Ronald Coase theorized that as transaction costs come down, so does the need for companies to keep all parts of their value chains in-house. Time has proven Coase right several times over: every company today not only outsources, insources, partners, platforms, co-brands, co-develops, co-innovates, and licenses like there is no tomorrow, every technology company and start-up aspires to provide its offerings on-demand or as-a-service.
As a result, using third party capabilities to assemble value chains and accelerate growth has become standard procedure for starting and scaling businesses, helped by platforms that provide seamless access to relevant services.
However, most established businesses are not quite ready to muster these “plug ‘n play” value chain dynamics inside their organizational boundaries and are forced instead to orchestrate their entire suite of activities through something like a cumbersome matrix structure.
Authors: Gillis Jonk, Johan C. Aurik
Source: Kearney
Subjects: Management, Organizational Behavior
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