Book Summary: The Connected Company

If you build your firm like an ivory tower, success is no longer certain. Your network of clients, partners, and workers is gaining power.

They may set the agenda and define how your firm should function and connect in its market using the new social media technologies.

Product-driven economies, which are fueled by manufacturers, are giving way to customer power. Companies that have traditionally been product-driven are also less adaptable and responsive.

The writers, Dave Gray and Thomas Vander Wal, have written a manifesto on how to rebuild your business to leverage platforms and networks in their book The Connected Company.

Let's get this ball rolling!

Lesson 1: Focus on Service

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We don't live in an industrial economy anymore. We live in a service-oriented society.

According to recent research, services will account for the majority of corporate growth in the future decades. Services, however, unlike products, cannot be created in isolation. They're made in collaboration with customers.

Rather than considering items as a means to a goal, we should consider them as a tool, a component of a service...an experience.

Take the iPhone, for example. We use it to communicate with coworkers, access internet information, play games, do financial transactions, watch movies, pinch, zoom, and tap a million other applications.

The value comes from the services we consume, which the iPhone facilitates.

Customers want services that are simple for them, not you. And, like the iPhone, they want to be able to access them all simultaneously. As a result, we must connect with consumers to define our linked companies.

Lesson 2: Focus on Customers

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It's only natural to pay attention to a consumer. So what's the deal with us being so awful at it?

In a nutshell, we become distracted. We identify and establish new possible expansion opportunities as we become successful in our markets. We grow avaricious and lose sight of who feeds us: the client.

Similarly, getting overly concentrated may be a concern. We forget that markets evolve and change, and if we don't shift our emphasis, we risk missing the boat and losing clients.

We must confront the market. We must pay attention, observe, and learn.

Lesson 3: Focus on Learning

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According to the authors, the issue is that, while today's businesses are adept at processing data and creating outputs, they cannot adapt.

To adapt, businesses must engage with their surroundings and strive for continual development through trials and feedback. A learning company is one that is linked.

Learning, on the other hand, is not the same as training. Training focuses on what you already know and do: existing procedures, habits, and systems.

Learning helps students acquire strategies for dealing with novel, uncertain, and confusing circumstances. New inventions, breakthroughs, and discoveries. You will lag behind if you do not learn.

According to the writers, learning requires criticism to develop, and the most essential critic is your client. Customers compare your service not just to what you've done in the past but also to your rivals.

Customers don't always want services supplied regularly or in the same way as others, so be cautious. They want services that are tailored to their specific needs.

Lesson 4: Be Organic

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A connected company learns and adapts by engaging with consumers at the moment of engagement. They can see firsthand what they need. How are you going to do it?

Many of the issues have been solved by the individuals who caused them in the first place: technologists. They added to the complexity by providing us with more tools and information. They also provided us with social media tools that allowed us to communicate with our clients.

The writers equate typical enterprises like trains on a track while discussing them. Between A and B, a true and unchanging path is designed for control and efficiency.

Because changing the rails is both difficult and costly, we invent ways to extend the rails, imposing even more inflexibility. The solution is simple: we must disembark from the train and adopt a new system and attitude.

Connected companies aren't hierarchies with functional pieces that are governed from a central location.

Connected companies are organic, complicated systems that work together, with each component functioning as a fully functional whole in and of itself. Companies that are connected are known as podular.

Lesson 5: Focus on PODS

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How might you split your personnel in your business to optimize for innovation rather than efficiency?

Their solution is to use podular organization to augment divisional thinking. In a podular organization, labor is divided into "businesses within businesses," each of which may provide a full service in its own right, increasing flexibility and adaptability.

Podular design is similar to a franchise model. It provides support and structure while allowing pods to operate independently to solve local difficulties.

Pods are adaptable, quick, scalable, robust, and self-contained. They have the authority to speak on behalf of the firm and to deliver outcomes to consumers. Each person may make changes without interrupting the others.

If a pod fails, the system has enough redundancy that the related services may be found elsewhere. As a little avatar of the bigger firm, each pod has a lot of tacit knowledge.

