Friday, May 21, 2004

The end of corporations 

I hope this title is big and provocative enough to create a good discussion. My instinct is telling me that large corporations will face their end in the coming decades. I know I know, the current trends are globalization, acquisitions, and mergers. They tell us that the larger the corporations, the larger the profits. And in business, profits equal longevity. Anyhow, I’m throwing in this post what I feel is coming (please fell free to demolish the idea if it’s what it deserves).

Let me try to list some of the thoughts that led me to this intuition.
1. People of the coming generation no longer accept to conform to rules that don’t fit their own values. They don’t like to wait and like to be in total control of their lives.
2. Knowledge networks allow people to work across traditional boundaries such as departments and organizations.
3. Knowledge belongs to people and not corporations
4. Knowledge is equivalent to profit in a knowledge economy
5. The principle of continuity (fundamental in business) states that businesses are intended to last forever. Businesses as entity are then seeking to be stable over time even though their internal structures are changing. The problem is that they are too slow to adapt to change. Business structures that seek to improve flexibility (such as the matrix) are in fact a deconstruction of traditional business structures.

Following that, my rationale is quite simple:
1. Traditional corporations are not the best knowledge production structures in a changing world.
2. They are not able to capture or possess knowledge since knowledge belongs to people.
3. Since they will become always less competitive in creating knowledge, which is the profit generator in a knowledge-based economy, they will disappear.

What will replace corporations then? People. People working in networks, creating added-value by creating knowledge, getting paid according to their direct contribution to the society. This is a vision of empowered people that have their destiny in their hands, but also the responsability of its success or failure...

I'm with you, but the corporation is not going to die an easy death. Peter Drucker predicts that it won't be around in 25 years. Let's see what we can do to hasten its demise. How about an alternate model (business, legal, organisational, technological) that really works?
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