Complexity and Network Thinking - Coursework Example

MРLЕХITY АND NЕTWОRK THINKING Name: College: Course: Tutor: Date: Соmрlехity аnd nеtwоrk thinking Executive summary Network thinking is becoming common in professions and fields of practice that bring different disciplines together. The complexity in the contemporary business environment demands that a collaborative approach that leverages the diversity of individuals involved be adopted to enhance the survivability and sustainability of business organizations and the professional therein. Marketing practices can benefit from network thinking, which brings together diverse capabilities of the marketing network members, while employing new information and communication technologies to create marketing networks. Indeed, marketing networks emphasize on relationship marketing, which is the paradigm shift in marketing needed to capture and retain markets in a highly competitive and volatile business environment. Indeed, relationship marketing ensures that there is constant and continuous interaction between the organizations and their customers and between the customers themselves. Relationship marketing leverages the word-of-mouth as a basis of natural networks among individuals in combination with social media technologies to create marketing networks that overcome geographical and cultural barriers. Introduction Advancements in computer technologies have enabled the deeper understanding of complex systems and the networks therein. Indeed, understanding of the complex systems in society and nature has enabled the development of systems for special purposes of interest and the leveraging of the complex systems knowledge to yield specific intensions such as marketing of products and services in a highly competitive environment. In fact, modern marketing approaches have benefited much from the advent and advancements of information and communication technologies, thus making them different from the traditional approaches to marketing. Nonetheless, contemporary marketing practices that are effective and efficient are able to integrate traditional approaches to marketing such as word-of-mouth for instance, with social media platforms, in interconnections that are based on network thinking in complex human systems (Storey 2007). The ensuing discussion delves in the application of concepts in complex systems and network thinking to explain modern marketing approaches such as relationship marketing and internet marketing (Palmer, Simmons & Mason 2014). This topic is of interest because while the world has increasingly become competitive, those with the competitive edge have been able to harness the network thinking in marketing their offerings and positioning themselves in the market by developing intimate relationships with those they wish to impress their offering upon, with long-lasting consequences. Indeed, technological platforms such as the internet, social media and mobile technologies have taken advantage of the networking opportunities to enable marketers to improve the effectiveness of the traditional marketing approaches such as word-of-mouth, by leveraging on networking capability of the emergent technologies (Fritch &Cromwell 2001). This discussion will begin by describing the common understanding regarding complex systems and network thinking, and the underlying theoretical frameworks as well. Thereafter, the discussion will trace the transformation and evolution of marketing practices and the emergence of relationship marketing and internet marketing among other networking related marketing practices (Gonzalez, Claro & Palmatier 2014). The nexus between modern marketing approaches and network thinking shall be discussed in the context of humans as a complex system. After that, the future of marketing practice that employs networking thinking as the understanding of complex system advances shall be projected. Complex systems Complex systems are a large collection of interconnected components that have no central control yet they exhibit complex behavior (Mitchell 2006). The components in complex systems are relatively simple when compared to the collective behavior exhibited therein. As such, the simplicity of the individual components emanates from the seemingly insignificant functional role that each component plays, which when considered collectively results into complex behavior characterized by its unpredictability. However, complex behavior emerges from the simple components of the system whose individual behaviors have been aggregated in a nonlinear fashion. Indeed, Mitchell (2006) observes that systems exhibit complex behavior that is characterized by the patterns therein, the adaptability of the system based on collective behavioral patterns and the information processing abilities that such systems possess, which enable the complex system to evolve and succeed in competitive environments. Self-organization is a fundamental characteristic of complex systems because it expounds on the ability of such systems to reorganize in new ways in order to fit into new situations and environments, and meet challenges in new ways while solving emergent problems as they occur (Hopkinson & Blois 2014). Therefore, the ability to self-organize ensures that complex systems are able to evolve to enhance their viability and survivability in new environments. In addition, complex systems are orderly yet dynamic. Specifically, they are premised on the balance between order by being static and inert, and disorder due to chaos that is haphazard and random. From another perspective, complex systems exhibit macroscopic order alongside microscopic fluctuations while reconciling holism with reductionism as espoused in the complex systems