speed - full speed ahead
Go as fast as possible - even when some people complain loudly - the thing you must never do is waste an SME/SMB's time. The smaller the business the less time they are prepared to invest in team development - they just cannot afford it.

RULE 4. Good cop - Bad Cop
You will need a 2-person facilitation team to work effectively with these kinds of group. The Bad Cop pushes the group to get things done to the deadline (always too soon). The Good Cop handles the stragglers, slow movers and those whose itch is not (yet) being scratched.

RULE 5. Collaboration is just a piece of cake
SMEs need a taste of 4 different ingredients every time they meet (or they will fall away):
A. Business opportunities - that is why they are in the room in the first place
B. The Collaborative Project - this is what stops it being just a "talking shop"
C. Learning about working together - if they already knew how to do this they would be collaborating already
D. Team Social Relationships - teams who don't invest in getting to know each (and letting their hair down) usually disintegrate at the first sign of trouble.
Read more about what it takes to create a Sustainable Network..

RULE 6. Network Karma - You can't get more out than you put in
1. We agreed we want this result
2. And we agreed these tasks need done to achieve this result
3. So why wont the group share out leadership of the tasks?
If not how will they get the result? Go back to 1. Are we aiming too high? Read more about Network Karma..

RULE 7. Tit for Tat (TFT) is how you (eventually) get "Win-Win"
Co-operate but if the SME/SMBs don't play ball then "Sanction and Forgive" and go back to co-operating. Remember this needs to be a partnership. Quid pro quo. Despite what Stephen Covey might tell you in "The 7 Habits of Highly Effective People", in collaborative networks "Win-win" is a destination not the process for getting there! "Tit for Tat" is the proven model of collaboration in nature not win-win.

RULE 8. Passion powers Process
"The why" and "the what" must be right for the group BEFORE we start to work with the group on "the who" and "the how". If you dont sort the why and the what out really well then you will run out of steam during the who and the how.

RULE 9. Two is company and three is a .....network?
Networks always start very small - "Big bang" networks are just crowds of the uncommitted - they might look like a group but they don't have what it takes. It is much better to have 5 or 6 really committed members than 50-60 members who are just there to spectate. If you have a solid group of 5 or 6 "founder members" you can grow to 10-12 if each member brings on board just one more and takes responsibility for inducting them and so on carefully adding members one at a time in waves.

RULE 10. Fasten your seatbelts we are experiencing some turbulence..
Everyone in these types of groups always says "We want to Collaborate". In reality initially they just really want to see what benefits they might get for themselves. Remember businesses are selfish and have to learn that collaboration means having to accommodate others in getting what you want. This takes practice, is new to many and will cause all sorts of irritation and conflict at the start. This "collaborative turbulence" is absolutely unavoidable - learn to live with it - the sooner it starts the sooner it will pass. If it does not calm down after a few weeks then there are some real issues that you have missed! Better go back to RULE 1!

Finally remember sometimes you need to break one of these rules but you need to realise each time you do so you are taking a calculated risk. That is RULE 11!

Have you discovered the power of Serendipitous Collaboration yet?

2010-07-21T00:30:00.001-07:00

The most common approach to business collaboration (Planned Collaboration) involves prior analysis of the participants to try to identify shared interests in collaboration (e.g. as complementary players in a collaborative supply network). Another more radical approach (Serendipitous Collaboration) involves putting a random mix of companies in a room and seeing what develops. Guess what - Serendipitous Collaboration works really well provided you have a good process for uncovering synergies!

The Network Synergy Discovery Technique

Purpose:
To discover the critical synergies in a Network right at the start of a potential collaboration, in a way which is much more effective than "creeping death" disclosure. The objectives are to find if real collaboration opportunities exist within a potential Network and:
- Identify any critical gaps that could derail the Network
- Create new and effective win-win partnerships within a Network.

Background:
The conventional approach to working with a new Network is to first build some trust, exchange relevant information, and then start exploring collaboration possibilities. The problem is that this approach does not really work.

The first problem is that it usually takes far too long; never gains enough momentum or continuity; and eventually the participants lose interest and move on to "something productive." The second major problem is: Let's imagine you have invested in building "enough trust" with the group, and then you find that after all this effort and time, you don't actually have the right people in the Network. By then it is too late.

How to use Network Synergy Discovery
The main objective of Network Synergy Discovery is to find out if there are enough potential synergies within the group to make the Network work. The other objective that is just as important, is to do this very quickly in a way that is highly interactive, engaging, and develops new relationships. Each participant should go away with at least one new useful relationship, even if he or she never comes to another Network meeting.

Step1: Everyone identifies their core business offer, and puts it on a YELLOW card with their name, and sticks it up on a large whiteboard. These YELLOW cards represent Core Product Providers.

Step2: Everyone reads all the cards, and must fill out at least one BLUE card and stick it beside any Core Product card (YELLOW), that they believe they might be able to produce for a new customer. These are called BLUE cards, Channels.

Step3: Everyone also fills out at least one PURPLE card for any YELLOW card that they believe they have some knowledge of, or a product that could make a core product more valuable. They stick these up beside the YELLOW Core Product cards. These are called PURPLE cards, Innovators.

Step4: Then the whiteboard is examined to see how many natural sub-clusters are made up of Core Product Providers, one or more Channels and one or more Innovators.

Step5: Participants are then asked to look for opportunities to merge these sub-clusters with the objective of having not more than three merged clusters. Also, each merged cluster should have at least four players, one of whom should be a channel.

Step6: Participants are then asked to go back to work on these merged clusters, to explore the possibilities and requirements for three further roles, and they stick more cards into the clusters on the whiteboard for:

RED - Supporting Service Provider: provides a critical supporting service for the collaborative product.
ORANGE - Integrator: plays a key design or integration role in the new collaborative product.
GREY - Investor: can provide finance or resources needed to make the collective supply chain viable, and attractive to the market.

Step7: Then it's time to do a quick "tidy up," to name and assess scope for each of the merged clusters as "collaborative product offers." Then at close-out time, feedback from each of the participants is gathered to see if they are intrigued enough to want to collaborate further and to develop each of the merged clusters.

