2011-12-27

Co.Exist

The Corporation As You Know It Is Probably Obsolete

In a second excerpt from his new book "Betterness: Economics for Humans," Umair Haque says that a new economic landscape is going to fundamentally alter with whom companies compete.

There is a groundswell in new kinds of corporate forms that is gaining steam. Consider the rise of "for-benefit" corporations. They’re a new kind of corporate form, built from the ground up to create wealth, instead of being tiresomely legally bound to return maximum profit to shareholders.

Imagine, for a moment, the new organizational possibilities that the novel legal and contractual design of these organizations opens up, where bonuses are tied to marginal wealth attained by people, communities, and society, roles are created to manage benefits (think "chief impact officer"), and transparent accounts demonstrate real, meaningful benefits, not earnings. You’d have an organization geared to do explosively more than just buy and sell crap that’s slightly updated every year or so, on yesterday’s moldy old terms. You’d have instead an organization tuned not just to make stuff, but to have real relationships, to meaningfully enhance lives, to push the boundaries of elevating human potential, to laser-lock on to creating wealth, to do all the above in ways that matter, count, last, endure, inspire, amaze, and delight—and to do all the above habitually, consistently, and repeatedly.

Now put that new arsenal of enterprise, its disruptive new set of capabilities, its unexplored, undeployed firepower in the hands of someone with the unsatisfied hunger, unyielding determination, and laser-sharp insight of a Steve Jobs, Sergey Brin, Larry Page, or Richard Branson, and you might just begin to nervously ask yourself: "is there a bullet out there somewhere with my name on it?" Sure, the fact is that there’s no corporation in the world that works quite like this—yet. But the truth is that when there is, it’s going to put "business" as usual out of business.

Ultracompetition Can Only be Won Through Betterness

In the twentieth century, rivalry was most often about a single kind of counterorganization: competitors. That was yesterday: in the twenty-first century, a new range of insurgent counterorganizations must be contended with, hell-bent on toppling imperious incumbents from their comfy, cushy thrones. They are markets, networks, and communities composed of a huge variety of actors: NGOs, peer and trade groups, customer and supplier communities, activist investors, and labor organizations, to name just a few.

Hypercompetition is an increase of like-for-like competitive intensity. Ultracompetition is increased competitive intensity across new kinds of counterorganizations. This turns up the pressure dramatically. Ever consider students a counterorganization? Think again. At Harvard Medical School, students self-organized to pressure professors to stop accepting gifts from pharmaceutical companies, citing a clear lack of interest and diluted objectivity. The result? Harvard profs stopped accepting gifts, and the structure of pharmaceutical marketing changed, just a tiny bit.

The lesson? Often, you can’t negotiate and bargain with ultra-competitors; the Harvard Med students weren’t interested in selling out, at any price. And you can’t lock out them out or ignore them; ultracompetitors don’t go away. Expand a small number of Harvard Med students to a metamovement of thousands of protests consisting of millions of people erupting across the globe, and you begin to get the picture of just how rapidly ultracompetition is intensifying.

To meet the new challenges of ultracompetitors requires organizations to learn how to become ultracompetitive. Ultracompetition isn’t just quantitatively greater, but qualitatively different. That means, in turn, it can’t be responded to simply by doing more of the same, harder, better, and faster, but only by better, in terms of real marginal wealth creation. It can’t be responded to through better marketing, cheaper products, or bigger threats. It requires a sea change in how to compete. Our products and services may be competitive when measured against our rivals, but are they competitive when measured against the full spectrum of counterorganizations?

For mere businesses, the answer is almost always no. Like Big Food, Big Pharma, Big Energy, and Wall Street, they are increasingly vulnerable to ultracompetitors. Companies in betterness, in contrast, are learning that the key to answering the threat of economic insurgency isn’t to ignore it, deny it, or try to crush it, but to redraw the boundaries of competitiveness.

Reprinted by permission of Harvard Business Review Press. Excerpted from Betterness: Economics for Humans. Copyright 2011 Umair Haque

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7 Comments

  • tobybarazzuol

    Another great excerpt from "Betterness: Economics for Humans"!  If you haven't already, do yourself a favor, stop what you're doing, and read these 50 pages...you may never go back to what you were doing before.

    Umair lays out a beautiful blueprint of what might be possible if we have the imagination and courage to build something new with our businesses.  Explore the realms of possibility that open up to you once you realize that business can be about so much more than simply making money.

  • Tan Kok Leong

    Never-ending pursuit of obscene profit perhaps need to be balanced
    by something more human - a cleaner world and a better world
    climate.

  • James Rock

    I agree with your prognosis. It's very refreshing to find someone who like me, thinks that the economic model is changing to a new set of dynamics based on social value rather than profits. However, your article says that there aren't yet any companies out there that act like that. I would disagree. Nearly two years ago I wrote about the emergence of a new breed of Authentic Businesses, based on a new set of values. I started to compile a list of these companies, as exemplars to follow. You can see the list here: http://is.gd/8crRhP please add more if you know of Inspiring Companies...
    @James_Rock