Is market the future of enterprise ?

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In a context of uncertainty and perpetual disruption, there is only one thing certain for businesses : they will have to learn to adapt and reinvent themselves continuously.

What implies a couple of things :

– adhoc team reconfiguration : the needs at a given moment determines the structure. That’s not the structure that dictates the way the organization responds to a need.

– “talent mix” : bring the right talents together, at the right place, develop the existing ones and quickly find those that lack, mostly on emerging matters.

– innovation in terms of service, business model and organization (and not only in technology).

Organizations must move from the Soviet era to the market era

It’s easy to realize that the ideal way to operate is to work as a market because it allocates resources and talents in a dynamic way. To continue with my economic metaphor, the current enterprise is like the soviet planned economy while tomorrow’s is market economy (in its non depraved form).

The interest of the group dictates the organization and the way resources are allocated, the global optimum is favored over the local maximum that implies silos, internal competition and strict resource allocation.

That what may happen in an ideal world. Unfortunately, enterprises are not markets. We can think that they should become markets but there are many barriers that will make it very difficult. I’ll also add that traditional markets are based on a competition logic that I don’t find beneficial in the workplace : it may lead to the extinction of one player and everyone know the rules but in the workplace it will harm the needed employee engagement.

Enterprise can become more flexible, there are things to do in terms of resource allocation, however they need internal regulations and management.

When you can’t become a market internally, become one externally

However, solutions exist. If the idea of keeping employees engaged and standing together implies some limits, these limits are lesser outside the organization where partnerships can be established on a opportunistic base, make the collaboration last as long as it makes sense and change directions when it doesn’t.

That’s how leaders of the digital economy operate : essential resources are internalized and the rest is commoditized, working on an “on demand” basis. Uber has no drivers but service providers. AirBnb does not rent its room but serves as an intermediary. These companies can adapt to the market, resize themselves based on the demand and be fully customer oriented without wasted resource.

In this way they personify a future one may like or not : a freelancing economy with its good and bad sizes that compensates for the internal rigidity with an added external flexibility.

Markets do no perform well for scarce resources

But this model also has limits. It works for easily findable and substitutable resources. Drivers, flats, people having time to perform elementary task in the case of the Amazon Mechanical Turk. This model is also an engagement killer and its force may become its weakness when a competitor comes with a more engaging model, a better employee experience or partner experience.

Who would hire a freelance data scientist today ? No one. Depending on the context and urgencies, a business that want to move along the value chain or build a competitive advantage must lock the most scarce talents they’re not willing to share or see leaving in the blink of an eye.

No business wants its strategic assets to be free agents on the market. Full outsourcing has limits and if we can expect some downsizing, company’s size won’t be divided by two or more.

A marker approach is both about resources and the way they’re organized

What’s going to change is the pace at which a given skill will move from strategic/internal to commodity/outsourced.

Thinking the “market enterprise” in terms of availability/cost of talents is a first step. But it does not solve the organization/resource allocation issue, that may be harder to deal with with partners than employees.

A Uber-like approach works because the mission is simple. For more complex projects or missions, it’s not sure that working with a constellation of partners makes business that efficient. When a company works with large partners there are lots of chances that, once it has solved its own efficiency issues, the constraint moves inside the partner’s organization. At this point having one’s own staff may be better that a poorly efficient and responsive partner.

And what’s about digital on this matter ? It’s both a piece of context that pushes organization towards a market approach and a piece of response helping to make market relationships more fluid from a technology and even cultural standpoint. But technology alone won’t change operation models or corporate structure.

Photo credit : Marketplace by Mathias Rosenthal via Shutterstock