Developing a Company inside a “Kiretsu” Network

Entrepreneurs create value. Or at least that is the idea. Scalability is the key to create this value. This should be done by making clever use of networks, and not by controlling everything yourself. Make use of the best skills of others, focus on your own “differentiating skills and ideas”.

Triangle of value creation
The triangle of value creation identifies the interaction between market/market access, product/technology and money. Having money, a product or technology alone will never be sufficient to create value. In a few cases, only having market access is enough to establish a valuable company. To have market access, networks are distribution relationships are essential.

Outsourcing and suppliers
In a Kiretsu-group there is an understood role and use of networks.
Scale is achieved more cleverly when the firm depends on its network, and when non-core activities are outsourced. Outsourcing makes a firm more flexible. Prerequisite for the sustainability of such a firm is multi-sourcing. This means that the firm always has at least two sources for every supply, to prevent too much dependability. When one supplier cannot deliver a promise, the firm can turn to the second supplier and does not have to say no to its customer. In practice, this gets more difficult the more high-tech a firm becomes. In any case, one of the goals remains to have few employees, those that you really need, and that you outsource all other activities into a network of relationships, preferably with as few single-dependencies as possible.

Cooperate with your Competitors in new markets
Another interesting aspect of making use of networks to create value is co-opetition in the very early phases of innovation. Normally, in established markets, a company has competitors. In new and early markets, there is little or few competition. In new markets, growth and standards are more important than competition. Therefore Co-opetition (cooperating with your competitors can put priority on growth and can reduce development costs. Customers will see commonalities and choice between few competitors, and the market grows faster than when the leaders confuse the new and early markets.

Reference customer
But of course, the customer is the best proof of your offer. Having an early customer is the best mechanism to promote your product or service. And not to forget: early customers can serve as co-developers of the offer to make it more valuable.