Image for post
Image for post

What Every CEO Should Know About the 21st Century

There is a broad consensus among CEOs that the interconnected processes of globalization and rapid technological change — particularly, the emergence of technologies related to social media, platforms and big data — have profoundly disrupted traditional forms of organization and created new business models, as well as opportunities. A great deal of energy — both in traditional media outlets, but also online — has been devoted to understanding these trends.

The End of the Firm?

It is this aspect of Coase’s story that is attracting interest (again) today. The suggestion is that new technologies — and particularly network-based technologies — have disrupted markets by facilitating a significant reduction in transaction costs across multiple sectors of the economy.

Employer-Employee Relationship

Tracking this discussion on the “end of the traditional firm” is a parallel debate about the current state and likely future trends of the employer-employee relationships within the firm. In a world where companies increasingly attempt to become more agile, innovative and responsive by restructuring the way they are organized, lifetime employment is no longer feasible or even desirable. The result is that CEOs can no longer rely on traditional forms of coordination, which were oriented around hierarchy and command and control.

The Evolution of the Firm

So, the firm will not disappear. However, the current way of thinking about work necessarily involves a re-framing of the relationship between an individual and the firm. How then should a 21st century firm organize itself in order to offer a meaningful and relevant environment for its stakeholders? There are no easy answers to this question, but the best option is to embrace a combination of what my co-author Mark Fenwick and I characterize as “flat-hierarchy” and “visionary leadership”.

Image for post
Image for post

the best firms recognize the importance of allowing an individual to preserve its own identity, whilst also allowing him or her to become part of a larger ecosystem where growth potential and strategic possibilities are greater than if the individual was to remain independent

The more fluid and inclusive relationships that we describe here presupposes a high degree of cooperation, loyalty and mutual trust, at least when compared to more control-oriented, directed and horizontal organizational forms. Particularly important in this context is the need for open communication between the various participants. Open communication provides a mechanism by which coordinating of different stakeholders takes place. Most obviously, open communication involves a different style of information dissemination and exchange that characterizes relationships between all actors/individuals in the firm. Such an approach involves acknowledging the potential benefits that accrue from a much freer flow of information inside an organization, but also between the organization and those on the “outside”. In particular, open communication is characterized by a more personalized approach to communication.

Written by

Video Gaming Prof • Middle-Aged Ultra Runner — on a self-learning journey

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store