Company 4.0: The beginning of the end of the company as we know it?

The company as we know it is a result of the organization of work in the 18th century. It has constantly evolved, but the basic features have remained the same: employees provide a service in more or less good and well-organized cooperation, which is sold under a company. The resulting monolithic entity became independent in the perception of society. People spoke of the interests of the economy. In recent years, however, there has been a growing realization that the economy is a part of society and more holistic views are gradually gaining acceptance. The logical conclusion of this development is the dissolution of the “company” model. Simply because this form of work organization is becoming far too expensive in an environment of advanced technology.

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4 trends that are softening the traditional company

If we look at the development of the last few years, I notice 4 trends that run counter to the corporate concept of the last century. This list is by no means exhaustive.

Self-organized companies

Especially in IT, companies in which the employees determine the organization themselves are becoming increasingly numerous. Holacracy is often referred to as a kind of lighthouse concept. Designed in 2007 by entrepreneur Brian Robertson as a “best practice concept”, it has since gained considerable recognition and application. What I often encounter in my daily work, however, are not pure Holacracy organizational models, but mostly modified forms. You could call them “holacracy-but” models. In essence, it is always about supporting decisions more broadly, shortening decision-making paths and giving employees more co-determination rights.

What shaped the corporate culture for decades as a top-down organization now fits less and less into the way employees see themselves and their work. And many managers have realized that decisions are generally much better when they are made by the people who are directly involved in the respective challenges.

This type of self-organized company, especially on a larger scale, is only possible because we have the technical tools to set ourselves up as an organization in this way.

Social responsibility

In one of my first business management lessons at business school, I learned that the primary purpose of a company is to make money. That was just over 20 years ago. And I think the perception of this question has changed fundamentally in recent years. Of course, shareholders are still important, but many companies, especially technology companies, see their activities in an overarching, often philanthropic context. This is the outer end of the spectrum, so to speak.

Companies that are challenged by consumers are more in the middle. Be this in relation to gender equality, working conditions in general and, above all, ecology. Today, corporate social responsibility is a matter of course, albeit sometimes with its own interpretations. However, the topic is comparatively young in terms of economic history. For example, the EU has only been officially dealing with it since 2001.

New forms of work

The last 20 years have seen the separation of work and private life become increasingly blurred. It is difficult to determine what is driving and impacting this development. What is certain, however, is that gender equality and the resulting new awareness that parenting and household work should be shared equally by both parents are demanding new flexible models. Highly qualified employees in technology in particular consciously decide to work part-time as soon as they reach parental age. It is an achievement of our time that this is increasingly possible.

What I also observe is that many new entrepreneurs think twice about actually “casting” their project into a company. Or set up company structures that manage without employees but exclusively with partners.

Among qualified employees in particular, I am increasingly seeing a desire for work that is as diverse as possible. Not that they want to pursue different professions. It’s more that they don’t want to be tied to one employer for a long period of time. This is a development that will undoubtedly affect less qualified workers sooner or later.

Decentralization in the economy

Decentralization, or decoupling, is a megatrend that many in business today do not recognize. Whereas it used to be important to aggregate mass and become a big player, speed is increasingly important in business today. The underlying logic is simple: size used to be important because it allowed synergies and economies of scale to be exploited. However, these effects are increasingly being replaced by new technology.

This decentralization also makes a great deal of social sense, as large companies harbour immense social risks. Some people remember the political exercises from 2008 under the catchphrase “too big to fail” all too well. When we talk about the concept of “fail-fast” in projects, start-ups and products, this should not stop at companies. After all, the overall social costs are much lower when smaller companies go under.

I like to talk about a “peer-to-peer economy” in this context. By ensuring that no company is big enough to destabilize the entire network, we make the entire economy safer. It is therefore important that companies remain fast and agile. And not focus on size.

A time of new beginnings

We are living in a new era of rapid upheaval. The catalyst for this development is social discourse and, of course, politics. For this reason alone, the company as such will of course remain with us for a long time to come.

But in the last 10 years, it has become more acceptable to question the status quo and dare to try something new. This is a positive development that we urgently need. Above all, the perception of change has changed to the extent that more people are embracing it and seeing it as an opportunity. And actively shape it.

This should not stop at the company. Whether you want to call it Company 4.0, start-up culture, transformation model or whatever, is irrelevant. The main thing is to seize the opportunity to tackle change. And to benefit from these changes.

(This article originally appeared in TopSoft Magazine August 2016)