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Network Challenge, The: Strategy, Profit, and Risk in an Interlinked World

By Paul R. Kleindorfer, Yoram (Jerry) R. Wind, Robert E. Gunther

Published by FT Press

Published Date: Dec 1, 2009


New Paperback Edition


Networks and the Enterprise: Breakthrough Thinking and Actionable Strategies


“This book presents an amazing collection of insights on underlying forces and ways to thrive in our post-Coaseian age–an age in which the centralized firm is changing into an agile and resilient network of participants. A must read for a world where unpredictability reigns supreme.”

–John Seely Brown, Independent Co-Chair of the Deloitte Center for Edge Innovation, and Senior Fellow at the Annenberg Center for Communication at the University of Southern California


“I couldn’t wait to get my hands on this research…I have already begun to put the ideas into practice in designing next-generation open innovation networks…the diversity of ideas and perspectives is truly amazing and will be a terrific resource to anyone seeking to move to new business models based on the power of networks for innovation, marketing, and creating and leveraging big ideas. Job well done!”

–Larry Huston, Creator of the “Connect and Develop” program for Procter & Gamble, and Managing Director of 4iNNO, a major Open Innovation consulting practice


“In our borderless world, every manager needs to understand the strategic implications of networks. For the first time, The Network Challenge brings together thought leaders from many fields–a team of experts as broad as the network challenge itself.”

–Kenichi Ohmae, author of more than 100 books, including the seminal work, The Mind of the Strategist, advisor on global strategy to foreign governments and scores of multinational corporations, selected by The Economist as one of five management gurus in the world.


Networks define modern business. Networks introduce new risks (as seen by the rapid spread of contagion in global financial markets) and opportunities (as seen in the rapid rise of network-based businesses).
While managers typically view business through the lens of a single firm, this book
challenges readers to take a broader view of their enterprises and opportunities.


This book’s 28 original essays include

CK Prahalad on networks as the new locus of competitive advantage

Russell E. Palmer on leadership in a networked global environment

Dawn Iacobucci and James M. Salter II on the business implications of social networking

Franklin Allen and Ana Babus on contagion in financial markets

Steven O. Kimbrough on artificial intelligence, evolutionary computation,
and networks

Satish Nambisan and Mohan Sawhney on tapping the “global brain” for innovation

Manuel E. Sosa on coordination networks in product development

Christophe Van den Bulte and Stefan Wuyts on customer networks

Christoph Zott and Raphael Amit on using business models to drive network-based strategies

Yoram (Jerry) Wind, Victor Fung, and William Fung on network orchestration

Valery Yakubovich and Ryan Burg on network-based HR strategy

Howard Kunreuther on risk management strategies for an interdependent world

Paul R. Kleindorfer and Ilias D. Visvikis on integrating financial and physical networks in global logistics

Witold J. Henisz on network-based political and social risk management

Boaz Ganor on terrorism networks


And much more...

Table of Contents

Authors xviii

Foreword by Dean Thomas S. Robertson and Dean Frank Brown xxv

Preface xxvi




Chapter 1        The Network Imperative: Community or Contagion? 3

Paul Kleindorfer and Yoram (Jerry) Wind


Chapter 2        Creating Experience: Competitive Advantage in the Age of Networks 25

C.K. Prahalad


Chapter 3        Knowledge as a Social Phenomenon: “Horse Holding” and Learning in Networks 37

Alan Kantrow


Chapter 4        Cross-Cultural Leadership in Networked Global Enterprises 49

Russell E. Palmer




Chapter 5        Social Networks: You’ve Lost Control 67

Dawn Iacobucci and James M. Salter II


Chapter 6        Biological Networks: Rainforests, Coral Reefs, and the Galapagos Islands 85

Sonia Kleindorfer and James G. Mitchell


Chapter 7        Information Networks in the History of Life 105

Robert Giegengack and Yvette Bordeaux


Chapter 8        Artificial Intelligence: How Individual Agents Add Up to a Network 125

Steven O. Kimbrough




Chapter 9        Network-Centric Innovation: Four Strategies for Tapping the Global Brain 147

Satish Nambisan and Mohan Sawhney


Chapter 10      Coordination Networks in Product Development 165

Manuel E. Sosa


Chapter 11      Organizational Design: Balancing Search and Stability in Strategic Decision Making 185

Jan W. Rivkin and Nicolaj Siggelkow




Chapter 12      Complexity Theory: Making Sense of Network Effects 207

Colin Crook


Chapter 13      Supply Webs: Managing, Organizing, and Capitalizing on Global Networks of Suppliers 225

Serguei Netessine


Chapter 14      Leveraging Customer Networks 243

Christophe Van den Bulte and Stefan Wuyts


Chapter 15      The Business Models as the Engine of Network-Based Strategies 259

Christoph Zott and Raphael Amit


Chapter 16      Extended Intelligence Networks: Minding and Mining the Periphery 277

George S. Day, Paul J. H. Schoemaker, and Scott A. Snyder




Chapter 17      Network Orchestration: Creating and Managing Global Supply Chains Without Owning Them 299

Yoram (Jerry) Wind, Victor Fung, and William Fung


Chapter 18      Managing the Hyper-Networked “Instant Messaging” Generation in the Work Force 317

Eric K. Clemons, Steve Barnett, JoAnn Magdoff, and Julia Clemons


Chapter 19      Missing the Forest for the Trees: Network-Based HR Strategies 335

Valery Yakubovich and Ryan Burg


Chapter 20      Relating Well: Building Capabilities for Sustaining Alliance Networks 353

Prashant Kale, Harbir Singh, and John Bell




Chapter 21      Networks in Finance 367

Franklin Allen and Ana Babus


Chapter 22      The Weakest Link: Managing Risk Through Interdependent Strategies 383

Howard Kunreuther


Chapter 23      Integration of Financial and Physical Networks in Global Logistics 399

Paul R. Kleindorfer and Ilias D. Visvikis


Chapter 24      Telecommunications: Network Strategies for Network Industries? 417

Kevin Werbach


Chapter 25      Network-Based Strategies and Competencies for Political and Social Risk Management 433

Witold J. Henisz




Chapter 26      Terrorism Networks: It Takes a Network to Beat a Network 453

Boaz Ganor


Chapter 27      Global Diseases: The Role of Networks in the Spread (and Prevention) of Infection 471

J. Shin Teh and Harvey Rubin


Chapter 28      Lessons from Empirical Network Analyses on Matters of Life and Death in East Africa 495

Jere R. Behrman, Hans-Peter Kohler, and Susan Cotts Watkins


About the Authors 513

Index 537