Hooray for Hollywood.
According to a recent McKinsey report, the next economy will see a significant rise in network organizations—groups of "unbundled" companies cooperating across the value chain to deliver products and services to customers. By owning fewer assets and leveraging the resources of partner companies, these network orchestrators require less capital, return higher revenues per employee, and spread the risks of a volatile market across the network.
The network organization isn't new; a successful model of unbundling has existed for years. It's called Hollywood.
A half-century ago, the major Hollywood studios not only owned the soundstages and backlots necessary for their movies, but also the producers, directors, writers, actors, cinematographers, musicians, PR specialists, and distributors. Some even built theater chains for the exclusive use of their own properties. As the dream machines cranked out hundreds of look-alike movies to feed their growing overhead, movie-making began to slide from craft to commodity. The independents soon learned how to end-run the mega-studios by producing high-quality "little" films and low-budget B-movies.
What happened next? The big studios learned from the small ones, and began unbundling their vertically integrated companies. By switching to a network model, the studios could avail themselves of the best talent for each project, thereby creating unique products and shedding unnecessary overhead. In reversing the trend toward commoditization, they encouraged the growth of an artisan community, not unlike those that grew up around the cathedrals of Europe. Like the cathedral-builders, Hollywood specialists don't see themselves as technicians, but as craftspeople working in a creative network.
Hollywood isn't unique, just more evolved than other industries. In the 1980s, Silicon Valley faced a similar challenge when Japan threatened to walk away with its franchise in microchips, duplicating their features and undercutting prices. Valley companies quickly discovered the value of open collaboration, producing ever-more-advanced systems and components that kept them one step ahead of the copycats.
In the mid-1990s I was privileged to be a member of the superteam that launched Netscape Navigator, along with related products and services. My firm developed the Navigator icon and the retail package, while other firms, including an advertising agency, a web design firm, a PR group, and an exhibit design firm, worked on their own pieces to help launch the product at warp speed. This example of "parallel processing" showed how collaboration can yield not only quality but quickness. Netscape was formed in 1994, went public in 1995, and was absorbed into AOL by 1999. During this short period, it launched more than a dozen products and changed the direction of computing.
Thanks to the Hollywood model, design managers are now learning how to assemble top-notch teams of specialists, inspire them to work together productively—even joyfully—then disband them when the project's over, only to reassemble them in a different configuration for the next project. The lesson hasn't been lost on other industries. Soon every knowledge-based business will adopt some version of the Hollywood model, and, years from now, many will undoubtedly agree with Noel Coward's statement that "work was more fun than fun."