The company of the future - review

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Title: The Company of the Future
Author: Frances Cairncross
Publisher: Profile Books / Harvard Business School Press 2002
Format: Hardback, 256 pp
ISBN: 1861974051
Price: £17.99

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Following her previous book, The Death of Distance, which dealt with the ways in which the technological revolution of the last ten years affected communications, Frances Cairncross has now turned to corporate structures and management. It’s not a new subject area, and there have been no shortage of other books on the same theme in recent years – however this book stands out. It’s very well written, and very readable – there’s plenty of detail, but techophobes should be able to understand the techie bits and the economically illiterate will be able to make sense of the financial stuff. The tone is generally positive about the benefits of internet technologies, without going over the top – the book went to press in the last quarter of last year, so the effects of 11 September and the dramatic fall in technology stocks are both taken into account.

Cairncross starts by listing ten key attributes of good management for the new economy – manage knowledge, make decisions, focus on customers, manage talent, manage collaboration, build the right structures, manage communications, set standards, foster openness and develop leadership. The rest of the book is roughly a chapter on each. Looking at the list as a whole, it’s not that different to Peters and Waterman’s list in In Search of Excellence – although the emphasis on knowledge and communications are new, as is the sharper focus on decision making, which Cairncross quotes approvingly as "the killer application of the human brain".

Obviously some parts of the story are of more relevance to training specialists than others. Overall however, human relations issues and especially training have a very high profile throughout the book. Companies are increasingly realising the importance of finding and keeping the best human talent. Part of the problem is that traditional accounting methods don’t properly reflect the value of training. US GAAP (the accountancy rules that govern the interpretation of balance sheets) tends to regard training as simply an expense item, subject to depreciation, rather than a real and appreciating source of value. Cairncross discusses the relative merits of hiring externally or cultivating talent internally – she quotes Rosabeth Moss Kanter’s idea about the growing importance of "knowledge nomads", who move between organisations gathering and spreading cutting edge ideas. She also points out alarmingly that many of the most highly sought after skills today simply didn’t exist a few years ago.

The hard part for a company is not simply providing the money to hire and train staff – it’s developing organisational forms and structures that both encourage and nurture talent, and allow knowledge to travel around horizontally, rather than just from the top downwards. The main avenues for knowledge management must be lateral rather than vertical and the company that makes the most effective use of the knowledge it has will tend to be the most successful. In this area, e-learning will become increasingly important, especially if it builds on collaboration and develops learning in granular, bite size chunks. She describes it as being like a microwave oven – not very good for some things, but better than a conventional oven for others. You need both.

The real changes in business practices caused by the Internet are not those that appeared important immediately – each major change in technology in the past has taken a long time and often a bit of serendipity to realise its greatest benefits. Telephones had been around for over 100 years before telephone banking came along. It took a visit to a Chicago slaughterhouse to give Henry Ford the idea of using electricity to run a production line which could make things rather than just chop them up.

There’s plenty more of the same in the chapters on corporate governance and supply chain management, where perhaps some of the most far reaching changes wrought by the communications revolution will occur. Systems can be changed – but if the essential legacy structures remains the same (usually top down) then nothing different really happens. Cairncross closes by tantalisingly suggesting that the company of the future may come to resemble the university – an institutional form that has been around for far longer. Many large companies have set up corporate universities, and educational institutions are always being told they need to run themselves like businesses. Maybe we should be thinking the other way round !

This is a perceptive and challenging book which is well worth reading.

David Evans
E-Learning Consultant,
Financial Projections Ltd

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