A “glass company” may therefore have to redefine itself by what it is good at doing rather than by the material in which it has specialised in the past. One of the world’s largest glass makers, Corning, sold its profitable business making traditional glass products to become the number one producer and supplier of high-tech materials. Merck, America’s largest pharmaceutical company, diversified from making drugs into wholesaling every kind of pharmacy product, most of them not even made by Merck, and a good many by competitors.
The same sort of thing is happening in the non-business sectors of the economy. One example is the free-standing “birthing centre” run by a group of obstetricians that competes with the American hospital’s maternity ward. And Britain, long before the Internet, created the “Open University”, which allowed people to get a university education and obtain a degree without ever setting foot in a classroom or attending a lecture.
The Next Company
One thing is almost certain: in future there will be not one kind of corporation but several different ones. The modern company was invented simultaneously but independently in three countries: America, Germany and Japan. It was a complete novelty and bore no resemblance to the economic organisation that had been the “economic enterprise” for millennia: the small, privately owned and personally run firm. As late as 1832, England’s McLane Report — the first statistical survey of business — found that nearly all firms were privately owned and had fewer than ten employees. The only exceptions were quasi-governmental organisations such as the Bank of England or the East India Company. Forty years later a new kind of organisation with thousands of employees had appeared on the scene, eg, the American railroads, built with federal and state support, and Germany’s Deutsche Bank.
Wherever the corporation went, it acquired some national characteristics and adapted to different legal rules in each country. Moreover, very large corporations everywhere are being run quite differently from the small owner-managed kind. And there are substantial internal differences in culture, values and rhetoric between corporations in different industries. Banks everywhere are very much alike, and so are retailers or manufacturers. But banks everywhere are different from retailers or manufacturers. Otherwise, however, the differences between corporations everywhere are more of style than of substance. The same is true of all other organisations in modern society: government agencies, armed forces, hospitals, universities and so on.
The tide turned around 1970, first with the emergence of new institutional investors such as pension funds and mutual trusts as the new owners, then — more decisively — with the emergence of knowledge workers as the economy’s big new resource and the society’s representative class. The result has been a fundamental change in the corporation.
A bank in the next society will still not look like a hospital, nor be run like one. But different banks may be quite different from one another, depending on how each of them responds to the changes in its workforce, technology and markets. A number of different models is likely to emerge, especially of organisation and structure, but perhaps also of recognitions and rewards.