SME’s (surviving) thriving guide to business ecosystems

Tiina Valjakka @tiinavaljakka & Katri Valkokari @valkatti

Businesses operate in broad interlinked networks – business ecosystems – where the variety of habitats is as wide and competition as fierce as in natural ecosystems.

ekosysteemi

Some food chains in the ecosystem are easier to depict than others. Each firm has its own perception of the closest network and its position within it. Typically, each firm also tends to find, or draw, their own business as the core of the network and the closest collaborators around it. In practice, this is one of the reasons why attempts to manage a network often fail or create no response, while the network actors have not considered the interests of others, or even the existence of the further away ecosystem.

Due to their network position, firms have different opportunities to influence or control other actors, network relationships, and the whole network. Even with a more objective view of their surrounding habitats, managing the network position is a hard task.

Small businesses have traditionally been in the outskirts of business ecosystems but digitalization, e.g. sensor technology and the real-time data available is providing them with new means to become a more valuable and influential actor in the ecosystem. Our case firm here is an example of an SME that has looked around when formulating new strategy and offering concept.

Lännen Tractors- a Finnish SME exploiting the opportunities in the outcome economy

Lännen Tractors develops and manufactures machines for demanding applications. The long term objective has been to become a strong international player.  Three global megatrends: climate change, resource efficiency, and urbanization, set the base for the new ambitious strategy of the firm.

The analysis of a Lännen Tractors’s own position among the networks as well as different networking directions offered new ideas how their business networks will look like in the future and who are the relevant network actors and partners to contact and collaborate.

The strategic aim of the firm is to change the industry in the direction they believe is profitable to them and also to the other actors in the ecosystem (service purchasers, service providers, and contractors). The vision of the management is that “less is more”; that the modern mobile multi-purpose machinery is more productive and environmentally friendly than conventional solutions that have often led to sub-optimization on work sites.

The keystones of the offering in the new strategy are multi-purpose, mobility, productivity and sustainability and the concept is marketed as the “Heavy-duty multifunction backhoe loader with all terrain mobility”. The core capabilities are relevant to a single-machine contractor, to a service provider managing a larger fleet and also from service purchaser’s perspective. The aim of the concept is to concretize the meaning of “less is more” – productivity, and productivity goes hand in hand with environmental sustainability. One multipurpose machine compared to separate machines means less fuel consumption and less staff. Utilizing the full qualities of multi-purpose machinery increases productive work time and lowers the impact on the environment by decreased exhaust emissions, decreased noise levels, less disruption to traffic and residential areas and lower impact on the landscape.

See also:

DIMECC REBUS  programme final publication

Practices for Network Management – In Search of Collaborative Advantage

 

 

Lost in Network? Network picturing as a tool in dynamic network management

By Tiina Valjakka and Katri Valkokari

This post illustrates how picturing networks from different actors’ perspectives affects the network management and facilitates the building of new connections. It is based on a paper we presented last month in the IMP 2015 Conference in Kolding, Denmark. The aim of the paper is to extend understanding of strategic management in dynamic business networks, especially from the viewpoint of SMEs operating in a B2B context.

moniverkosto

Firms are simultaneously acting in various networks in different roles (see picture above).  Each of the actors has its own perception of the network and its position within it. Managers’ understanding of perceptions across boundaries is a key to a firm’s success in networked business ecosystem, where knowledge and resources are dispersed and value co-creation requires integration of resources. Drawing from the management point of view, our preliminary research question was: How to picture and combine the different network perspectives in order to better manage the business network?

Network pictures can be seen, and utilized as:

  • Business actors’ subjective mental frameworks of their surroundings, and thus as sense-making tools that underlie decision-making in networks
  • a tool used by researchers and practitioners to grasp actors’ understanding of their surrounding business network(s)
  • boundary-spanning mechanisms which serve as an interface between different organizations

In our case study, we utilized network picturing as a tool for strategic management in a SME. We first draw two focal company perspectives; factory and sales, identified their most important connections, and described the roles and content of interaction with these first-level partners. The other network perspectives depicted were end-users’ network pictures from different customer segments. These network pictures, snapshots from different network actors’ perspectives, were then utilized for drawing the network management perspective. Network picturing resulted in the identification of new relevant network actors and needs for building connections to them.

The managerial challenge is to guide the development within business networks. Often, companies anchor themselves to a single vision of their customer needs and network structures, which may preclude considering the viewpoints of other network actors. Many businesses have a complex nature, and network picturing gives a possibility to see beyond the most obvious and traditionally closest actors. Our study highlighted that in order to act as a change driver in their business environment, a SME must have broader connections than the relationships with the direct customers and suppliers.

Reference

Valjakka, Tiina; Valkokari, Katri; Kettunen, Outi. 2015. Utilizing network picturing in the management of dynamic networks. IMP Group. 31th Annual IMP Conference and Doctoral Colloquium 2015 “Organizing Sustainable BtoB Relationships – Designing in Changing Networks”, 25 – 29 August 2015, Kolding, Denmark.