Computer Game Design 05 - Need for New Capabilities? During 1980s & 1990s, Executives in Large Compan

In the dynamic business landscape of the late 20th and early 21st centuries, companies faced a pressing need to evolve their organizational structures. The challenge was to combine the efficiency and control typically found in large corporations with the agility and entrepreneurial spirit of smaller firms. This drive led to the development of new capabilities and the emergence of networked organizations, designed to thrive in an increasingly complex and interconnected global environment.

Why Did Companies Need New Capabilities?

During the 1980s and 1990s, large corporations primarily focused on internal restructuring efforts like downsizing, delayering, and reengineering. Strategic alliances were emphasized as a way to build new capabilities and expertise. However, by the mid-1990s, executives realized these approaches weren't enough; a new business model was essential to navigate the rapidly changing environment.

Companies struggled with several key challenges:

• They found it difficult to achieve both efficiency and control simultaneously.
• External Challenges: Slow market growth and strong global competitors, even those capturing small market shares, posed significant threats.
• Internal Challenges: There was an inability to effectively combine the power and resources of a large company with the hunger and adaptability of a small one.

The rise of the internet and networked technologies intensified this dilemma, forcing both established large companies and entrepreneurial firms to find ways to be "big and small" at the same time. Small firms, in particular, needed to quickly expand their product lines and geographic reach to keep pace and collaborate with larger, market-dominant companies.

The Evolution of Organizational Structures: A Historical Perspective

The concept of hybrid organizations isn't new. In the 1950s and 1960s, similar structures were designed to allow companies to operate with both scale and agility. These models aimed to provide both control and efficiency, alongside flexibility and rapid response.

The 21st century, however, demands an even more sophisticated approach: an "adaptive, information-intensive, team-based, collaborative, and empowered organization." Yet, companies adopting these structures often encountered new problems, including conflicts, confusion, information overload, and costly duplication of resources. The core issue wasn't just developing a strategy, but effectively managing it within a new, complex environment.

The late 1990s saw the emergence of the internet, e-commerce, and powerful, flexible databases and business systems. These technologies provided the information processing and communication infrastructures needed to support both large and small company needs. However, technology alone isn't a silver bullet. While networked technology can enable new organizational structures and systems, it cannot intrinsically define what information is needed or motivate people to use that information for strategic decisions and actions. Recent progress in information linking technologies like EDI and XML has helped ease the technical burden of sharing information between companies, highlighting the ongoing need for new organizational capabilities.

Understanding the Traditional 'Big Company' Model

Traditional large organizations have distinct characteristics, advantages, and inherent problems:

Characteristics of a Big Company

• Organized by function, dictating information flow.
• Strong commitment to efficiency.
• Operates with strict controls.
• Typically has a pyramidal structure with clear hierarchies.
• Focuses on risk reduction, suitable for stable environments.

Advantages of a Big Organization

• Substantial financial resources for long-term investments.
• A large staff of knowledgeable and experienced professionals.
• Accumulated experience applicable to new situations.
• Economies of scale in purchasing and manufacturing.
• Significant R&D capabilities to drive innovation.

Problems of a Big Organization

• Employees can become entrenched in routines, leading to stagnation.
• Management may become risk-averse.
• New ideas can get lost or stifled within bureaucracy.
• Rigid rules, policies, and hierarchies can add unnecessary costs to simple tasks.

The 'Big-Little' Company: A New Paradigm

The need for "big-little" companies arises because neither purely large nor purely small companies can fully deliver what today's customers demand. This new model seeks to combine the best of both worlds:

Strengths of Big Companies

• Size: Capability to manage and lead on a larger scale, addressing external environmental factors.
• Reach: Ability to extend influence and operations beyond the internal organization.
• Resources: Capacity to allocate resources efficiently, considering competitor moves.

Strengths of Small Companies

• Flexibility: More adaptable in their approach.
• Responsiveness: Primarily accountable to the internal environment, leading to lower risks and quicker reactions.
• Closeness to Customers: Often fosters greater customer loyalty.

A "big-little" company differs significantly from an industrial economy company in its business model, organizational structure, management responsibilities, approach to its value chain, sourcing strategies, and typical revenue streams.

Building a Networked Organization: Key Challenges

Creating an effective networked organization comes with its own set of hurdles:

• Building consensus is a time-consuming process, and network members may not always agree on goals, objectives, or strategies.
• The network must cultivate trust among its members, which can be difficult if member organizations compete for the same funding or resources.
• Previous personal and professional experiences among members can affect their ability to collaborate effectively.
• As the network grows, managing logistics becomes more complex, requiring diligent communication to keep all members informed of meetings, actions, results, and upcoming activities.
• The network must establish a fair means of dividing work among members.
• It's crucial for the network to remain a collaborative effort among all members, preventing it from becoming dominated by one or a few powerful entities.
• Members must agree on clear rules for smooth and effective operation.
• The network needs to determine how to best leverage shared resources for collaborative activities.

Guidelines for Effective Networks

To overcome these challenges and foster a successful network, consider these guidelines:

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