Why Every Aspect of Your Business Is About To Change
Imagine an economy without friction —a new world in which labor, information, and money move easily, cheaply, and almost instantly. Psst—it’s here.
That’s how this Fortune cover story started. I had to keep reading. “Every Aspect of Your Business Is About To Change” is a fascinating read that explores the new rules governing today’s “new economy.” The article distinguishes between businesses evolving as “21st century corporations” and those that aren’t (yet at least). Studying Tesla and GM helps us better understand this dynamic.
General Motors creates about $1.85 of market value per dollar of physical assets, while Tesla creates about $11.
GM creates $240,000 of market value per employee, while Tesla creates $2.9 million.
Tesla, though in the same business as GM, is a fundamentally different idea.
The article goes on to explore Nike, Apple, Microsoft. The 21st century corporation is not very different from what we here at Work Market call the “modern enterprise.” We’ve spent considerable time exploring the massive digital transformation that many companies are currently undergoing in an attempt to modernize their business.
The 21st century corporation must rethink nearly every aspect of their business. How they allocate capital. How they create value. And how they deploy labor.
“Some of the deepest rethinking to be done by 21st-century employers will follow from this question: What happens when the labor market becomes friction-free? It’s clearly headed that way, as the rise of the gig economy shows. Companies still employ full-time workers who aren’t really needed full time, but keeping them on staff is easier than constantly hiring and firing. At least it used to be. Now employers are hiring millions of workers worldwide to do information-based work through online marketplaces; each worker is rated by previous employers, and you don’t pay unless you’re satisfied with the work.
“Project the trend a few steps further, and the whole model of employment could change fundamentally. Employee-owned businesses are likely to increase, but they’re just one option among many, which may eventually include a far more radical structure. Former Cisco CEO John Chambers said in June that “soon you’ll see huge companies with just two employees—the CEO and the CIO.” It’s crazy, except that Chambers has a record of making crazy predictions (like opening your hotel-room door with your smartphone) that eventually come true.”
We’re certainly seeing a shift in the way businesses think about their labor models. Earlier this week, we examined how companies like Nintendo, General Electric and Procter & Gamble are retooling their workforces to capitalize on a new class of independent professionals. Sprint’s new CFO Tarek Robbiati recently called his company’s cost structure “bloated” and announced plans to cut 10% of operating costs for a $2 billion savings that would “inevitably result in job reductions.” HP CEO Meg Whitman said that her company’s latest job cuts will “enable a more competitive, sustainable cost structure.”
While some businesses will struggle to adapt to this new reality, others will thrive. The nature of disruption itself is unpredictable and chaotic.
“The good news is that accelerating change, creative destruction, and new business models are all opportunities for the venturesome. A unifying theme as the economy transforms is that in almost every business, barriers to entry are coming down. Opportunity is more widely available than ever. Every person and every organization can possess the 21st century’s most valuable assets: openness to new ideas, ingenuity, and imagination.”