WHAT Will You Change?

During most of the Industrial Era there were two dominant business models – Centralized or Decentralized.  Decentralization tended to foster innovation and customer intimacy while giving up scale and leverage.  The centralized model was the opposite – gaining leverage and control, very often at the expense of intimacy and innovation.  Early on, the decentralized model worked well because customers, suppliers and employees were more Local than National and travel both physical (cars, planes, etc. ) and the electronic (telephones, telegraph, mail, etc.) were very limited.  As both modes of travel advanced in the last half of the 20th century, the more centralized business model emerged.

There have been many examples of large scale, centralized success but one of the most recognized was Wal-Mart with their powerful National supply chain emerging in the 1980’s.   This was enabled by the great physical expansion of interstate highways, suburban living and the large scale computers, data bases and networks throughout the United States.  Today’s network and information capabilities have expanded the reach across the Globe which has enabled a boundriless world of commerce and competition.  It has also flipped the relationship between the enterprise and its customers to where the power is with the buyer not the seller.

As a result of this progression, a competitive 21st century model has emerged that is neither fully centralized nor decentralized – but, a hybrid with the powerful attributes of each.  For example, a company like Apple has a leveraged global supply chain and an intimate customer relationship and innovative products.  Therefore, if you strive to be competitive in the new economy the “either/or” strategy needs to shift to an “and/and” mentality.  Doing better at what you used to do may not be enough.  You may have to change the way you think and operate.