Since the mid-1990s academics and business leaders have been striving to focus their businesses on what is profitable and either partnering or outsourcing the rest. I have assembled a long list of quotes that define what a virtual organization is and why it's different than conventional organizations. The point of looking at these quotes is to demonstrate that none of these models or definitions can adequately be achieved without some heavy analytics and integration of both IT (the wire, the boxes and now the cloud's virtual machines) and IS - Information Systems (Applications) with other stakeholder systems and processes. Up till recently it could be argued that these things can and could be done because we had the technology. But the reality is, unless you were an Amazon, e-Bay or Dell, most firms did not necessarily have the money or the know-how to invest in these types of inovations.
With the proliferation of cloud services, we are finding new and cheaper ways to do things that put these strategies in the reach of more managers and smaller organizations. Everything is game... even the phone system can be handled by the cloud. Ok, I digress, Check out the following quotes and imagine being able to pull these off without analytics.
The next posts will treat some of the tools and technologies that are available to make these business strategies viable.
In order to effectively manage activities across organizations' it becomes critical to have certain processes in place to manage as well as measure performance and quality (Hammer, 2001; Champy, 2002; P-CMM v2.00, July 2001). According to Venkatraman (1994), organizations seeking to effectively integrate with business partners must first get their house in order through the use of BPR – Business Process Redesign/Re-engineering. Hammer (2001) says that for those who have re-engineered their internal business processes and extracted most of the value available internally, must now look at integrating and re-engineering externally to yield the next gains in value and profitability.
What is a virtual strategy? What does it cover within the company? Who is affected? Who benefits? Venkatraman & Henderson (1998) reflect these questions in a 3 vector and 3 stages model (presented in Figure 5) that is aligned in spirit with Chesbrough & Teece's view that no one formally defined structure will ensure the success of a virtual organization.
A variety of authors have generated lists of firm capabilities and resources that may enable firms to conceive of and implement value-creating strategies (Barney, 1991; Bharadwaj, 2000).
In order to better define Venkatraman & Henderson's virtual organization, we have broken it down into components that are inspired by Barneys' (1991) three generic resource types and Nitin Nohria's (2003) model of organizational competencies; competencies that have characterized firms who performed exceptionally and developed or maintained a leadership position over the last 10 years. Nohria also suggests that to achieve overall success you need to excel in all 4 primary competencies and at least 2 of the secondary (See Figure 3). However Nohria emphasizes execution as primary means of success and differentiation.