3: It's All About Networks
The author describes an experiment in "swarm" technology - the creation of a school of robotic fish that, programmed to operate autonomously, constantly investigate the waters of a seaport, and which was exceedingly successful in doing so. Primarily, a swarm represents strength in numbers: it is capable of being in many places rather than one, the failure of a single member of the swarm doesn't appreciably weaken the swarm. The other units continue to function, and will compensate for its absence until it can be replaced.
Networks of Nodes
The author relates a few lessons learned by NASA, particularly in the wake of Apollo I, which burned on the launch pad, killing the crew - primarily, because there was no failsafe plan if everything didn't work out as expected. Fast-forward to the Apollo 13 incident, in which catastrophe was avoided by ingenuity - but the ingenuity was enabled by the fact that the vehicle consisted of three separate and independent spacecraft (command module, service module, and lunar module) which were designed to accomplish specific tasks independent of one another. The existence of redundant systems enabled engineers to cobble the tree components together - had they been designed as a single system with no redundancies, it would not have been possible to bring the crew home alive.
This illustrates the value of a network of nodes: discrete entities that, while connected, are capable of operating autonomously. This notion is extended to most business organizations: in which people are "nodes" - some of which are interchangeable (one member of a team can step in if another calls in sick), some of which are specialized (an attorney and accountant are two different kinds of professional and cannot be swapped around). Some are more efficient than others, and some seem (and may well be) entirely useless.
The Skill of Synthesis
Networks exist by design. Each node is created for a reason, and given certain functions and the authority to make the decisions necessary to accomplish them. Organizational management establishes protocols for communication among the nodes and coordinate their interactions, but over time, the network evolves. The internal function and external connections of nodes change as the organization adapts over time. As a result, networks are difficult to analyze.
The author draws an analogy of the business analysts to the little boy who enjoys taking things apart to learn how they work, but may ultimately find himself unable to put them back together. Deconstructing something you don't understand is simple - but when you find yourself with a myriad of loose bits, you may not be able to figure out how to put them back together simply by inspecting each piece and guessing its function. It may have helped had he taken the time to examine the object in greater detail before taking it apart - to understand how the parts interact in the working model.
Following the same analogy, it is often insufficient simply to piece the object back together. The environment may have changed, the needs may have changed, and the parts must be reassembled to create an entirely different kind of machine - perhaps using some additional parts, or getting rid of the ones that are not needed for the new purpose.
In business organizations, there should be a blueprint for your own "machine," or you can attempt to learn by observation how it works. The more difficult task is seeking to understand a competing organization, as the information you can glean by observation may be incomplete - as such, your examination will be superficial at best, which will make it difficult to learn with much accuracy or detail how it "works," and how it can be defeated.
The author goes into another parable - this time, a car accident in which five bystanders were present, but each gives a distinctly different report to the police. Primarily, it's because people attempt to construct a "truth" and choose (or distort) the facts to suit their interpretation. If these people are put in a room to talk about the incident with one another, their stories change, and tend to become less accurate rather than more.
This relates to the task of analysis: you cannot help having assumptions, and you cannot help attempting coming to a premature conclusion that will distort your identification and interpretation of facts. However, you can attempt to keep the facts and your interpretations separated to minimize the impact of the latter upon the former.
The Impossible Occurs
The author refers to the failures of the American automotive industry - Chrysler and General Motors, which both went into bankruptcy in 2009 - as evidence that even large, established organizations can fail. And while there's some validity to the claim that this came from external factors, it's clear that it's the result of a lack of attention to market forces, bad decision making by management at every level, and an astounding level of indifference to their customers, suppliers, and business partners. The author's commentary suggest that these companies assumed a business as usual posture, and refused to take action to adjust for changes in the environment, even when the signs were clear. (When Toyota surpassed GM in sales, GM's response was "to stick its head in the sand.")
Even for very large organizations, their success is based on a number of factors that are external to the organization itself (exchange rates, interests rates, suppliers' inventory levels, even the climate), to which the organization should be constantly and acutely attuned: changes in these factors will require some action - preferably in advance of, rather than in reaction to, a drastic change. The company that fails to do so does so at its own peril, regardless of how large it is or how successful it may have been in the past.
The Network That Changed Music
In happier news, the author describes the success of Apple 's iPod/iTunes combination, which has made the company the leader in retail music (while "record store" franchises have fallen flat and even other entertainment retailers have lost ground).
Under Steve Jobs, apple was looking for digital consumer products outside the computer workstation (though as peripheral devices to accompany their Macintosh line of computers rather than an end unto itself).
(EN: people often overplay the notion that Apple was visionary - but in truth, customer demand for digital music, and a convenient way to manage it, existed before the iPod, but the problem was that it was fractured: multiple small companies offering music files to download, software to manage them, and a device to play them. Apple merely put together an end-to-end solution - while competitors such as Dell made a token effort at best, preferring to focus on their traditional lines of business instead.)
The author also mentions Honda, as a company that seems to be in many lines of business - motorcycles, cars, generators, tractors, jet engines, and anything with an engine. (EN: This is not unique to Honda - many "motor" companies engage in a wide array of consumer devices, though it tends to be more common in Europe and Asia than in the US.)
So in this sense, many companies fall into the trap of insisting that "we make ____" and refusing to consider other alternatives. Dell make computers and refuses to dabble in home electronics. Chrysler makes cars and does not explore other applications for its technology. Both have missed significant opportunities and, by lack of diversification, are vulnerable to shifts in market demand.
From one perspective, this can be viewed as a company's failure to consider a critical component of its network: the customer. A firm that focuses on customer needs, and is willing to be flexible in meeting them, will have a considerable advantage over a firm that considers its customers as external suppliers of capital and recipients of whatever its internal network cares to produce.
Returning to Apple, the company recognized the demand of its customers for digital music, and has since recognized their desire for video (hence the iPod evolved to accommodate video formats), for telephone communications (hence the iPhone), and for traditional text-and-picture information (hence the iPad).
As the company recognizes more consumer needs, and finds that they can be fulfilled with relatively minor augmentations and changes to its own organization, it can be expected to enjoy continued success and a considerable advantage over slower-moving competitors.
A Purpose-Driven Company
The qualities inherent in a organization - the structure of its nodes - are derived from its purpose. Ultimately, the collective purpose of the nodes is to create value, and the arrangement of the nodes and the flow of work through them are orchestrated to that purpose. This is common to any organization, regardless of the specific details of its purpose or product.
To be successful over the long run, the organization must not only create value, but do so in some unique way, which gives it competitive advantages over competing organizations. Most organizations are sufficiently resilient to weather periods of nonproductivity, or of less-than-optimal productivity, or productivity without competitive advantage (provided there is not a sufficient level of completion).