The Director of the Future Enterprise Research Centre- David Hunter Tow argues that the credibility of the Enterprise brand, particularly Big Enterprise, has been severely damaged in recent times and can only be remediated by meshing more closely with the entrepreneurial technologies of the Web and the norms of a more sustainable and ethical society.
But the future doesn’t wait for perfect solutions and the Big Enterprise is now caught in a roiling sea of change, having consistently failed to adapt to the social and technological imperatives of the 20th and 21st centuries.
The modern enterprise has emerged as a relatively recent force in social development; the child of earlier corporate and other business models, supposedly a more dynamic and entrepreneurial entity than previous structures, allowing individuals to cooperate more efficiently to achieve a range of common legal, financial and social goals.
But it is not just rooted in the capitalist system, although its primary goal is usually the generation of a return on investment for its risk takers, whether private or public. Its goals may also be of a social, non-profit or purely philanthropic nature.
Along the way it has acquired the usual mix of fellow travellers - investors, shareholders, partners, regulators ideologists and lobbyists. But when operating as a typical risk taker, it has been allocated special privileges such as limited liability, low or non-existent tax breaks and other special exemptions including often State sanctioned dispensation to exploit the assets of the Commons- the natural endowments of the planet. These can include- previous heritage sites, mineral rights, natural forests and farming land, fresh water sources, unpolluted air and often intellectual property; originally reserved for the public as a natural right for their health and general wellbeing.
Particularly since the 20th century the Enterprise has proudly emerged bigger and bolder, acquiring ‘multinational’ status and systematically utilising mass production and development methods largely based on fossil fuels, to exploit and degrade the planet’s resources- blanketing cities, waterways, farming land and forests with acrid poisonous residues, often causing endemic disease and misery as it went.
Toxic mining and processing wastes still pollute rivers and estuaries, killing the marine life and destroying the health and livelihoods of many dependent communities. And this still continues in many developing and developed countries such as Australia, Canada, China and the US where petrochemical companies continue to spew out lead and other heavy metals as well as fracking and tar sand residues, polluting the pristine farming land and groundwater.
The modern enterprise may therefore be more entrepreneurial, dynamic and socially aware than its predecessors, but such travesties are still common and acceptable because along the way the ethics of larger enterprises got hijacked by their executives and regulators who lost sight of the fact that they had an obligation to act for the wellbeing of the community at large as well as maximise shareholders profits. Public servants in Government agencies also went along with this form of criminality and a revolving contractor door began creating massive conflicts of interest between regulators and managers, which continues unabated today.
And so began the era of the Big Enterprise-where corruption and the ‘winner takes all’ mantra became the behavioural norm within business oligopolies including- Big Pharma, Agri, Oil and Chemical, Defence and Armaments, Media, Retail and Commerce, Banking and Finance and Construction and Engineering industries; because might was right and scale was power and influence and smaller enterprises often became collateral damage, unable to compete effectively for market share.
And because Big Enterprises became so profitable and powerful, Governments continued to provide carte blanche for their exploitation of the planet’s finite assets and pollution became routine, particularly by Big Miners such as Chevron, which still refuses to pay compensation for massive destroyed tribal habitats in the Amazon and Big Banks that stole the savings of small investors and pension funds during the GFC and Big Agri companies like Monsanto which established seed monopolies over farmer’s rights on the back of patented plant genes and Big Pharma that tried it on with human genes and Big Manufacturers of consumer goods that outsourced their production to substandard factories employing child labour in developing countries with no legal safety protection.
And the bigger they got, the more they assumed that the Commons was available for the taking, until today much of the original resources of a pristine planet has been stripped bare and big enterprise continues to consume them at 150% of sustainable capacity.
To counter the bad vibes it encountered from this pernicious behaviour, Big Enterprise also gathered an army of apologists and cheer leaders in the form of PR and lobbyist minions to sanitize their actions. They also recruited security companies to protect their stolen assets against pesky indigenous and activist groups who were outraged by their behaviour. Also police and spy agencies such as the NSA began collecting the names and personal records of those who interfered with lucrative enterprise arrangements such as price fixing and illegal waste disposal, on the pretext of preventing terrorism.
