Is the new "networked organization" already a thing of the past? We don’t think so. According to recent McKinsey findings reported in this issue’s cover article, "The future of the networked company," collaborative networks of suppliers, distributors, subcontractors, and customers have created far more value than their industry peers over the past half-decade and have held up more robustly in the recent market downturn. The authors—Remo Häcki and Julian Lighton—go on to explain the economic and managerial logic behind establishing networks for the exchange of information about inventory, production, demand, and so forth through common software platforms and protocols.

Such networks stand on the shoulders of two earlier but still prevalent models of organization: simple outsourcing schemes and unbundled corporations. "The false promise of mass customization," by Mani Agrawal, T. V. Kumaresh, and Glenn Mercer, notes that original-equipment manufacturers rely on separate parts and subassembly manufacturers, which "push" products through the supply chain—products that the market can accept or reject but has almost no direct hand in developing.

This is unfortunate, since auto companies are also in the business of managing relationships with customers and dreaming up new products. Because manufacturing, product innovation, and customer care require quite different talents and indeed make conflicting claims on organizations,¹ they would probably be wise to unbundle these activities. In the transportation industry, as described in "First-class returns from transportation," by Bernard Bot, Pierre Girardin, and Moira Goulmy, the three broad areas of responsibility are system management, asset ownership, and the customer interface. Among passenger airlines, specialist sliver companies serving several carriers have already emerged in the areas of aircraft leasing, aircraft maintenance, baggage handling, and catering.

Of course, the ideas on which such forms of organization have been built go back decades. It was more than 30 years ago that Peter Drucker began writing about knowledge workers and their preference for purposefully focused organizations. Twelve years ago, Charles Handy noted the existence of "shamrock organizations," possessing "a core of essential executives and workers supported by outside contractors and part-time help."

The organizations discussed in "The future of the networked company" haven’t structured or restructured themselves solely to meet the specifications of the unbundled corporation. Brought into existence by declining interaction costs, tightly linked supply chains, and Internet-based ordering platforms, these companies have devised a mode of interaction—among themselves, their business partners, and their customers—that promotes, in Gary Hamel’s words, "collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies." Charles Schwab, Cisco Systems, CNET Networks, eBay, E*Trade, Palm, Qualcomm, and other members of the first generation of networked companies have excelled over the past few years and remained standing amid the recent economic turmoil (made worse by the vendor-financing excesses of equipment makers, described in "Caveat vendor," by Kevin Buehler, Lee Scoggins, and Mark Shapiro). Networked companies have leveraged their network partners’ resources and core competencies to earn higher margins with less invested capital than do their industry peers.

What holds networks together? Why did so many form almost simultaneously? The same thing that helped a patchwork of US local railroads become the basis of a continental economy: standards. Once standard-gauge track was extended to the West, by government order during the Civil War, the time it took to cross the United States fell from months to mere days. The standard-gauge track of the present—data standardization—allows information on orders, delivery times, and payments to flow as freely between organizations as it formerly had within them.

In the industrial age, companies were built on the principle, "Do more, and do it cheaper." The means were vast scale and scope as well as rigid internal control. In the information age, the watchwords are "fewer, faster, less"—fewer assets, faster growth, and less activity managed under one roof. These are the features of the networked organization, a business model that may forever change the way companies compete.