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Chapter 3 ■ The transformation perspective

profile of engineering resources and developing the right technologies). Does this focus
represent a recognition of the need to develop learning (the learning organization),
intellectual capital or invisible assets? It is now commonplace to argue that intellectual
capital (i.e. the intangible assets of the organization) comprises renewal and develop-
ment, customer knowledge and loyalty, and process knowledge. They argue that
Skandia, one of Sweden’s leading insurance and financial services organizations, defines
intellectual capital that way. It is interesting to note the similarity of themes looking at
the BPE situation.

Taken together these approaches represent an emerging value-added strategy
to design and manage the new organization.
In the above I have tried to identify the nature of new thinking and practice
which is leading managers to radically rethink organizations. I have looked at
some of the consequences and implications of this work – although for a cri-
tique see Rifkin (1995) for projections regarding the end of work. Finally, in
Chapter 7, when we look at value adding models for organizations, we identify
some practical methodologies used by practitioners as they rethink and recon-
figure their own organizations.
Clearly issues related to cohesion, sociability and mind-set are vitally
important to an understanding of how to manage these new organizational
forms. Thus corporate culture comes to centre-stage (see Goffee and
Jones, 1996).

The network organization

A logical extension of the cluster organization model, the network model adds
partnerships across the boundary raising the fundamental question of where the
boundary of an organization lies. This can be depicted as shown in Figure 3.8,
and one should note that the key aspect of a network organization is that it seeks
to add the pursuit of flexible specialization to the advantages of the cluster organ-

ization (see Barnatt, 1995).
In principle a network can be a combination of a number of organizations,
each of which can take any form. In Europe, Airbus Industrie comprises French,
German, Spanish and British aerospace companies each of which is organized
hierarchically, at least to some significant extent.
Lipniack and Stamps (1994) identify five organizing principles for networks:
1 Unifying purpose: the glue holding it together. Shared ideas, values and goals.
2 Independence: each member should be able to stand on its own while benefit-
ing from being part of the network as a whole.
3 Voluntary links: characterized by multiple links as a means of attracting needed
skills, resources, access to markets, etc.
4 Multiple leaders: networks comprise people, groups, companies, each of which
has something unique to contribute.

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