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The future of firms

Changes in technology, institutions and values are pushing us into a weird, wild and wired world. Information technology definitely opens up many new opportunities for wealth creation, but an argument can also be made that from an economic point of view, IT in general, and the Net in particular, is best thought of as profits enemy No. 1.

The current trends of deregulation, globalization and digitization are pushing us into a knowledge-based economy in which balance of power between those who sell and those who buy, on one hand, and between capital investors and competence investors, on the other, may dramatically change. Combined, these effects could very well make it much more difficult for firms to show a profit.

At the same time that competence has become the primary competitive weapon, evidence is suggesting that the knowledge landscapes on which modern firms base their competitive advantages are being transformed. Increasing dispersion, diversity and depth combined with decreasing durability contribute to companies being forced to adapt their organizational structures and processes. Particularly the predominant hierarchical model must be questioned when the creation of novelty becomes a question of combining knowledge across geographical, technological, industrial, organizational and, perhaps, institutional borders as well.

In addition, the leadership challenge is further complicated in a world where the few employees who control the most critical resources of a firm have alternatives every minute of every day. From their point of view, the organization may even be disposable - a temporary camp. Moreover, the firm does not necessarily employ all of these critical individuals. Today, they could work for suppliers, customers and even competitors, or perhaps they have their own one-person companies. Increasingly, under such conditions leadership can no longer be based merely on formal authority.

To succeed in this hypercompetitive market, we believe that innovative organizations are already taking a number of new steps. Based on an extensive collection of secondary data, surveys and in-depth case studies of successful companies and leaders around the world, this research project investigates three primary categories of change:

  1. New strategies and business models focusing on attracting or reducing the power of consumers and competents, respectively.
  2. New organizational forms and processes capable of securing a steady state of both exploitation of current competitive advantages and creation of new ones under conditions of knowledge complexity.
  3. New leadership styles and roles in a world where knowledge is key, loyalty is low and the legal boundary of the organization is less relevant than in the past.

 

Publications

Nordström, K. A. & Ridderstråle, J. (2003) Karaoke Capitalism - Management for Mankind. Stockholm: Bookhouse Publishing. »

Holmberg, I. & Ridderstråle, J. (2000) Sensational leadership. In Chowdhury, S. (Ed.) Management 21C, pp. 33-44. EdinBurgh: Pearson Education Ltd.

Nordström, K. A. & Ridderstråle, J. (1999) Funky Business. Stockholm: Bookhouse Publishing. »

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