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Future of the company dec 2018

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This point of view builds on prior global dialogue on the social value of the organisation, the future of the company and work plus recent debate on the value of data and British Academy research on the future of the corporation.

It looks at the future of the company through three lenses:
Corporate Purpose
The Digital Company
Organisation 3.0

This is being shared in a speech / workshop in Kuala Lumpur and used to kick off further discussions that will take place during 2019 on the future of work, the future of the organisation and the future of the company.

For more information:

Future Agenda
www.futureagenda.org

Future of the Company (2015)
https://www.futureagenda.org/view/initial_perspective/the-future-of-company

Future of Work (2018)
https://www.futureagenda.org/news/future-of-work

Integrated Reporting
http://integratedreporting.org

Future of the Corporation (British Academy)
https://www.thebritishacademy.ac.uk/future-corporation

Purpose of the Corporation (Frank Bold) http://en.frankbold.org/our-work/campaign/purpose-corporation

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Future of the company dec 2018

  1. 1. The Future of the Company Insights From Multiple Expert Discussions Around The World 4 December 2018
  2. 2. Context This point of view builds on prior global dialogue on the social value of the organisation, the future of the company and work plus recent debate on the value of data and British Academy research on the future of the corporation.
  3. 3. THREE AREAS OF FOCUS CORPORATE PURPOSE ORGANISATION 3.0 THE DIGITAL COMPANY
  4. 4. CORPORATE PURPOSE
  5. 5. Companies with Purpose As trust in business declines, structures and practices of corporations come under more scrutiny. All companies are called on to improve performance on environmental, social and governance and ESG reporting is compulsory.
  6. 6. A Problem of Focus Corporations were originally established with clear public purpose – but today many corporate purposes focus solely on profit. Instead of being part of society, numerous organisations have grown apart from it.
  7. 7. Disconnected Business Many big businesses have become disconnected from broader society. The narrow focus on short-term returns has prevented companies from investing in innovation to foster long-term sustainable growth.
  8. 8. Balanced Purpose Leaders propose that companies adopt a social purpose that takes precedence over, or is balanced with, its commercial purpose: Purpose should be intrinsic to the core of the business and not just driven by shareholder interests.
  9. 9. Long-Term Perspective The primary interest of the board should be its long-term success in achieving the purpose for which the company was incorporated: Innovation and exploring new opportunities is key to sustained growth.
  10. 10. Integrated Reporting In just over a decade integrated reporting has been picked up by an increasing range of companies who want to the ability to tell a story about the bigger picture – one often overlooked in quarterly reports.
  11. 11. A Greater Purpose Directors should act within the planetary boundaries and social foundations: Maybe the future purpose of corporations is to produce profitable solutions to the problems of people and the planet?
  12. 12. THE DIGITAL COMPANY
  13. 13. Increasing Value of Data As organisations try to retain as much information about their customers as possible, data becomes a currency with a value and a price. It therefore may become openly traded within new marketplaces.
  14. 14. Outdated Perspectives There is a fundamental difference between the economics of production of physical vs. digital products (atoms vs. bits). Many companies are still following principles established during the first Industrial Revolution.
  15. 15. The Rise of Intangibles In 1975 17% of the market value of the S&P500 was based on intangibles: By 2015 this had flipped to 84%. Many leading companies are now focusing on innovating to build IP, brand value and other key assets.
  16. 16. Speed to Scale Digital firms face no limits in ability to scale – the bigger they are the bigger they are likely to become. Greater connectivity shrinks the time to 1bn customers and a $10bn valuation. Revenue / employee is $1m - 20 times traditional leaders.
  17. 17. Growth Opportunities With faster change and the 4th Industrial Revolution building traction, many see a major impact on jobs - creating new ones but rendering others redundant. Several view capturing opportunities to be a significant driver of growth.
  18. 18. Reinventing Roles Will the shifts ahead drive mass unemployment or can the evolutions that replaced blacksmiths with car mechanics be repeated? Technology will have a fundamental impact on roles that are currently part of our social fabric.
  19. 19. Data as an Asset A firm’s data is seen as an asset and as a liability. As it is increasingly traded, Integrated Reporting will include data as a ‘capital’ alongside financial, social, environmental and human capital. Annual reports reflect this.
  20. 20. ORGANISATION 3.0
  21. 21. Organisation 3.0 New forms of flatter, project-based, collaborative, virtual, informal organisations dominate - enabled by technology and a global mobile workforce. As such the nature of work and the role of the organisation blurs.
  22. 22. The Nimble Organisation? Traditional firms are going out of business quicker: Over the last 30 years the ‘average lifespan’ on the S&P500 has dropped from 35 years to 15. Growth companies today make decisions through collective wisdom.
  23. 23. A Change in Structure There is a shift from vertically integrated to horizontally specialised firms – from product to platform and from sector to ecosystem: Firms are moving from being a nexus of contracts with standardised rules to mechanisms of coordination.
  24. 24. Reskilling and Upskilling As some sectors and countries gain from new technology, others will correspondingly lose out and fall behind. A response to this will drive both the call for more reskilling and upskilling as well as an inevitable surge in migration.
  25. 25. Smaller ‘Big’ Companies The employment pool expands with ‘on and off-balance sheet talent’. In 2008 the world’s ten most valuable companies employed 3.5 million. Today, the top ten companies are worth twice as much, but only have 50% of the employees.
  26. 26. The Freelance Economy The majority of us will be independent ‘free agents’ available for work as projects require. Last year 36% of the US workforce were freelancers - many expect this to rise to 50% by 2030. Up to 60% of freelancers are professionals.
  27. 27. Projects Not Jobs Many see the future organisation as increasingly flexible, permeable, flat and virtual. Companies shift from being employers to become the bodies that create or coordinate projects that an increasingly freelance population delivers.
  28. 28. Projects Worth Working On ‘Funky Business’ focused on a world with a few elite “people worth employing” and a select range of “organisations worth working for.” Going forward, we may be focused on the “talent worth accessing” and “projects worth working on.”
  29. 29. Future of the Company The whole notion of an organisation has to be updated: The future of the company is as much in flux as the future of work itself. Innovation to drive long-term growth in a digital world is critical.
  30. 30. QUESTIONS
  31. 31. MORE INFORMATION Future Agenda www.futureagenda.org Future of the Company (2015) https://www.futureagenda.org/view/initial_perspective/the-future-of-company Future of Work (2018) https://www.futureagenda.org/news/future-of-work Integrated Reporting http://integratedreporting.org Future of the Corporation (British Academy) https://www.thebritishacademy.ac.uk/future-corporation Purpose of the Corporation (Frank Bold) http://en.frankbold.org/our-work/campaign/purpose-corporation
  32. 32. Future Agenda, 84 Brook Street, London W1K 5EH +44 203 0088 141 www.futureagenda.org | www.futureagenda.net | @futureagenda

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