L. A. Times column, October 12, 1998
Sat, 17 Oct 1998 14:52:45 +1000
Tony Barry wrote:
>I suspect in simpler times when economies were locally based symbiotic
>cooperation was much more prevalent than the competive model which
>globalisation favours. With the net providing better communication and
>making vertical integration more attractive I guess we will see further
>cooperation vertically in markets.
>Are there other industries, other than software, where we can see a central
>component kept out of the market system?
I'm not sure what vertically integrated model Tony has in mind. If it's one
where a company produces, distributes and sells its products, then they're
in from some stiff competition from 'virtual" organisations that are able
to coordinate, but not own, each aspect of the process from production
through to sales and delivery.
Take the following from Ray Lane, Chief Operating Officer and President of
Oracle Corporation,19 November 1996:
"So as we look at the new order, and this new order becoming what I call
we find more and more companies and institutions focusing on their core
What do you do well? Do you market things, do you design things, do you
do you serve things - what do you do well? And everything else is
supportive to that
core competency and if it's supportive you have to call it into question as
you should own it."
"A better example is a company called L.L. Bean. Now I don't know if L.L.
Bean sells in
Australia - have you heard of the company? Wonderful company - provides casual
clothing, outdoor clothing, camping equipment, things like that - yet L.L.
manufacture anything, they don't ship anything, they're purely a marketeer,
provide catalogue marketing, and of course when they have enough customers
they'll be doing that electronically and they can provide an entire value
virtually. So someone else manufactures the products but you think it's
Someone else ships you the products but you think it's L.L. Bean. It is the
quality customer experience you've ever had and you credit it all to L.L.
Bean. Yet they
have a very low cost high service delivery system that depends on others
and they tie
it all together."
Yarralumla ACT + South Durras NSW
"Simplicity is the key to truth."
Bloke in the pub