Are corporations efficient?
Anyone who has ever worked for a large successful corporation will agree — there are times when they seem hopelessly inefficient. Despite this, corporations have an established record of economic efficiency.It is fair to say that corporations are far from perfect but are nonetheless the best known way to drive economic production.
Examples of corporate inefficiencies
Way back in 1776 Adam Smith made a prediction about corporations — at the time they were more theory than reality. Smith predicted that corporations would be inefficient because of the separation of ownership and management.Many of the widely observed inefficiencies of corporations today can be tied to this very problem:
- short sighted planning (focus on quarterly performance)
- office politics
- executive disincentives (golden parachutes)
- disengaged employees
- spending waste
- disconnects between pay and performance
Is there anything better?
The modern corporation has been the dominant unit of production for more than 150 years. This is not likely to change quickly. However, there is one model ready for the challenge: the Social Media Value Chain.The Social Media Value Chain
A Social Media Value Chain is a network of individuals (and small companies) who organize production of goods and services using social media.
A Social Media Value Chain has similar characteristics to a corporation:
✓ economies of scale
✓ specialization
✓ brand awareness
✓ political influence
Additionally, a Social Media Value Chain has one important advantage over a corporation: there is no separation of ownership and management. Adam Smith's grim 1776 warning might undo the corporation after all.
Has the transformation started?
There are plenty of signs that the Social Media Value Chain transformation has begun. Not surprisingly, the transformation is being led by the corporations themselves:- investment in social media and social software
- the move to outsourcing
- PaaS / SaaS
- contractors over employees
- telecommuting
- the move to social media marketing
The writing is on the wall: the modern corporation is becoming a employee-less association of free agents tied together with social technologies.
Innovative corporations such as Google and Amazon have seen this coming for quite some time. They have focused their strategies on enabling the Social Media Value Chain transformation.
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