There are two distinct and apparently contradictory trends that have set us thinking. We are in the age of the multinational mega-companies and they seem to be growing ever bigger through merger and acquisition activity.
Coordination is the key role of the business organisation and management.
Consider some of the recent mega-deals: Compaq bought Digital, Worldcom purchased MCI, the Citibank and Travelers merger, the Daimler Benz acquistion of Chrysler and the British Airways alliance with American Airlines. This is starting to give some credence to the notion of a future where the world is organised around giant global corporations.
On the other hand, there is increasing evidence of a groundswell around the disintegration of the large corporation. Key people leaving large corporates and going into business for themselves as contractors and freelancers, large corporates consciously breaking up into smaller business entities, and the management approaches within large corporates changing fundamentally to encourage and reward entrepreneurial behaviour. Our own market and our own business are living proof of this.
Our strategic thinking process has highlighted these trends, which we consider to be very important to our future business thinking. Clearly we are not alone in considering this as there are some interesting articles and books emerging around this topic.
The industrial age
Coordination is the key role of the business organisation and management. Let`s consider for a moment the coordinating technologies of the industrial age versus the "new economy". The technologies of the industrial age amplified the benefits of centralisation; think about transport in the form of railroads and the motor car or the telephone system and mainframe computers. This all lent itself to managing large organisations centrally and providing economies of scale in manufacturing, distribution and almost everything else.
With the proliferation of increasingly powerful PCs and broad, increasingly available electronic networks, we have seen the introduction of the coordinating technologies of the 21st century, the enablers of fluid, fractal organisations. Information can be shared instantly and inexpensively among many participants in many locations. People can collaborate among themselves. They can coordinate their efforts for a specific purpose among a network of small, autonomous businesses or people.
More questions than answers
So then we really do have to take a step back. What is a business organisation all about and what is the role of management? In essence both are a mechanism for coordination. The coordination of people, flow of work, materials, money and so on.
There is nothing implied which is not totally compatible with the idea of smaller, networked organisations (enabled by today`s technologies) which team up and work together, then disband until the next opportunity presents itself. Today there are many examples, across many industries, which support the viability of this model, and the technology and building blocks are in place. The question is: where are we, as people and businesses, in understanding and embracing this future?
One of the questions behind today`s column is about the co-existence, or not, of these two hugely different organisational models as we move toward the 21st century, and the role of "management" in that future world.
In thinking through some scenarios there are key roles which may potentially be filled by the mega-corporations. For example, for a network (business or otherwise) to operate efficiently there needs to be some standards at various levels.
The Internet is a good example of this. Anyone can participate in the Internet provided they adhere to certain technical specifications and work within the protocols and behaviour of the communities within the Internet. (I hasten to point out though that the reason these "standards" are so effective is that the Internet is not controlled by anyone in particular.)
Similarly, a business network will work much more optimally if there are existing "standards" understood and supported by the many participants within the network. There also needs to be some common understanding of processes so a team can form, function optimally and disband until the next time.
Clearly there needs to be alignment of thinking and approach for the virtual team to work effectively. Furthermore, we are clearly seeing the power of the brand, particularly in an increasingly fluid and virtual world.
Can the brands be built in these virtual networks or will the brands be built by the mega-companies? Even more radically, will the future owner of the brand be very small (in today`s terms) but extremely powerful and central to the virtual business networks by virtue of the power of the brands they have created?
Will we see a powerful dynamic between the mega-corporation and the fractal business networks as the business model of the 21st century evolves?
More critically though, is the question of where we are in our thinking. It is clear to anyone who spends some time pondering these issues that it has a profound impact on our futures, both as businesses and as individuals. Where are our current mindsets? Can we seriously envision this future world, and take ourselves and our businesses there?
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