See also The Collaboration Dartboard for another great way to get inter-company collaboration started quickly.

For more details on this and other techniques for building successful inter-company collaboration see The Networked Enterprise Book.

Innovation Networks improve new product flow

2010-07-21T00:25:00.000-07:00

A few years ago I co-authored a major report for Forfas (the Irish national policy advisory board for enterprise, trade, science, technology and innovation) on Innovation Networks under the overall editorship of Tom Martin.

The report was published in June 2004 and it encouraging to see some of the major research houses such as Forrester echoing the same theme of networks as the new hotspots of innovation.

Forrester research is expensive (and concise) but I thought I would highlight three of their titles as it reinforces the message that we are moving rapidly beyond an economy based on companies and supply chains to one based on networks:

Innovation Networks: A New Market Structure Will Revitalize Invention-To-Innovation Cycles
US Innovation Agenda Must Focus On Networks: The US Must Restructure Investments To Win In Global Innovation Networks
Software Innovation Networks Go Vertical: A New Market Structure Will Help Vendors Deliver Vertical Software Innovations

I include links and an executive summary paragraph for each report ….

Innovation Networks - A New Market Structure Will Revitalize Invention-To-Innovation Cycles

EXECUTIVE SUMMARY
Length: 21 pages

Finicky customers, ruthless competition, and stringent regulations are accelerating demand for technology-enabled innovation. But supply-side deficiency and ineffectiveness hamper firms' ability to convert inventions into profitable innovations. The result? A new market ecosystem — called Innovation Networks — will emerge to match global demand for innovation with worldwide supply. Innovation Networks will let firms fluidly weave internally and externally available invention and innovation services to optimize the profitability of their products, services, and business models. Innovation Networks will deconstruct vertically integrated invention-to-innovation cycles in software, finance, and CPG industries — and reinvent the formula for success in regional, national, and global markets.

US Innovation Agenda Must Focus On Networks - The US Must Restructure Investments To Win In Global Innovation Networks

EXECUTIVE SUMMARY
Length: 9 pages

On December 15, the US Council on Competitiveness hosted the National Innovation Initiative (NII) Summit. The NII recommended creating a US innovation agenda to reverse the decline in America's ability to compete globally based on innovation. The NII Summit's focus on talent, investment, and infrastructure are solid. But the US can't win in this global competition merely by more invention. It must also internalize a new game — which Forrester calls Innovation Networks — in which US players must engage rival firms from around the world in a co-opetitive game that combines transformation, brokering, and financing, as well as invention.

Software Innovation Networks Go Vertical - A New Market Structure Will Help Vendors Deliver Vertical Software Innovations

EXECUTIVE SUMMARY
Length: 11 pages

Vertical-specific Software Innovation Networks will become the hotbeds for technology advances, with multiple networks battling it out in each vertical. These networks — made up of ISVs, service providers, and forward-thinking users — will collaboratively develop and market industry-specific solutions built on top of software platforms from IBM, Microsoft, Oracle, and SAP. These networks will allow smart CIOs to consolidate their platform investments and only consider vendors with strong commitments to the platform of their choice. Forward-thinking ISVs will ditch their "not-invented-here" mindset in favor of "best-from-anywhere" to exploit economies of scale offered by vertical Software Innovation Networks.

A kick-start plan for setting up a Virtual Enterprise Network in 6 weeks

2010-07-21T00:21:00.001-07:00

In a previous article, Virtual Enterprise Networks allow business scale through virtual collaboration I introduced the idea of a Virtual Enterprise Network or VEN as a way for smaller businesses to achieve “virtual scale” by collaborating on business development, marketing and project delivery for major enterprise customers.

A kick-start plan for setting up a Virtual Enterprise Network in 6 weeks

I described why these VENs are forming and their basic value proposition - gaining scale without sacrificing agility!

I referenced a number of real VEN examples and identified the 4 critical success factors (CSFs) for a VEN:

CSF1. Not over-complicating the technology support
CSF2. Taking "Network Governance" Seriously
CSF3. Development of Common Collaborative Working Practices
CSF4. "ABC" Roles

In this article I suggest a kick-start plan for creating your own VEN from scratch in just 6 weeks!

Week 1 - Find 3-4 founder network companies

These should be people you already know and trust.

They should be in companies in the same industry as your own company but with complimentary capabilities.

Some product overlap if fine but avoid direct competitors (at least in the early days of the network).

Week 2 - Set 'quick win' targets for sales, new members and network governance

For sales a good target would be to have your network added to a major organisation's “Invite to tender” list.

For new members you should be aiming for at least 6 more companies in the network.

For network governance you need to have your basic ground rules in place for how you intend to operate as a network.

Week 3 - Acquire the resources to run the network until you get your first contract

The Broker and Coach role are absolutely critical at this stage.

They can be resourced by combinations of three sources:

Member company contribution - in cash or in kind
Local enterprise development agency support - most LEDs are very keen on network and cluster development as it helps exports and regional competitiveness
Consultancy support - for example brokerage can be secured on a 'win-fee basis' with a low (or no) retainer and a bonus when the first results are achieved.

Week 4 - Implement your network collaboration tool

You need a tool to allow all the companies in the network to communicate and to co-operate on documents.

You should go for a web-based hosted service which does not require the added complication of any software installation on member computers for it to be used.

It should allow the companies to aggregate their capabilities - in other words it must provide some kind of “competency database”.

It should help with marketing and business development, for example, allowing target prospect information to be captured, relevant tenders to be circulated and the ability to provide a "corporate-feel" public website.

It should be possible to negotiate a “try and buy” of suitable network collaboration software - a three month trial should let you prove the software's usefulness worth to the network.

Week 5 - Start operating the three key network streams

The New Members Stream should be led by the Architect.

It must focus on signing up new members with complimentary capabilities including local universities and local enterprise agency staff.

The Sales Stream should be led by the Broker.

