Let’s play a game: A world without big corporations
I challenge you to play a game with me. What would the world be like if there were no big corporations?
First we need to define “big corporation” and come up with the rules. Let’s make 25 persons the definition of a “big corporation”, even though it is a very small limit. Let’s call this a “25 person rule“. And the whole thing the “25 person game“.
The simple rules are as follows: We are establishing a global law that forbids anyone to create or maintain any corporation employing more than 25 persons. It’s also illegal to chain organizations, thus it’s not possible for any organization to own more than 33% of another organization directly or indirectly.
Then, let’s start thinking what the world would be like. I’ll start by listing some random things. My speculations may be wrong, corrections are very welcome.
Much more companies. The production and jobs would need to be maintained on the same level. This means that a 10,000 employee corporation would need to be split into minimum of 400 new companies. What would they do?
Much less decisive market positions. Since the big corporations can’t own the markets, it’s very difficult to obtain a decisive market position. There is no market shared between Coca-Cola and Pepsi. How this market would be fullfilled?
Much more competition. Since there would be huge amount of companies, it is likely that there is much more competition. Small companies can’t produce with same efficiency, so would the products be different?
More diverse offerings. Instead of having the market shared between a few big ones, there would be much more to choose from?
Stronger labour unions. Would there be a need for the workers to be organized? Or is everyone going to be self-employed?
Less mass production. 25 people companies can’t have mass production in larger scale. Or can it? Automation, robotics or artisanal production?
Networked companies or consortiums. Will there be much more networks where companies would work together? Consortiums? Ad hoc project team?
Stronger role for the authorities. Since the number of organizations would be much higher, authorities would need to take a much stronger role in keeping the world becoming the wild west.
Please add more, plenty more. Let’s play the 25 person game!
25 person game 25 person rule change corporate corporations game imagination market change scenario speculation
Well, in short, that would create the situation one could call “network economy on acid”.
There are vast amount of things you could find for this list from that discourse.
Also, as this is theoretical discussion, actual practical implications might be vice versa. For example, it is possible that offering would become less diverse – everyone selling same most sold potato-breed since it has the biggest potential and small companies might not be able to bear the risk of one failure (you verify hypothesis by looking how actual market places work).
Some thoughts and different perspective
Weaker impact of authorities – practically speaking authorities will have mission impossible to govern so many small companies.
Requires network of trust – trust becomes even more important and there needs to way to understand trustworthiness of various small scale plplayers
Increase of agility and responsiveness of companies – Positive impacts through removing the issues related to diseconomies of scale.
Might decrease overall productivity – potentially decreases economies of scale common to big industrial ecosystems
True market economy – current situation is oligopolistic market economy and often leads to systematic inefficiencies – though often oligopolistic situation occurs because of economies of scale, perish of the weak, high entry barriers etc.
Companies could become tribes – fierce competition and small number of employees could mean that employees might become more attached to companies
Co-operation and collaboration become necessity – small cannot survive alone, they have to work together and create alliances
Network aggregators – there would be need for specific organization that are in the business of building bridges between companies
Rise of collective company groups
Potentially speeds or slows innovation rate – depending whether companies are able fail gracefully or not
… I could go on, but I have to go to bed now 🙂
Good stuff, Ville! Some additional thoughts to your comments.
Impact of authorities is a very interesting aspect altogether. And also the whole political system. What would it be like?
Trust networks – do you need to trust more, or is it easier to change the partners if you need to, or will the trust be governed by reputation?
I’ve been scared to say this aloud. Is this the key to true market economy?
Are we describing here something that the startup ecosystem is trying to be?
This is not the key to true market economy, because ability to govern and manage big organizations is an advantage some companies have and some lack. You would remove that advantage completely. It’s kind of the same that playing 10000 person game where every corporation needs to be big. That could make them somewhat more competitive in purchasing and supply chain management but not so in agility, for example. More restrictions > further from true market economy. True market economy requires both, big and small companies.
Playing the 10000 person game would result in different end result for sure.
For true market economy we should get rid of the authorities and regulation of any kind? 😉
Hmm, this is hard to imagine. How would you arrange the construction of a new highway or a large building, who would sign the contract? Or the investment to a new factory (for e.g. computers) that costs a billion. 25 is not enough, even with extensive subcontracting, to run or design the largest Internet services…
Actually, large construction projects are today already split between smal(er) subcontractors.
The financing doesn’t necessarily require companies to have a large number of staff.
There must be a way to manage construction and IT infrastructure projects somehow within these rules?
Already today somebody – the investor – has to pay to the new factory material providers and building workforce, be it subcontracted or employed. So the network organizes itself around the money source.
Running the service then… That’s would be about scheduling the operating hours to the different subcontracted operators who then come and do their service in the op center.
The only difference is that instead of regularly paid employees there would be regularly billing contract firms which take care of their own side costs. In this case, one could consider that “large” companies were those with large pool of subcontracts or those that have the large billing/revenue. Quite similar to today.
A bigger difference could be that this one person enterprise can offer its services to multiple competitors. That is something an employee is usually not allowed to do.
Good point Laura. One person would be able offer services to multiple companies competing with each other.
It’s an interesting idea which I think would result in a world very different from today. It sounds like the world was before industrialization so I would almost argue that a rule like this would have effectively prevented industrialization / urbanization the way we have it. We probably would not have computers, mobile phones, big cities, cars, etc.
Yes, I was think pre-industrial scenario. But if we are moving towards post-industrial era anyways, couldn’t we disassemble those structures and keep the technology and knowledge it created?
Well not really. Big company has management, project management and projects. One company could be specialized to management of big projects. It in turn buys project knowledge from companies that are specialized in management of projects. These in turn buy…
Rarely if ever there is more than 25 decision makers in management group of a company or steering group of a project. Analogue follows.
So you think big projects could be run with the 25 person rule? I think that too.
Interesting thought. In another discussion, someone proposed that every person should act like a self-employed entrepreneur. If every person actually did that, we would pretty much have this kind of situation. There would be no employees but subcontractors.
How would mass production work then? Well, there would be lots of subcontractors working on the production line. They would all bill their services through their firms. Pretty much like construction business is organized today, just extending the contracting down to individual level. Sales would be the same with small independent yet networked dealer companies. Actually, if you formed a two person company, you could always send in a substitute when sick… There might be a brand building company for building, well, the brand, that could buy tactical marketing from another company. The HR would turn into a company offering subcontractor management services. Etc.
A human thing is that, after an initial hassle, this kind of networked subcontractor companies would gradually form operational routines. They’d favor and use the same known subcontractors that they already have a working relationship with.
I was thinking about the self-employment scenario myself when writing the original post. I decided to allow some group forming, because destroying the entire incorporation idea would be even too dramatic to start with.
How much people-produced mass production we need in the end? Is it just the preferred way to create jobs? If robotization would take care of most of the mass production anyway, we need to find other things for people to do.
Maybe we should call in the foresight experts…
Maybe it isn’t the mass production that would be the hardest part. After all, mass production is a set of established routines which in turn makes (sub)contracting quite predictable.
Maybe the hardest part would be R&D. That is the gray area where the selling company doesn’t know exactly what it is selling and the buying company doesn’t know what exacly it is buying. “Err, we are selling new, non-existing products” or “I’m selling innovation power by hour” doesn’t just sound credible. And then there is the whole “solution sales” business that does exactly this by “Our company not selling products or services, we’re selling solutions”…
Interesting. I would think R&D would not be a problem. Maybe R&D would give more interesting results if it wasn’t too muc process-driven by big organizations?