The mighty are falling.
Virtual Companies are replacing the traditional corporation as the most viable form of business entity. Virtual companies leverage technology to drive efficiency advantages that make them more competitive, nimble, and profitable.
While corporations look to satisfy many stakeholders, Virtual Companies are likewise unburdened; being narrowly focused on doing just one thing right.
Investors like that.
A ‘Virtual Company’ is a loose association of temporary independent partners (customers and suppliers) who use technology to share resources to achieve each stakeholder’s objectives. There is no central office. Fluid relationships between actors defy any organizational chart or hierarchy. Where corporations depend on senior management teams to manage everything, the Virtual Company focuses on doing just one thing well, and rely on working relationships for everything else.
The Virtual Company doesn’t have the overhead from supporting a large workforce. It doesn’t suffer the inefficiencies from organizational malaise or the need to simplify a message so it can be comprehended by the ‘higher ups’ and answered with an equally simple ‘Yes’ or ‘No’. It has a perfectly flat organizational structure and no internal management.
Far-flung units quickly locate suppliers, contractors, designers, and manufacturers.
Virtual Companies are causing organizational vertical dis-integration (the death of corporations) across the globe. Almost nothing you buy today was physically created by the company whose name appears on the label. The phone you have in your hand, the meat in your sandwich, or the shoes on your feet are the result of a loose association of temporary partners, each contributing to the final product.
The new ‘organizational order’ is having profound impact on our society. Most immediately, there simply is not the need for workers as there was before. It is a world of highly educated, sophisticated, technical specialists. For such people, the Virtual Company offers much opportunity. It is also quickly eroding the social safety net. A good pension is hard to find. Even governments owe trillions of dollars in underfunded pension liabilities. Governments themselves are succumbing to the ‘Virtual’.
Control and accountability is a problem. Who is in charge? The ‘Virtual Company’ has poor visibility into the product or service it sells in terms of what goes into it or how it is made. Outsourced suppliers rely on other outsourced suppliers who are relying on others and so on.
Business will continue as it always has, but the corporation as we know it today is in demise.