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THE IDEAS AND APPROACH OF THE IMP GROUP

THE IDEAS AND APPROACH OF THE IMP GROUP. HAKAN HAKANSSON AND DAVID FORD IMP GROUP. BACKGROUND. 1976 FIRST MEETINGS IMP 1 PROJECT – FIVE COUNTRIES, c 1000 INTERVIEWS FIRST BOOK 1982. CONTINUING…………. FIRST IMP CONFERENCE 1984 IMP 2 PROJECT 1995 impgroup. org

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THE IDEAS AND APPROACH OF THE IMP GROUP

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  1. THE IDEAS AND APPROACH OF THE IMP GROUP HAKAN HAKANSSON AND DAVID FORD IMP GROUP

  2. BACKGROUND • 1976 FIRST MEETINGS • IMP 1 PROJECT – FIVE COUNTRIES, c 1000 INTERVIEWS • FIRST BOOK 1982

  3. CONTINUING…………. • FIRST IMP CONFERENCE 1984 • IMP 2 PROJECT 1995 • impgroup. org • 23RD ANNUAL IMP CONFERENCE MANCHESTER 2007

  4. EMPIRICALLY BASED CHALLENGES • ANALYSIS OF DISCRETE PURCHASES

  5. EMPIRICALLY BASED CHALLENGES • ANALYSIS OF DISCRETE PURCHASES: RELATIONSHIPS

  6. EMPIRICALLY BASED CHALLENGES • ANALYSIS OF DISCRETE PURCHASES: RELATIONSHIPS • MANIPULATION OF MIX VARIABLES

  7. EMPIRICALLY BASED CHALLENGES • ANALYSIS OF DISCRETE PURCHASES: RELATIONSHIPS • MANIPULATION OF MIX VARIABLES: INTERACTION

  8. EMPIRICALLY BASED CHALLENGES • ANALYSIS OF DISCRETE PURCHASES: RELATIONSHIPS • MANIPULATION OF MIX VARIABLES: INTERACTION • ATOMISTIC STRUCTURE OF MARKETS

  9. EMPIRICALLY BASED CHALLENGES • ANALYSIS OF DISCRETE PURCHASES: RELATIONSHIPS • MANIPULATION OF MIX VARIABLES: INTERACTION • ATOMISTIC STRUCTURE OF MARKETS: STABILITY

  10. EMPIRICALLY BASED CHALLENGES • ANALYSIS OF DISCRETE PURCHASES: RELATIONSHIPS • MANIPULATION OF MIX VARIABLES: INTERACTION • ATOMISTIC STRUCTURE OF MARKETS: STABILITY • SEPARATE ANALYSIS OF CUSTOMER AND SUPPLIER: SIMILARITY

  11. PUTTING THESE CHALLENGES TOGETHER…. • THE CHALLENGE TO STRUCTURE • THE CHALLENGE TO PROCESS

  12. TWO CHALLENGES….. • THE CHALLENGE TO STRUCTURE: COMPANIES AND MARKETS OR NETWORKS AND RELATIONSHIPS

  13. TWO CHALLENGES….. • THE CHALLENGE TO STRUCTURE: COMPANIES AND MARKETS OR NETWORKS AND RELATIONSHIPS • THE CHALLENGE TO PROCESS: INDEPENDENT ACTION OR INTERDEPENDENT INTERACTION

  14. WHAT HAS HAPPENED IN THE REAL WORLD? • DIVERSITY OF MODELS • SPECULATION VS POSTPONEMENT • GREATER INTERDEPENDENCE EASIER CO-ORDINATION • SEPARATION OF TECHNOLOGIES/FUNCTIONS BETWEEN COMPANIES

  15. WHAT HAS HAPPENED TO OUR CHALLENGE TO STRUCTURE?

  16. WHAT HAS HAPPENED TO OUR CHALLENGE TO STRUCTURE? EVERYONE TALKS ABOUT RELATIONSHIPS:

  17. WE BELIEVE THAT THE IDEA OF RELATIONSHIPS HAS ONLY BEEN PARTIALLY ADOPTED

  18. EVERYONE TALKS ABOUT RELATIONSHIPS….. …..BUT AS A TECHNIQUE

  19. LOOKING MORE CLOSELY AT RELATIONSHIPS… • RELATIONSHIPS ARE AS FUNDAMENTAL AS ORGANISATIONS THEMSELVES. • EXISTING INTERDEPENDENCIES FORM CONTEXT FOR RELATIONSHIPS • INTERDEPENDENCIES ARE THE OUTCOME OF RELATIONSHIPS. • DYNAMICS TEND TO OCCUR WITHIN HETEROGENEOUS RELATIONSHIPS,

  20. WHAT HAS HAPPENED TO OUR CHALLENGE TO PROCESS?

  21. WHAT HAS HAPPENED TO OUR CHALLENGE TO PROCESS? …..AN INTERACTION VIEW IS DIFFICULT TO RELATE TO A SINGLE COMPANY VIEW.

