Managing networks

INTRODUCTION The main aim of the paper is to bring together some ideas of " What we know about networks " and present these as a model of Managing in Networks. The paper uses a case study based on the well known retailer, IKEA to illustrate the model. We then draw from this model a series of ideas on the dynamics of business networks and what these mean for the concepts of management and strategy. Before examining the model of managing in networks, it is important to make clear some ideas on nature of business networks that will affect that management. We can outline these ideas as follows: Interaction, interdependence and incompleteness We believe that three common myths have affected ideas on the nature of business behaviour and challenging these has been a major part of IMP Group activity over the years. These myths and our alternative views can be described as follows: 1. Problems, Interaction and Solutions: The Myth of Action sees business as a process of action by one company and reaction by another. Marketers tend to see themselves as the active party with customers in a reactive role. Purchasing people have the opposite view. Our view is to see companies as members of a business network consisting of a large number of active and heterogeneous companies each interacting with others and seeking solutions to their different problems. One important outcome of this approach for managing in networks is that these interacted solutions are likely to affect several of the involved companies. 2. Interdependence and Limits to Discretion: According to the Myth of Independence, a company can carry out its own analysis of the environment in which it operates, develop and implement its own independent strategy based on its own resources, taking into account its own competences and shortcomings. Our counter-approach is based on the interaction between companies in relationships. These companies are interdependent for sales, supplies, information, technology development and for access to other companies elsewhere in the surrounding network. This means that companies have limited discretion to act or to build independent strategy. The outcomes of their actions will be strongly influenced by the attitudes and actions of those with whom they have relationships. Interaction between interdependent companies involves simultaneous elements of cooperation, conflict, integration and separation in the companies' relationships. A company's position in the network is based on its total set of relationships and …