At the same time the creative accountants and corrupt auditors found ways to minimise the tax paid by enterprises, including tech giants such as Google and Apple, through the use of global tax havens or by channelling profits through minimal tax zones.
And really this litany of corruption and abuse has not been improving. If anything it has got worse in the 20th and 21st centuries. So despite the tens of thousands of sustainable small and medium law abiding enterprises with a conscience – mainly family businesses not intent on taking over the world, enterprises have been getting a reputation for exhibiting psychopathic, anti-social behaviour. In other words, if anything this cancerous growth in the corporate/enterprise sector has been metastasizing at an exponential rate.
Not a pretty picture. And eventually something had to give.
Finally in the late 20th and 21st century the tide began to turn. A new form of social enterprise emerged- the activist NGOs –such as Greenpeace, Human Rights Watch and Transparency International. These have gained traction- finding ways to fight back against the goliaths by exposing their excesses and successfully taking legal action. And smaller enterprises, like farmers markets and small scale renewable energy developers are becoming more innovative, creative and agile, offering a more personal and fairer option to the communities of which they are a part.
The other change and it’s a big change, is that the community has finally turned against Big Enterprise, becoming sceptical of its anti-social practices and the hype and lies in the form of deceptive marketing and glossy advertising campaigns; increasingly caught out by the social media, activists and whistle blowers. Their greed and naked criminality is being exposed like never before and governments are slowly being forced to act on their constituent’s behalf.
Enterprises and their shareholders and executive employees cannot hide anymore in gated enclaves behind bland anonymous websites, immune from the consequences of their actions. Through pervasive sensors and eyes in the form of the smartphone cameras of citizens, every action of the Enterprise is being monitored and reported. With the imminent advent of the Internet of Things or sentient objects, the pervasiveness of watchful sensors will ramp up exponentially.
When Big Enterprises pollute or destroy habitats in Africa, Asia or South America, with their products sourced from death trap factories, or supply chains packed with illegal conflict minerals, the world will be watching. The outcomes of enterprise actions will be reported in the social media as they regularly are now within milliseconds and that record will remain as a stain in the digital archives for perpetuity, accessible by prosecutors. There are now not just a handful of investigative reporters tracking the perfidy of big business, but the eyes and ears of citizens everywhere.
As well as the increasing crackdown on Enterprise corruption another revolution is underway. It is called Sustainability. To remain in synch with community aspirations in a globally warming world shareholders are being encouraged to punish enterprises that cause harm to the planet and its life forms, whether through use of fossil fuels, pollution or fraudulent practices, by withdrawing their investments.
Big Enterprises must not only produce profits for their shareholders - often Funds representing the savings of everyday citizens, but must also prove the delivery of socially sustainable benefits for the communities such as local indigenous groups from which they draw their sustenance in return for token jobs and royalties as in PNG. And the pressures for this investor-driven change are now enormous.
No more banks marketing fraudulent derivatives or rigging borrowing rates or Walmart outsourcing garments made by women and children working for a pittance in the fire factories of Bangladesh.
All too often enterprises have are adopted a head in the sand attitude when confronted with anything that impacts their short term profits and executive bonuses – repeating the pathetic mantra- ‘It’s just business’ as a justification, similar to that of mafia murderers- as if business and society’s ethics can be separated. How can any reasonable planning forecasts for energy supplies, vehicle exports, wheat harvests or fashion garments be calculated without taking into account major geopolitical issues such as global warming and conflict affecting those markets. And yet this is exactly what many big enterprises and governments employing dozens of market analysts still produce.
Buy there’s a whiff of panic in the air from Big Enterprise. The fossil fuel extractors are beginning to realise that a large proportion of their oil, coal and gas reserves may now have to remain in the ground, where their assets will become liabilities. The major tourist hotel chain operators are also starting to sweat as they realise that the luxury resorts built in tropical hurricane zones such as North Australia and the Caribbean will have to be written off, as well as assets in the vast no go areas of the planet- those becoming lethally hot or potentially flood prone. Instead the scope for the smaller eco-friendly enterprises has expanded for those that don’t leave a footprint on the planet or believe eternal growth is mandatory.
So Global Warming and the concomitant need to mesh with the sustainability and ethical goals of the broader community are now emerging as two massive constraints and shapers of the Future Enterprise.
