• 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.

A largish financial-services company tried another idea: appointing not one CEO but six. The head of each of the five operating businesses is also CEO for the whole company in one top management area, such as corporate planning and strategy or human resources. The company’s chairman represents the company to the outside world and is also directly concerned with obtaining, allocating and managing capital. All six people meet twice a week as the top management committee. This seems to work well, but only because none of the five operating CEOs wants the chairman’s job; each prefers to stay in operations. Even the man who designed the system, and then himself took the chairman’s job, doubts that the system will survive once he is gone.

In their different ways, the top people at all of these companies were trying to do the same thing: to establish their organisation’s unique personality. And that may well be the most important task for top management in the next society’s big organisations. In the half-century after the second world war, the business corporation has brilliantly proved itself as an economic organisation, ie, a creator of wealth and jobs. In the next society, the biggest challenge for the large company — especially for the multinational — may be its social legitimacy: its values, its mission, its vision. Increasingly, in the next society’s corporation, top management will, in fact, be the company. Everything else can be outsourced.

Will the corporation survive? Yes, after a fashion. Something akin to a corporation will have to co-ordinate the next society’s economic resources. Legally and perhaps financially, it may even look much the same as today’s corporation. But instead of there being a single model adopted by everyone, there will be a range of models to choose from.

The Way Ahead

The time to get ready for the next society is now

The next society has not quite arrived yet, but it has got far enough for action to be considered in the following areas:

The future corporation. Enterprises — including a good many non-businesses, such as universities — should start experimenting with new corporate forms and conducting a few pilot studies, especially in working with alliances, partners and joint ventures, and in defining new structures and new tasks for top management. New models are also needed for geographical and product diversification for multinational companies, and for balancing concentration and diversification.

People policies. The way people are managed almost everywhere assumes that the workforce is still largely made up of people who are employed by the enterprise and work full-time for it until they are fired, quit, retire or die. Yet already in many organisations as many as two-fifths of the people who work there are not employees and do not work full-time.

Today’s human-resources managers also still assume that the most desirable and least costly employees are young ones. In America, especially, older people, and particularly older managers and professionals, have been pushed into early retirement to make room for younger people who are believed to cost less or to have more up-to-date skills. The results of this policy have not been encouraging. Generally speaking, after two years wage costs per employee for the younger recruits tend to be back where they were before the “oldies” were pushed out, if not higher. The number of salaried employees seems to be going up at least as fast as production or sales, which means that the new young hires are no more productive than the old ones were. But in any event, demography will make the present policy increasingly self-defeating and expensive.

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