competing in the networked economy : summary

Information transparency changes the rules of competition and heightens the importance of corporate values. In a world where information is disseminated broadly and instantly, actions speak louder than words, and there is no room for missteps. During our discussion of morality, Vice Admiral and Deputy Chief of Naval Operations John Morgan demonstrated the power that can be generated by doing the right thing-as the U.S. Navy does when it sends hospital ships to disaster areas.

But information transparency also creates new temptations, such as when disgruntled consumers attack established brands. Diamond Chairman Mel Bergstein noted that values-based leadership can help any organization navigate the vagaries of a decentralized network. "Values start at the top of the organization, and the strength of any firm's values will never exceed those of the leader." Perhaps this is why the Google management team has adopted as one of its ten guiding principles "You can make money without doing evil."

All executives should aspire to have information transparency. As Diamond Fellow John Perry Barlow noted, "individual privacy is probably a lost cause, but the challenge remains to increase organizational transparency at the same rate that individual privacy is lost."

We coined the term "cyborganization" to describe how technology is inseparable from the operations of a modern organization. We witnessed this phenomenon directly during our dinner at the Monterey Bay Aquarium where the designers of the kelp forest tank had to create a water surge machine to mimic the motion of the waves in nature. This function is literally the heart of the exhibit, for without it, the kelp would die, as would the ecosystem it supports.

Keeping people alive and healthy is just one of the examples Dave Watson, SVP and CTO of Kaiser Permanente Information Technology, shared showing how remote monitoring provides timely biofeedback to patients, their families, and caregivers, guiding superior treatment. Such technologies pay for themselves by reducing hospital visits, enabling prevention, and creating healthier patients. Diamond Fellow Vince Barabba expanded the notion of the cyborganization to the community level. He described an entirely new development in Quay Valley, California that will have the network built into all homes, appliances, autos, schools, and community locations. The town will be a test market for what is possible when community life embeds today's best technology for energy and communications.

Cyborganization particularly resonated with those who run businesses where the speed of information is critical for decision-making and reacting. Diamond Partner Tony Paoni led a discussion with our technology panelists, Cathy Brune, SVP and CIO of Allstate, Alene Korby, EVP and CIO of Kraft, and Toby Redshaw, corporate vice president of Innovation, Data, Enabling Platforms and Architecture Services of Motorola, about how they've changed information management -whether to provide the right information to the right people within a timely decision cycle, or to get people to work and behave in self-organized networks outside of direct management control.

Self-organization is one of the most powerful and destabilizing forces of the network because it allows people to get together and share information with others who might be interested. This phenomenon shifts the power to the user, and gives corporations less control over their brand and public relations messages. At the same time, it creates opportunities to have a direct dialog with customers. Dave Weick, CIO of McDonald's Corporation, recounted a number of examples of how the company is using new technologies and viral marketing to change the nature of their relationship with customers. A "global casting" contest advertised only on the Internet yielded thousands of responses from individuals hoping to have their picture appear on the new McDonald's bag-the winning submission rolling out this spring.

As leaders experiment with new technologies and the possibilities they create, learning should remain the goal. Author Paul Carroll and Diamond Fellow Chunka Mui stressed the importance of studying and learning from others to avoid costly mistakes as they shared the thinking behind their upcoming book. And as Diamond Vice Chairman John Sviokla emphasized, networks learn faster than bureaucracies, which is a necessary advantage in a fast-changing world. Only by learning and responding rapidly can organizations achieve the agility they need to keep up.

Fortunately, people and organizations are pulling together in new ways to help each other learn and become more efficient. They recognize the value of working together, even when they are fierce competitors. Admiral Mike Mullen, Chief of Naval Operations and member of the Joint Chiefs, shared a vision of the "1,000 Ship Navy"-a model for international collaboration at sea. As cost pressures mount, no one organization can afford to do everything by themselves, and sometimes banding together-even with competitors-makes sense for everybody.

In discussing the creation of industry standards to facilitate inter-operability and trade with our panelists, Arthur Holden, chairman of the Pharmaceutical Biomedical Research Consortium, Rick Prelinger, board president of the Internet Archive, and Judy Sprieser, former CEO of Transora, it became apparent that the keys are finding common ground-which isn't always easy-and creating a balance between what is and isn't standardized. As one participant noted, standards enable scale and efficiency, but they can retard innovation.

Leaders need to strive for the right balance, which is different for every company and situation. That is a big job, but getting the information architecture right is the first step. Leaders need to ask themselves whether their management data gives them an economic advantage, and whether they can deliver the appropriate information to the right people, who can use it effectively, at the right time. If not, there are clearly short-term improvements that can be made. Throughout all of this change, the leader should strive to promote information transparency, drive values, foster learning, and watch the horizon.