Virtual Integration Part I

A new definition of team work and a pathway to new opportunities.

In Michael Hammer’s authoritative work – The Agenda: What Every Business Must Do to Dominate the Decade – he puts forth the concept of Virtual Integration. He suggests that for a company to succeed it must embrace his “radical” vision of virtual integration which includes doing the following:

1. See your business not as a self-contained company, but as part of an extended enterprise of companies that work together to create customer value.

2. Define your company in terms of the processes you perform, not the products or services you create.

3. Identify and strengthen the key processes at which you excel.

4. Outsource everything else to someone better equipped to do it.

5. Learn to work closely with others, not just on your own.

6. Be prepared to rethink your company’s identity and strategy in fundamental ways.

Now, in the spring of 2010, the way we strive to outsource non-core processes is a standard practice. We run our companies around our core competencies and off-load the rest in order to grow more quickly and profitably. When we see an opportunity to offer new, complementary and innovative services to our customers, we form a “strategic partnership” so that our customers can access these new services. This enables our customer to receive more value, while maintaining a relationship with a team of people that is very familiar with their business needs.

Virtual Integration also enables our team to grow and learn from others. As Keith MacFarland states in his book The Breakthrough Company :

Breakthrough companies seek to integrate new tools, processes, and ideas to help them better manage the growing complexity of their worlds, without, at the same time, losing the firm’s unique aspects that inspire people to give their best efforts.

We are always looking to prepare for the future, anticipate where our industry is going and how we can gain a competitive edge against our competitors. Most organizations look to a “product” or specific “tool” to help them succeed in their future endeavors. And, traditional planning processes assume we can predict the future. Neither of these premises hold true in today’s economy.

What companies that want to succeed must do today is to create a more “agile” organization that is responsive to customer needs and adaptable to market changes.