The Future: bigger companies, faster deaths - Growth Science
What does it mean to live in a world with ever-more huge companies that live ever-shorter lives?
1. The end of “lifetime employment” – for those few who still believe in it.
2. Greater incentives for entrepreneurism.
3. More independent contractors (vs employees).
4. Successful big companies will operate less like fiefdoms and more like networks.
…when cities double in size, each person in the city becomes 15% – 20% more productive.
In contrast, as huge companies grow they end up with diseconomies of scale; productivity per employee drops.
The reason cities become more productive with scale, and huge companies become less productive, is that cities evolve as self-organizing networks (while huge companies are dictatorial fiefdoms). Cities emerge through decentralized, diverse activities that are driven by people acting to maximize their self interests. Overall, it’s in everyone’s self interest to be more productive so the city’s structure evolves to maximize that result. For example, in cities nobody tells you where to live, where to shop or who to make friends with, so individuals find multifaceted, robust structures to accomplish those goals for themselves. In contrast, companies tell you where to sit, what to do, who to work with and grant little latitude to exercise individual judgment.[i] Structures and pathways don’t evolve to produce an ideal result, rather they’re dictated from overlords. In a world where a company’s longevity depends on its ability to create multifaceted, robust networks of talent, ideas and capabilities, companies might consider learning a thing or two from cities about how to thrive in the long-run.
Huge companies love to trumpet their friendly ecosystem activities and collaborations, however the reality of working with huge companies can be quite different. … call out two trends that are fundamentally redefining what it means to have a job, a career, and to be a business.
The days of lifetime employment are bygone. There are increasing incentives for the best and brightest to strike out on their own. This means huge companies need to figure out how to transform into masterful networks of talent, ideas and capabilities rather than oppressive fiefdoms. Meanwhile, huge companies resisting these trends can increasingly look forward to swift and certain death.