From corporation to confederation.
Here are two prominent examples of the corporation as a confederation. Eighty years ago General Motors first developed both the organizational concepts and the organizational structure upon which today’s large corporations everywhere are based. And it was based for seventy-five of these eighty years on two basic principles. We own as much as possible of whatever we manufacture and we own everything we do. Now it is experimenting with becoming the minority partner in competing companies: Saab in Sweden, Suzuki and Isuzu in Japan, and it’s about to become the controlling minority partner of Fiat. At the same time, it has divested itself of 70 or 80 percent of what it manufactures.
The second example goes exactly the other way. It’s Toyota, which for the last twenty years or so has been the most successful automotive company. It is restructuring itself around its core competency—manufacturing. It is moving away from having multiple suppliers of parts and accessories to having only one or two everyplace. At the same time, it uses its manufacturing competence to manage these suppliers. They remain independent companies but they are basically part of Toyota in terms of management.
ACTION POINT: Understand the structure of your industry by analyzing whether your organization and its competitors are more like GM or Toyota.
Managing in the Next Society
The Next Society (Corpedia Online Program)
* Source: The Daily Drucker by Peter F. Drucker