Why we’ll see the end of the megacorporation sooner than you think
Will the corporation survive this era of profound change to the way we do business? A decade ago, this would have been a silly question. Megacorporations were literally printing money (“creating value”, if you prefer) in the 20th and even early 21st century.
But today, the rapidly changing marketplace is causing quite a bit of turbulence for corporations. The impact of iTunes and Spotify on the music industry is undoubtedly the most spectacular example, but other industries are not immune to the trend. In the services sector, we see middle men cut out at a frightening rate. If 3D printing ever becomes mainstream (which I think will happen sooner rather than later) traditional manufacturing is bound for a profound reshape.
Inside the corporation, things are spinning out of control as well. Generation Y employees are demanding different business environment and practices, sometimes leading to frictions between generations that are increasingly difficult to manage. The ‘war for talent’ is now a reality in many areas, and will certainly take dramatic proportions in many more in the next 10 to 20 years. Perhaps even more worrisome: young innovative, entrepreneurial people are setting up their own businesses much earlier than any previous generations, depriving traditional companies from much needed creative talents.
The ‘ghost’ corporation
But corporations are also challenged in areas where, historically, they had a competitive advantage thanks to their huge scale: business functions. There are plenty of early signals of changes that will affect the very nature of corporate organizations. Let’s take a brief look at trends in some of the corporate functions:
- Research & Development: Companies increasingly rely on the ‘outside world’ for their innovation processes – a process called ‘open innovation’. Procter & Gamble set itself a clear and bold goal: 50% of its new products should come from open innovation (links to a PDF). Marketing: An increasing number of creative or operational marketing tasks are now being crowdsourced. In some cases marketing might even become obsolete whenever the main go-to-market channel is a ‘social buying’ platforms such as Groupon
- Sales. One could argue that the ‘affiliate program’ concept introduced by Amazon (and, since, emulated by plenty of other businesses) could replace a full-blown sales force. We now see such models even in a business-to- business environment.
- Administration. Tasks can now be broken up in dozens of sub-tasks and performed through micro-tasking.
- Manufacturing. If (or when) 3D printing becomes mainstream this would dramatically reduce the need for a manufacturing workforce. It’s not the product in itself that will be sold, it’s the code to make the products.
Taken together, all these trends look like a prelude to a disintegration – a ‘virtualization’- of the corporate organization. Obviously, companies will still need personnel to coordinate all these activities, as well as for a number of other core activities. But the increasing adoption of these trends indicates that organizations are up for a serious downsizing of their operations. With these trends a company of, say, a couple of billions in turnover, could easily be managed and operated by a few dozens of employees.
Will we ever arrive at that point? After all, companies benefit from the loyalty of their employees. And surely they want to exercise some control over critical functions such as innovation and sales? Certainly, but consider the advantages of the trends mentioned above: the leanness with which companies can swiftly deal with new challenges and opportunities, as well as the increased loyalty of customers that are now part of the innovation process of the company. Most likely some form of ‘virtualization’ of the corporate organization will take place.
The age of the micro-entrepreneur
And what with the other side of the coin? Will we all become micro- entrepreneurs, participating in open innovation projects, competing for crowdsourcing contracts or performing minute-to-minute administrative tasks? Will we need to become our own marketers in order to get the best chances to obtain such assignments?
Perhaps the real question is: are we all prepared to take advantage of such a world, or would this world only benefit the happy few most creative, most entrepreneurial minds? As much as I love the thought of everyone taking his professional life in his own hands and become his own boss, I’m afraid the answer is the latter. Most people are ill prepared for a life as an entrepreneur.
Luckily, the impact of this trend towards the disintegration of corporate organizations will not be felt overnight, even if early signs of it are already visible today. It means we still have time to prepare. Undoubtedly education will have a critical role in this, by preparing young people to promote themselves and teach them how to turn ideas into tangible products and services. In other words: teach them how to become entrepreneur. One way or another, we will all (have to) become one…
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