It should focus on strategic customer identification, network product/service definition, network public identity and ‘quick win’ possibilities.

The Network Governance Stream should be led by the Coach.

It must handle the implementation and training of the web-based network tool and the development of ground rules and network working practices.

Week 6 - Develop a self-sustaining network business plan

Even though you are only started you need to get everybody thinking about on-going sustainability!

Start to outline a business plan for the next 12 months which identifies both new revenue possibilities and the investments all parties will have to make to achieve them.

The experience of these networks is that if they are run properly they will generate 15-30% of additional revenue per member after the initial settling in period.

The final trick

The final trick is to ensure that all the VEN participants know the costs necessary to operate it on an on-going basis and are committed to making these investments provided the network proves its worth to all parties by delivering the quick wins!

A Collaborative Network Maturity Model

2010-07-21T00:18:00.001-07:00

Over the last year months a group of cluster facilitators and network coaches in Northern Ireland, including myself, have been working under the auspices of the Cluster Facilitators Forum, to try and develop a non-proprietary open model to guide how collaboration can develop between businesses through clusters and networks.

The ambition is partly inspired by the hugely influential CMM framework for software capability originally developed by the Software Engineering Institute at CMU.

Below is a diagram which summarises the current state of the CFF collaborative network maturity model:

Like all models this one needs to be viewed in the light of Einstein's famous quote:

"All models are wrong but some are useful"

The model is intended to help place a network or cluster on the spectrum of collaboration and to assist in identification of priorities and supporting interventions.

Of course it is an over-simplification and should not be taken to imply that real networks develop in such tidy and linear stages!

Achieve supply chain agility through Virtual Enterprise Networks

2010-07-21T00:16:00.000-07:00

In the US there has been a movement within large contractors in the defence and advanced engineering sectors (e.g. automobile and aerospace) to develop more agile supply chains by working differently with their suppliers. One of the leading proponents of this approach is Ted Goransen (and author of the book “The Agile Virtual Enterprise”)

But why is agility so important?

First what do we mean by the term agility?

Agility is defined as “the ability to respond to unexpected change”

So agility is important when you don't know what's coming next!

The first agility driver is cost

In the automotive sector amazingly only 30% of the cost of a car is to do with “value activities".

The other 70% are the costs and overheads of running a major automobile manufacturer in its current form.

The scope for cost savings through agility in supply chains is therefore huge.

The second agility driver is technology

A huge problem in major development programmes, often running for 5-15 years, is that the underlying technology gets locked in very early.

In many cases this technology becomes obsolete even before it is ever delivered.

How does an agile virtual approach work?

Let's say you are a major defence manufacturer of missiles.

You have two design options on the table for a particular contract.

Option 1 is a low-risk option using existing technology which can be manufactured on time at a particular cost/ feature set.

Option 2 is a higher-risk option using emerging/experimental technology.

You won't know for two years if option 2 will work – it’s got a 50% chance of being successful.

However if it does work the cost/feature set of the option 2 product is very significantly better than option 1.

Over a twenty-year product lifetime the financial benefits to the contractor and customer of an option 2 solution are be enormous.

However using the traditional approach to supply chains no one will take the risk!

Enter the agile virtual supply chain

With an Agile Virtual Enterprise approach you effectively manage two parallel supply chains with evaluation and decision point every 6 months for the first 3 years.

The suppliers in both chains know the score.

More importantly the financials are designed so that if the conservative supply chain gets canned (because the higher risk one delivers) then the canned suppliers will be still be adequately compensated.

This is made possible due to the bigger profits ahead from option 2.

This type of transparency and partnership is very different from the tradtional supply chain management styles with information controlled and manipulated by the major player at the head of the chain.

Agile or Lean?

The key question if you are a major supply chain OEM or one of their tier 1 suppliers is this:

“Am I in an agile market or a lean one?”

Lean markets (e.g. steel-making) are stable and cost is the primary driver.

Agile markets are unstable with technology changing rapidly.

Aerospace, Automobiles and Software are markets which require agility not lean.

For more on this important area see The Agile Virtual Enterprise (Ted Goranson, 1999)

A Taxonomy of Virtual Business Networks

2010-07-21T00:14:00.000-07:00

Virtual business networks are appearing everywhere and in many guises and names such as Collaborative Networks, Virtual Clusters, Virtual Enterprise Networks, Collaborative Supply Chains, Networked Enterprises and Star Alliances to name just a few.But how does a business leader or a government policy-maker make sense of them all?

Introduction

Virtual Business Networks seem to be the hot topic at the minute - everybody is talking about virtual business collaboration, clusters and networks.

When I say Virtual Business Network (or VBN) I mean “companies coming together to co-operate to achieve some shared business goal by forming networks enabled by various forms of internet-based technology”.

I am excluding from my VBN definition the many forms of 'social network' which are also developing extremely rapidly and in a very interesting way. (The only reason I am excluding social networks is that their membership tends to be individual rather than corporate).

VBNs are appearing everywhere and in many guises and names such as Collaborative Networks, Virtual Clusters, Virtual Enterprise Networks, Collaborative Supply Chains, Networked Enterprises and Star Alliances to name just a few.

But how does a business leader or a government policy-maker make sense of them all?

Are all VBNs the same or do they have significant differences?
Are they all equally likely to succeed?
Do different types of VBN produce different returns and demand different levels of commitment?

Based on detailed experience working in this area over many years I believe there are very clear differentiators, commitment levels, return on investments, advantages and disadvantages for each type of VBN.

These must be properly understood before thinking about either joining a VBN or deciding to invest in building one from scratch.

This article offers what I believe is the world’s first practical taxonomy of modern virtual business networks.

I identify and define eight distinct types of VBN and also provide real-life up-to-date examples of each VBN type to enable better understanding and provide a start-point for further investigation:

These eight types are not based on an academic framework but rather a practical classification of the different kinds of VBNs which are actually happening today:

CSC - Collaborative Supply Chain
CSN - Collaborative Supplier Network
CPDN - Collaborative Product Development Network
ETA - Enhanced Trade Association
IAN - Incubation & Acceleration Network
SPX - Subcontracting & Partnership Exchange
TLE - Technology-Led Ecosystem
VEN - Virtual Enterprise Network

I do not suggest for one minute that this taxonomy is exhaustive - it is merely a starting point. In fact, I will be massively disappointed if it does not grow significantly in terms of new types of VBN.