  22. INTERACTION….. • IS BEYOND THE CONTROL OF AN INDIVIDUAL ACTOR. • THE EFFECTS OF ANY ACTION DEPEND ON THE PERCEPTIONS AND REACTIONS OF OTHERS. • IT IS INCREMENTAL, NOT DISCONTINUOUS • IT CAN ONLY BE UNDERSTOOD IN ITS RELATIONSHIP/NETWORK CONTEXT.

  23. INTERACTION….. • INTERACTION MAKES IT IMPOSSIBLE TO MAKE SENSE OF WHAT HAPPENS BETWEEN COMPANIES BY LOOKING AT JUST ONE OF THEM. • THE DIRECTION OF A BUSINESS RELATIONSHIP IS OUTSIDE THE CONTROL OF A SINGLE COMPANY. • SUCCESS OR FAILURE FOR A RELATIONSHIP CANNOT BE EXPRESSED SIMPLY FROM THE PERSPECTIVE OF A SINGLE COMPANY.

  24. WHY HASN’T THE IDEA OF INTERACTION BEEN ADOPTED? BUSINESS MODELS START OUT FROM A SINGLE ACTOR - “MARKETING IS A COMPANY AFFAIR”.

  25. SOME IMPLICATIONS FOR RESEARCH • INTERACTION INVOLVES SPECIFIC OTHERS • INTERACTION IS CLOSELY ROOTED IN THE PAST • ALL INTERACTION IS JOINT • THE TANGIBLE ASPECTS OF BUSINESS ARE ACTUALLY LESS SUBSTANTIAL THAN THE INTERACTION BETWEEN THEM. • STRATEGY IS ABOUT ASSESSING INTERACTIVE PROCESSES IN THEIR WIDEST SENSE • INTERACTION MEANS THAT NO COMPANY IS ANY WHERE NEARLY IN CONTROL OF ITS OWN DESTINY!

  26. INTERNATIONAL BUSINESS NETWORKS • EXISTENCE OF INTERNATIONAL BUSINESS NETWORKS • RESULT OF TWO DIFFERENT TRENDS • DEVELOPMENT OF EXTENSIVE RELATIONSHIPS BETWEEN BUSINESS PARTNERS • BREAKING UP OF INTEGRATED INTERNATIONAL COMPANIES

  27. NETWORKS – EFFECTS • NEGATIVE: MANIPULATIVE, NON-DEMOCRATIC, POLITICAL (SERVING OWN INTERESTS), DIFFICULT TO SEE THROUGH • POSITIVE: CREATE OPPORTUNITIES FOR CO-EVOLUTION WITH EFFECTS ON BOTH EFFICIENCY AND INNOVATIONS

  28. A NETWORK CASE • NETWORKS ARE COMPLEX AND DEVELOPMENT MULTIDIMENSIONAL • A VERY SIMPLE PRODUCT (BARALDI 2003) • IF IMPORTANT NETWORK EFFECTS • MORE COMPLEX PRODUCTS CAN BE EXPECTED TO INCLUDE EVEN MORE OF SUCH EFFECTS

  29. The Lack table

  30. IKEA (in 2003) IKEA: 65,000 people >550 directly controlled business units 180 retail outlets (30 countries), 230 million visitors/year 25 Distribution Centres 40 Purchase Offices (in 33 countries) 12,000 products, SEK100 billion turnover IKEA catalogue: 110 million copies Strategic heart: “IKEA of Sweden”, 600 people, 12 GBAs (>30 “Istras”) A production-led retailer: Develop & design products for affordability, manufacturing, logistics and last-mile in cooperation with >2,000 direct suppliers, 10,000 (?) indirect ones 1 Enrico Baraldi

  31. ”Lack”: an unusual coffee table • “Lack”: Retail price SEK99 for basic version. CONSTANT for 22 years! • Sales: 2.5 million pieces, SEK300 million • Sole supplier: Swedwood Poland (IKEA-owned) • Technology: “board-on-frame” • Inputs: HDF, honeycomb filling, lacquers, chipboard, veneers • Constantly developed: technology & concept, for sales & costs • Hundreds of projects in close cooperation with key suppliers • Technology then applied to other IKEA products 2 Enrico Baraldi

