How can you use a network organizational structure to improve your business?

2 Why use a network organizational structure?

A network organizational structure can help you improve your business in several ways. For example, by outsourcing non-essential or non-strategic functions or tasks, you can reduce costs and risks while sharing responsibilities with partners who can provide economies of scale and scope. Additionally, a network of partners can offer flexibility and responsiveness to changing market conditions, customer demands, or technological innovations. Furthermore, collaborating with diverse and talented partners can enhance innovation and learning in your organization by accessing new ideas, knowledge, skills, or technologies. You can also benefit from the best practices, experiences, or feedback of your partners to improve your own performance and quality.

3 How to use a network organizational structure?

To use a network organizational structure effectively, you need to identify your core competencies and strategic goals, select partners carefully, establish clear and mutual agreements, and maintain trust and communication. Knowing what sets your organization apart from others and what you want to achieve will guide your decisions on what functions to outsource. When selecting partners, consider their reputation, reliability, quality, cost, and how well they communicate. Establishing agreements that define the scope, terms, expectations, and responsibilities of each partner is essential. Lastly, build and maintain trust with your partners by sharing goals, plans, feedback, and concerns. Recognize their contributions and celebrate successes together.

5 What are the challenges of a network organizational structure?

A network organizational structure can also pose some challenges, such as loss of control and coordination due to outsourcing functions or tasks to external partners. This may result in delays, errors, or conflicts, as well as different cultures, norms, or standards. Additionally, you may become dependent and vulnerable to your partner's actions, decisions, or performance. Complexity and uncertainty can also arise from managing and maintaining a network of partners that may change over time. You may have to cope with environmental changes, technological disruptions, or regulatory issues that could affect your network and put you at risk for losing competitive advantage, intellectual property, or customer loyalty.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?