This taxonomy of virtual business networks will enable:

Leaders of small businesses to identify which type of VBN can best accelerate their ambitions for growth through virtual collaboration
Leaders of large enterprises to explore more effective forms of VBN-based working with smaller suppliers than traditional supply chains
Government policy-makers to establish which types of VBN might be worth evaluating and including in their strategies to enhance regional economic competitiveness and where they can look globally for the best case studies and exemplars

Virtual Business Networks are everywhere

We see a proliferation of virtual business networks around a number of common themes:

Business-Business Cooperation
Enhancing Business Scale
Mutual Business Benefit Focus
Internet Technology-Enabled

The terminology varies widely with labels such as:

Collaborative Network
Virtual Cluster
Networked Incubator
Virtual Enterprise Network
Collaborative Supply Chain
Concurrent Enterprise
Agile Virtual Enterprise
Collaborative R&D Network
Networked Enterprise
Subcontracting and Partnership Exchange
Star Alliance

Many of these labels are used interchangeably and it can all be very confusing if you try to compare two VBNs - it’s the classic apples and oranges problem.

However as well as being difficult and frustrating it can also be very costly!

Lack of a good basis for comparison of the key features of VBNs can result in a business joining the wrong kind of network or government policy-makers using the wrong VBN cases on which to build long-term regional economic development strategy.

But before we look at the differences between VBNs we should look at where all this interest in virtual business networks is coming from.

The Drivers of Virtual Business Networks

There are two main drivers of virtual business networking activity - Individual Company Activities and Regional Competitiveness Agendas.

Individual Company Activities

Companies typically join virtual business networks for a number of different business-related reasons.

Most commonly this reduces to three broad areas - increased sales, enhanced innovation and reduced costs:

Increased Sales
Collective marketing (sharing a common brand)
Collective bidding (wider product offering)
New Channels to Market (for existing products)

Enhanced Innovation
New product development (shared knowledge)
Improved efficiency and products (best practice)
Access to university R&D (technology transfer)

Reduced Costs
Sharing a resource (capacity, people)
Sharing a service (training, marketing)
Joint procurement (materials and services)

Regional Competitiveness Agendas

The development of networking and clustering schemes is a also major priority for a number of highly competitive regions globally.

These schemes usually involve some combination of:

Fostering and supporting collaboration among SMEs
Building linkages between the SMEs and global players
Developing and strengthening their knowledge-based sectors
Seeking to use and develop new technology to support all forms of collaboration
Enhancing International trading and reputation of companies and regions
Seeking sustainable mechanisms to take beyond the incubation and piloting phases

Some regions have developed substantial VBN programmes, such as Denmark, Switzerland and parts of the US.

In other areas, such as the UK there are ambitious VBN programmes which have only been running for a couple of years.

Other regions have formulated ambitious VBN policies and plans (e.g. Republic of Ireland) but have not yet started major implementation.

The need for a simple taxonomy of Virtual Business Networks

Having worked extensively in this area for many years I offer a practical taxonomy of Virtual Business Networks.

It is not intended to be exhaustive and I welcome any additions and suggestions for improvement from VBN practitioners.

The only criterion I require is that they should be real live VBNs and not just unimplemented VBN concepts.

So if you wish to forward a new VBN type for the taxonomy you must also include links to two real case studies which illustrate it!

My starting taxonomy includes the following eight types of VBN which I have listed in purely alphabetical order

CSC - Collaborative Supply Chain
CSN - Collaborative Supplier Network
CPDN - Collaborative Product Development Network
ETA - Enhanced Trade Association
IAN - Incubation & Acceleration Network
SPX - Subcontracting & Partnership Exchange
TLE - Technology-Led Ecosystem
VEN - Virtual Enterprise Network

I will explain each of these in more detail but first let’s look across all eight types of VBN to see the main differentiators between them.

Key Differentiators of different types of Virtual Business Network

From my experience there are some major characteristics which differentiate a VBN:

a) Topology

Are they based around a single large central player (i.e. a star) or not?

In other words is it a “many to one” VBN or a “many to many” VBN?

There are big advantages in having a major central player (e.g. resources and money) and big disadvantages (e.g. balance of power and over-dependency).

b) Primary Objective

What is the primary purpose of the collaboration?

For example:
Skills Development
Government Policy Lobbying for a sector
Collective Sales & Marketing
Collaborative Product Development

c) The Level of Cooperation

There are typically three levels of Co-operation in VBNs:

Light (Communicating) - exchange of external information often through organising events and external speakers

Medium (Co-ordinating) - sharing of internal knowledge on organisational best practice and common problem solving

High (Collaboration) - commitment to co-invention and risk/reward such as making collective bids

The higher the cooperation the more significant will be the likely returns. However significantly more commitment and input will also be needed from the VBN members to achieve these returns.

Participants need to balance what they want out of a VBN with what they are prepared to put in and in many cases they are only prepared for light co-operation.

d) VBN Longevity

Is the VBN on-going (usually funded through membership fees or government support)?

Or has it been formed for a very specific purpose and lives for just 6-18 months and then dissolves?

e) Legal Formality

The legal formality needs to be appropriate to the level of risk and reward the members are taking in cooperating together and usually evolves over time - provided the co-operation is fruitful.

Too much formality at the start of a VBN can distract and inject a dynamic of distrust into a VBN which will kill its chance of entrepreneurial success before it even starts.

