Global Finance Houses Winning Business Networks Of the 20th century
Global Finance Houses Winning Business Networks Of the 20th Century
The Last business network we will consider in this chapter is the network of finance houses of New York, London and Frankfurt that gained strength in the 20th century. With massive industrialization came the need for massive financing of the industry. At the same time, growing world trade needed the finance network to be global in nature. Imagine an oil trader has no way to ensure that the seller will deliver him exactly what he purports to offer and that the buyer will pay for the oil on time - unless the modern finance house steps in with supply chain financing solutions, such as humble letter of credit.
The Modern World of Commerce and Industry Finance
From such simple finance instruments, the modern world of commerce and industry finance has developed into complex and bespoke financial arrangements that suit the needs of investors, commerce, industry and speculators. Facilitating all these transactions, and keeping trust in the system, is a network of businesses involved in the business of finance. Without going into the history of the finance houses, such as Barings, Rothschild, JP Morgan and others, we will take the key lessons from the outstanding success of these business networks. Undoubtedly, the first reason for their success is the value they create for their customers, since no business can thrive for any length of time without that. This is underpinned by their ability to understand a diverse set of business circumstances that their own customers face and to readily come up with flexible solutions to meet those circumstances.
Ability to attract, train and retain talent is the key to understanding your customers. Patience, ability and willingness to shape legislature, ability to formulate and enforce a trust-building mechanism in the network and a willingness to work through the ups and downs of the business cycles, are some of the other drivers for success. A key feature enabling the success of this business network is the overwhelming practical nature of the participants, without any dogmatic adherence to outdated ideas. To the extent this network retains its ethos of service and humility, it will continue to prosper and retain its relevance in the coming era of simultaneous globalisation and fragmentation.
The Silk Road - a vast, ancient business network
Business networks have thrived through the ages in various forms. In this chapter, we briefly examine six relatively well known business networks from the history. The Silk Road - a vast, ancient business network - comprised hundreds of sub-networks, each functioning on its own, in order to achieve a vastly superior business outcome. Venice - the powerful business network of the middle ages - started the trend towards consolidation of power for achieving business outcomes. The Spanish empire - an imperial business network took this trend to extremes, where it became impossible to distinguish between the business goals and the imperial goal of the network.
The East India Company - the first multi-national company - established commercial networks that still thrive after more than 250 years. American railroads, a business network that opened up the continent to thriving commerce and led the industrial revolution in the new world. Global finance houses, winning business networks of the 20th century, funded the industrial Revolution in the new world. Global finance houses, winning business networks of the 20th century, funded the industrial Revolution and benefited from its vast reach.