02 Oct, 2019
"The Rise of Network Society" (1996) is Manuel Castells' first book in his trilogy where he explores the transformation of relationships between corporations and small companies. He argues that the smaller trends are working together to increase productivity and profit. The transition from mass production to flexible production has help the business model in general. He argues that the current business model of our time is Cisco because they were smart with their money, formed relationships with the best in their field, and prioritized the well-being of everyone involved in their company.
Castells starts the reading by defining the reasons why economic restructuring occurred in the 1980s. While there are different lines of thought for as to why this happened, there are five fundamental facts: (1) the mid-1970s marked a divide between production and markets in the economy, (2) the organizational changes preceded and were independent from the diffusion of information, (3) the organizational changes were made to cope with the changes from “economic, institutional, and technological environment of the firm” (page 165), (4) many of the changes pertained to automated laborious tasks, and (5) knowledge is vital in the global economy. He argues that these trends are working towards a common goal of increasing productivity and competitiveness in the global economy that favor large industrial companies.
He goes onto explain “the transition from mass production to flexible production, or from ‘Fordism’ to ‘post-Fordism’” (page 166). The purpose of mass production was productivity and economic gain for corporations. This method became too expensive with unpredictable demand, so a flexible production system was adopted. This is when production “accommodates ceaseless change without presenting to control it” (page 166) in terms of customization. High-volume flexible production favors economy of scale as well as customization that can be flexible to changing needs.
Castells explains another trend: the crisis of corporation pertaining to mass production. He cites Bennett Harrison, who believes corporations have a concentrated influence in major economies that small businesses lack because they are less technologically advanced. Castells presents a number of people who would disagree, that small businesses have outperformed corporations many ways. He introduces Keynesianism; the idea that corporations strive to industrialize world markets. He argues that to do so, corporations must change their methods. He concludes this section by stating that both small and large businesses have a role in the economy, but they are under the control of large corporations.
In the second part of the reading, Castells starts by explaining each reorganizational period has an expression, and that our current, internet-based period is the “Cisco Model.” He explains that Cisco is based on three core assumptions: (1) relationship with its customers, (2) the way they share information, and (3) communications must have a networked fabric. Cisco is an internet company that provides for small and large businesses, and Castell explains how a relatively small investment turned into a major profit. This was because Cisco got involved with the best companies, engineers, and scientists, not saving money and spending it in smart ways. They prioritized customer service, as well as employee well-being. This business model can be applied to any industry.
In today’s economy, I believe that small businesses play a vital role in specific industries, but stand no chance compared to large companies in other industries, especially technology. For example; bakeries, restaurants, flower shops, gift shops, and boutiques are all examples of small businesses that people cherish simply because they are small businesses. On the other hand, people will most likely not buy a phone or laptop created by a small business.
Many of the characteristics of Cisco’s business model related to a small business model, like customer satisfaction and workers’ well-being. By combining what works for a large business with what works for a small business, a small idea can turn into a major corporation.