On the other hand no formal agreements leave a VBN and its members open to abuse

The different options include:

Loose co-operations with no legal basis
Semi-Formal with Non-Disclosure Agreements and Ground Rules
Multiple bilateral legal agreements between each VBN member (“many too many” like a joint venture)
Single “virtual business network agreements” which all members must sign up to as a condition of joining the VBN (“many to one”)

The VBN taxonomy with definitions and examples

1. CSC - Collaborative Supply Chain

Definition:

A supply chain, around a major player, but which seeks to operate much more collaboratively than traditional supply chains

Examples:

Virtual Agility Movement (US)
The Agile Virtual Enterprise (Ted Goranson, 1999)

In the US there has been a significant movement within the large contractors in the defence and advanced engineering sectors (e.g. automobile and aerospace) to develop more agile supply chains by working differently with their suppliers.

Agility is defined as “the ability to respond to unexpected change”

2. CSN - Collaborative Supplier Network

Definition:

A group of suppliers who present a common public identity and address areas of common concern such as training and business development

Examples:

The Danish Networking Programme
“Networks of Innovation” Report, Forfás Ireland 2004

In 1989 a government-funded report declared that prospects for the Danish economy were bleak, “size is the problem.” The Danish economy consisted of a large number of small firms (with 10 to 30 employees) which were too small, too dependent and too diversified to compete in an increasingly global market.

In March 1989, the Danish Ministry of Trade and Industry announced its “Strategy ‘92” which included a Network Plan aimed at creating business networks among small enterprises. Within a year of its launch, the Network Plan had more than 1,500 firms operating in networks. EU Cooperative Research (CRAFT)

Supply Network Shannon (SNS)

An open network of companies in the Shannon Region, which was established in 1998 representing companies in the Shannon region of Ireland. SNS aims to promote, develop and market sub-supply capability in the Region.

3. CPDN - Collaborative Product Development Network

Definition:

A group of companies who are collaborating on new product development, new channels to market or applied research and development

Examples:

EU Cooperative Research (CRAFT)

CRAFT Proposals must be collaborative, involving companies from at least 3 EU member states, SME oriented and technology focused. Projects run for a minimum of one year and a maximum of two years. Each project should cost between €0.5 and €2 million. There have already been around 200 CRAFT projects completed. The third call (possibly final call) was published in December and closes 14 September 2005. Budget is €75 M. Consortia must also include at least two RTD (Research & Technology Development) performers, which are organisations with the facilities necessary to carry out research on behalf of the SMEs.

4. ETA - Enhanced Trade Association

Definition:

A Trade Association which extends its traditional activities into networks and cluster development

Examples:

Atlantic Technology Corridor (Ireland)

The cluster comprises 272 companies focused on Information, Communications and Technology companies (ICT) / Medical Technology companies in the West of Ireland.

5. IAN - Incubation & Acceleration Network

Definition:

A network organisation which supports technology business start-ups

Examples:

Networked Incubators (US)
"Networked Incubators: Hothouses of the New Economy" Harvard Business Review, September-October 2000.

Professor Donald Sull and his colleagues at the Harvard Business School have suggested that a new type of incubator, called a networked incubator, represents a fundamentally new and enduring organizational model uniquely suited to growing businesses in the Internet economy. It shares certain features with other incubators — such as fostering a spirit of entrepreneurship and economies of scale. But its key distinguishing feature is its ability to give start-ups preferential access to a network of potential partners.

Network for Satellite Navigation, Oberpfaffenhofen, Germany

Following the decision of the European Union to develop the satellite based navigation system GALILEO, the Bavarian State focused on establishing the region west of Munich (Oberpfaffenhofen) as the leading centre for applications of satellite navigation in Europe.

6. SPX - Subcontracting & Partnership Exchange

Definition:

An electronic mechanism for connecting (small) suppliers with (major) buyers.

Examples:

Subcontracting & Partnership Exchanges (UNIDO)

Subcontracting and Partnership Exchanges (SPX) are aimed at the developing nations and are organized as non-profit industrial associations run by qualified entrepreneurs. They operate as technical information, promotion and match making centres for industrial subcontracting and partnership between main-contractors, suppliers and subcontractors. The objective is to optimise utilization of the manufacturing capacities of the participating companies and industries.

Results produced by an SPX after a three year take-off period are impressive - especially given the fact they are located in developing economies, typically:

50-100 national contracts concluded per year worth €5.5M-8.7M
25-50 international contracts concluded per year worth €2.7M-5.5M

West Midlands Collaborative Commerce Marketplace (UK)

WMCCM aims to increase sales and lower costs through providing easy access to the core competences and capabilities of SMEs. It provides tools such as projects, clusters, catalogues, auctions, bazaars and marketplace tenders

7. TLE - Technology-Led Ecosystem

Definition:

A network which seeks to exploit the business opportunities offered by a new and emerging enabling technology

Examples:

Wireless Leiden, Leiden, Netherlands

Wireless Leiden is the network of professionals and companies behind the largest wireless hotspot or community network in Europe covering the whole city of Leiden and the surrounding villages. Also new applications, such as location based services; messaging and voice over IP applications are possible within the network.

8. VEN - Virtual Enterprise Network

Definition:

A group of companies who operate as a collective with the objective of winning collaborative business contracts

Examples:

Virtuelle Fabrik (Virtual Factory), Switzerland

“Virtuelle Fabrik Nordwestschweiz-Mittelland“ is four networks each of about 40 SMEs, which was formed in 1997 with the expectation of being able to realize competitive advantages when co-operating.

Yorkshire Forward VEN Programme (UK)

Focuses on specific industry areas such as Healthcare, Engineering, IT/Digital, Chemicals/Bioscience

A VBN Taxonomy - Summary and Conclusions

We need a taxonomy of virtual business networks (VBNs) to help us make sense of all the new forms of virtual business network which are emerging.

Based on detailed experience working in this area over many years I believe there are very clear differentiators, commitment levels, return on investments, advantages and disadvantages for each type of VBN.

I have offered the following starting VBN taxonomy:

CSC - Collaborative Supply Chain
CSN - Collaborative Supplier Network
CPDN - Collaborative Product Development Network
ETA - Enhanced Trade Association
IAN - Incubation & Acceleration Network
SPX - Subcontracting & Partnership Exchange
TLE - Technology-Led Ecosystem
VEN - Virtual Enterprise Network

This VBN taxonomy has to be used with discretion and common sense and all networks won’t fit into a single type.

