Fuzzy enterprise boundary
According to George's explanation, IBM calls these modules "business components", which are the basic building blocks of the company and are loosely connected with each other. Business components allow enterprises to expand or develop without increasing the complexity of the organization like traditional "hard-wired" business models.
Enterprise-level optimization not only needs the support of new technologies, but also needs to consider business model design from a new perspective. With the maturity of internal specialization, the integration of business activities transforms the company into a network composed of business modules, each of which contains a series of interrelated activities, supported by appropriate enterprise resources (such as personnel, processes and technology). Each business module plays a unique role in the organization and can run as an independent entity. One advantage of this "module alliance" design is that it can accelerate the decision-making process of enterprises and distinguish the business modules that should be operated internally from those that are suitable for outsourcing.
Adopting modular structure does not mean giving up centralized management. Although components need flexibility, they must be consistent with the company's architecture and strategy. In order to help customers improve their business design and realize enterprise-level optimization, IBM has specially developed a brand-new enterprise framework-"Component Business Model".
Component-based business model usually provides customers with a "future-oriented" business framework, which promotes enterprises to develop into fully mature internal specialized organizations. CBM can be used as a diagnostic tool to help companies with complex business models identify and isolate problems. It can realize internal specialization without increasing organizational complexity, and at the same time, it will not let customers feel the changes taking place inside the enterprise.
For example, Procter & Gamble always pays great attention to product development and brand promotion internally, but not all product ideas must be provided internally. In fact, even in the core business areas, P&G advocates the use of external experts. For example, P&G cooperated with the professional design company DesignContinuum to develop a very successful mop business. These internal changes not only did not affect consumers, but also accelerated product innovation and provided more and better services.
Second, external: weaving industry resources into a network
Compared with internal specialization, external specialization is another aspect of specialized enterprises. Standardization-driven internal specialization is becoming more and more mature, and loosely connected business components give enterprises considerable flexibility. Companies that have completed enterprise-level optimization can cooperate with external partners at low cost through industry networks, whether they are independent suppliers or external departments in other large organizations.
The management of external resources can also be roughly divided into three stages. In the first stage of external specialization, enterprises own and manage almost all units of the industrial value chain. In their view, vertical integration is the only way to obtain reliable suppliers and target customers. George explained that during this period, automobile manufacturers had hoped to run their own rubber plantations to provide raw materials for their tire factories, while beer manufacturers dreamed of running their own bars to sell products. Companies in the stage of "internal integration" try to improve product quality by strictly controlling input and distribution. Therefore, internally integrated companies are usually "customized" enterprises, which independently develop and use IT solutions based on industry-specific systems and interfaces. This model is attractive when supplier-driven large-scale distribution channels have not yet posed a threat to enterprises. Companies with "internal integration" have begun to feel that their special configuration is becoming an obstacle to cooperation with suppliers, and a large number of personnel, processes and technical inputs are inevitable. Now, many companies have passed the stage of "internal integration" and started to learn to cooperate with a few selected partners and outsource some major functions in the industry value chain to external experts, thus entering the stage of "strategic cooperation". At this stage, enterprises adopt open standards to support inter-enterprise communication in the field of cooperation, but still rely on dedicated solutions; Enterprises began to identify specialized fields in the value chain, but the original units of the internal integration structure still exist, and many non-core activities are still carried out within the enterprise.
In the final stage of external specialization, the company made use of low-cost transactions on global commercial platforms to establish contact with many external experts. These "industry networking" enterprises focus on the field of professional competence, and at the same time make organizational changes in order to play a role in the cooperative industry ecosystem. They rely on open standards and industry agreements to communicate with their partners. Industry network companies mainly focus on core business activities and coordinate the value network composed of industry-specific experts and cross-industry experts. The manufacturer with the best performance in the professional field will gain the scale advantage. Enterprises focusing on market segments and professional value will become the main form of growth-driven enterprises in the future.
The evolution of PC industry in the past 30 years has fully proved the development trend of external specialization. In 1970s, the vertical integration mode prevailed: IBM and DigitalEquipmentCompany purchased and produced every PC component internally (of course, the word PC usually can't completely refer to the early personal computers). At the same time, Apple Computer tried to control the whole value chain through special operating system and hardware design methods. However, by the end of 1980s, the cooperative mode began to prevail, which changed the state of the industry. Major technology suppliers such as Intel and Microsoft began to occupy an absolute advantage, and new brands such as Dell and Gateway rose rapidly as customer-oriented manufacturers. In 1990s, with the prevalence of order manufacturing, the PC industry was completely commercialized and entered the networking stage. It can be seen that in less than 30 years, the PC industry network composed of a large number of specialized enterprises completely replaced the early internal integration players.
Externally, P&G has carried out extensive cooperation with partners and experts in non-core business areas. In 2002, the company outsourced its global facilities management functions to external experts. P&G's IT infrastructure, finished product distribution and logistics are all under the overall responsibility of external experts. In 2003, the company outsourced some human resources work to a third party. In China, P&G has also adopted a global practice, handing over a series of non-core businesses such as logistics to local experts. The ultimate goal of specialization through componentization is to realize the global management ability of enterprises and implement the differentiation strategy. This needs an efficient, fast and flexible business model to support: in the face of new customer needs, the interior can be quickly and freely combined to form new capabilities to meet customer requirements; External resources can be quickly integrated to form a new value chain.
Different from traditional enterprises, specialization can flexibly adapt to the cost structure and business processes, reduce risks, and conduct business at a higher level of productivity, cost control, capital efficiency and financial predictability. George boldly predicted that in the next 10 to 20 years, the business environment of China enterprises will undergo earth-shaking changes. The global business platform has brought about the reduction of transaction costs and put forward a series of new requirements for enterprises. Only those specialized enterprises that focus on a few core business areas can succeed. In these key business systems, competitors in the traditional sense will form strategic alliances; The cost center may be transformed into a new source of income; Past trading partners will develop into future partners.
As loosely connected components gradually replace integrated business units, today's enterprise boundaries will fall apart. Finally, the company that can find the best balance between the internal centralized execution of core activities and the outsourcing of non-core tasks will become the ultimate winner. "George asserted.