We have been discussing how Alan Murray, in some new work, and Peter Drucker, from work published many years before the modern world of instant communications, saw the demise of the modern corporation.
While he doesn’t right now see exactly how the modern corporation has to be structured, Murray sees that they must invest in lots of bets on new innovations in order to not miss the big one but also must be willing to cut their losses. In addition to resource allocation, they must motivate and inspire their workers. Power and decision-making must be pushed down the organization as much as possible. He envisions ad-hoc teams of peers coming together for a project then disbanding.
Drucker found much difficulty in the fact that the modern corporation had lost its legitimacy when the stockholders by proxy voting lost control over the management. To reclaim that legitimacy, management had to be responsible for “the economic interest of the enterprise and of society.” The economic interest of the enterprise was, of course, profit. Profit is not a reward; it is the life-support system of the enterprise. Not surprisingly, when discussing the role of the worker in this new order, Drucker’s answer was the same. Everyone was to “see his job, his work and his product the way the manager sees them, that is, in relation to the work of the group and the product as a whole.”
The modern shops with work centers building the entire product with teams of equals and everyone on salary is one step in this direction. One such company that I have worked with is Nucor Steel. Each of their plants is an independent unit with full authority to manage their operations. Each department operates as a team, picking their own workers. Everyone shares in the production efficiencies. One vice president told me that Nucor abandons more ideas than most steel companies try as they continually attempt to upgrade their operations.
Murray goes on to say that information gathering needs to be broader and more inclusive in order to see the next big thing before it is too late. Companies must look outside for product ideas rather than developing them from within. His conclusion is to question whether the 20th-century corporation can evolve. Innovation must apply to management as well as technology.
Drucker, the eternal optimist, had a more positive outlook on the corporation. He continued to look on the organization as the framework within which a livable society could be built. What choice do we have? He maintained that we live in an industrial world. (Drucker wasn’t a part of the “post-industrial society.”) Moving into the future involves risk. To try and eliminate risk “is not only futile, it can be harmful." The bigger your job, the greater the risk you should be taking as a manager.
Does this describe your company in today’s world?
The New Corporate Model
By Jack Marino