For example The Stac (Scotland) has elements of both CPDN and CSC.

However this Virtual Business Network taxonomy should allow:

Leaders of small businesses to identify new ways to accelerate their ambitions for growth through network cooperation
Leaders of large enterprises to explore more effective forms of working with their suppliers and other partners
Government policy-makers to enhance their strategies for clustering to improve regional competitiveness

I also invite virtual business network practitioners to collaborate with me in extending this initial VBN taxonomy.

The only condition is that any new VBNs are real networks (not concepts!) with live case studies to back them up!

Virtual Enterprise Networks allow business scale through virtual collaboration

2010-07-21T00:12:00.000-07:00

Small businesses from many different industries, both traditional and hi-tech, have discovered a new way for them to succeed in the "global economy". It involves collaboration on large proposals, R&D and fulfilment of orders assisted by relatively low cost, virtual collaboration technology.

Virtual Enterprise Networks (aka VENs) give small businesses scale

Traditionally many small businesses join supply chains centred on larger companies.

Unfortunately the companies at the bottom of such supply chains are often treated as commodity players and replaced with cheaper alternatives when the opportunity arises.

Some brave small businesses have attempted to "go it alone" by creating sophisticated internet e-business architectures which directly link them to their major customers and partners.

However the expense, risk and sheer management effort involved in this approach puts it beyond the reach of most.

Virtual Enterprise Networks (aka VENs) give small businesses scale

The "third way" which companies are discovering is to join "Virtual Enterprise Networks" or VENs with other like-minded but complimentary businesses to market, sell and deliver collective offers to the market beyond what the individual companies could offer by themselves.

In addition these VENs are also undertaking significant collaborative product development work, often in partnership with applied research institutes and universities, which would be beyond the reach of the member companies individually.

For example, a group of UK Engineering companies are using the VEN approach to collectively bid for many-million pounds of work per annum from a large European Customer. Like many corporates this customer has a supply chain rationalisation (aka small supplier reduction) programme which would stop them dealing with any of the companies individually.

Another example is a group of Swiss component manufacturers who used VENs to move up the value chain away from contract-specific components to branded product solutions in the face of stern cost-based competition from Czechoslovakian companies exporting into their home market.

A third example is a group of Mexican manufacturers who used a VEN to support their entry into a new, more sophisticated market (the US).

So what exactly is the "Value Proposition" for a VEN?

A VEN connects businesses into peer networks that are supported by appropriate technology to give them the capabilities and competitive advantages of global enterprises particularly:

SALES
MARKETING REACH
PRODUCT DEVELOPMENT
HUMAN, CAPITAL & IT RESOURCES

Whilst exploiting their inherent competitive advantages in being able to be more agile in areas such as:

SPEED & RESPONSIVENESS
ENTREPRENEURSHIP & INNOVATION
FLEXIBILITY
LOW OVERHEADS

So what are the critical factors for making a VEN a success?

All the experience points to four main ones:

CSF1. Not over-complicating the technology support!

The surprising thing about virtual enterprise networks is that the technology support companies need to get started and win collective new business is neither complex nor costly.

When companies are starting to collaborate all they really need is a simple web-based collaboration platform which they can access from their companies (whilst travelling) which allows them to securely communicate, schedule, discuss and work on shared documents.

Typically numerous suppliers offer such software as a hosted, pay-per-use service, which requires no software, installed at any of the client PCs.

Companies operating in a network also need access to good shared business applications such as campaign management/CRM - these applications must be web-based as networks of small companies do not have shared IT infrastructures.

CSF2. Taking "Network Governance" Seriously

The biggest concern a customer will have in dealing with a network is who is accountable when things go wrong (and can I sue them if it has to come to that!).

Also customers want to treat the network like a single entity not like a collection of different companies. Thus they need to see single point of contact, seamless business processes and common values from a network.

This can all be grouped together under the term "Network Governance".

Networks, which do not invest in building this typically unravel in their first sales pitch to any large customer once the customers procurement department starts asking probing questions.

"Marriage of Convenience networks" rarely win collective contract work from major organisations.

CSF3. Development of Common Collaborative Working Practices

A virtual enterprise network is a virtual team. However it is made up of individuals from many different organisations with different ambitions, IT awareness, business cultures many of whom do not know each other well.

It is therefore a classic Virtually Networked Team and as such needs to agree the way these people will work together, make decisions, handle conflicts, share information and use the virtual collaboration technology.

An aspect of VENs which seem to differentiate them from other forms of networking is the willingness of the members to invest in the development of these shared working practices.

Without such practices it is unlikely that trust will grow in the network to the extent necessary to achieve anything significant.

The first conflict that happens will probably destroy the network.

Strange as it may seem it is sometimes the appearance of the first good business opportunity that destroys a network as members revert to non-collaborative styles with the smell of the money!

CSF4. "ABC" Roles

The most successful virtual enterprise networks are based around 3 key roles, which can be remembered using "ABC".

"A" is for the Architect who knows what the network of companies can (and cannot) deliver. The Architect is also responsible for finding companies to fill gaps in the virtual supply networks needed to deliver specific customer opportunities.

"B" is for the Broker who sources potential customer opportunities for the network and then works closely with the Architect to qualify them and configure the right virtual teams to bid.

"C" is for the Coach who works with the individuals in the different companies to build trust, design accountability structures, resolve issues, address conflicts of interest and build them into effective cross-company teams.

Ability to collaborate will be the defining skill for successful businesses in the future

It used to be said that the ability to learn quicker than your competitor was the only skill that would guarantee your survival (Arie De Geus).

The small-medium businesses, who are operating virtual enterprise networks (aka VENs), are demonstrating that real competitive advantage lies in learning to collaborate better.