theory (Condorelli 2016). The complexity in such systems is premised in the detection of rules in uncertainty, surprise, and discontinuity. As such, the paradigm of complexity in systems enables to solving of new and emerging problems in creative and intelligent approaches that can be tailored to every problem. Networks Networks are collections of nodes and links connecting the nodes together (Håkansson & Ford 2002). Indeed, networks formed by human being can be better understood by knowledge obtained from networks in systems such as the brain or ant colonies for instance. Specifically, the brain is made up of numerous neurons that make up the nodes and synapses that form the links in between, thus making the brain a huge network. In addition, the ant colonies are made up of individual ants that form the nodes and their palpable vibrations that form the informational links between them. Various network models have been developed. One model by Watts and Barabasi categorized networks into three groups, namely random networks, small-world networks and scale-free networks (Strogatz 2001; Watts 2004). The different networks differ in the arrangement of their neighborhoods and in the degree of distribution of nodes within the networks. Other characteristics that define the different networks are the average path length between nodes and the clustering coefficient. Networks thrive because of the economies of specialization, which enable units with specialty in different aspects of a system to become interlinked and interdependent, while improving efficiencies therein. Aggregations economies are characteristic of networks because they facilitate the gaining of efficiencies such as economies of scale, economies of scope, and administrative efficiencies, which enable the undertaking of bulk transactions and the maintenance of long term relationships while aggregating risks as well (Wilkinson 2001). Networks, in their organic nature, can spur innovation, particularly when they have open structures and dynamics. In fact, network-centric innovation leverages external networks and communities for amplifying and enhancing the speed and quality of innovation outcomes (Sawhney & Nambisan 2007). Innovative networks share fundamental principles such as an architecture of participation, cumulative knowledge relation in groups a shared worldview, and shared goals and objectives. Models of network-centric innovation include the orchestra model, the creative bazaar model, the jam central model and the modification station model, with each of them having been visibly applied in outstanding projects (Sawhney & Nambisan 2007). For instance, the orchestra model is employed by Boeing during plane manufacture and assembly in which partners that are scattered globally are brought together by trust and unity of purpose to create sections of an aircraft entirely from the conception of designs to the final production of the part. The creative bazaar model leverages the availability of technology in various stages of development and maturity to obtain the product or service that suits its strategy. Indeed, Procter & Gamble engages patent brokers and idea scouts to obtain ideas that can act as intermediaries and facilitators of their innovation process. The jam central model is commonly employed by the biomedical research community, which uses emergent innovation spaces and diffused leadership to facilitate innovation. Finally, the modification station model allows for diffused leadership within the innovation network with a prominent measure of control over the innovation space. The development of internet content and computer games usually employ this model (Sawhney & Nambisan 2007). Despite the presence of these models, networks continue to be difficult to understand due to their structural complexity spurred by network evolution and the presence of connection diversity (Strogatz 2001). In addition, dynamic complexity of the node systems, node diversity and the wide variety of interrelated complications hinder the understanding of networks (Strogatz 2001). Network thinking Network thinking is premised on the understanding of networks as linkages that are formed between a collection of individual human beings, which enables them to interact and share information and other experiences and knowledge (Mitchell 2006). It also involves the viewing of organizations as networks of entities that are interrelated by their pursuit of given goals rather than discrete disconnected components with each seeking to achieve specific and unique objectives. As such, network thinking promotes the perception of interrelatedness of systems in a bid to thrive and survive in an environment that is changing rapidly due to enhanced flow of information and knowledge, economic interdependence and enhanced competitiveness. Such thinking is cognizant of the advantages that being networked portends to individuals and organizations, which include the creation of new opportunities, elimination of barriers and promotion of efficiency. Network thinking changes the perceptions regarding hierarchical relationships in organizations and between communities of professional practice (Condorelli 2016). Indeed, according to Condorelli (2016), value network analysis is one aspect of network thinking in which professionals in different fields of practice can be mapped as networks, thus presenting new ways of perceiving their relationships. Therefore, in network thinking, focus is on adaptability rather than control, and organizational charts are replaced with network maps. In addition, network thinking emphasizes emergence instead of predictability through the encouraging of diversity in conversations to avoid insularity. Such diversity promotes