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Networked Business Defined

In my recently published research agenda, one of the topics that I included was networked business. I gave a brief definition of the term in that post, but realized that it would be useful to go a bit deeper. My goal is to make sure that Gigaom Research clients and followers would have a solid, base understanding of the term whenever I use it in the future.

What is ‘networked business’? Much academic work has been done to define this term in the last two decades. However, rather than forge a consensus definition from multiple opinions, I decided to build my own in 2012, based on the dictionary definition of each component of the term.

However, I quickly found that there is not a single definition for each word. Every dictionary that I referenced offered a slightly different, nuanced version of what the words ‘network’ and ‘business’ mean. In the end, I decided to work with definitions from Snappy Words, a free online visual dictionary. Snappy Words consistently offers thoughtful, refreshing definitions that go beyond the ordinary ones proposed in more traditional dictionaries. Here are the Snappy Words definitions I chose to start from:

network (n.) – an interconnected system of things or people

business (n.) – a commercial or industrial enterprise and the people who constitute it

The Snappy Words meaning of ‘business’ cited above is a good example of how their definitions are different. Most traditional dictionaries do not reference ‘people’ in their definitions of ‘business’. The central point of the Social Business movement was (and is) that people matter quite a lot in business. As is often the case, Snappy Words has done the best job of incorporating recent thought into their definitions.

Back to the task of creating a definition for ‘networked business’ from those for ‘network’ and ‘business’. Combining the two definitions was not as straight-forward as you might think. The complicating factor is which part of speech should emphasized, the adverb (‘networked’) or the object (‘business’). If the object is highlighted, the resulting definition of ‘networked business’ best applies to a single organization. If the adverb (or state) is deemed most important, then the definition most accurately describes an ecosystem

So we really need two definitions for ‘networked business’. Here are the ones that I have proposed:

networked business (n.) –  a company whose value-producing assets are connected to each other and with those of other organizations

networked business (a.) –  a state in which an interconnected system of organizations and their value-producing assets are working toward one or more common objectives

The first definition is about an individual business and the connected state it is in, internally and externally. A networked business views its organizational units as both independent silos and connected network nodes. It treats its people like individuals and co-dependent employees. The networked business sees itself as a separate entity, as well as a partner with other organizations.

The second definition speaks to the larger concept of networked business. It describes the collaborative ecosystem in which individual networked businesses work together to create and capture value. It is a philosophical objective and, if successfully achieved, an operational reality of how business is done in the early 21st century.

These definitions have held up well in the three years since they were written and first published. That said, any definition should be subject to change, as the thing that it is attempting to define morphs over time.

What do you think about these two definitions of ‘networked business’? What do you specifically like or dislike? Are there things that would you add? Please leave comments and suggestions below. Thanks!