1、Developing products and services in networks (1),Neil Alderman University of Newcastle upon Tyne Business School,Outline,Networks as an organizational form Network approaches Types of network Strategic alliances Implications of networks Involving customers and suppliers motivations and barriers,Netw

2、orks as an organizational form,Between hierarchy and market Hierarchy-command / authority Network-cooperation / consensus / mutuality Market-competition / price after Adler (2001) Network form considered to be of growing significance as knowledge-based assets become more important A response to grow

3、ing complexity in technology and increasing rate of change demanded by the external environment,Approaches to networks,Social Network Analysis concerned with relationships between entities Transaction Cost Analysis concerned with costs of exchange under conditions of bounded rationality, asset speci

4、ficity and opportunism Actor Network Theory removes the dualism between entities and the network; gives equal weight to human and non-human agents Thompson (2003) The Swedish School based on the work of Hakansson most closely related to social network analysis,Product development as a distributed pr

5、ocess,Product development does not take place solely as an internal process of the firm Firms require inputs from a wide range of other actors and different places Customers, suppliers, competitors, consultants, funders, users, Universities etc Whilst one actor may commercialise the product or servi

6、ce, the process of development may be widely distributed Managing product and service development therefore implies management of networks,Basic Constituents of Networks,Activities ActorsResources Exchanging Goods/technologies Documented information Social knowledge Finance Hakansson (1987),Transact

7、ions,Transformations,Types of Network,Intra-firm / inter-firm Formal / informal contractually defined socially defined Simple (dyadic) / complex Open / closed Sharing knowledge with rivals Protecting proprietary knowledge,Strategic Alliances,An agreement between two or more partners to share knowled

8、ge or resources, which could be beneficial to all parties involved (Vyas et al., 1995) May be horizontal (e.g. with competitors) or vertical (e.g. with suppliers) The joint venture Equity based separate legal entity R&D collaboration Project-based contract agreements Technology exchange agreements,M

9、otives for strategic alliances,Reduction of cost of technological development or market entry Reduction of risks associated with development or market entry Achieving economies of scale in production Reduction of development and commercialisation time (speeding up the development process) Establishi

10、ng technical standards Efficiency in exchange of technical knowledge In many cases there will be multiple motives,Risks and limitations,Failure to understand and adapt to new style of management required Failure to learn and understand cultural differences Lack of commitment to succeed Strategic goa

11、l divergence Insufficient trust Operation and /or geographical overlaps Unrealistic expectations Lowest common denominator solutions Legal arrangements may limit information exchange,Some examples,Philips and Sony Development of the CD Complementary not competing motives Airbus Industries MBB: Germa

12、ny, Aerospatiale: France, CASA: Spain, BAe, Britain Defraying high cost and risk Government underwriting Rover and Honda Rover provided access to European market Honda provided technical expertise IBM Multiple alliances to develop software, components, services, security systems etc.,Advance Micro D

13、evices (AMD) Expands Semiconductor Technology Alliance with IBM The announcement by AMD represents the first time a member of a technology development alliance will work directly with IBMs Research Division on electronics materials, R&D, and basic feasibility studies 3 to 5 years before commercializ

14、ation. The expanded agreement includes R&D of submicron process technologies over the next five years, and adds early stage research on emerging technologies targeted at 32nm and 22nm generations. The extended alliance with AMD is one of the longest working relationships IBM currently has with any o

15、f its semiconductor alliance associates. By collaborating on early exploratory research, the companies will be able to both identify and explore future technology challenges earlier and accelerate the finding of solutions. Both companies believe this type of partnership will bring products faster to

16、 the marketplace and more affordable to consumers. Source: Nano World News, November 2005 issue,The paradox of networks,A mechanism to reduce and spread risk A control mechanism A facilitator of innovation BUT Networks involve new sources of risk Leakage of knowledge and IP Unpredictability of infor

17、mal transactions (randomness) Dependent on trust Constrained by dependencies,Management of Networks,Networking is a political process Networks need active management Finding, joining and participating Project champions Enrolling support, building trust etc. across organisational boundaries Importanc

18、e of gatekeepers,Conceptual model of the development of networks with customers and suppliers,Model 1,C,P,S,Requirement,Technical spec.,Component,Product,Traditional mode of working Producer (P) passively receives specification from customer (C) Often adversarial relationships with supplier (S) Design performed by the Producer (P),Model 2,C,P,S,Requirement,Functional spec.,Component,Product,Networking mode of operating Producer (P) begins to influence customer (C) Co-operative relationships with supplier (S) Detailed design performed by the supplier (S),Market acceptability and other