I was searching through my book today for a Peter Drucker quote on the future of business and came across one I wasn't actually looking for.
In a 2002 interview with Business 2:0 magazine, Peter Drucker said: “The Corporation as we know it is unlikely to survive the next 25 years. Legally and financially yes, but not structurally or economically.”
At that time, many companies rushed to prove him right; “257 public companies with $258 billion in assets declared bankruptcy last year (2001), shattering the previous year’s record of 176 companies and $95 billion. This year (2002) is on pace with 67 companies in the first quarter. And not just any companies. Big, important, Fortune 500 companies”
Then my good friend and collaborator Richard Banks sent me an article published recently in BusinessWeek about how the interim search and placement model is being ravaged by the proliferation of online business networks, and indeed the massive rise in global connectivity at an individual level.
In a candid interview with BusinessWeek, Heidrick & Struggles CEO Kevin Kelly recently described his company as having a half-century old business model which must transform if it's to survive. He said, "What keeps me up at night is not Russell Reynolds, Korn/Ferry, Egon Zehnder and Spencer Stuart, our direct competitors, but what is going to happen to this industry. We have a 55-year-old business model, and how many companies do you know that survive given a 55-year-old business model?"
Sound familiar? People forget so easily. In 2003 one of the world's leading interim firms approached me at Ecademy to help them design a network centric approach for sourcing candidates and clients. They only looked at alternative models because business had dried up due to the mini-downturn in 2001. As soon as business picked up, actually doing any strategic thinking was anathema. How well would they be positioned now if they had continued to innovate despite the bull market in interim placement? Isn't this what the CEOs and boards of companies are paid to do?
Only last year, another huge recruitment organisation's response to its employees using LinkedIn to source candidates instead of its multi-million pound Siebel CRM application was to er.....
Force them through a LinkedIn account deletion process on exiting the company. Here's some advice from our friends at Cluetrain;
Paranoia kills conversation. That's its point. But lack of open conversation kills companies.
If recruiters don't wake up and smell the coffee, they will become something worse than being killed. They will become irrelevant.
Our problems (and they are our problems) cannot just be blamed on war, the credit crunch and natural disasters but rather on a fundamental shift. A shift from one organisational model (command-and-control) to another (peer-to-peer). Peter Drucker also said;
“New ways of working with people at arm's length will increasingly become the central managerial issue of employing organisations, and not just of businesses.”
Now everything is up for grabs and, as a result, what may first appear as an endless series of threats will to others be a rich source of opportunities. Considerable prizes lay in wait for first movers to network centric organisation.