The Network Is The Business: Part 2

One of our Guest Webloggers, Vinnie Mirchandani, referenced an article from The Washington Post about Why U.S. Business Is Winning, by Sebastian Mallaby. The whole article is worth reading, and I especially liked this paragraph, talking about the secret sauce that has made so many American businesses the best in class:

The best guess about the "X factor" is that America's business culture is peculiarly well-suited to contemporary challenges. American business is not especially good at coaxing productivity out of factory workers: The era when this was all-important was the heyday of Germany and Japan. But American business excels at managing service workers and knowledge workers: at equipping these people with technology, empowering them with the right level of independence and paying for performance. So the era of decentralized "network" businesses is the American era.

I have written before about the ascendancy of the network business organization model. The network business, back in my MBA days was a footnote in the back of the text about alternative business models. The emergence of the Internet as the backbone of commerce has helped to make this model really take off in the past several years. The result has been a dramatic lowering of costs to bring a new business into being. The real currency today is not cash but the skill set and know-how to bring a business to life as part of the larger network. These are skills for which Americans seem very well adapted.

Software as a Service, SaaS, or on-demand computing as some prefer, has a special place in the new network business economy because it has a native Internet presence. As a result SaaS enables the network business technologically in a way that on-premise software cannot. On-premise was fine in the era of single factories banging out product for a few main customers. But in the network economy the key is many customers in a well-defined market niche. The Internet makes this possible. SaaS makes it happen.