  32. ”Lack”: an interactive development story >20 B. units involved, mostly outside IKEA GBA2 at IKEA of Sweden: complete responsibility on “Lack” Swedwood BoF-division, Poland (three plants): produce IKEA TSO, Poland : purchase Wicoma, Poland: engineering partner KronoPol, Poland: HDF, chipboard supplier Becker-Acroma and Akzo-Nobel, Sweden: lacquer suppliers Sorbini, Italy, Bürkle, Germany: coating line suppliers IKEA Sales Organizations, Retail Units, Distribution Centres 3 Enrico Baraldi

  33. ”Lack”: complex technology under the surface Board-on-frame: more components and complex construction Coating technology: expensive, delicate and highly adapted Necessary close interaction with technology specialists/suppliers Key facilities affecting Lack (costs, quality etc.): Leg line, 3 bordering lines, veneering line 6 coating lines, 2 print-on-wood lines Warehouses at production plant and distribution centres Transport equipment (damages, costs, time) Retail stores Hard to balance and tune the effects of all facilities, components etc: Impossible to “optimise” or “adapt” everything: 10,000 other Ps Small but continuous steps and experimenting! 4 Enrico Baraldi

  34. GBA2/IOS Krono (PL) TSO Poland HDF Border line Local Ikea Sales Organiz. Warehouse 3 Swedwood plants (PL) Surface line Ikea Stores Lacquer Retail Store "Lack" Becker Acroma Akzo-Nobel DC house -Product -Facility -Business unit -Business relationship Local Ikea Distribution Centres The “resource network” involved in producing and marketing Lack

  35. CONTENT OF BUSINESS RELATIONSHIPS • WHAT DOES A WELL-DEVELOPED BUSINESS RELATIONSHIP LOOK LIKE? • LONG TERM AND BROAD • INFORMAL • ADAPTATIONS • CO-OPERATION BUT ALSO CONFLICTS • BUT ALSO “BURDEN OF RELATIONSHIPS”

  36. CONTENT OF BUSINESS RELATIONSHIPS (CONT.) • DEVELOPMENT – CO-EVOLUTION OF THE TWO PARTIES • TECHNICAL CONNECTIONS • SOCIAL BONDS • KNOWLEDGE – LEARNING, TEACHING, JOINT KNOWLEDGE • BUT THEY ARE NOT ISOLATED DYADS!

  37. EFFICIENCY IN NETWORKS • CONNECTED RELATIONSHIPS AS A MEAN TO LINK INTERDEPENDENT ACTIVITIES • PRODUCTION ACTIVITIES • LOGISTIC ACTIVITIES (TRANSPORTATION AND HANDLING) • ADMINISTRATIVE ACTIVITIES • ECONOMIZING ON EXISTING AND CREATED INTERDEPENDENCIES

  38. EFFECTIVENESS IN NETWORKS • CONNECTED RELATIONSHIPS AS A MEANS TO TIE RESOURCES • PHYSICAL RESOURCES SUCH AS FACILITIES OR PRODUCTS • ORGANIZATIONAL RESOURCES SUCH AS KNOWLEDGE AND CAPABILITIES • SUCCESSIVELY CHANGING AND DEVELOPING THE EMERGING ECONOMIC STRUCTURE

  39. STRUCTURE AND PROCESS Defined by product. Anonymous members Atomistic Heterogeneity inside units Competitive Competition/independent companies Vendors and customers separate Stable (except counterparts) Change from external sources. Product life cycles within market STRUCTURE AND PROCESS Defined by threads, nodes. Individually identifiable members Particular Heterogeneity also between units Conflictful and cooperative Relationships/ inter-dependent companies Multiple/unclear roles Changing (except in counterparts) Different trends and changes All mediated through relationships MARKET AND ACTION: NETWORK AND INTERACTION

  40. ACTIONS ACTIONS OF SINGLE ACTORS COMMON MODES OF BEHAVIOUR ACTIONS A RESULT OF INDIVIDUAL STRATEGY HOMOGENEOUS PRODUCTS FOR MULTIPLE CUSTOMERS SINGLE SUPPLIER CONTROLS MARKETING MIX DISTRIBUTION MANAGED BY PRODUCER MARKET IS DEMAND DRIVEN DIFFERENT ACTIVITIES FOR SUPPLIERS AND CUSTOMERS INTERACTIONS INTERPLAY BETWEEN ACTORS. INDIVIDUAL MODES OF BEHAVIOUR INTERACTIONS A RESULT OF HOW COMPANIES RELATE HETEROGENEOUS OFFERINGS FOR INDIVIDUAL CUSTOMERS MULTIPLE COMPANIES INVOLVED IN OFFERINGS. COORDINATION OF OFFERING ABSENT /MANAGED ANYONE NETWORK IS PROBLEM DRIVEN ALL COMPANIES ENGAGED IN NETWORKING MARKET AND ACTION: NETWORK AND INTERACTION

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