When I worked in management consulting we used to talk about the various phenomena driving changes in business. One of these was the “Dis-aggregation of Corporations” - consulting speak for the “break of up large corporations”. Like so many of these things, this one seemed a little far fetched. Now we’re watching it happen.
Basically the “command and control” corporate structure just doesn’t get the best out of people. It was an answer of sorts when people had to be brought together to share the use of assets (as in factories) and communicate with each other (as in offices). Now that machines are automating all of the grunt work, employment is more about knowledge and communication than effort. Initially the effect was to move people from the factory floor to the office desk. More recently the move has been from office desk to out the back door.
Corporations need fewer knowledge workers, and there isn’t room for everybody in the management bureaucracy; so the older people are being driven out - past their sell by date - to make room for the younger generation. Of course the human resource planning functions completely miss the fact they’re losing all the skills and experience of the older guys. What happens next? The throw out ends up working as a consultant, selling those same skills back to the business.
The largest and fastest growing age group for start-ups is the 50+ baby boomers. The second fastest growing group is the “moms” who value a work/life balance over the corporate ladder. The third fastest growing group are the graduates who can’t see the point in commuting when they could be computing.
The Internet is making this all possible. It’s increasing everybody’s flexibility, expanding their reach and destroying bureaucracy. It’s making the Flat World and Wikinomics realities. It’s making “hollow corporations” the business model for the future.
Small businesses are increasingly the real engine for growth in developed economies as evidenced by this interesting list of facts:
The SBA has released their updated small business statistics. for the USA. Here are a few of the highlights: small businesses
- Represent 99.7 percent of all employer firms.
- Employ about half of all private sector employees.
- Pay more than 45 percent of total U.S. private payroll.
- Have generated 60 to 80 percent of net new jobs annually over the last decade.
- Create more than half of nonfarm private gross domestic product (GDP).
- Hire 40 percent of high tech workers (such as scientists, engineers, and computer workers).
- Are 52 percent home-based and 2 percent franchises.
- Made up 97 percent of all identified exporters and produced 28.6 percent of the known export value in FY 2004.
- Small innovative firms produce 13 times more patents per employee than large patenting firms, and their patents
are twice as likely as large firm patents to be among the one percent most cited.
The number of new small businesses has grown steadily over the past few years. In 2002 there were about 570,000 new small firms employing people. That number grew to almost 650,000 new businesses in 2006.
The new stricter bankruptcy laws have clearly had an impact. Bankruptcies in small businesses had been 34,000 - 39,000 per year for several years, but dropped to 19,000 in 2006.
Comments (RSS 2.0)
Leave a Reply
You must be logged in to post a comment.