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The mega-corporation is dead; long live mega-networks

Posting in Technology
Is the world's economy increasingly being dominated by a handful of corporations, or are things becoming more competitive?  

In a recent TechCrunch post, Klint Finley asks the question: what became of those gigantic, sinister global megacorporations that were predicted in many a dystopic science fiction movie? Omni Consumer Products in Robocop is one example, there was also Cyberdyne Systems Corporation mentioned in Terminator, and on the recent Fringe television series, Massive Dynamics. 

In fact, a few decades ago, the world seemed to be headed in that direction: consolidated under the control of a few multinational conglomerates. But these days, things seem to be far more diversified. Or are they?

There is some recent research that suggests that as few as 147 companies -- mainly big banks -- control most of the global economy. Forbes contributor Brendan Coffey takes it a step further to suggest those 147 companies are actually run by four powerful parent/holding companies.

Plus, many would argue that big corporate box stores such as Walmart and Lowe's have put many small stores out of business. Then there's the giant e-commerce company Amazon which is usurping retailers' businesses as well.

Following Finley's logic, the 147 dominant corporations may be paper tigers. "The economy isn't dominated by a handful of megalithic conglomerates," he says. "It consists of hundreds of thousands of smaller, more specialized firms." Rather than enter the age of the mega-corporation, we have entered the age of the "mega-network."

John Naisbitt, in his seminal work Megatrends, published in 1982, put it this way: the corporation was evolving into a "confederation of entrepreneurs."  Many of the leading telecom and tech companies, for example, rely on third-party partners to pass along services to customers.

The splintering of organizations into mega-networks isn't external -- it's also going on the inside as well. Witness the latest shift taking place at e-commerce giant Zappos. The company recently re-formed itself from a hierarchical management structure to a "holacracy" -- a self-governing organization with no managers or job titles.  Instead, the company is organizing itself around 400 different "circles." In other words, an internal mega-network.

Then there's Valve, a $4-billion gaming company, which also is a management-free company, with its work accomplished by ad-hoc team that form around ideas.

Even GE, which can be considered, for all intents and purposes a global mega-corporation, is structuring itself as independent, entrepreneurial lines of businesses to boost innovation. In many ways, larger enterprises are working very hard to adopt startup cultures, even going as far as launching internal venture-capital type operations that can operate independent of the organizations' more established business lines.  

It may not be long until these internal mega-networks start networking with external mega-networks.

— By on January 6, 2014, 8:04 PM PST

Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure