26 Sep 2009
'The corporation as we know it, which is now 120 years old, is unlikely to survive the next 25 years.'
That was the prediction of Peter Drucker, made in an interview with James Daly in August 2000.
If Drucker's prediction is right, corporations have just 16 years to run their course in current form. The clock is counting.
But what to become?
According to Greg Oxton, Executive Director of the Consortium for Service Innovation, the corporations which seek to become dynamic networks will be more effective than those which remain static hierarchies.
The observation may sound unrealistic, even abstract. But it is in fact based on hard truths about the way that companies are increasingly seeing their business hinge on the organic networks that form online around their products.
In a survey the Consortium for Service Innovation found that of some 8 million respondents, just 2% are seeking product support directly from company representatives.
By contrast, 71% are learning about the products they use from online communities, such as google groups, blogs, wikis and Amazon reviews.
That means consumer-to-consumer communications are increasingly defining the life of brands, product uptake and service support.
Corporations which embrace this new way of doing things will stand a better chance of getting ahead, Oxton suggests.
He gives the example of Dell's Ideas Forum through which consumers propose and vote on ideas that they think will improve Dell products.
Listening to web-based communities is a powerful way for corporations to learn faster. Nurturing the vitality of the networks becomes the key to learning what works and what doesn't.
But, Oxton predicts corporations will go much further than simply listening to the networks that are talking about their products. They will refashion their operations so that they come to resemble a network overlaying their traditional hierarchy.
Greg Oxton's observations are important for businesses that want to thrive in radically turbulent online markets.
Yet he has not considered how these observations might impact many other non-profit organizations, even governments.
In this fast changing world, where we can publish and broadcast from virtually anywhere to virtually anyone, citizens take on a new role.
Citizens become the drivers of knowledge exchange and therefore central to the process of policy formation.
As Chris Blow says on this blog:
Our sphere of influence has expanded dramatically with the internet, and with globalization. And today we live with an infrastructure that extends our relevance to millions of people that we do not know ... We are all bumping up against one another now, unwittingly.
In this new environment - a web that no longer silos communication by language - an Egyptian will form his view of US policy in the Middle East not just from local or regional media, but from interactions with Americans online.
The networks that define how consumers perceive brands will be replicated by networks that define how citizens view policies.
Just as companies will learn faster by nourishing these networks and creating open ways to listen to them, so governments will learn faster how their policies will impact a region by listening to the emerging conversations about those policies online.
Governments that are truly progressive may even abandon the most cumbersome parts of their public diplomacy operations and replace them with investment in online listening tools and new forms of community.
Perhaps even diplomatic niceties will be replaced by authentic citizen-to-citizen conversation. Digital diplomacy of the people.
The potential is of course for new kinds of advocacy to emerge, some which may be perceived as threatening to governments. But beyond any narrow politics, surely a more networked world will be a more stable one.
Citizens who share experiences and knowledge in sustainable communities will surely be less willing to sanction military intervention by governments. Their diplomacy and dialogue will be the most valuable preemptive strike possible. They will beat their leaders to the negotiating table every time, so leaders will be forced to listen.
Chris Blow suggests we have to re-evaluate what is relevant to us, and move away from the traditional nation-state language communities of the past:
We have not learned to care about things — people — that are in fact relevant now to our lives. We haven’t learned to care about the people who make our socks, our bikes and our computers. We haven’t learned to care about the people we influence with our policies and purchases.
Crucially, the next phase of globalization has to reinterpret concepts of news relevance and political motivation.
One thing's for sure, it will not be a zero-sum battle for superiority to shape the trajectory of globalization. That died with the cold-war.
We now have an opportunity for a different kind of globalization which is more equitable, where policies are negotiated for common interest in a densely networked world.
In the meantime, governments could start by taking a good look at the observations of the Consortium for Service Innovation.