information sharing, co-creation and continuous learning, which makes organizations more resilient to challenges in the business environment. Diversity also spurs innovation thus making organizations and groups of people approach situations and problems in new ways. From this premise, network thinking values contribution of the network members rather than their credentials. This enables the networking community to approach complex problems with clear and simple solutions after evaluating all the solutions presented from the diverse members. The networked society The structures of societies have transformed tremendously since the advent of industrialization and the rapid development in information and communication technologies. Indeed, individuals in societies have become connected in their production and consumption activities, with the flow of knowledge, ideas, human resources, financial resources, and goods and services having been transformed as the world embraced new technologies and became globalized. As such, the map of the world has transformed from being characterized by physical and geographical boundaries to becoming connected in webs that are based on various relationships between the individuals and entities therein (Slaughter 2016). Modern economies emerged in the 1990s when information and communication technologies became ubiquitous and became the biggest driver of the new economic structures (Kirkman, Osorio & Sachs 2002). Therefore, according to Kirkman, Osorio & Sachs (2002), the real borders of the contemporary world are no longer between countries and nations but rather between the free and the fettered, the powerful and the powerless, and the privileged and the humiliated. The new economies that have emerged are characterized by three features, which are being informational, being global and being networked (Castells 2000). First, new economies are informational because they have capacity to knowledge and information that is pertinent in determining the productivity and competitiveness of various economic units that exist, be they countries, regions and companies as well. Secondly, the new economies are global because of the capacity to operate in real-time on a planetary scale. This means that new economies are able to transcend physical barriers and thus operate in such large realms that are unprecedented. Third, the new economies are networked because of the enhanced connectivity and flexibility that characterize their activities. Specifically, networked economies consist of numerous individual entities, whose interactions change and shift depending on the projects and activities at hand. Therefore, individual entities continuously change partnerships and alliances depending on the purpose of interactions, the time when such interaction occurs, the process being undertaken and the product of interest (Castells 2000). Networking is increasingly being used in describing organizations that have been able to leverage their internal and external capabilities to make them adaptable and flexible in turbulent and competitive environments. Networked organizations are those that recognize the value of their stakeholders and the relations formed within and outside the organization (Hillebrand, Driessen & Koll 2015). The institutional theory explains how firms adopt certain structures, behaviors, and processes that focus on satisfying stakeholders (Yi 2013). According to this theory, organizations operate within social frameworks governed by norms and values while their economic behavior is constrained by information, income, technology, and social constructs. According to Van Alstyne (1997), networked organizations can be described from a behavioral perspective whereby organizations for patterns of social relation among different people, groups of people, positions in organizations and between different organizations as well. From this perspective, networked organizations are characterized by their structures, processes and purposes, which combine assets that are intangible and co-specialized within an environment of shared control. In all, organizations seek to be networked to acquire legitimacy, which would guarantee the survival and success of the organization (Yi 2013). Marketing and network thinking Marketing is the process of or activities that help create, communicate, deliver and exchange offerings that have value to targeted customers, partners and the society as a whole. Marketing has evolved much since the advent of information and communication technologies, which have brought to the fore the importance of relationships rather that one off transactions with customers. Indeed, the conceptualization of networks has found valuable utility in marketing strategies in the current environment fraught with fierce competition and highly discerning customers. In fact, in the marketing circles, focus is shifting from media management to network management in which relationships has gained precedence over the tools employed during marketing initiatives (Ryan & Fahy 2012). Business networks as based on relationships as valuable resources that are possessed by businesses. Business relations provide both direct and indirect benefits to organizations including direct access to knowledge and markets and indirect access to resources and competencies (Ritter, Wilkinson & Johnston 2004). Marketing networks are forms of business networks and therefore can be explained using the principles of network organization. The different types of organizational networks include vertical networks, intermarket networks, opportunity networks, small firm networks, and internal networks (Achrol & Gundlach 2014). Characteristic of these networks is that they are anchored on trustworthiness