It's easier to build a business from a small base

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The Independent Online
IT'S SAID that "we are all knowledge workers now" - that although "people are the most important asset" of any company, they and not the employer are responsible for developing their careers; and that success in an increasingly volatile world is dependent on flexibility.

But how can these, and other changes be brought together? According to consultants at Booz Allen & Hamilton, the answer is the "centreless corporation".

Bruce Pasternack and Albert Viscio, founding partners of the firm's strategic leadership practice, are not the first to state that the corporate model of the 19th century has outlived its time. Nor are they especially ahead of the pack in urging that companies should reduce the concentration of power and headcount at headquarters; many have argued recently that the arrival of the "knowledge" or "information economy" means a corporate structure based on physical assets is outmoded. The international engineering group ABB, with its famously minimalist base in Zurich, is just one of a number of companies intent on getting maximum value from the people working at the centre.

But the consultants claim that their ideas help to make sense of the various strands of thinking with which big businesses around the world are grappling.

In their book of the same name, published by Simon & Schuster in the United States earlier this year and due out in Europe in the summer, they point out that the centreless corporation should be thought of as a network with a core - in which the various elements are not separated by boundaries but connected through internal and external alliances.

Such an organisation has leaders throughout its operations who focus on "what is really important": people, values, strategy, customers and learning.

Drawing on what they claim to be one of the most extensive studies ever undertaken of corporate behaviour, the authors go on to claim that a "global core" differs greatly from a centre. It is "a sense of essence and purpose", creating a context for growth. As such, it sets the tone rather than dishing out orders and adds value rather than overhead.

The authors define the core missions as formulating identity, building capabilities, minimising the cost of capital, providing strategic leadership, and exercising control on behalf of the board and shareholders. But for this to work a different kind of business unit, the "elastic building block", must be developed. This exploits synergies between the various units and outside organisations linked via strategic alliances.

In this way, organisations can gear themselves up for growth and prosperity by replacing accustomed ideas with "unaccustomed thoughts" and untapping propulsive energy.

The alternative is an "unfulfilled future" in which large corporations become smaller and weaker as they desperately seek to deal with the complexities of size and diversity.