14 business network tactics for creating value in business

Networking tactics in business are essential for innovation and creating value. Here’s a guide on how to apply 14 different business network tactics, with practical examples for each.

1. Affiliation

How to Implement: Create an affiliate program where other businesses or individuals can earn a commission for promoting and selling your products. Align with other businesses that can sell your product, earning a commission from sales.
Example: An online software company offers affiliate programs to bloggers and content creators, providing them promotional materials and a share in the sales they generate.

2. Alliances

How to Implement: Identify potential partners with complementary strengths and negotiate a formal alliance to share resources, risks, and revenues. Partner with other companies to share resources and risks while expanding market reach.
Example: A tech startup forms an alliance with a larger company to access their distribution channels, sharing revenue generated from the increased sales. An airline may form an alliance with a car rental company, offering customers a seamless travel experience and shared loyalty benefits.

3. Competition

How to Implement: Partner with a competitor on specific projects where joint efforts can lead to better outcomes than working separately. Join forces with competitors on non-competitive aspects to improve the industry or market segment.
Example: Two competing pharmaceutical companies collaborate on research to develop a new drug, combining their expertise and resources. Two tech companies might collaborate on standardizing charging ports, creating a better user experience and reducing production costs.

4. Complementary Partnering

How to Implement: Partner with companies that offer complementary products or services to your own. Develop joint offerings or bundle products. Pair with businesses that offer complementary products or services to provide a full solution to customers.
Example: A smartphone manufacturer partners with a headphone brand to offer bundled products. A home security system provider partners with a smart home appliance company to offer a comprehensive smart home ecosystem.

5. Consolidation

How to Implement: Identify and acquire companies in similar or complementary markets to consolidate market presence and resources. Strengthen market position by acquiring or merging with other businesses.
Example: A food and beverage company acquires several smaller organic food brands, consolidating its position in the organic market. A large coffee shop chain acquires a smaller specialty tea brand, expanding its offerings and leveraging the tea brand’s unique market position.

6. Coopetition

How to Implement: Identify areas where cooperating with competitors could expand the market or improve technology for all. Collaborate with competitors on specific projects or in specific markets where mutual benefits can be achieved.
Example: Rival tech companies collaborate on developing a new open-source software that benefits the entire industry. Streaming services might collaborate on a shared technology platform while maintaining separate content offerings.

7. Crowdfunding

How to Implement: Use online platforms to gather small investments from a large number of people to fund new projects. Use platforms like Kickstarter or Indiegogo to present your product idea and gather funding from a large number of small investors.
Example: A startup launches a crowdfunding campaign for an innovative smartwatch, raising capital from thousands of backers.

8. Franchising

How to Implement: Develop a business model that can be easily replicated and offer it as a franchise to entrepreneurs. Allow others to pay to operate businesses under your brand and business model.
Example: A successful coffee shop chain offers franchising opportunities, expanding its brand nationwide. Fast-food chains often expand their global footprint by franchising their brand and processes to local business operators.

9. Horizontal Integration

How to Implement: Acquire or merge with companies at the same level in the supply chain to increase production capabilities. Expand your capabilities or market reach by merging with or acquiring companies at the same level of the value chain.
Example: A book publisher acquires another publisher to increase its range of publications and market reach. A smartphone manufacturer might acquire another electronics company to expand its product line to include tablets and laptops.

10. Merger & Acquisition (M&A)

How to Implement: Identify companies that offer strategic advantages in terms of capabilities or market access and negotiate a merger or acquisition. Combine with other businesses to access new markets, capabilities, and assets.
Example: A telecommunications company acquires a smaller competitor to expand its network and customer base. A pharmaceutical company acquires a biotech startup to gain access to innovative drug development technologies.

11. Open Business

How to Implement: Collaborate openly with partners, suppliers, and even customers to co-create value.
Example: A software company collaborates with its users to co-develop new features for its product. A clothing manufacturer might collaborate with suppliers and fashion designers to create a new eco-friendly fabric.

12. Open Innovation

How to Implement: Share your patents or processes with others or incorporate external innovations into your business. Share your IP with others or use external IP to accelerate internal innovation.
Example: A car manufacturer licenses its battery technology to other companies while using external innovations in navigation systems. A software company might license its APIs to third-party developers to create complementary applications.

13. Secondary Markets

How to Implement: Identify opportunities to sell your by-products or waste materials to other industries or sectors. Utilize waste or by-products by selling them to other industries or markets.
Example: A brewery sells its spent grains, a by-product of brewing, to local farmers as animal feed. A furniture company sells its wood offcuts to a company that makes wood pellets for heating.

14. Supply Chain Integration

How to Implement: Integrate your supply chain processes with suppliers and distributors for greater efficiency. Streamline your supply chain by integrating processes and information flow with suppliers and distributors.
Example: An e-commerce company integrates its inventory management system with its suppliers, ensuring faster restocking and reduced storage costs.

Implementing Network Tactics for Innovation

Assess Compatibility: Ensure potential partners share similar values and strategic objectives.
Establish Clear Objectives: Define what you want to achieve through the network tactic, such as market expansion or innovation in a specific area.
Create a Framework for Collaboration: Develop agreements that outline the roles, responsibilities, and benefits for all parties.
Leverage Technology: Use digital tools for communication, project management, and data sharing to facilitate collaboration.
Monitor and Adapt: Regularly review the effectiveness of the network tactic and be ready to adapt as necessary.

By weaving these network tactics into your business strategy, you can unlock new opportunities for innovation, extend your market reach, and create significant value for your company and your customers. It’s about building bridges where markets or resources converge, turning competition into collaboration, and transforming the supply chain into a value web.

These tactics have been drawn and adapted from Doblin and UNITE’s works.