Why Business Networks Are Important?
Business Networks are important. As what Jane Howard, “Call it a clan, call it a network, call it a tribe, call it a family. Whatever you call it, whoever you are, you need one.”
It is useful to take some lessons from the evolution and success of business networks. Business structures have evolved radically to such degree that now most businesses have no option but to create business networks.
Business Networks are more important than your business infrastructure
Naturally your business infrastructure is fixed, rigid and cost accruing. Your business network, on the other hand, is evolutionary, flexible and revenue accruing.
Business Networks make your business more resilient and responsive – at the same time.
Those businesses which had the most responsive and resilient business networks were the ones to recover from any downfall the quickest.
When Cash is the King – Business Networks Triumph
Data is visibly conclusive that in times of cash crisis, the quality of their business networks saves the companies. The companies with more robust business networks have far superior cash conversion cycle. Business network masters improve their cash to cash cycle leading up to the Global Financial Crisis.
In boom times Business Networks Give You Speed
Even relatively smaller businesses can achieve remarkable results quickly based on the responsiveness of their business networks. In economic booms, whether accompanied by economic volatility, or economic stability, business networks allow you to realize higher profits, quickly. The potential of your company’s capabilities are multiplied many times over, by the leverage effect provided by your business network. This is only possible through extensive utilization of business networks that the company built, nurtured and managed effectively. Most executives grossly under-estimate the value and efficacy of the business networks in ramping up capacity rapidly in times of boom.
Business Networks Help Smooth out the Volatility
Especially during the times of extreme volatility. No wonder we see airlines and shipping companies forming global service alliances to ride out the season and economic peaks and troughs. In such a volatile business environment, budgeting and planning can become a nerve-racking exercise for all the companies except those which use their business networks to cushion the lean periods with long term contracts and find scarce capacity during the boom periods. Supply chain is unique to every company and industry, formulated over a number of decades in many cases, and is worth several trillions of dollars in value.
Valuation of Business Networks is Astronomical, Though Difficult to Quantify
Estimates range into trillions of dollars, and yet may be underestimating the full extent and power of these hidden business resources. The magic of business networks has made it possible to design, build, launch and sell revolutionary products in less than one-third time of the industry.
If you cannot make your business networks more visible and manage them more proactively, you may be silently yielding the competitive advantage to others who can. The magic of business networks has made it possible to design, build, launch and sell revolutionary products in less than one-third time of the industry.
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