The future of corporations

The word “innovation” is oftentimes used to try to mark the difference in companies’s cultures. As a matter of fact we tend to compare large corporations with start-ups.

In this present historical moment, where growth is lacking, and there are more employees than employers, it might be interesting to start a reflection on how corporations might adjust to face future challenges.

I would center the whole analysis around the threshold between “Entrepreneur” and “Intrapreneur”. Both profiles are driven characters who are willing to take on challenges beyond the statu-quo and want to change the environment around them according to their vision. The only difference is that the latter is trying to “play” within the rules of a corporation, while the first at times was a “misfit” within similar rules and wandered off.

However, it is essential for Corporations to establish rules to be more efficient repeating processes and limiting operational and financial risks. However, rules can become the limiting factor for innovation to sprout (what Y. Morieux of BCG calls the Hard Pillar).

So is there a way to find a compromise?

We could list and study a series of examples, from the Google (e.g. 80/20 rule) and Apple (“No limit” culture) to the GE (Innovation Barometer)’s of the World. However, I would like to propose a model, where flexibility, agility and accountability can match corporate rules. A simple model that could be implemented in any environment.

Corporations look for shareholder’s returns, ROCE and market share in markets they know, hence stable growth. Start-ups look for the fastest growth possible in a short time, potentially with limited early returns putting all at risk of failure.

What if we blend the two?

In my opinion, the future of corporations is to become Holding companies, allowing talented employees to manage specific businesses competing in the market place but supported by strong backing. What I mean is that every new activity, at first, should be treated/managed as an independent company with the mother corporation retain the majority of the capital.

This solution, although simple to describe but potentially disruptive, offers major advantages. Risk is diluted, new markets will be addressed, collaboration within the holding and across holdings will be favored, last but not least managers will be exposed to and challenged by market dynamics more than internal politics.

This model would also allow for simpler integration of start-ups to a larger organization without killing the inherent spirit. It will also foster internal competition to develop ideas into revenue generators.

The other great advantage is for the Human Resources, who will be challenged not to fit profiles to established boxes, but to design new boxes to retain the Human Potentials (as Y. Morieux says in his TED talk).

This is, in my opinion, the ONLY model that could allow for future exchanges and developments generating more jobs, enhancing employee engagement (Y. Morieux again and the Gallup report in 2014), leveraging globalization but acting locally.

I would call it the “NEXT Corp” a lean, agile, dynamic organization centered on the markets and open to innovative ideas.

If you have question, comments or want to know more about the concept, tweet me at @bridging_value