Completely rewritten for this, its second, edition, Managing Business Relationships is a précis of the three decades of research carried out by Industrial Marketing and Purchasing Group, an international network of academics. 

The authors start by exploding three myths.  The first is the myth of action.  They attack the notion that marketing is something that manufacturers do and involves targeting a segmented group of faceless, passive consumers.  They argue that, in fact, business buyers actively source solutions, that they are not looking for products from manufacturers and that customers vary widely in how they behave and what they do.

The myth of action is the idea that a company can act independently.  IMP believes that companies are defined by their relationships with other companies, be they suppliers, intermediaries or customers.  You have to understand the position you occupy in this lattice before you can make sense of the world. 

The myth of completeness holds that a company can develop a strategy based on its own resources and skills.  IMP believes strategy has to involve the resources of those with whom the company interacts and on whom it depends.  It claims that core competencies these days are typically based on a network of relationships.

So what is the network?  Quite simply, it covers every company with which yours has a direct or an indirect relationship.  And, these days, terms such as "manufacturer" or "distributor" are meaningless.  If Ford buys in 70% of what it resells, is it not a distributor? Even terms like "distribution channel" and "supply chain" are erroneous, because they imply an artificial definition of upstream or downstream based on your own position.

So what comes out of all this?  The book presents a series of network paradoxes, based on the observation that, if a company is defined by its network of relationships, then the network is both a source of freedom and a cage.  Your position gives you strength, but you cannot alter it easily.  To make change you have to work with others in the network.

It also redefines technology as something that provides a solution for a customer. 

This knocks on the head all our preconceptions of technology as something that is developed in a laboratory by manufacturers.  McDonalds’ core offer allowing you to eat fast on the move is technology.  So is the scoop, which shovels the chips neatly into a paper bag.  The implication here is that technology exists throughout a network.  It resides as much with the pharmacist or IT reseller who comes up with the solution for the customer as with GSK and Intel.  And, of course, the solution has transformed the product.  No one simply "resells" your product.  All this highlights just how much companies need to have a much clearer idea of how their product fits into the ultimate solution.

All this leads to a flow of new thinking.  For example, the network theory explains why so many suppliers’ channel initiatives fail.  These initiatives assume that every intermediary is the same, that each intermediary is in some way defined by its relationship with the supplier and that as intermediaries they are less important than the manufacturers who own the technology.  They are "Microsoft resellers, GlaxoSmithKline distributors or Electrolux retailers".  They are, of course, nothing of the kind, and few suppliers have as much power as they think they do.  

It is easy to dismiss this book as overly theoretical.  But it is built on detailed case studies from many industries.  They make convincing reading.  The book shows the dangers, for instance, of developing technology in a vacuum, using as an example a paper mill that nearly went bust because it did precisely this. The idea that technology needs to be developed in relationships comes over very powerfully.  Sometimes the managerial implications of this come over very clearly.

The conclusion to a chapter on Managing Relationships with Customers says that: "Account management is no substitute for a clear understanding of the long-term investment costs of particular relationships, their true potential, their operational implications and their place within the company’s overall portfolio". This is a statement that should probably be stencilled onto the forehead of your sales director! 

Or take the book’s view on marketing, where it observes that "many marketers largely confine themselves to working within the existing relationships of their company, or they desperately try to find new customers without relating these to the company’s existing portfolio."  It adds: "The marketing manager must consider the outcomes of her networking, rather than simply the sales or margins that she achieves".

Agreed, but what does this really mean to the marketing manager’s job role?  That question is never answered in detail, and that is why this book is not a management bestseller. It would be nice to know precisely how enlightened companies actually organise and incentivise the folk involved in "channel management".  Yet the weight of history lies with this book.  Networks are the future.  Channels are the past.  Buy this book and read it carefully.

Managing Business Relationships (second edition, 2003), by Professor David Ford, Professor Lars-Erik Gadde, Professor Håkan Håkansson, and Professor Ivan Snehota. Published by Wiley. Published by Wiley. ISBN 0-470-85125-2