In recent years the concept of networks in business has slipped towards seeking work-enhancing contacts, even employment, through meeting people at events over a glass of wine.
By comparison, my University PhD was based on the approach of the Industrial Marketing and Purchasing Group (IMP), a large worldwide group of marketing academics who looked at business networks, an area that has now been largely consumed as one major foundation of the framework of Service Dominant Logic.
IMP thinking began some decades ago by looking at two-party buyer-seller relations but soon found this had limited value if other companies such as competitors or innovative businesses with new technologies were ignored. A company exists as an “actor” within a network that keeps changing dynamically. It soon became clear to the IMP Group that pretending that, as the head of a business, you can somehow “create” or “control” your network was a fatal misconception.
In a rather elegant recent promotion, PrimeAsia Leather explains some of this: “Our supply chain is a story of people and circularity. An origin story that connects families, land and industry into a never-ending daisy chain. Creating traditions and legacies to carry on for all generations that come after. At the intersection of new and old is taking care of what’s important and valuing longevity of the things that connect us.”
PrimeAsia has had an interesting evolution from Prime Tanning, a leading U.S. tanner before the most dramatic global reorganisation upended the entire leather industry. The company is now operated from Taiwan with its tanneries in China and Vietnam and a major office loyal to its historic origins in New England. Yet it remains astonishing how many of its early linkages remain intact – customers and suppliers who have themselves developed and moved geographically and structurally to the new world scene.
The network is still all about leather but, at every corner, it has transformed so it has required very skilled management to somehow keep Prime, now PrimeAsia, in a strong position within it. Sceptics within the industry might discuss this in terms of the failure of a U.S. business to maintain its dominance, rather I see an appropriate move to use network resources through collaboration to follow their customers to new geographies and sensible moves to fit changing global realities.
Networks have a role in innovation
It is increasingly recognised that overlaps in networks also offer opportunities for innovation, as I discovered when doing my PhD. The Schultz patents and commercial development of chrome tanning in the U.S. brought skills from the German dyestuff industry together with a creative Gloversville tanner recently acquired by a leather trader in Liverpool in the UK who was keenly supportive of searching for new ideas throughout his life.
Such collaborations have been increasingly important over recent decades from new leathers and even machines developed with a large element of mutual interaction between two or more actors.
Network understanding supports strategic analysis
In the current turbulent environment, we also need to recognise that external shocks from the likes of currency and material shortages reach the business after travelling through the network, and it is by giving consideration to how a strong dollar, for example, will impact different areas of the network, rather than only considering the buying and selling costs for your own unit, that can better prepare you for unexpected consequences.
This has been a big issue over the last two years with leather chemicals, which have been impacted by supply and price volatility from transportation issues, Covid closures, high energy costs shuttering some plants such as ammonia production where carbon dioxide is an important by-product and of course the Russian invasion of Ukraine.
An unpredictable world
Increasing global polarisation and unpredictable politics have also pushed geopolitics into a higher-level consideration. Countries such as Thailand and Vietnam are moving in some ways closer to Russia, wanting their wheat, tourists and oil to keep inflation down and boost their economies, so leather industry tanners and brands in such places will have to watch closely as the U.S. and China further separate their economies and Russia looks to find ways to escape from sanctions.
India is another country in a balancing act as it relies on Russian military equipment while it worries about a disputed 3,500 km border with China. There is also a thought that Russia will put a gas line through the Caspian Sea to Iran and then on to supply India; something the U.S. and the EU would be very uncomfortable with. Mostly these issues do not impact tanneries, but these are unpredictable times.
So, forget about the “networking” cocktail parties and look seriously at the actual business network you are in. Look wide and deep before setting any boundaries or horizons. It is increasingly the far-off development that can reverberate through a network and create problems for you.