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This chapter is from the book

The Broad Opportunities for Orchestration

Although this book focuses primarily on manufacturing networks, with which we have the most experience, the principles of network orchestration have broad applications across diverse industries and activities, from research and development to services. While Boeing was breaking up its manufacturing supply chain for building aircraft and dispersing it across the world, as previously discussed, innovative airline carriers were engaged in outsourcing processes and resources to transform their offerings. Before deregulation in the late 1980s, major airlines were asset-intensive. They owned their aircrafts, reservation systems, maintenance teams, baggage crews, and catering services. Upstarts such as Southwest, and later JetBlue and RyanAir, put most of their operations out to bid. They leased engines, leased aircraft, and contracted for baggage handling and maintenance crews. They retained the core of branding and the overall concept for the airline. This enabled them to cut costs and offer a very different positioning than the majors. But quality and safety still had to be maintained, and this required skill in orchestrating these networks to ensure the planes could fly on time and maintain their safety records even when the contributing business processes were not fully owned by the carrier. While the success of Southwest and other carriers is rightfully attributed to their distinctive strategic positioning, this positioning depended upon skills in network orchestration. The major airlines have now moved to more leasing and outsourcing as well. (For example, American spun off its Sabre reservation system and Lufthansa spun off its maintenance operations as a separate firm.) Network orchestration is now a key capability for success in the airline industry.

We consider some other applications of network orchestration in Chapter 12, "Practice: A Lever to Move the World." These include the network Olam International built, working with small and midsized farmers in 40 countries to orchestrate a network for agricultural products and food ingredients. Other research networks, such as the Connect & Develop networks created by Procter & Gamble, have linked it with more than 1.5 million independent researchers around the globe; external networks have helped Canadian-based GoldCorp significantly improve the yield of its mining business by orchestrating an eclectic group of experts outside the firm.

Companies have created marketing networks to orchestrate hundreds of thousands of buzz agents to convey messages and promote products. Networks have been created for innovation, such as the system built around Nike and iPod to create an electronic personal trainer. Global sports leagues offer another example of the power of coordinated networks. Even the military is increasingly turning to networked models to meet the complex challenge of fighting modern wars and addressing global terrorist networks.

All these examples share one thing in common: They all are based on networks that come together to create a product or service. And they all require some form of orchestration to keep these networks from devolving into chaos. The principles of network orchestration can be applied to these networked enterprises in addition to supply chains and manufacturing.

Although Li & Fung is a large multinational, the opportunities for network orchestration are not limited to large global companies. These opportunities apply equally to companies large and small. In Hong Kong alone, at least 50,000 smaller trading companies manage global (or, at least, regional) supply chains. They all do network orchestration like Li & Fung. In fact, the new technologies and other shifts of the flat world lead to a leveling of the playing field that makes it easier for small firms to participate in networks or to engage in network orchestration.

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