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Knowledge is key in governing the extended enterprise

Governing the extended enterprise requires a new way of thinking about relationships with suppliers and customers; each requires a strategy of its own.

The concept of the “extended enterprise” is hardly new. Even in the early years of the 20th century, when big corporations were gathering all the means of production under their corporate roofs to exercise control, the management theorists were advancing such ideas as the “organization as community” and the “environmental complex” of a management problem.

What distinguishes the extended enterprise today, of course, is knowledge.

The notion picked up steam in the 1990s as global markets took on structure, and outsourcing and partnerships became an acceptable response. Today, however, the nature of extended has evolved into something heretofore unimaginable.

What distinguishes the extended enterprise today, of course, is knowledge -- of the customer, the supplier and new business ideas in the minds of anyone, anywhere.

And the challenge for leaders today is governing this newfangled thing that breaks most of the management rules we grew up with. Even the term governance seems arcane -- too harsh and proscriptive for a fluid and ever-evolving enterprise. Just look at the words we use for it: value web, network and ecosystem.

I’ve observed the evolution firsthand, starting in the early 1990s at GE, where we were creating new and exciting business models and their enabling technology -- too new, too exciting, it turned out, for the customers we had in mind at the time. And then in my own company, where the focus is on innovative management applications, research and best practices on which agile and adaptive organizations would run.

Technology, of course, makes the extended enterprise possible. And technology makes it necessary: the new markets, the globalization of business, the lower thresholds to entry for competitors, the speed of everything, the novelties in business models and products -- all of these are the devilish work of technology. And managing technology wisely -- within your four walls and outside across the extended enterprise -- using available, proven management standards is the answer.

A few general observations will move us toward a working governance plan.

Download the PDF: “Governing an Extended Enterprise.”

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