A New Future for Corporate America

My 7 year old has recently learned the lovely phrase, “you’re not the boss of me”, which she likes to throw at her sometimes-inclined-to-be-bossy older sister. My response often is, “I’m the boss of both of you….” And in that phrase, I encapsulate one of the foundational principles of corporate life: an organizational hierarchy for decision making flowing ever upwards to the C-Suite. The idea that expertise, if not always intelligence, necessarily, is concentrated towards the top of the management pyramid and that the smartest, most experienced people are the ones who should make the important decisions, i.e. the people at the top. But increasingly, there are challenges to this concept, and more often than not, they are being driven, at least in part, by the need to be innovative.

Let’s take a look at the old model of innovation, the corporate R&D lab; a small group of very smart experts would be given, seemingly, limitless resources, segregated from the rest of a company and told to work on whatever they wanted to in the hope that this kind of financial and intellectual freedom would result in radical innovation. And it worked very well for a long time until this economic model became unsustainable for most of the companies funding these labs. Now, a new model is emerging; anyone, anywhere in an organization can be innovative. Crowdsourcing, both internal and external is being seen as a way to tap into the collective creativity of a company’s employees, or customer base. Netflix found its crowdsourcing competition to be such a good investment, that no sooner had they announced the winner of the first competition, than they announced a second one.

The other side of crowdsourcing is the notion of crowd-evaluation; in The Widsom of Crowds, writer James Surowiecki makes the claim “If you can assemble a diverse group of people who possess varying degrees of knowledge and insight, you’re better off entrusting them with major decisions rather than leaving them in the hands of one or two people, no matter how smart those people are.” Surowiecki has many conditions to apply to the makeup of the crowd; the individuals have to be somewhat independent, diverse and in not too small a group, to name a few and the subject matter has to lend itself to this kind of evaluation. But even with these caveats, the idea is an intriguing one, particularly when paired with the concept of crowdsourcing; if the crowd is the best generator of ideas and also the best evaluators of those ideas then what is the role of management in the company of the future? Perhaps it will be nothing more than to facilitate the work and wisdom of the crowd.

Could this lead to a radical realignment in the executive suites of corporate America? It certainly might lead to a rethinking of hiring policies, corporate education programs, and diversity programs, just for starters. Ultimately, a major determining factor will be the value derived from crowdsourced and evaluated innovation. But if the payoff turns out to be significant, then who knows, the corporate organizational structure might look very different 10 years down the road.

Jonathan Reichental, Ph.D.  |  Director of IT Innovations, PwC

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2 Responses to A New Future for Corporate America

  1. Umair says:

    Hi Sarah,

    Nice & informative article,but these experts were/are responsible for the GFC.The cases are coming forward & other will come in near future,for instance Goldman Sachs,Lehman Brothers AIG to name a few.

    Thank you

    Umair

  2. steve says:

    great post and blog!

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