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The Virtual Corporation: Can We Ensure the Momentum?
by Geoff Moore, The Chasm Group
"The virtual corporation promises free access to a much broader array of utilizable resources, gained through acts of partnerships, empowerment, and trust ..."
Ever since Bill Davidow coined the term "virtual corporation" several years ago, it has struck a chord with business managers looking to extend the reach of their organizations without also extending their fixed overhead. For what the virtual corporation promises is free access to a much broader array of utilizable resources, gained through acts of partnership, empowerment, and trust that were foreign to an earlier generation where the boundaries of power were coextensive with those of the formal organization. By going beyond these limits, businesses are divesting themselves of low-value- added tasks and breaking free from market-restricting constraints, thereby allowing them to maximize the return on their highest-value-added assets.Given how pervasive this strategy has already become, it is remarkable how recent a phenomenon it is. In 1985 corporations like IBM were the paradigm for business success - and a more non-virtual corporation would be difficult to name. By leveraging its size and reach, Big Blue dominated virtually every element of the computer industry, and people were hard put to imagine how that hegemony could ever be disrupted. A mere 10 years later, however, companies that have retained such structures are in many ways perceived to be at a disadvantage for the very attributes previously seen as their strengths. Now companies with more decentralized, partner-oriented cultures like HP, Sun, Microsoft, and Compaq appear to have the edge. They are widely acknowledged for faster time to market as well as an ability to keep more irons in the fire and to place bets on multiple competing alternatives without fear of potential cannibalization because they have so much less invested in any one alternative.
Leveraging the Infrastructure
What has made this dramatic shift in strategic advantage possible? It is almost entirely a function of the proliferation of a newly emergent web of computing and communications infrastructure. With the rise in popularity of laptop computers, virtually every public site is making itself over to be a surrogate office, be it a hotel room, a frequent flyers lounge, the corner copy service, or an extra bedroom. Now that these computers are modem- enabled, and with the rise of both private networks and the Internet, electronic mail addresses are becoming standard on all business cards, meaning that it is as easy for a customer or partner to email you as an office colleague. Indeed, where centralized IT organizations are still actively restricting access to the Net, it is often easier to communicate with people outside your company than inside. Add to this that telephony, paging, and faxing are ubiquitous, with publicly accessible video conferencing soon to follow, and it is clear that the rules of engagement no longer privilege the global corporation’s size advantage.More importantly, this same infrastructure now makes possible customer intimacy and partner responsiveness at previously unimaginable levels. Enhanced communication and shared computing resources like the World Wide Web allow companies to risk more and more decentralized approaches to executing marketplace strategies. This, in turn, cuts through the constraints of time and space, and garners the optimal go-to-market team instead of their division’s default internal alternative.
There’s just one caveat. All of the above rests on the underpinnings of global standards for interoperability across heterogeneous platforms, be they computers, operating systems, networks, or applications. Everywhere the new infrastructure encounters proprietary obstructions to the free interchange of computing and communications. Not all solutions are based on legislated, de jure standards, to be sure - the de facto standards of Windows, NetWare, Notes, and Netscape Navigator are also playing a powerful role in creating and sustaining this web of inclusion. But maintaining the pressure for standards and moving swiftly to implement new levels of open systems on all sides is critical to ensure the continued proliferation of this phenomenal boost to the wealth-creation capabilities of nations.
It should come as no surprise that the companies destined for success in this venue are the ones whose leaders recognize the pivotal position at which we stand and are prepared to act upon it by demanding the necessary standards for long-term dominance and investing to create and promulgate them.
Geoff Moore is president of The Chasm Group, a Palo Alto, CA, research firm specializing in marketing strategy and organizational services to high-technology companies. He is the author of two books, Crossing the Chasm and Inside the Tornado, which describe organizational strategies for dealing with the Technology Adoption Life Cycle.
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