But a third factor has emerged that has caught most of the bigger businesses totally flatfooted.
This is the competition from the tens of thousands of next-gen innovators involved in entrepreneurial Startups funded by thousands of smaller non-bank investors, covering every application and industry that was once the exclusive domain of the Big Enterprise.
The services sector is now in turmoil with thousands of small agile enterprises based in cooperative hubs in every major and many minor cities across the globe; cashing in on new opportunities to re-engineer traditional ways of doing business without the need for massive PR budgets or bribes.
And an increasing proportion of the population is becoming technically savvy and better educated, particularly in the massive emerging populations of India, Africa, Asia and Latin America. Global conglomerates across the planet are being stripped of their mystique and gatekeeper roles. They are also being stripped bare by the new wave of creative apps, with agile Startup groups disrupting every traditional industry process, from 3D manufacturing to mobile payments, from personalised healthcare to online education, from local eco-tourism to flexible online travel reservation; using clever algorithms linked to the Internet and powered by cheap smartphones and pads
The smaller enterprise is becoming more innovative, creative, agile and competitive, offering a more personal and fairer option to the community. Innovation and creativity are the new buzzwords and the citizen beneficiaries are loving it.
And this is just the beginning.
The future enterprise will from now on be dominated by technology- from the Internet / Web and every other innovation that goes with it including- Virtual Clouds, Social Networks, Mobile devices and soon the Internet of Things - all available at a relatively low entry and maintenance cost. Technology will not just be an external enabler but will impact the very heart and soul of the enterprise, changing its structure and ability to compete in radical ways; allowing the smaller players to compete on a level playing field.
As the technological basis and norms of society shift, so the structure of the enterprise will also be forced to adapt.
And so we come to the fourth factor in the evolution of the Future Enterprise- the Virtual Enterprise.
The Virtual Enterprise- VE is much more opportunistic and is already here. It does not require its employees to be gathered under one roof or even in one country or controlled from one centralised management team. The VE marks the beginning of a networked distributed architecture obsoleting the traditional siloed hierarchical model of the 20th century.
In such a fast-moving logistical revolution, skills and techniques as well as materials have to be available on demand. Outsourcing of every process- from HR to Manufacturing to IT, including strategic decision-making, will therefore become the new norm.
The workforce, partners as well as customers will be global as well as local, with lightning paced decisions made to optimise production or marketing as opportunities arise and where resources, including skilled and unskilled contractors- even robots, are ready to go. We see virtual flexibility today in the skilled expat diasporas and migration from high unemployment zones of Europe and Asia, supporting every industry from the mining to construction to finance.
Smaller enterprises will have a significant advantage in such a world- without carrying the enormous overheads and legacy of a large enterprise. The virtual enterprise will allow them to scale up or down as required. Without the artificial dichotomy of workers and management, a much more cooperative and flexible model of social evolution can be introduced.
This is likely to lead in fact to the structure of the future enterprise eventually meshing with that of the Web, at the same time connecting with community needs and aspirations on a symbiotic local, regional, national or global basis. Such a pervasive networked architecture utilising a Web based on much cleverer virtual Software Defined Network – SDN and Data Linked Architectures, will apply equally for big and small, public and private enterprises. This will facilitate distributed and largely autonomous decision-making, with the capacity to dynamically route information and intelligence- human or artificial, to key decision nodes as algorithms begin to dominate the management of more complex processes.
Organisational boundaries will become increasingly fluid and porous with individuals moving freely between projects and career paths adding value at each step, in turn allowing them to acquire new skills linked to ongoing advanced learning programs.
So today’s lumbering enterprise behemoths will likely be largely unrecognisable by 2030 - smaller, networked, far more flexible, agile, scalable and opportunistic as well as cooperatively tuned to the needs of the community as well as the customers they serve, eventually on a largely autonomous basis.
They will also apply the latest knowledge within a far more ethical and non-combative environment; cooperatively as well as competitively, applying sustainable methods of energy conservation and high standards of ethical governance.
Sound too good to be true?
Not really – just a logical and inevitable outcome driven by changes in the global environment which are already largely in train and in which the enterprise of the future will play an increasingly significant role.