When it's time to scale up a service, a pod can divide into two pods, each of which can bring on new members with minimum growth pains. What is the ideal size of a pod?

The authors recommend adopting Amazon's measure of two-pizza teams or around 8-10 individuals. It's too huge if you can't feed the pod with a couple of pizzas!

Here's a word of warning, though. A podular system is not the most cost-effective method of doing business.

Podular structures have a lot of redundancy, which implies they're more expensive. With a podular approach, you're betting that the gain in customer value, along with greater operational robustness, will more than balance the cost increase.

Lesson 6: Focus on Platforms and Networks

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Any podular organization, according to the authors, should include an underlying support structure that connects the pods. This enables them to plan operations, share knowledge, and improve the company's overall efficiency. This is how pods grow in strength.

Platforms assist pods in their work and provide a peer-to-peer coordination mechanism. Platforms improve cohesiveness and minimize friction.

Cultural and technological norms are essential for a podular system to function, as are proper limits. These may be found on the platform. However, the platform's advantages must always outweigh the cost, whether you measure the cost in money, time, or effort.

When one element of the organization's needs differ from another, a balance must be struck. Where there is a lot of change and unpredictability, you and your platform should be adaptable and agile. A solid, trustworthy platform is ideal when change and variability are low.

How do you decide which sacrifices to make?

Examine your company's business ecology and ask yourself, "Where can we anticipate a lot of variation, and where can we expect things to stay stable?"

As a result, bureaucratic hierarchies perform well for routine tasks, whereas podular networks operate better in volatile or changing environments.

Connected companies exist as living, learning networks inside bigger networks.

Awareness and influence, not control, are the sources of network power. The management works on building and optimizing the system to promote learning and performance. At the same time, leaders establish clarity, trust, and a common purpose.

Lesson 7: Focus on Measuring

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According to the writers, as leaders of a linked organization, we must excite it with ideas, energy, and emotion. As a leader, we should be the company's most connected individual.

When you run a connected company, you're in charge of a network: a dispersed control system that gives individuals and teams the freedom to execute their jobs the way they choose.

Connected leaders pay attention not only to employees but also to suppliers, customers, and investors.

The authors propose a unique method for determining how well your firm is performing: measure its temperature. Is it too hot, excessively chilly, or just right?

The ideal temperature for a firm corresponds to the rate of change in the industry. It should be set at the same temperature as consumers and rivals, if not slightly higher.

A firm that is excessively chilly will have regulations that are so rigid that they obstruct productivity. People will discover ways to get things done by working "around" the system. Processes will be over-coordinated and closely linked.

A firm that is too hot will find itself constantly reinventing the wheel, tackling the same challenges. Every project or effort will be launched from the ground up, without regard for previous lessons learned.

What is the best position? Goldilocks—neither too hot nor too cold.

Lesson 8: POD Cultivation

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So, how do we go about putting together pods? The authors provide many recommendations.

We should concentrate on podular growth. If our organization needs to grow, we should consider starting with a pod for the new endeavor.

Create a pod with the correct amount of people who can act independently. Mix in personnel who can operate as self-contained units and back up the pod with the organization's main administrative systems.

We should seed new pods with people from current pods to create new pods. As you progress, you'll be able to preserve and disseminate tacit knowledge, as well as your enthusiasm and energy for the job.

Platforms that assist rather than control, that reduce rather than generate bureaucracy, should be developed.

We should seek podular individuals and encourage cooperation by ensuring that all employees know the shared objective and those sub-group goals are not separated.

Put your employees first and eliminate goal conflict inside the organization.

Changing the firm and forming pods necessitates a shift in the underlying mindsets of previously focused individuals. They must commit not just with their heads but also with their emotions. Find strategies to get them to talk about their feelings.

A pilot pod should be launched. It is an experiment that takes place outside of the company's usual framework. Pilot pods are similar to military special forces. They operate outside the norm and are not bound by the same rules and constraints as regular troops.

A pilot pod does not have to be a full-fledged business. It might be a modest test, such as a new service or a cross-disciplinary project. However, it must be self-contained and linked to the environment to learn and offer true innovation.

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