Shrinking Core, Expanding Periphery: The Relational Architecture of High-Performing Organizations

This article examines how firms find pathways to high performance with a simultaneous focus on their top and bottom lines by aggressively developing and managing their relationships with key stakeholders. Top-performing firms are shrinking their core while at once expanding their periphery. At the same time that they are contracting their organizational centers and outsourcing increasing portions of their activities, these firms are extending their organizational borders by trying to provide customers with greater sets of products and services. As companies refocus, they have become increasingly dependent on reinforcing mutually beneficial ties to four sets of critical stakeholders: customers, suppliers, alliance partners, and intra-organizational business units. In each of these relationship dimensions, successful firms work their way up a ladder in which they intensify their collaborative efforts with that particular constituent. This phenomenon, which is evident across an array of industries, is one of the hallmarks of a new operating model—the relationship-centered organization.