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The Death of Big Business

© Bert Markgraf

OK, perhaps "the news of its death has been greatly exaggerated" and big business is still going to be around for a bit but there are some challenges in the market place which big business hasn't been able to meet. If it doesn't address them successfully, big business is going to be like the Roman Empire at its end - still hanging in there in the executive suites but basically just rich pickings for the barbarian hordes.

The first challenge is that of keeping a skilled labour force. Many sectors already have difficulty filling key positions and this will only get worse as the baby boomer population bulge retires and there aren't enough replacements. These workers will want to be treated as individuals and they will want their individual needs personally addressed. Big business achieves efficiency by treating large numbers of employees the same. This basic contradiction is going to be hard to resolve.

Big business has tried offering higher salaries to keep skilled workers and this brings us to the question of profitability. As a result of higher salaries, customers have to pay more. Already it is often only big business which can afford the services of big business. Even with massive down-sizing in the bureaucracy of big businesses, the percentage of the customer's payment which goes to the person doing the work is still very low. Other business models deliver a much higher percentage of the customer's payment to the worker. In an independent contractor model, the worker gets paid more and the customer pays less. That's difficult competition for big business.

Business models based on networks of small businesses or independent contractors have other inherent advantages. A small business owner or an independent contractor will always be more motivated to get it right than an employee. The rewards for the former are not only much higher than for the employee but the direct line of responsibility for mistakes is much clearer and the consequences for screw-ups more severe.

When the best people work outside of big business because they can earn more, are more able to fulfill their needs and are able to offer a better product at a lower price, big business is toast unless they address and solve these problems. Don't take my word for it - check out an article in the Harvard Business Review. Then start thinking about quitting your job.

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