This morning I came down I-95 headed for JFK airport and my flight to Mexico City. I passed Stamford, all it’s buildings (UBS, etc.) pressed up against the highway like ponies at feeding time.
And I was thinking we don’t love the corporation for its own sake. It’s not intrinsically better as a form of organization. It’s just better than the alternatives.
But this organizational form has very distinct problems, and it finds itself perpetually uneasy. The problem is that the better the corporation becomes, the more difficult it makes the world. As it gets swifter, smarter and more adaptive, it creates a world that becomes every more dynamic. (And the farther behind the mark falls the public sector, not for profit, organization.)
The corporation pushes the world to become more testing. In the process, it pushes itself systematically to the edge of its own incompetence. There are moments when it looks like absolute gains are possible. The telephone, computer, email, the advice of Peter Drucker or Tom Peters. Any one of these promises an opportunity for the corporation to pull ahead, to win a lead, to get "on top of things." But of course as every corporation uses its new advantage, it recreates a world beyond its grasp.
I am not sure what to call this problem. I was thinking of something like "The Problem of the Perpetual Last Mile (aka the Postrel Principle)." Or the "bow wave effect (aka the Postrel Principle)." The subtitle I choose to honor Virginia and Steve Postrel, two of the people best positioned to help us understand the problem. (See Virginia’s The Future and Enemies for essential reading on the problem.)
Any and all suggestions gratefully received. Maybe I will think of something on the way to Mexico City.
Postrel, Virginia. The Future and Its Enemies. New York: The Free Press. [this may be imprecise in some of its particulars, I am sitting in an airport lounge, book title and author’s name are correct, though.]
Are you talking about one particular corporation or the corporate form?
The corporate form continues to evolve new structures of advantage, sucking up and incorporating the latest technologies, ideas, etc. Value is created in new and exciting ways, while those stuck in the old form adapt or die. Mary Tripsas’ study of the typesetting industry remains one of my favorite examples of this. Waves of technology change wiping out most firms in an entire industry… over and over… certain elements of corporate structure were associated with survival (meta-structures more like it).
In the Strategic Management literature, this explains the emergence of the “resource-based view of the firm,” and more recently the “dynamic capabilities” school (though I’m no longer an armchair practitioner… for some reason I was possessed to try it myself!).
If you’re lamenting the need for particular corporations to always have to work to reinvent themselves… hmmm. Is this a problem? Or were corporations just able to be lazy before? The Postrel Effect has always been… and now it has accelerated.
Even if I agree that the corporation tends to make the word more interesting / challenging / information dense, I don’t see why that’s a “problem” instead of a “feature”, or – neutrally – just an effect.
I came across your question while searching background information on the “bow wave effect” as it relates to project management. It seems a very real phenomenon, describing the outcomes of assigned work not getting done on time. Very simplistic when defined that way, but when considering massive, multi-billion dollar construction projects (such as the company I work for performs), a bow wave of unfinished work activities can lead to massive estimated budget/cost overruns as the end of a five year project approaches. I can see your point when applying it to ever-increasing corporate searches for competitive advantage. Sort of like chasing the ever-illusive chupacabra, or BigFoot. I wonder if it might be likened to the ever-expanding envelope test pilots face? Maybe call it the “sound barrier” effect?
Jason, great observations, all; apologies for being so slow to get your comment in place. Thanks again. Best, Grant