The empty company

One possible definition of a company is “an organized set of means to engage in a commercial activity, which produces and sells goods and/or services, in order to respond to the changing market needs.’ In fact, what a company is varies from sector to sector and changes over time.
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What is a company in the Era of Knowledge or in a knowledge-based business sector? If on a Friday there was a fire in your office, destroying the equipment and facilities, what percentage of your business could you count on the following Monday?

In a sector little based on knowledge, you might continue doing business with about four or five percent. The commercial department would probably be able to contact clients to explain what had happened and get their sympathy and understanding. But there would be no product to deliver, no raw material to consume and no machinery to transform it. Without a good insurance policy, few companies would be likely to survive such an ordeal.

In a highly knowledge-driven sector, you would probably be able to continue with 95% of your business. So long as the people who provide the services were not injured in the fire, they would be able to deliver what had been sold on the following Monday.

This is the nature of knowledge-based businesses. They are difficult and time-consuming to develop, but they are more flexible in their implementation and more resilient to natural disasters because they exist mainly in the minds of the workers. Fire is an extreme example, but it would not even have been necessary.

In the age of knowledge, when the workers leave the company at the end of the day, they take with them the bulk of the company’s capital: the know-how; tacit and explicit knowledge; business relationships established with clients over the years; history of problem solving; knowledge of the idiosyncrasies of each of the peers they interact with and how to make the internal relationships work; the behaviour which best promotes the company culture; all unregistered information; technical skills; the ability to work with both equipment and technology; the outcome of training courses and of all investment made in knowledge; the learning acquired from the mistakes made over the years, which were never recorded because they had been corrected; hundreds of different ways of interpreting the available information, the blending of many different points of view; the friendly service we provide our customers; the ambition, the professionalism, the accuracy, the quality and all the attitudes that make us good at what we do; the friendly relationships built; the welcome and social support that sometimes cannot be found anywhere else; the inspiring stories that encourage teams to proceed despite adversity; examples of what cannot be done but looks bad to admit it bluntly; the different groups and their sensitivities that must be respected for the Whole to work in a harmonious way; the accumulated wisdom of the best way to deal with difficult people in general and each boss in particular; respect and credibility gained in the marketplace; the creative response to competitors’ subterfuge; pride felt in being a part of the company and defending the brand; etc.

At the end of the day, when the workers leave, the company is empty. There is only a place left where anything can happen as long as the people who work there return the following day.

(originally published in Executive Digest, August 2010)
By Ricardo Vargas