Corporate Models of the Future (with bonus Ohno Circle exercise)

How Crisis Shapes the Corporate Model is an interesting article in the March 28, 2009, New York Times. It gives some history of how past economic shifts have affected the structure and nature of corporations. The article speculates on what may be to come. It gives many interesting historical examples.

An Unbundling of the Corporation?

It quotes John Hagel III, the co-director of the Deloitte Center for Edge Innovation, as saying that we may see “an unbundling of the corporation” to achieve greater efficiency and profitability. Based on the the examples in logistics (Federal Express and U.P.S), call centers (Convergy), and contract manufacturing (Flextronics), unbundling sounds like another word for outsourcing and offshoring. Disconnecting processes and stretching out the value stream doesn’t seem like a smart thing to do, even in the name of cost savings.

The article also makes a passing reference to lean manufacturing and just in time strategies. It takes a contrary view that high fuel prices may in fact bring more manufacturing sourcing decisions closer to the point of consumption instead of in low-cost countries. Out of altruism or the need for survival, manufacturing corporations are presenting themselves as “social organizations, whose obligations extend well beyond Wall Street” according to Rakesh Khurana, a professor at Harvard Business School. As an example, the embattled U.S. automakers are portraying themselves as “pillars of their communities and pillars of American manufacturing, not purely economic entities” according to the article.

Technology as Cause or a Co-occurring Factor?

The article’s author may also be confusing correlation with causation when he talks of how technology has made it easier to monitor and manage large and complex corporations. This notion doesn’t seem to have a direct line to the Depression or other economic shifts highlighted in the article. Perhaps technology is an enabler of change in the corporate model, but only one of many. Whether technology is a greater catalyst of chance in the corporate model or whether economic factors are a greater catalyst is an interesting question. One that’s not easy to test, however.

Management: a Science or Not?

And do you agree or disagree with the bolded portion of this quote from the article?

Innovation in management, after all, is adaptive. Management is not a science, like physics, with immutable laws and testable theories. Instead, management, at its best, is an intelligent response to outside forces, often disruptive ones.

Can management not be a science and also be adaptive, and yet possess immutable laws, testable theories, and respond intelligently to outside forces?

Bonus feature: Stand in the Circle Photo

The photograph of the Flextronics factory in Hungary from the article is a good one for practicing the “stand in the circle” exercise. Pretend you are in the factory, standing in the Ohno circle. Your task is to identify 30 small problems or improvement ideas in the next 30 minutes. As a company, Flextronics is known for having some fairly lean sites, and this factory appears to be clean and organized. In addition, the fact that you cannot see people moving makes it slightly more challenging. On the other hand, it allows you to observe a single moment in time more deeply. I found 18 possible improvement areas in 12 minutes before it got really hard. What will you find? Add your observations in the comments below.

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