Wanted: strategic network manager no computer nerds

If recruitment ads are meant to reflect trends in commerce, it is surprising that we do not see any ads like this. The emerging organisational form of this new century is the network, to replace the traditional bureaucratic hierarchy. In the network, companies band together to create strong competitive entities. But successful networks take some managing, and their management characteristics are not necessarily the same as those prevailing in traditional organisations.

According to Prof Charles Snow and Prof Ray Miles, two US professors who have studied network management, there are certain fundamental differences between managing a hierarchy and managing a network. In the former, managers in a vertical hierarchy plan, organise and control resources held in-house. But in networks, managers operate across hierarchies, creating and assembling resources held by outside parties. Thus, Prof Snow and Prof Miles call strategic network managers "brokers". They break down the broker role into three categories: the architect, lead operator, and caretaker.

The architect brings the quintessential skills of the entrepreneur to get the network going, much like a start-up business. The architect is the one with the business idea or the vision, and the network is created to implement his/her business concept. The architect seeks out firms with the requisite expertise and puts together deals that will attract these firms to join the network. Using relevant criteria, s/he must identify and select suitable partner firms. Then the architect has to pull together the skills, equipment and financing to create a new enterprise.

An example of the architect is the entrepreneur Mr Michael Dell, founder of Dell Computers. He can be deemed to have started a network, since Dell is an assembler-distributor, rather than a manufacturer of computers. Dell has created a network of component manufacturers.

Movie producers or managers of independent television production houses can also be seen as architects. They negotiate a set of contracts for each single film or television series, engaging actors, directors, productions crews, distributors, etc.

The lead operator broker role follows on from the architect by consolidating the network as a stable entity.

Nike is often cited as an example of a lead operator firm. It carries out R&D and marketing, while outsourcing manufacturing from a number of firms, mainly located in developing countries.

Another lead operator example is McKesson, a US drug distribution company. It is at the nexus of a network of drug and toiletry manufacturers at the upstream end, and pharmacies at the downstream end. McKesson's key role is to provide logistics, management accounting systems and consulting advice. The Irish company, United Drug operates a model similar to McKesson.

Caretaker brokers focus on network development and enhancement. They must consolidate the cohesiveness of the network, so that the members share common objectives and behave as part of a unified organisation, transcending ownership, and often nationality. The caretaker has to ensure there is constant learning going on and everyone is up-to-date, if the competitiveness of the network is to be constantly upgraded.

The caretaker must be aware of the need for change to enhance network performance. This could entail restructuring and shifting of network membership, as new firms whose capabilities match emerging needs are added and others dropped, unless they can develop the necessary capabilities. While the constant addition of "new blood" enhances vitality, too much churning is counterproductive if a sense of commitment, loyalty and trust is to prevail. Another caretaker function is disciplinary, when a network member acts in its own short-term interest to the detriment of the network as a whole. Repetitive offenders will eventually have to be expelled to avoid serious damage to the whole network.

The lead operator and caretaker roles both require the ability to facilitate learning. Above all, this means securing members' commitment to share knowledge and to learn from each other.

A network is a voluntary entity, so the requisite cooperation cannot be legally or contractually mandated. That would only inhibit the spontaneity and open interaction that spawns creativity.

Having established a positive climate for learning, the broker has to facilitate the learning process itself by providing for easy communication among the members, thus ensuring the creation and transfer of new knowledge that underpins innovation.

Much of the innovation derives from the diversity of skills, technologies, attitudes and motives that exist in a network, as compared to the often unitary, even monolithic features of a single firm. Harnessing this diversity requires an appreciation of what each member brings to the party, and insights about how these unique inputs can be creatively combined.

In further network development, the original business idea that spawned the network may undergo change and transformation as network members continually adapt it, always bearing in mind the needs of the end customer. It is this focus which keeps networks together.

Certain management abilities and characteristics are common to all three broker roles - the ability to deal with complexity and diversity, and simultaneously, to manage her/his own internal firm, to ensure it delivers on its own obligations to the network. But cutting across all the network management functions are interpersonal skills and the art of negotiation and persuasion. That is why nerds need not apply.

Dr Eleanor O'Higgins is a lecturer in strategic management and business ethics at the Smurfit Business School, UCD.