For more on how to get started with VENs see A kick-start plan for setting up a Virtual Enterprise Network in 6 weeks

An earlier version of this article was originally published by Ken Thompson in Enterprise Ireland eBusiness Live, December 2003

A checklist for assessing virtual business networks

2010-07-21T00:10:00.000-07:00

All business networks are not equal

Ten questions to ‘healthcheck' a collaborative business network.

In Virtual Enterprise Networks allow business scale through virtual collaboration, I discussed the Virtual Enterprise Network (VEN) as an important new collaborative enterprise which small businesses are using to achieve ‘virtual scale’ without sacrificing control and agility.

A key differentiator of VENs from other types of business network is that the member companies have made real and serious investments in creating a collaborative network enterprise and all this implies.

Despite what a network might call itself many business networks are little more than loose associations of companies who barely know each other and have not invested in learning to collaborate together.

These kind of opportunistic business networks believe that when they win the first customer contract that will be time enough to learn to collaborate.

In the real world however this is not something that discerning and demanding customer organisations are likely to give them the chance to prove!

It is important therefore that if you are a prospective customer of a VEN or you are a small business thinking of joining a VEN to have a way to check-out how serious a collaborative enterprise such a network is.

Ten questions for assessing a collaborative business network/cluster

1. Network Mobilisation

Has the network completed a formal network mobilisation process to align member goals, inputs and expectations?

2. Management Resources

Does the network have dedicated network management resources in the key areas of overall network leadership and administration/technology support?

3. Ground Rules

Has the network agreed Ground Rules which all members must observe to ensure the interests of all members are fairly and transparently governed?

4. Broker & Sales Plan

Is there a dedicated Broker responsible for identifying sales opportunities for the network in line with an agreed business development plan?

5. Capability Map

Have the companies aggregated and analysed their capabilities to identify core/quick win areas and gaps where new members may needed?

6. Tenderfeeds

Does the network have access to regular tender information backed up by a systematic process for qualifying and processing opportunities?

7. Affiliate Management

Does the network have a process for managing new and affiliate companies to ensure they are properly considered for bids and have good regular information which keeps them informed about network activities and opportunities?

8. Innovation & Alliances Plan

Does the network have a committed strategy and plan for collaborative product development (generally involving an applied research group/project funding), external product sourcing and the formation of useful alliances with other networks?

9. Common Processes

Does the network have common and regularly updated processes covering the execution, management and reporting/liaison of internal and customer-facing projects?

10. Collaborative Legal Agreements

Has the network developed detailed legal agreements to underpin collaborative working in key areas such as Intellectual Property, non-performance and risk/rewards?

Analysing a network’s responses

If a network can answer ‘Yes’ supported by evidence for five or more of these questions then there is a good chance that they are serious about operating as a collaborative network.

If the network can say ‘Yes’ to seven or more then you probably have found a very strong network you can work with.

If the network can only say ‘Yes’ to a couple of the questions then you have a network which probably should be avoided for one of two very different reasons:

a network in its early stages which needs more time to develop or
a ‘network of convenience’ which is unlikely to be a good strategic partner

The Networked Enterprise (TNE) Reference Card

2010-07-21T00:07:00.000-07:00

A unique reference card for printing on 2-sided A4 (Landscape) which folds into 6 sections showing the key priorities and resources in developing The Networked Enterprise through its 7 maturity stages with the 8 key techniques and their checklists. A must-have for all group collaboration coaches, leaders and practitioners!

Checkout the TNE Book

Ten critical foundations for collaborative networks

2010-07-21T00:03:00.000-07:00

There are 10 really critical foundations to make a Virtual Enterprise Network a success: 1) Communities and Project Dynamic, 2) Network Ground Rules, 3) Group Membership Structures, 4) Practical Group Structures, 5) Complete set of Network Roles, 6) Appropriate Legal Frameworks, 7) Practical Exchange Model, 8) Viable Stakeholder Ecosystem, 9) Realistic Network Development Model, 10) Proven Development Road Map. This article offers an introduction to these ten foundations.

1. Communities and Project Dynamic

A Virtual Enterprise Network (VEN) is a voluntary and dynamic community of SMEs that commit to working together for a period of at least six months (ideally, twelve months) to collectively seek opportunities to participate in collaborative projects of mutual business advantage. Each of these virtual enterprise projects involves a specific subset of members from the community and typically focuses on either winning new business contracts, implementing shared services (cost reductions) or new product adoption and development.

A symbiotic relationship exists between the VEN Community and VEN Projects. The community spawns the projects and the projects validate the community. If you have only the Community aspect, then eventually it will crumble as the only business outcome is networking. If you have only the Projects aspect, then eventually it will harden into a closed supply chain with no ability to attract new members or address new market opportunities

2. Network Ground Rules

Here are the main areas that Ground Rules must address:

1. What damages trust?
2. What destroys trust?
3. Conflicts of Interest, the most likely scenarios?
4. How will the information be shared?
5. Principles of Transparency versus Privacy
6. How will the issues and conflicts be resolved? Both Informally and Formally
7. How will the decisions be made? Day-to-Day, Operational and Strategic Topics
8. How will the new members be handled? Promotion, Selection, Induction and Mentoring
9. What sanctions will be employed and how will they be agreed upon?
10. On what basis will bid and project teams be constructed?
11. How will lead generation and business development be handled?

3. Group Membership Structures

There are typically four entry requirements for new VEN members:

1. Sign a Non-Disclosure Agreement

2. Commit a senior company director to active participation

3. Sign-up to the VEN Ground Rules

4. Be accepted by the other network members

All new members should be subject to a probation period.

Companies may also join the network as associate members if they do not wish to join (or are ineligible to join) as full members, or are fulfilling specific bid or contract roles, or as a first step to full membership.

4. Practical Group Structures/Governance

Experience shows that 6 specific work groups are typically needed in a VEN
.
The first three groups concern the whole VEN community, whereas, the second three groups address specific projects and enterprises within the VEN:

1. VEN Board. This consists of representatives of all companies and sponsoring organizations. The board is responsible for overall network governance and strategic decision-making, and usually meets quarterly.

