The blog post was published originally in Jakamo Official Blog at 23 Feb 2015.
Internet of Things (IoT) is now on the crest of a wave in the current discussion of digitalization while the importance of the social media seems to be decreasing particularly as a managerial tool for B2B relationships. Nevertheless, these two phenomena represent certain extremes in the wider digitalization sphere in business. Here, I want to highlight a certain area of digitalization, which does not belong either to the social media nor the IoT category of digitalization but forms a third important dimension of it. This dimension deals with business intelligence in inter-organizational relationships and networks and I call this phenomenon Internet of Organizations.
Fly with your partners!
The leading Finnish magazine of business Talouselämä recently cited our research project that addressed to the question whether swarm intelligence and other natural networking phenomena could be applied as useful benchmarks for the development of business ecosystems. In the project, we became (among other things) impressed with the smooth and fast movements of a school of fishes or flock of birds. These animals use their species-specific senses to keep their ‘networks’ dense and brilliantly move always in the same direction even if the direction has to be changed. What a benchmark for any business ecosystem! What would be the senses that enable firms in a business ecosystem to fly together as smoothly as a flock of starlings? It is evident that information has an important role in this connection.
Inter-organizational = inter-personal!
Inter-organizational information management is but electronic data exchange (EDI, integrated ERPs and other integrated IT systems), also creation, sharing, storing and using knowledge across organizational boundaries. Actually, the latter activities form the basis for inter-organizational knowledge management. What is, then, inter-organizational? As we know, organizations are social systems that are run by individuals. In a similar vein, inter-organizational relationships are actually cross-border individual-level relationships and inter-organizational knowledge management takes place in that socially embedded context. So, if we equip our firms’ boundary spanners with appropriate tools and practices by which they can implement inter-organizational operations and knowledge management effectively, our firms become capable to flying smoothly in the same direction.
Academic literature on networks and inter-organizational relationships highlights various types of cross-firm interaction as the core of networking. Interaction manifests itself in the form of such practices as value proposition co-development, value co-creation, user / customer / supplier involvement in R&D, joint learning, joint problem solving and joint decision making. These practices are not only theoretical but represent also the everyday practice of firms, particularly of the networked ones. Interaction is basically a social phenomenon. In the business context it, however, gets managerial content as it aims, e.g., to improve productivity, expand business and cut costs.
Managerial B2B practices included!
We need a software solution enabling digitalization in the world of Internet of Organizations. It should differ from social media and firm-centred solutions in the way it offers knowledge management tools for cross-firm interaction. It should be linked to the above ideals of inter-organizational interaction and knowledge management, and, at the same time, to the everyday tasks of inter-organizational practices. Managing cross-firm issues through software should enable boundary spanners to boost useful interaction and implement inter-organizational knowledge management effectively.
Platform + Practices = Interaction!
All in all, digitalization plays an important role in the development of business ecosystems, but it goes hand in hand with inter-organizational practices. Digitalized platforms do not give gains as such, but inter-organizational practices that deploy the features of the platform effectively are needed as well. It’s crucial to acknowledge this fact and try to intertwine industrial practice, opportunities for inter-organizational knowledge management and modern tools for IT-systems design to continuously introduce better platform features. These features aim to enable and serve current and future practices for socially embedded inter-organizational interaction.