Kirk Klasson

Business Models

Henry Ford once owned a rubber plantation in the Amazon jungle, the better to control and manage the supply of raw material for his tire factories that supplied his auto assembly lines.

Now that’s vertical.

Fords hierarchical business model yielded exceptional control over the value chain, and for the times, it made good economic sense. Same story at General Motors, where boss Alfred P. Sloan Jr. laid down command-and-control principles that hav served as models of hierarchical management to this day. Indeed, the transaction and coordination costs of doing it any other way were unthinkable. But those concepts are a world away from the fluid, market-based organization interactions that define the sharp edge of the New Economy, and which are enabled by a World Wide Web that allows value to be exchanged in entirely new ways – in e-business ways.

But can we agree that e-business is a fundamentally different way of doing things, or is it simply consulting jargon? If Henry Ford were alive today, would Ford be build on command-and-control? And what about you? Do you believe that your organization will look the same next year as it did two years ago?

Today, ever organization is grappling with the implications of a digital strategy. Most will commit to radical redeployment of assets, skills, and processes without ever fully understanding why their business models need to change.

This white paper provides that understanding. In this special edition, we take the arguments well beyond the introductory points made in out first white paper in this series – the New Economy Primer – by describing how the Web alters the value-exchange dynamic and reshapes the boundaries of the organization.

We don’t propose that on approach will suit every kind of organization, nor will it be applicable in all business situations. But we do invite candid reflection on the new options that the Internet has brought. Don’t dare to assume that the organizational model that has served you well will carry you to success in the New Economy.

To view the full Business Models White Paper Click Below:

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