Chapter 7
Boundaries of the solution space
Who hires the services?
There are millions of people working in the service industries. By definition, they are all earning money by helping others to make money, so, their earning are dependent upon the needs, ideas and initiatives of others. These others might be described as:
1) Other service industry individuals or companies who need specialist niche services to augment their own range of services.
2) Managers in companies who are outsourcing services
3) Entrepreneurs who are creating speculative business enterprises
In the Industrial Age economy, entrepreneurial contributions were confined mostly to the early phases of the life cycle of a business. As soon as a business became established, it would be restructured and formalised to ensure the activities of the business would be carried out efficiently, reliably and consistently. This transition normally involved replacing the entrepreneurial functions with managerial functions. The call for services is then switched from being under the control of entrepreneurs to being under the control of managers. This situation is illustrated in figure 7.6.
Figure 7.6
Industrial Age business usually matured from an entrepreneurial stage to a managed stage. This changed the nature of the service requirements
In the e-business environment of the Information Age, there are constant technological changes and developments. This continually opens up new opportunities for competitive initiatives. In such an environment, it is not reasonable to expect a business to reach a state of stable maturity where the running of a business can be handed over to trained managers. Instead, a business has to be organised to be highly adaptive to cope with unpredictable change. This situation is illustrated in figure 7.7.
Figure 7.7
In the volatile environment of e-business, there is continuous change. This prevents businesses settling down to a stable state of maturity. Instead, they have to become adaptable
The need for a business to become flexible and adaptive requires that a business becomes predominantly concerned with change and uncertainty. This will need entrepreneurial rather than management thinking: making it impossible to replace entrepreneurial functions with managerial functions.
Managers and entrepreneurs have to have completely different mind sets; these are not compatible. Managers will try to eliminate change as much as possible, while entrepreneurs relish change and use it to gain advantage. This difference in attitudes will greatly effect the way each will make use of services
Managers will be looking for methods, procedures and controls, to provide stability and consistency. Entrepreneurs will see these as handicapping the ability of the business to adapt and respond to new situations.
Managers will want to formalise all arrangements with services. They'll want specifications and binding contracts with long term commitments. Entrepreneurs on the other hand will prefer very loose arrangements with built in flexibility and no long term commitments.
Managers will prefer to keep service arrangements to a minimum, bringing as much work in house as possible where they can exercise more control. Entrepreneurs will prefer to use as many outsourced services as possible, so that the core business has a minimum of overheads and does not get locked into redundant or out of date methods or technology.
It is this difference, between the strategy of a manager and the strategy of an entrepreneur, that epitomises the difference between Industrial Age and Information Age businesses. This will be critically important when it comes to devising a suitable e-business strategy