How to create network business models for the economy 2.0?

In the interesting article “What Airbnb, Uber and Alibaba have in common” published in the Harvard Business Review, the authors present how companies that implement a “network orchestrator” business model currently create more value and receive valuations two to four times higher than companies using other business models.

However, network orchestrators are still rare business models. The authors argue that management principles and skills do not pay so much attention to the creation of these business models. 

From my point of view, we must consider the inherent difficulty of the creation of these models, which rely to a great extent on the value created by actors “outside of the organisation” but must implement adequate formulas to appropriate this value:

– Legal instruments: by means of patents, copyrights and legal contracts that put barriers to replication from competitors.

– Organizational artifacts: by implementing processes that inhibit others from benefiting from the same network effects.

– New marketing tactics mainly focused on social networks and the Internet 2.0

– New financial models which allow managers to delay the creation of revenues until the network reaches enough critical mass.

Although there will be enormous opportunities in this space in the future due to the growing spread of Internet technologies, many companies that will try to seize these opportunities will inexorably fail.

Actually, many of the business opportunities which currently are referred as “collaborative economy” or “economy 2.0” will be appropriated by “network orchestrators”. But there are many questions that do not have simple answers:

– how do companies create the network effects needed for such business models?

– how do companies appropriate the value created and prevent others from replication?

– should public entities enter this space regulating it or even acting within the economy 2.0 as proactive agents?

– how these business can be implemented in less developed economies?

This article was first published on Linkedin by David Arias on April 19, 2015

Image by PollyDot from Pixabay

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