2. VEN Management Group. This typically has the same membership as the VEN Board, but typically meets monthly to discuss operational issues, whereas, the board deals with strategic issues and investments.

3. VEN Working Groups. Typically the VEN Management Group is too large and has too little time for meetings to deal with detailed issues. The best way to address this is by establishing smaller working groups for handling detailed VEN issues that typically include:

Business and Market Development. Marketing the VEN to prospective customers. Defining, developing and researching the best VEN target sectors, collaborative offers and identifying opportunities.
Network Development and Governance. Developing the VEN goals, objectives, ground rules, roles, working practices and technology and process infrastructures.
Member and Capability Development. Increasing the VEN membership and member capabilities, and identifying, attracting and inducting new member companies.

4. Campaign and Bid Development Teams. Groups of VEN members who form teams around specific opportunities to engage prospective customers and make collaborative bids.

5. New Product Development Teams. Groups of VEN members who form teams around specific new product development opportunities and research projects.

6. Project Management Teams. Groups of VEN members who form teams to manage the execution of project contracts won by the campaign and bid development teams and also internal VEN projects.

5. Complete set of Network Roles

Six key roles are generally present in successful VENs

1. Architect. Qualify opportunities brought by the Brokers and others, and configure viable network supply chains that can win bids, satisfy the members and successfully deliver work to accepted quality levels and standards.

2. Brokers. Use their contacts and personal credibility to bring potential customer opportunities to the VEN, and manage these relationships during the bid process. A broker can also bring other opportunities such as research funding. In a sense, every VEN member should consider themselves as a broker, but there is also a need for dedicated brokers. Lack of a dedicated broker is one of the most common causes of a VEN's underperformance.

3. Coaches. Build Network Teams and Work Groups that trust each other, are able to surface issues and resolve conflicts, and effectively manage their commitments without having to be constantly chased.

4. Digital Technology Support. Train and support the network members in the effective use of virtual collaboration technology in the VEN and technically administer the network.

5. Executive Leader. Win the confidence of the other network members that their interests will be respected, attract new members, represent the public identity of the network and be the senior internal customer for all network activity.

6. Group Leaders. Lead workgroups in key VEN areas, described under VEN Workgroups in the previous section

NOTE: A Bid Manager will also be required if this role cannot be fulfilled by the Broker

6. Appropriate Legal Frameworks

A set of Model Contracts for VENs was developed by the EU Alive Project (IST 2000-25459) [20], that suggested generic but detailed guidelines and templates covering the pre-contract, contract and post-contract aspects of collaboration for businesses cooperating in virtual networks and clusters covering three instruments:

1. Letter of Intent (LOI). This is a pre-contractual bilateral agreement between a network business and the network "Business Integrator" used in the opportunity evaluation phase.

2. Memorandum of Understanding (MoU). This is an optional consortium agreement that can be used before a Virtual Enterprise Agreement is created, if it is particularly important to create clarity concerning the roles and IP.

3. Virtual Enterprise Agreement (VEA). This is a very detailed agreement between every member of the network and covering all aspects of internal relations (e.g. IP), external matters (e.g. future relationships and ownership of customers) and hybrid matters

Additionally if a VEN is to be a legal contracting entity then additional Legal Structures will be required. This will require specialized advice.

7. A Practical "Exchange Model"

This must address four key commercial elements:

1. Pricing/Costs: In supply chains bids, it is common practice for suppliers to add in extra overheads as padding, typically in the region of 15-35%, to protect their costs. When Supplier1 submits costs to Supplier2, Supplier2 also adds its padding factor to Supplier1's padding, and the result is "padding being padded." With typical supply chains running to five levels, it is very easy to see how this practice can make the final set of costs offered to end customer somewhat uncompetitive. VENs need to use pricing and costing models that are consistent with the objectives of commanding new markets.

2. Payment: In a traditional supply chains, the payment model is "trickle-down." The prime supplier gets paid, and then, and only then, will it pay its sub-suppliers, who in turn pay their suppliers. Unfortunately, this trickle-down approach can destroy the peer nature of a VEN because money is power and the suppliers higher up the chain control the payments to the smaller suppliers. Even worse, top-tier suppliers can withhold payments for reasons not related to the quality or timeliness of its suppliers work. VENs need to devise alternative payment models that, as much as is practical, result in all parties that have successfully completed their work get paid at the same time: One paid - all paid.

3. Liability and Risk: In a traditional supply chain, the customer holds the prime contractor fully liable and accountable. The prime contractor then uses back-to-back contracts to off-load as much of the liability as possible to its suppliers. This can lead to non-collaborative and combative behavior. For example, if the prime contractor is not careful, it may end up picking up issues that fall between the cracks - sometimes after all the other suppliers have been paid and are no longer under contractual obligation. On the other hand, a prime contractor may try to unfairly offload liabilities to a supplier for parts of the contract the supplier is not directly involved in or has no control over. A VEN needs to explore alternative mechanisms for creating joint accountability among all parties

4. Sustainability and Investment: In a supply chain, it's unusual for the suppliers to make any investments unless the customer or prime contractor "guarantees" the return on investment. For example, if a prime contractor encourages a supplier to buy a new machine, the prime contractor is expected to commit to keeping it busy for the first two years. In a VEN all parties need to be prepared to make investments on the basis of sound business analysis, but without any cast-iron guarantee of a return.

8. A Viable Stakeholder Ecosystem

The figure below identifies the 5 major stakeholders who all need to be fully engaged and laigned to support the network:

The VEN Core Companies
The Big Players
The Enterprise Support Bodies
The Major Customers/End-Users
The Research Institutes

9. A Proven Network Development Model

Successful networks need to navigate many stages before they reach sustainable commerciality - typically there are around 7 key development/maturity stages:

Selection - > Incubation -> Mobilisation -> Market Testing -> Viability -> Differentiation -> Commerciality

10. A Proven Development Road Map

Networks need a proven roadmap to ensure sufficient attention is paid to 3 critical types of activity

Member/Capability Development
Network Development/Governance
Business/Market Development

For more details see my book The Networked Enterprise