Fighting the Risk

Are network orchestrators geared to orchestrate their victory against extended enterprise risks?

-  sachin Paranjape

The transition of capital allocation across four economic revolutions is what has led us to where we are today. Let’s travel back in time to chronicle these shifts in consumption and capital allocation. The Industrial Revolution sparked a change from hand production to machines and capital-intensive processes. In this ‘Asset Builders’ phase, physical assets were key determinants of performance and value. In the 70s, firms shifted to a lower capital model where they leveraged human capital (in the form of services) yielding higher returns. This was the ‘Service Provider’ phase.

Kernel of truth

‘Access over ownership’ is the kernel of truth backing the unstoppable rise of today’s sharing economy. uber is a mobility company without practically owning any vehicles, and Airbnb is an accommodation provider without owning any real estate. These organisations have snaked their way into the mainstream and are firmly establishing their place as companies of the future.

With the development of the internet, the Information Revolution gave rise to ‘Technology Creators’. This model used capital to develop and sell intellectual property (IP) commonly seen in industries such as biotechnology, software, analytics etc.

In the last decade, organisations have found ways to create value based on interactions with users, suppliers and other points of contacts. Known as ‘Network Orchestrators’ or sharing economy, in this phase, an organisation has less of their owned assets and resources deployed but the overall scalability and business value are generated by orchestrating a number of network players. We are in the midst of a reorganisation of our economy in which platform owners are a seemingly developing power that may be even more formidable than that of the factory owners in the early Industrial Revolution. Let’s determine how.