• Strategy
  • The Economist

Survey: The Near Future

Peter Drucker explains how it will differ from today, and what needs to be done to prepare for it.

There are already a good many variations on this theme: the American contract manufacturers, already mentioned, who now make the products for half a dozen competing Japanese consumer-electronics firms; a few independent specialists who design software for competing information-hardware makers; the independent specialists who design credit cards for competing American banks and also often market and clear the cards for the bank. All the bank does is the financing.

These approaches, however different, still all take the traditional corporation as their point of departure. But there are also some new ideas that do away with the corporate model altogether. One example is a “syndicate” being tested by several non-competing manufacturers in the European Union. Each of the constituent companies is medium-sized, family-owned and owner-managed. Each is a leader in a narrow, highly engineered product line. Each is heavily export-dependent. The individual companies intend to remain independent, and to continue to design their products separately. They will also continue to make them in their own plants for their main markets, and to sell them in these markets. But for other markets, and especially for emerging or less developed countries, the syndicate will arrange for the making of the products, either in syndicate-owned plants producing for several of the members or by local contract manufacturers. The syndicate will handle the delivery of all members’ products and service them in all markets. Each member will own a share of the syndicate, and the syndicate, in turn, will own a small share of each member’s capital. If this sounds familiar, it is because the model is the 19th century farmers’ co-operative.

As the corporation moves towards a confederation or a syndicate, it will increasingly need a top management that is separate, powerful and accountable. This top management’s responsibilities will cover the entire organisation’s direction, planning, strategy, values and principles; its structure and its relationship between its various members; its alliances, partnerships and joint ventures; and its research, design and innovation. It will have to take charge of the management of the two resources common to all units of the organisation: key people and money. It will represent the corporation to the outside world and maintain relationships with governments, the public, the media and organised labour.

Life at the Top

An equally important task for top management in the next society’s corporation will be to balance the three dimensions of the corporation: as an economic organisation, as a human organisation and as an increasingly important social organisation. Each of the three models of the corporation developed in the past half-century stressed one of these dimensions and subordinated the other two. The German model of the “social market economy” put the emphasis on the social dimension, the Japanese one on the human dimension and the American one (“shareholder sovereignty”) on the economic dimension.

None of the three is adequate on its own. The German model achieved both economic success and social stability, but at the price of high unemployment and dangerous labour-market rigidity. The Japanese model was strikingly successful for 20 years, but faltered at the first serious challenge; indeed it has become a major obstacle to recovery from Japan’s present recession. Shareholder sovereignty is also bound to flounder. It is a fair-weather model that works well only in times of prosperity. Obviously the enterprise can fulfill its human and social functions only if it prospers as a business. But now that knowledge workers are becoming the key employees, a company also needs to be a desirable employer to be successful.

Discuss

Your email address will not be published. Required fields are marked *