The Rise of the New Corporation

End 2018, Gary Hamel wrote an article in HBR, titled "The End of Bureaucracy", describing the way Haier Appliances of Qingdao, China, runs its business. Haier is a global company with $35 billion in sales but has organized its 75,000 employees in over 4,000 "micro-enterprises", often as small as 10-15 employees, giving them a very high degree of autonomy. Thanks to this hyper-flexible structure and a highly motivated, entrepreneurial workforce, the company is able to out-maneuver and out-innovate its competitors, generating a revenue CAGR close to 20% over the last decade.

Haier took many years to build and is in many ways unique. Yet, every major company I know is overwhelmed by the pace and the volume of change. Most companies are organized for predictability, not for growth or transformation. In times of unprecedented change, companies should reconsider the way they organize themselves and distribute leadership.

Almost twenty years ago, two colleagues and I wrote a book, titled "Rebuilding the Corporate Genome", predicting the end of the corporation as we know it. The digital revolution lowers transaction costs and allows for more nimble organization forms, focused on ever more tailored customer demand. Granted we were a tat early, but at a time when any startup can now sell its goods on online platforms and have it delivered at any customer's doorstep, the time for organization rethink has finally come.

In the book, we imagined the modern corporation organized around its most crucial capabilities - and nothing else. Apple religiously manages its brand, its innovation and product designs, and its customer experience, but leaves the bulk of its manufacturing, assembly, packaging and logistics to others. Strictly contracted of course – as if their suppliers were part of their organization, but contracted, nevertheless. It has become very proficient at this and can effortlessly manage to launch events where all of its avid fans want their new product literally the minute it launches.

We live in an age where value is increasingly created and delivered based on personal and situation-specific needs, designed and marketed based on ever-changing and customer-specific data.?The point is that most companies are built for scale, both in marketing, manufacturing and distribution, and most have limited access and knowledge of individual consumer needs. In a world where change is no longer episodic and where survival is based on the ability to shape and transform at speed, the ability to focus and adapt is key.?It is no coincidence that more and more is written about topics such as distributed leadership, focus, and decentralization as a means to gain speed, ownership and flexibility.?The time to rebuild the organization as we know it has finally come.