Purpose, people & practices are needed at the macro & micro level
Clusters that have collaboration, cooperation and challenge provide healthy eco-systems for companies to thrive.
At the annual research symposium on ‘networks in changing business ecosystems’ last week at Edith Cowan University that brought together partnerships that are happening around the globe in research and business with the focus on how to understand business ecosystems or clusters and how that can be used to support business communities to thrive.
It was great to change my focus from the micro to the macro for a couple of days and discover new perspectives. Professor Kerry Brown brought together a diverse range of speakers from different industries, countries and backgrounds with one thing in common - networks and clusters.
Just to clarify the difference between a Cluster and a network;
Clusters are a collection of interconnected companies and associated institutions. Firms in a cluster produce similar or related goods or services and are supported by a range of dedicated institutions located in spatial proximity, such as business associations or training and technical assistance providers.
Networks are alliances of firms that work together towards an economic goal. They can be established between firms within clusters but also exist outside clusters. Networks can be horizontal and vertical.
Horizontal networks are built between firms that compete for the same market, such as a group of producers establishing a joint retail shop
Vertical networks, particularly supplier development schemes, are alliances between firms belonging to different levels of the same value chain, such as a buyer assisting its suppliers for upgrading.
There were three repeating elements that came through in every presentation; purpose, people and practices, interestingly the same elements I believe need to be considered when looking at organisational culture that enables success.
Having a joint purpose that went beyond profit enabled businesses to come together and collaborate even though they may be in competition. Pia Turcinov discussed this in the work she is doing through ‘Strategic Global Pathways’ a program that brings together businesses who want to expand out of the state of WA . Although they have very different products, services and organisation vision the expansion out of the WA market is the purpose that brings them together to collaborate. This also was present in research presented by Professor Jennifer Waterhouse and John Burgess on the ‘Regional Resilience of two wine valley’s of Swan Valley and Hunter Valley’ where although they are the two oldest regions with very different histories and structures have the same purpose of keeping the area and landscape agricultural. The message was clear that all networks need a common purpose, and the same is true of organisations. The lack of a clear purpose that people understand and can get behind leads to competition rather than collaboration.
The practices and structures we put in place give us boundaries and agreed rules of operation allowing co-operation to take place. Consideration needs to be made of the most suitable framework for the organisations involved and the agreed purpose of the network or cluster. Andrew Outhwaite, Director of We Are Arising Pty Ltd demonstrated how an incubator that provides a supportive environment for entrepreneurs to develop, can have a positive impact on the wider community. While Professor Tim Mazzarol, University of Wester Australia shared the advantages of ‘Co-opertives as a Strategic Network Form Organisation’ demonstrating the strength that this structure can have. Sharing some insightful case studies such as the grain farmers of WA who in 1933 during the great depression found that the hessian sacks holding their grain costed more than the grain so formed a co-operative. They now have 4,100 members with an annual turnover of $3.45 billion. They are able to access global markets via internal trading services and allows them to bulk purchase up and down the value chain. This provides stability in the cost of trading and marketing and tax efficiency but ultimately creates jobs for the community. The organisation structure with practices and procedures we have in place in organisations has a direct impact on how we operate, collaborate and interact. The most effective organisations have considered the purpose of the organisation, the culture that would best achieve that purpose and the people they want to attract and what individuals need to thrive before they start to look at structures and practices to achieve that.
Social enterprise, the people involved in all of these networks or organisations were the most important thread that ran through all the presentations and research shared. The skills and competencies available to the networks in terms of technical, interpersonal and management capabilities impacted the ability of the networks to achieve their purpose currently and in the future. An interesting study ‘Inter-firm cooperation and networking among small regional firms by researcher Jallah Sharafizad and Professor Kerry Brown found that personal networks were much stronger than inter-firm networks in areas like Margaret River with an agreed ‘code of conduct’ with trust and support being very high and important. The dark side of collaboration was explored as well where organisations take advantage, participate in behaviours that are destructive to the relationships over time as well as the network or cluster. The same is true for organisations particularly those that have grown and have a number of teams with different focus and skills, these departments can start to operate as if they are different organisations that although have the same purpose are actually in competition with each other. The most effective organisations are those that have built personal networks across the organisation that break down these silos and enable collaboration.
An interesting study presented by Andrei Lux ‘The role of business ecosystems: Enabling business owners to leverage assets and capabilities’ was able to demonstrate a direct link between business performance and the physiological and social capital and education of organisations. This is good news for organisations considering in investing in their employees as it demonstrates a strong return on that investment.
So if you are not getting the results you are looking for within your organisation you need to examine your purpose, people and practices the same is true if you are part of a network or cluster.
If you need help navigating this process then please call me for a discussion on 0423 360507, I’ll be glad to help.