among the members, they are not constrained by physical boundaries and thus have a global reach, and their management and control is decentralized dispersed rather than being centralized. Marketing networks are important because they deliver competitive advantage to the members therein (Neves, Cônsoli & Castro 2010). The competitive advantage accrued emanates from functional specialization, information processing capabilities, knowledge creation and innovation, continuous adaptation, flexible interdependence, shared governance and distributed decision making (Achrol & Gundlach 2014). Relationship marketing Marketers are witnessing increasing collaboration between consumers who are empowered and informed, courtesy of advancements in information and communication technologies. As such, consumers are increasingly surpassing barriers imposed by geographical borders, distance and time to communicate with each other seamlessly in different formats, including text, images and videos as well. This has turned the marketplace into a global village, which is no longer confined by physical boundaries (Potra 2016). Management practices have changed over time, which has influenced marketing approaches as well. Specifically, players in the market place interacted at arm’s length, in relationships characterized by tension and conflict. However, this has given way to engagement in long-term relationships that enable producers to interact with other producers and to connect with their customers directly, sometimes surpassing intermediaries such as distributors in the process (Young, Wilkinson & Smith 2015). The results of this transformation is the debut of relationship marketing, which has enabled the customization of engagements with consumers to build long-term relationships that are mutually beneficial to the parties involved (Gadde 2016). This is in recognition that markets are increasingly becoming segmented along customer categories that have distinct preferences that can be used to avail differentiate offerings. In addition, firms have recognized the benefits to be accrued from long-term cooperation and coordination among firms that make up the distribution channels (Achrol & Gundlach 2014). Marketers have always recognized the immense power of word-of-mouth, which is a natural phenomenon, in influencing many buying decisions of customers (Kozinets et al. 2010). With the advent of information and communication technologies, and particularly social media platforms, traditional word-of-mouth has transformed into technology enabled word-of-mouth marketing. The organic interconsumer influence model, the linear marketer influence model and the network coproduction models are theoretical constructs that can be used to explain the development and evolution of word-of-mouth marketing. The organic interconsumer influence model explains the organic nature of the word-of-mouth approach, which is characterized by interaction between consumers without the direct influence of the marketer, thus making this approach self-propelling. In addition, the linear marketer influence model supposes that opinion leaders can be targeted by marketers to initiate conversations and flow of information regarding particular products and services of interest that ingrain desired opinions and spur the making of desired purchase decisions. In this case, the marketer recruits and influences opinion leaders through targeted indirect approaches such as promotions and advertisements. The network coproduction model explains word-of-mouth is initiated and perpetuated by seeding and communication programs that target one-to-one interactions that are facilitated by the internet. This approach allows marketers to not only influence the messages transmitted between consumers but also allows the consumers to become co-creators of messages with marketing utility. Conclusion Marketing is a business field that has benefited much from the concepts of networks, particularly in this era of fierce competition and globalization of the marketplace. Currently, marketing emphasis has shifted from simply pushing sales products and services to clients, to focusing on the development of long-term relationships with customers that would guarantee repeat purchases, increased customer loyalty and referrals by existing customers. The major advancements in information and communication technologies have been instrumental in the development of relationship marketing, which employs network thinking in marketing activities. Specifically, the and specifically social media platforms have introduce a customer-centric approach to marketing whereby the natural disposition of keeping in tough among groups of people is leveraged to form online marketing networks, where marketing power is shared between the business owners and their customers. Indeed, the advantage with social media marketing as a form of relationship marketing is that it provides and interactive platform on which firms and their customers, staff within the firms, and customers can interact often and form relationships alongside. Further, it enables customers to be the authors of messages with marketing utility, particularly when they undertake product and service reviews and recommend products and services to their family and friends. Indeed, the current forms of economy are integrated due to the power of technology, which has broken down any physical barriers, shortened the time of interactions and enhanced real-time communication. In addition, the contemporary society has become so networked through the internet such that marketing activities have had to take the cue and leverage on the marketing potential that these technologies provide. 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