FIT, FAILURE, and the HALL OF FAME by Raymond E. Miles

Author:Raymond E. Miles
Language: eng
Format: epub
Publisher: The Free Press
Published: 1994-07-15T00:00:00+00:00

Figure 7-2 Dell Computer: A Dynamic Network

Most recently, Dell has decided to branch out from the DOS-based PC market to sell bigger and more powerful computers that run Unix operating systems. Here again, Dell’s organizational approach is that of a network. It teamed up with UniDirect Corporation, a small new firm that specializes in computer software and customer support services for Unix operating systems. UniDirect uses its contacts in the Unix market, making arrangements with software vendors to provide partially activated programs that Dell preloads at its factory. The result is that Dell can offer a “mass customized” medium-size computer to a new market segment.

In a different part of the computer industry resides Novell Inc., another leader of a dynamic network organization. 8 Novell is the market leader in networking software, programs that link together masses of personal computers into “local-area networks.” Many firms, along with Novell, believe that large computer systems will eventually be replaced by cheaper local-area networks and, increasingly, wide-area networks. Novell is trying to remain at the forefront of this transformation. The company’s chairman, Raymond Noorda, has initiated a comprehensive strategy of acquisitions, alliances, and new-product development to accelerate the growth of computer networking.

In some ways, Novell’s organizational approach looks no different from those of other dynamic network leaders such as Dell. Novell keeps a very clear focus on its core competencies in networking software R&D, and it outsources other activities by forming partnerships with distributors and other companies. In at least two ways, however, Novell is a distinctive leader of a dynamic network. First, Raymond Noorda is a visionary executive who has successfully articulated, both within and outside his company, a view of computing’s future that is widely shared. In the high-velocity environment that is the computer industry, vision is an essential ingredient in keeping the various elements of a network organization focused and coordinated. Second, for years Noorda has promulgated a concept that he calls “coopetition.” He encourages competing companies to also cooperate, pushing for industry standards and sharing technology. The premise of coopetition is that if the entire industry grows, every competitor will benefit.

OPERATING LOGIC OF THE DYNAMIC NETWORK

The operating logic of the dynamic network is linked to that of the divisional form of organization. Recall that the divisionalized organization emphasized responsiveness by focusing independently operated divisions on distinct but related markets. The combination of central evaluation (corporate) and local operating autonomy (divisions) is reflected in the dynamic network, in which a lead firm links together independent firms, in alliances of greater or lesser degrees of permanency, to design, manufacture, and sell a particular product or service. Thus, the dynamic network’s operating logic is partner-firm independence coupled with the lead firm’s overall vision.

POTENTIAL CAUSES OF FAILURE IN THE DYNAMIC NETWORK

The availability of numerous potential partners eager to apply their skills and assets to the upstream or downstream needs of a given firm is not only the key to success of the dynamic network but also a possible source of trouble. For example, if

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