Virtual power to the people as companies fade away

KEVIN GAVAGHAN is no fan of traditional companies. 'They are like dinosaurs,' he says. 'They can't get the signals from the head to the tail rapidly enough.'

Earlier this month, the Royal Society of Arts produced its report on the Company of the Future, which discussed the need for businesses to evaluate themselves by criteria other than financial performance. Other observers say that companies must re-engineer, restructure, achieve Total Quality . . . Mr Gavaghan goes further: he wants to get rid of companies altogether.

As a founder of First Direct, the Midland's telephone banking service, he is better qualified than most to talk about the 'virtual company'. First Direct is as close to a non- existent organisation as it possible to get: it has a physical presence, in Leeds, but to its customers it consists of a telephone number and a disembodied voice.

It is, furthermore, run by highly trained people in charge of their own powerful computers. There is no great need for a hierarchy to make decisions, because the staff have access to all the information they need.

Mr Gavaghan, who is now a director of Visage, a specialist in satellite-based business communication, believes this is a good model for the company of the future. 'Rigidly structured organisations are crumbling before our eyes,' he says. 'Most companies are trying to combat it by re-engineering, quality programmes or restructuring - but it is quite likely they are only modifying existing structures.'

Every company is trying to get a flatter structure but, he says, 'some of the best and most successful companies appear not to have an organisation chart at all.'

His theory is that the power the networked computer gives to workers allows them to work together very effectively without belonging to a traditional organisation. 'Companies are changing from giant structures to deliverers of products at the end of a series of projects,' he says.

'The virtual company exists only where resources, skills, capital and knowledge are gathered to complete a specific project or set of tasks.'

There will be no shortage of people to 'staff' these companies: many will have been forced out by redundancy from computer-equipped office blocks to computer-equipped back bedrooms.

Mr Gavaghan looks outside the business world to find models for the virtual company. A surgeon's team is one example; a film production unit is another. In both cases, a team is assembled, works together, then disbands. An even better example, because it relied so heavily on technology, was the Desert Storm force in the Gulf war.

Mr Gavaghan defines the virtual concept as 'not physically existing as such, but made by software to appear to do so'. In other words, the virtual company can exist only because information technology is now so powerful.

Members of the team or task force will work wherever they are needed, or quite possibly at home, while a central manager co-ordinates their activities though the computer network.

But the word is 'co-ordinates', not 'controls'. The virtual workers will be highly trained, and will have access to all the information they need from their databases. They will, to use a particularly nasty bit of jargon, be 'informated' - which means informed and educated.

This process is already happening. Technology, Mr Gavaghan says, is pushing power downwards, because every office worker now has a powerful computer on the desk: 'As organisations get more emaciated, the people who make them up get more powerful.'

By using the expression 'virtual company', Mr Gavaghan is inevitably creating a link with virtual reality - the generation of three-dimensional computerised worlds that can be entered and explored. The two ideas go well together, he says: virtual reality will allow virtual workers to meet in an electronic space, probably by wearing helmets that make them feel they are in the same room.

All this is way in the future, of course, and Mr Gavaghan acknowledges that it will be a long time before we hear of many organisations that have no physical existence. But he does believe businesses should be responding now to the very real transfer of power to the computer-equipped clerk.

'Train, train and train again' is his message. First Direct spends six weeks training each member of staff.

'As a result, half a million customers are served by 500 people,' he says. 'Midland Bank has 36,000 people serving 4 million.'

(Photographs omitted)