Recently, IBM bought a company called Kenexa.
Oracle acquired eTaleo.
and now its IBM's turn to pickup a HR technology company.
The reason this news caught my attention is that Kenexa is not only a technology company that has HR solutions, but also provides HR services such as Hiring/HR consulting, etc. Now, that's interesting. Initially, I was thinking its a innovative idea from IBM perspective. But later, I had to change my mind and hence this blog post. Read on to find out why!
IBM has acquired not just a software company but a services/operations company as well, in HR space. Essentially, its a vertical integration of IT services business, where the IT services organization delivers the complete business operations enabled by technology.
Now, lets take a small detour...Go thru the following list and try to figure out what is common
Apple
Prosumers (Integration of Producers/Consumers)
Sellsumers (Consumers who sell their data/insights to corporations)
Tasksumers (Consumers who make money by doing small tasks for other consumers)
Single point of contact
Single window clearance
All these are examples of vertical integration where couple of responsiblities are fused to single individual or organizational entity. The fact is single window clearance in Govt context is so attractive not because its accountable and delivers results, but because coordinating with multiple entities within the Govt is time consuming!.
We live in highly-networked, Globalized World. We live in times where we have the unique opportunity to network with
virtually anyone in the World, thanks to advanced communication technologies. Still, the irony is We believe vertically integrated business models succeed!.
Vertically integrated business models indicates the degree to which a firm owns its supply chain, either upstream or downstream. Irrespective of the outcome - products/services - of those vertically integrated business models, people perceive those models are highly reliable, accountable and products are superior and world-class. It could be true!.
But, the question is - with the far reaching capability of social/professional networking, are we losing the opportunities to create world-class products/services by leveraging vertically disintegrated business models?. Unlike integrated business models, in a disintegrated model, the scope gets partitioned across several organizations that have their own specializations that gets finally integrated to deliver a product/service.
The more we disintegrate the responsibilities, the more we co-ordinate & co-create with diversified stakeholders in a network. The more we disintegrate and unify the capabilities in the network, more innovative the end products/services would become. But, does it also mean 'more chances of failure, more failure points?'. Possibly Yes.
Do we have examples?. Of course - What do you think 'Open Source Movements' are?.
There is no integration, There is no reward/incentive, There is no measurement criteria, There is no single point of contacts, There is no raci chart, Still the movement created a tremendous amount of impact in IT industry. The essence of open source development is all about 'coordination'.
There is no integration, There is no reward/incentive, There is no measurement criteria, There is no single point of contacts, There is no raci chart, Still the movement created a tremendous amount of impact in IT industry. The essence of open source development is all about 'coordination'.
Unfortunately, We couldn't replicate open source models within enterprises. Will we do the same mistake in Enterprise Social Networking?. We need to wait and watch.
In the industry, we constantly oscillate between integration and disintegration or centralization/decentralization. The question is not to ask - Either this or that, but to ask when to apply what?
But, as we have access to abundant data/computing power/professional knowledge across the globe, following a vertically integrated model would be a lost opportunity where we give the entire control to a single entity!.
What is another example of Vertically disintegrated model?. - Very simple - Hollywood industry.
Making a movie involves involving professionals from multiple business entities and they all work together to create a successful movie. The entire team gets dismantled once the movie is complete. Remember, with a variety of stakeholders from different entities, Intellectual property is still managed and results get delivered. The essence is 'Coordination' across entities, not just individuals.
While the traditional project management works under the premises of 'integrating' resources to deliver reliable services, breakthrough innovation can only happen by 'willingly coordinating' individuals/entities.
Soon, some pockets of our workplace could get transformed to the way the Hollywood works!.
2 comments:
Interesting post Bala. But, I think you are being harsh. I agree with your observations that we are seeing less , as you put it, 'disintegrated' business models. But firms are beginning to focus their efforts on ecosystems. Firms are realizing that in order to address innovation paradox( See Simon Wardley's rantings on this), ecosystems are the way forward to get ahead in the game. I see these acquisitions as a catch-up for players who missed the game in the next technological disruption. As I see it, IMHO, one of the reason why we are seeing the proliferation of this model is that they extend the status quo. The traditional consulting model buttresses this vertical integration business model. Why do we see consulting industry not innovating as much as the dynamic changes happening in the technology space? This stasis in the consulting model seems like an anomaly amidst these reckless changes happening in the technological landscape. I think what you pointed out may throw some light in understanding this.
Venkat,
Yes. Some of the mega vendors are promoting the ecosystem models. In my view, those models mimic hub-and-spoke architecture rather than peer-to-peer. Hub and spoke model definitely has its positives, but the industry is too polarised about in that position.
We have just not scrated even the surface of disintegrated biz models that is based on peer-to-peer architecture.
Regarding consulting, your point is valid. The industry has not innovated much. The reason being that the pace of technology changes has outstripped the ability to innovate in other areas. That's the fact. And its just not the consulting industry alone, there are several areas we are lagging. That's the subject of my next post!. :-)
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