LEANER, MEANER…AND QUITE DIFFERENT

In a recent conversation with a colleague, I commented on how I felt the business dynamic was changing. Permanently. I went as far as to predict that:

In a few years, there will be a handful of "mega corporations" responsible for everything from food production to financial services and media. Many of the "big corporates" today are learning the "merge or die" lesson, just look at the headlines that would have been unbelievable just five years ago. In my (very humble) opinion, these large corporate entities are going to form the basis for our economy. They will be the foundation, or "backbone".

"Brick and mortar" firms are changing too. They are either being swept up like rocks in a glacier, or going out of business. Sure, some are changing, but only then to become part of the "corporate glacier".

I think the "traditional" job will change. I see things such as benefits (healthcare, pensions etc) go by the wayside. I’d even hazard a bet that in the foreseeable future, "W2" style employees will be much rarer than 1099. After all, it makes sense for companies who need to be leaner, contain costs and reduce risk. Shift the burden of benefit costs to the employees.

On the flip side, employees can become business owners in their own right. Now, at least in theory, they are "vendors" who can charge for services provided. Work 40 hours, bill for 40 hours. Work 45 hours, bill for 45 hours. With no benefits to pay for and seeing the "employee" as a "vendor", even overtime becomes a cheaper option for companies than worrying about the "encourage unpaid overtime" that anyone who has worked in corporate knows about.

Not everyone is going to want to, or necessarily be able to, set up their own company or be a self-employed entity. Hence, for a while at least, traditional W2-style employment will be the norm, but, as we’re seeing, there will be fewer jobs with fewer benefits.

It doesn’t have to be all negative. Companies can (and already do) form organizations with collective bargaining power to obtain half-decently priced benefits such as healthcare. Personally, I see this as a help rather than a hindrance. Group insurance will be a little different, but it may be an option to self-employed people who belong to associations who are able to get "group" rates.

With so many self-employed / small companies, out there, there will be room for innovation and even more specialization. Consider this: a company wants a product. They hire a small company that is a specialist in developing a product. The small company gets a mandate and goes out to bring in just those resource companies that can develop the product. At the end of the project, everyone goes their own way. No expectations beyond the project. You’re paid for what you do, and off you go.

This more "modular" type of company / project / service scenario will suit the upcoming generations who are used to the technology and cultural mindset that will be required.

Of course, this prediction is open to suggestions of being rather "Orwellian" or, dare I say "socialist"? Except I see it evolving already. Look around you at the number of smaller companies, self-employed people and the number of "super corporations" that are getting bigger and bigger.

This isn’t intended to scare anyone, in fact the opposite. It’s just my opinion, but the business world is changing. We can fight or we can do what we do best: adapt and innovate.