1. Doing business in the network economy
Hugo Velthuijsen, Professor New Business & ICT

2. Internet destroys businesses
The internet lowers barriers to entry
Example: Music industry
Other businesses impacted:
Travel
Photography
Postal services
Banking
And many, many more ...
Production
Marketing & Credibility
Sales
Distribution
Business Model: from selling records to selling tickets
Source: David Byrne (Talking Heads) in Wired
New Business & ICT

3. Niches are getting more important
Thanks to the internet:
Smaller markets become addressable
Lower marketing & distribution costs
More choice
Results in:
Decline in “best sellers”
More items
Higher total volume
Market growth
New Business & ICT

4. The internet is still developing
Evolution of supporting tools
New Business & ICT

5. Social media and your business
Marketing & communication are getting out of your control
Your business is being discussed on the internet right now
You might as well listen to what is being said
You might as well try to change opinions
You might as well try to change your performan-ce accordingly
New Business & ICT

6. Power shifts to the consumer
R = G
New Business & ICT

7.
New Business & ICT

8.
New Business & ICT

9.
New Business & ICT

10. Extreme competition China, India, former Soviet Union
3bn new capitalists
India: new IT bachelors graduate every year
Better educated, more eager
Seamless collaboration thanks to New IT / Web 2.0 / Broadband
New Business & ICT

11. Integrating in business practices Solving SMEs problems?
Crowdsourcing
The wisdom of crowds
Business communities
Social networking
Integrating in business practices
Solving SMEs problems?
Good employees
State of the art knowledge
Innovative power
Global sourcing
New Business & ICT

12. Large groups of people are smarter than an elite few
Crowdsourcing
Making good use of other’s insights and creativity
Large groups of people are smarter than an elite few
Solving problems
Creating new ideas
Achieving innovation
Making decisions
New Business & ICT

13. The whole world can help you
Open innovation
Caveats
There are more ideas outside the company than inside
Profit from the ideas of others
Being smarter more important than being first
But be prepared to reap what you
sow!
New Business & ICT

14. Making a difference Know what your own added value is
Know your own worth
Know what your own added value is
Translates also to companies
Concentrate on your own specialty
Collaborate to add the rest
Rise of the network economy
New Business & ICT

15. Professional networks Xxxxxxxxx Crowd sourcing
Collaborating in a network economy
Some examples
Xxxxx (Out)sourcing
Professional networks
Shared innovation
Xxxxxxxxx Crowd sourcing
New Business & ICT

16. The network economy is about
A definition
select, persistent, and structured sets of autonomous entities (individuals or companies, as well as non-profit agencies) engaged in creating products or services based on implicit and open-ended contracts to adapt to environmental contingencies and to coordinate and safeguard exchanges”
Source: Jones et al., 1997, A general theory of network governance, exchange conditions and social mechanisms, Academy of Management Review, Vol 22 (4),
New Business & ICT

17. Governance in the network economy
What is governance?
Governance provides mechanisms for promoting:
that results are achieved, and
that information gets there and only there where it is needed
Question:
How “to guarantee” results in a networked collaboration
with implicit and open ended contracts?
New Business & ICT

18. Governance in the network economy
Comparison with traditional governance
Market-based (traditional)
Market orientation
Short-term relations
Competition
Capitalist
Shareholder value
Low stakeholder loyalty
Contract / Control
Radical innovation
Stakeholder conflicts
Network-based
Internal orientation
Long-term relations
Cooperation
Collective
Stakeholder value
High stakeholder loyalty
Trust
Incremental innovation
Stakeholder balancing

19. Governance in the network economy
When and how to organise networked collaboration
Tasks
Persistent/recurrent
Frequent interactions
Clear purpose
Uncertain results
Goal oriented, but no clear prescription
Solutions to be built incrementally
Sufficient resources
Clear roles
Participants
Relevance
Expected gain
Cost of contributing
Strength of front runners
Social mechanisms
Currency or “reputation”
Values & norms
Cost of non-compliance
Damage to “reputation”
Exclusion
Permeability
Based on analysis of (Jones et al., 1997) and experience with success and failure of internet-based social communities

20. The impact of the internet on (international) business is huge
Conclusions
The impact of the internet on (international) business is huge
Threat and opportunity are close neighbours on the internet
Social media is not the end; Linkedin and Twitter not the answer
Collaboration in the network economy will only succeed if the task is right, the community is right, and the right social mechanisms are in place
New Business & ICT