The Extended Enterprise

The concept of an extended enterprise represents a broadening of our view of the firm. Rather than contained within the bricks and mortar of a physical business, we think of our business of both the thing we represent on an organizations chart and which exists within the four walls of our business but to include our partners and connections that also make up what our business really is.

Wikipedia says it's a loosely coupled, self-organizing network of firms that combine their economic output to provide products and services to the market. I think it is more than that--it includes the connections that tie it to others.

Thus, Starbucks isn't just the coffee shop, it's the coffee shop plus all the coffee drinkers who buy the coffee, the employees involved in selling the coffee, the growers who supply the beans, and so on and so on.

That's a lot.

We need to think in broader terms because thinking that way gives us more ideas about how we can grow and thrive in whatever market we are obliged to compete in.

Entrepreneurship is the lifeblood of my professional activities. For my books, go to amazon.com and plug in my name and you'll come up with both mysteries, The Case of the Kearney Music School Murders and No Stop on Red. Neither is ready yet for the Kindle.

Michael Gerber's Franchise Prototype Model Rule to Win #1: Add Consistent Value

Gerber, p. 99, says:

1. The model will provide consistent value to your customers, employees, suppliers, and lenders, beyond what the expect.

I see at least two implications of this. First, with regard to customers, it's not clear what a customer is anymore. In the bad old days, you developed a product, pushed it out there, and people bought it (or not). Marketing was price, product, promotion, and the other "P" I can't remember right now.

Your business is really part of an extended enterprise which includes those other people and organizations Gerber includes in his list above. And one way you add value to your product is to include all these customers in the design of your product. Working together you develop "applications" which have added value and you can then charge for.

These days, people are only interested in paying for value. So you have to add value to your product if you're going to get people to pay for it. The process of getting paid for added value we call "monetizing," as in "Sounds like a great idea, but how are you going to monetize it?" This is particularly a problem with new, web-based businesses. You see all these businesses going under? I suspect a lot of them don't have a clue about this.

Second, you have to pay attention to the other people in your extended enterprise. Businesses aren't hierarchical, command-and-control type organizations. Well, many still are and many are in trouble. They're flatter, more interconnected, with more surface area. You have to add value for all of those folks if you're business is going to be all that it can be.

When Gerber wrote this, he didn't have on his radar screen all the social media and Internet tools we have today. But his words still ring as true as ever. That's because business hasn't really changed at all. Adding value to relationships is there today just as it was when LL Bean founded his company almost 100 years ago.

What do you think of this? I'd like to know. Post comment

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com

Etymology of "Entrepreneur"

From Wikipedia, the free, on-line encyclopedia, we have this:

The word "entrepreneur" is a loanword from French. In French the verb "entreprendre" means "to undertake", with "entre" coming from the Latin word meaning "between", and "prendre" meaning "to take". In French a person who performs a verb, has the ending of the verb changed to "eur", comparable to the "er" ending in English. "Unternehmer" (lit. "undertaker" in the literal sense of the word) is the high German equivalent and curiously, "Unternehmungs Forschung" is the German equivalent of Operations Research although the Anglo-Saxon model of the firm is fairly antithetical to the notion of management as a science.

Enterprise is similar to and has roots in, the French word "entreprise", which is the past participle of "entreprendre". Entrepreneuse is simply the French feminine counterpart of "entrepreneur".

Leave it to the French to have a feminine suffix. :-)

Anyway, Read the entire entry and follow its links.

Are you interested in words? I am. So, if you have something substantive to add, post a comment.

Entrepreneurship On Lineis my entrepreneurship course. The ideas in it supply the life's blood of my professional activities: teaching, writing, and real estate. For entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for entrepreneurial writing to www.kearneymusicschoolmurders.blogspot/com.