The final panel of the “education” day at the Thinkers50 management event in London on November 11 followed on panels debating the future of management education and the future of work. This one was called The Future of Enterprise and featured panelists Pankaj Ghemawat, Anil Gupta, Richard Rumelt and Roger Martin. There was a fair amount of skepticism among the panelists that the traditional, stable organizations many of us have come to take for granted will be the wave of the future.
“Everything will be Outsourced”
Dick Rumelt has been quite public about his opinion on this, so I’m allowed to quote him. Rather than jobs and careers being tied to an organization, he argued that only things that are tied to a physical place, people with extraordinarily unusual skills and…um tenured professors will have any hope of secure employment. I’d quibble with even the tenured professor observation, myself, as you can be as tenured as you want but if your institution folds it isn’t going to protect you at that point. Dick further remarked that he’s worried about American young people who want an “authentic life” (as came up in an earlier panel) competing globally with young people who are more concerned with hard work and advancement than achieving meaning at their jobs.
Transparency will be the norm
The panelists agreed that for a multitude of reasons, dramatic increases in organizational transparency are likely. This will lower barriers to entry, further exacerbating competition, and lead organizations to lose control over much of their communication and messaging, relative to what they had once enjoyed in the past. It will also root out less-than-authentic managers, expose organizations who are not being candid and make it much harder to keep secrets secret.
The Golden Age is over for Enterprise
A few observations from the panel suggested that the golden age of what some have called the good corporation is over. There is a systematic lack of innovation across many organizations, leading to a loss or lack of good jobs that supported a mass middle class. Businesses have lost the trust of much of the population (one panelist said they are being “reviled”). There were predictions that the number of public companies will decrease overall.
Globalization is for real
One of the more interesting activities at the panel was a discussion about what portion of the Fortune 1,000 would be from the emerging economies. In a test, several numbers were guessed at by the audience who felt that perhaps the proportion would reach 25% perhaps in 2018. Guess what – it’s already at 25% and emerging-economy companies are coming into their own in a big way.
The End of Competitive Advantage and Implications for Enterprise
So where do I come down on all this? Well, obviously, I have long thought that the era of sustainable competitive advantage is over, taking with it firms that are too smitten with having once been successful to reconfigure themselves to compete. I come down on the optimistic side, however, having studied dozens of firms that have successfully transformed themselves, many who offer excellent jobs, invest in their people, care about sustainability and their environments, and yes, prove to be enduring enterprises. There are many inspiring examples. Let’s consider a few. Monsanto transformed itself from a chemicals-centered company to a biology driven organization with a credible commitment to sustainability. UPM of Finland has been moving resources out of its mature pulp, wood and paper businesses and making big bets on biology based products, such as biodiesel. Verizon has dumped phone books to move into FIOS and other faster growth markets. DuPont actually sold off its name-brand textiles business to find growth in emerging markets and new industries. John Deere is pursuing systemic innovation in an industry people often think of as unimaginative and traditional.
Companies with a “sustainable competitive advantage or bust” mindset will indeed have a dreadful time navigating in what I call the transient advantage economy. But those who recognize that balancing stability (values, long-term commitments, talent, networks) with dynamism (rapid resource redeployment, graceful disengagement, experimentation) can create a bright long-term future despite the challenges. Get ready for the new strategy playbook for enterprise.