Posts Tagged credit crisis

The Unbundling of the Corporation

Here is an interesting article from the New York Times on the impact the credit crisis is having on corporate models.

Part of the article discusses the transformation of corporate structures:

  • Let’s try a different lens. How have past crises shaped management thinking and strategy? Innovation in management, after all, is adaptive. Management is not a science, like physics, with immutable laws and testable theories. Instead, management, at its best, is an intelligent response to outside forces, often disruptive ones.
  • Times of severe economic duress, management experts say, can serve to sharply accelerate trends already under way.
  • The technologies made it possible to monitor and coordinate business operations as never before. And the Depression made it imperative for managers to achieve efficient economies of scale to tap national markets, ensuring corporate survival amid a downward spiral in total demand.
  • A modern version of that kind of technology-aided shift in management practice and corporate organization could be in the offing, says John Hagel III, the co-director of the Deloitte Center for Edge Innovation, a research arm of the consulting firm.
  • The sharp downturn, according to Mr. Hagel, will force companies to go beyond simple cost-cutting to take a hard look at the economics of their businesses. Most companies, he says, are actually bundles of three different businesses: infrastructure management, product and service development and commercialization, and customer relations.
  • The current crisis, Mr. Hagel says, opens the door to “an unbundling of the corporation” to achieve greater efficiency and profitability. The trend, he notes, is already exemplified by specialist companies that focus on particular infrastructure fields. In logistics, Mr. Hagel says, many companies farm out those chores to Federal Express and UPS; in call centers, he points to Convergys; and in contract manufacturing, to Flextronics.
  • .. look like an Internet-era rerun of the corporate transformation of the 1930s and ’40s. “We’re facing the potential to have that play out again — this time with digital infrastructures that allow companies to organize and manage their activities in new ways”

The un-boxing of the organization is a trend I alluded to in my Ten Predictions for Project Management Trends in 2009 (see #8 the rise of the project workforce).

The article also mentions how large companies are creating smaller almost independent organizations within the larger entity and smaller teams within their product and service development divisions (for example) because they have learned that innovation and progress is far more likely to occur with such small teams. A trend I also see over and over in every project I have been involved with in my entire career.

The second part of the article discusses how the economic crisis is redefining the role corporations have to play now that government has been forced to get so intimately involved in their oversight and bailout:

TODAY, the pendulum is swinging back to a model in which corporations will be regarded more as social organizations, whose obligations extend well beyond Wall Street, according to Rakesh Khurana, a professor at Harvard Business School.

It is truly remarkable how important transparency, accountability, and social responsibility have become. I would even venture to say that these metrics are becoming as important as profits and growth in assessing a company’s value and whether it is deemed to be a dependable partner or a worthwhile investment.

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The difference is I

I am subscribed to a newsletter from Boaz Rauchwerger. He writes motivational and inspirational articles from time to time about situations he encounters and the people he meets. The difference is I is an amazingly positive and truly inspiring article I highly recommend to anyone going through some tough times which is most of us these days.

The difference is I

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How the credit crisis is affecting project management software initiatives

After fourteen years, Tenrox has been through several economic turmoils and shocking world events such as 9/11. The credit crisis is the latest challenge we are all now facing together and it is unlike anything I have seen or heard of in a life time. It is simply amazing almost incomprehensible to me how a small group of mostly innocent but naive individuals, greedy mortgage brokers and deceitful investment firms can cause so much damage to the financial system and the real economy. The list of bank and company failures is truly astonishing. Incredibly, the world's entire financial system is at risk.

Take Lehman Brothers, a Wall Street icon that has been in business for many decades. A month or two before its collapse we got a call from a department head at Lehman who was looking for a project management tool to improve their internal project cost accounting. A few weeks into the sales process we got to the step of the credit check which is something we do when we do not know about the company we are dealing with. When our account executive asked me if a credit check is necessary on Lehman Brothers I smiled and said "Joe, this is Lehman Brothers. I am sure their credit is good."

A few days later Lehman had still not signed the agreement so Joe called to see what happened. His Lehman contact said "Did you read the newspaper this morning?" and Joe said "Yes but I wanted to see if the initiative will still proceed" … Lehman Brothers had collapsed!

We have seen a few project cancellations and delays in the last several months but so far on-demand project management software is still in very high demand in 2008.  Judging from our current pipeline we will close the year on a very strong note. I would not even venture to predict 2009 for any industry or market sector! … we just have to hope that we have looked into but stepped away from the abyss.

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