SIZE MATTERS – DOWNSIZE!

Why the companies of the future will be small and agile, and what we can learn from designers?

You know it, but it happens quite rarely. Somehow a given is changed and an entirely new scale is introduced.

In Denmark, for instance, the metric system was introduces in 1907. An equally large change is happening in business life.

An early morning in the not so far future you will wake up, fumble to open you newspaper – and then sit straight up in your bed rubbing your sleepy eyes. The headline at the Wall Street Journal and the China Economic Times will read:

‘The world’s smallest companies – celebrating the teams that designed them.’

That is a change. We are all familiar with the Fortune 500 lists and remember the images of the winning – male – CEOs on the cover of the yearly biggest-list-edition in global business magazines. We know the images of those leading the world’s biggest companies where size matters and success is measured in terms of revenue and numbers of employees.

Since the industrial revolution, the world has admired the big companies. State politics have supported them; civil servants have struggled to create intensives to make them flourish, at business schools students have dreamed of one day being a top CEO. The Old Big Ones created value, stability, jobs and even entire communities, cities and states in the post war area.

Nevertheless, this is ending, because the Old Big Ones belong to a world of which only traces still exist. The future covers will not celebrate big – they will celebrate small. They will not celebrate individuals. They will celebrate teams and many of these teams will have designers as the cover girl.

In this setting, policy makers, entrepreneurs and investors need to rethink their perception of the right size. In a world very far from the Post War era, the values are changing. Creativity, freedom, flexibility, sharing, openness, transparency are valued and the Old Big Ones are facing huge challenges from the public, from states and from stakeholders.

The young and engaged are abandoning the hierarchy and limited visions of the Old Big Ones to start their own, small, flexible and flat entities. They do not work to work, but to live the lives they desire.

All over the world, these people are creating networks, finding new ways of collaboration, and implementing alternatives to shareholder models.

You might have noticed an infographic that surfed Facebook and LinkedIn in the beginning of 2015. It showed that Airbnb as one of the largest accommodation providers in the world do not own any real estate; that Uber who is aiming at becoming the biggest taxi company in the world does not own any cars, and that the globally leading media platform Facebook does not create any content.

Maybe that infographic was what made the ways of the new companies broadly known.

Airbnb, Uber, Kickstarter, Instagram, Flickr and the likes are the new big ones – but they are really very small and they differ from the Old Big Ones in many other ways. Let us call them the New Small Ones.

The New Small Ones are team based and proudly boast their employees. Their teams are small and many have designers among their founders. The New Small Ones work from digital platforms and if you pop by their offices you will find very little mahognany paneling, suits and little carpets but very open office spaces, scribbling walls, shorts and lacquered concrete floors. Moreover, the New Small Ones are actually good at doing business. They raise huge investments, their turnover is exploding, as well as their reach. Finally, they all work with a shared large vision other than profit. They want to share, use existing structures, address climate changes or create jobs for the bottom of the pyramid.

However, it is possible to get even smaller.

Next to the New Small Ones are the New Really Small Ones.

they are booming all over the world, they live on digital platforms, are formed by groups of friends or peers and some have even reached the stage where it is impossible to get any smaller.

The value exchange system Bitcoin is virtually not there and no one really knows who created the online payment peer-to-peer system, enabling users to transact directly without an intermediary – a bank for instance. Bitcoin is a DAO.

A DAO is a decentralised network of independent agents. Among them, they carry out production functions where the tasks are divided into computationally intractable tasks and tasks, which it performs itself.

A DAO as a company runs without any human involvement under the control of an incorruptible set of rules. The rules are simply open-source software, distributed across the computers of the people involved.

Adam Lent from the RSA ponders a future where traditional large companies ‘might be challenged by an arrangement where groups of self-employed individuals with complementary skills and experience contract with each other to pursue a certain commercial project. The co-ordination, decision-making and operational matters usually handled by the corporate hierarchy would be managed by a combination of computer code and a diversity of individuals and organizations in return for material incentives such as an automatic share of profits. The trust required to ensure that all the contracted parties had the necessary skills and resources to fulfil their functions would be built into the very code and processes that facilitate the contracts’

Until now, DAO’s are as small as it gets – but maybe it will get even smaller. As of now, we do not fully understand the implications of this development. We do not know what it will mean in terms of job creation, work/job balance, labor market and much more, but a guess is that soon most of what we know will be profoundly changed.

We are at a time where our Metric system is changing, and the first thing we need to do is to pay attention to the changes. The next thing might be to start looking towards designers – because designers are the ones founding many of the New Small Ones.

Share on LinkedInTweet about this on TwitterShare on FacebookGoogle+Pin on PinterestShare on Reddit