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This chapter is from the book

Orchestrate or Be Orchestrated

Orchestration is not a choice. It is an imperative. To remain competitive with partners who are skilled in network orchestration, companies have to be able to orchestrate. To enter global markets demands collaborating with local partners and orchestrating the business through complex networks and diverse cultures. In the flat world, a single firm will have a difficult time standing against a well orchestrated network. Yet managers at many established companies face a dilemma in moving to networked models. Their businesses and thinking are organized around a single firm. They are just beginning to think about sourcing from low-cost countries. They see the risks of moving to networked models—losing control over core parts of the business or sharing profits with partners. But they may not see the benefits. They don't have "the will to network." We hope that this book offers a clearer understanding of some of the benefits of networked models and the strategies Li & Fung has used to transform itself for a networked world.

Although we developed these insights at Li &Fung, the principles of network orchestration that we have honed in this context can be applied in many different industries and networks. If your company is part of a network, the question to ask is: Who is orchestrating? If there is no orchestrator, should you create or play this role? How can the principles of network orchestration—focusing on networks, managing through empowerment, and creating value through integration—be tailored to your own situation? If you don't see your company as part of a network, are you viewing your world too narrowly? Have competitors already created networks that are competing against you? Will you be able to survive in this world?

The following chapters examine how to compete in the flat world. Part I, "Focus: Firm and Network," examines network orchestration and the shift in perspective from the firm view to the network view. Part II, "Management: Control and Empowerment," explores the management needed for this environment, managing a supply chain that is not wholly owned in a world of greater demands for corporate social responsibility, empowering executives to act as entrepreneurs, creating stretch goals, building companies around the customer, and forging loose/tight relationships with networks of suppliers. Part III, "Value Creation: Specialization and Integration," considers how companies can capture more value by taking a more integrative view of their networks, as well as explores the need to draw together marketing and manufacturing to "sell to the source" in emerging markets. Part IV, "Implications for Policy and Practice," explores how government regulations—particularly trade barriers—are limiting the ability of companies to orchestrate and optimize global supply chains, and considers some of the broader implications for managers.

As Les Wexner found at The Limited, diffused supply chains can be optimized only through orchestration, by looking across the chain and abandoning the mindset of absolute control. Competing in a flat world means more than contracting with a company in Bangalore or Shanghai. It requires a different approach to the business. There is a need for new skills and a new mindset. The purpose of our book is to offer managers lessons about how to succeed in this flat world—not just how to build better supply chains, but how to build competencies in network orchestration and change the shape of your thinking, strategies, and organizations to embrace this flatter world.

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