BUSINESS IN THE NETWORK ECONOMY

A company is operating in a environment and develops a strategic management according to the trends of the industry, the market and its competitors,…
As the economy undergoes a substancial change, becoming a network ecosystem, businesses have to take in account such reality.

So what is the network economy?
The network economy has evolved in the the context of information society after the industrial era. It is using digital interfaces and social media to develop and has transformed the architecture of business and labour.
In this new framework , more customers may increase the networth of the entire network (that is a paradox in the traditional economy). While a network increases arithmetically, the value of the network increases exponentially.
The network value is also characterized by non- linear growth that is modest at the beginning, and then, through research and development with investments, suddenly spikes upward as the technology is mastered and popularized serving the customers. That's practical for startups in their endeavour to scale up.

Next, the more enterprises get in the industry the more the network will attract new experts through virtuous circles, and improve the overall business as the value explode with membership(e.g. outsourcing contracts).

In this new environment there are quick changes that are new opportunities and it is important in the corporate strategy to be ready to exploit the potential markets arising and adapt technology to the trends leading sometimes to abandon old ones to be creative.

Now, how wealth is gained in the network economy?
The companies always try new things, creating more new jobs than the ones that disappear, while producing more net worth through a high growth.
In the Network Economy, productivity is not our bottleneck, rather inovation (Kelly,1997).
Let's note that what matter now in the Network Economy is whether you are on the network or off.
So, the Network Economy has permitted industries to improve their efficiency while increasing their market share through the use of IT.
(I emphasized this in my bachelor thesis on the Network industry Outsourcing strategy and Intelligent distribution in 2007).

Particularly, the network industry is customer- driven and is subjected to changes that brings more competences in the company and moreover many nationalities sometimes.
The transformation it undergoes makes new kind of corporation gathering a diversity of talents with a multicultural background.
The talented people identify the needs of the customers and suggest the way to satisfy them.

The network profit is obtained beyond economy of scale as the strategic brokers put together needs and solutions trying to figure out the potential of new products.

The customer- oriented production leads the network industry to become a worldwide network when it comes to mix many groups around the globe that have developed expertise to solve problems.
Those groups can communicate more than ever before through the use of IT and modern means of transports creating so new networks in any country.
The added value will increase the worth of the products that will benefit to the consumers spread all over the world.

Michel M. Bugugu, BSc, MBA
BEST CONGO Founder and Manager


References:
KELLY, K.; Twelve principles of the Network Economy, in Wired Magazine, 1997
REICH, R. ; L’Economie Mondialisée, Nouveaux Horizons/ Dunod, Paris, 1993,
pp.75-78 & pp.101- 110