III. E-Organization

In the beginning, global meant for a company to sell its goods in overseas markets. Later global companies assumed manufacturing sites in various countries. The organization of the future will call on talent and resources – especially intellectual capital – wherever they can be found around the globe, just as it will sell goods and services around the world. Headquarters of a company is now determined by the place that offers the greatest advantage.

The Internet is a tool, and the biggest impact of this tool is speed. Speed of actions, deliberations, and information, and the speed continue to increase. This implies that the old process-oriented organizations must revamp or die. This means that there is no more time for deliberations and bureaucracy. The organization of the future will not have one ideal form. Some will be completely virtual, wholly dependent on a network of suppliers, manufactures, and distributors for their survival. Others, less so. Some of the most successful organizations will be very small and very specialized; other will be huge in size, scope, and complexity. Some companies will only last the time it takes for a product or technology to reach the market. Once it does, the organization will pass their innovations on to host companies that can leverage them more quickly and at less expense. Just as small companies will use technology to gain economies of scale, larger companies will harness technology to reduce the costs of complexity. Digitization means removing human minds and hands from an organization’s most routine tasks and replacing them with computers and networks. Digitizing everything from employee benefits to accounts receivables to product design time, cost, and people from operations, resulting in huge savings and vast improvements in speed. The truly great business of today and tomorrow will have powerful bit engines, digital systems for capturing, managing, and leveraging information both inside and outside of the company.

The organization chart of a traditional enterprise had long been defined as a shrinking pyramid with the CEO at the top. The 21st century organization will look like the Web; horizontal, a mesh that connects partners, employees, external contractors, suppliers, and customers in various forms of collaborations. The players will grow more and more independent. Fewer companies will try to master all the disciplines necessary to produce and market their goods but will instead outsource skills. Outsource to those outfits that can perform those functions with greater efficiency. Managing this type of intricate network of partners and competitors, spin-off enterprises, contractors, and freelancers will be as important as managing internal operations. The boundaries of the firm will not only be fuzzy but in some cases very difficult to define. Size of a company will no longer be the metric of success; instead, the market will prize the ability to efficiently deploy assets. Good bit management can allow an upstart to beat an established player, it can also give an incumbent vast advantages. By using information to manage themselves and better serve their customers, organizations will be able to do things cheaper, faster, and with far less waste. The new organizations will tailor its products to each individual in contrast to mass production and mass consumption. It will bring its customers into partnerships and give them the technology to design and demand exactly what they want. The best performers increasingly are great communicators, compromisers, and masters of change. In the next decade the new skills requirements and a more entrepreneurial mindset will produce a superstar class of CEOs. Chapter 1 goes into more detail regarding organizations and human resource practices in the electronic environment.

Tomorrow’s corporations will be virtual, defined not by their location but by their ability to acquire knowledge, organize information, and organize independent contractors and suppliers worldwide. In the process, businesses and professions are disappearing. Customers are leaving traditional business practices through intermediaries to making their own transactions on-line. In addition, the world workforce is changing. There is a global shortage of workers in information management and technology. At the same time there is increase employment insecurity as corporations shift their demand for skilled labor in the face of competitive pressure to change their operations. Recently, the US Immigration law has been modified to increase the number of talented personnel from 65,000 to 115,000 a year. Other nations such as Germany are following this trend.

Many organizations have already begun to adjust to the new realities of the Creative Economy, by allowing power to tilt from the sources of capital to the sources of ideas, by embedding themselves in fertile ecosystems, and by adopting codes of social responsibility to win the trust of a wary public. The 21^st century organization will be in many ways the opposite of traditional ones. Until recently creating intensive rivalries among competitors motivated their employees and assured success. Presently, an organization’s fiercest competitor might also be its most important collaborator. In the past business leaders strived to build enduring enterprises. In the future many organizations will be ephemeral, formed to create new technologies or products only to be absorbed by sponsored companies when their missions have been accomplished. From the need to expand to beyond national borders to the inexorable shift toward intellectual capital, are driving changes, but none is more important than the rise of Internet technologies. Instead of seeping out over months or years, ideas can be zapped around the globe almost instantly.  Thus, the new organizations must adapt itself to management over the web. It must be predicated on constant change, not stability, organized around networks, not rigid hierarchies built on shifting partnerships and alliances, not self-sufficient, and constructed on technological advances, not bricks and mortar. As shown in Chapter 1 the push is to get breakthrough ideas to market first. The advantage of bringing breakthrough products to market first will be more short-lived than ever; because technology will let competitors match or exceed them almost instantly. To keep ahead of the steep new-product curve, it will be crucial for organizations to attract and retain the best thinkers. Companies will need to build a deep reservoir of talent – employees and free agents- to succeed in this new era.