[obsolete page — view up-to-date version]
World Inc. Excerpts
Chapter 5:
Inside the Corporate Mansion
One way to help visualize the concrete challenges and opportunities facing modern multi-national corporations, especially as they consider a shift to social response capitalism, is to think of these huge companies as a mansion. Given the global span of these companies, it may seem absurd to visualize a GE, GM, or HP in one house. Think metaphorically of these mansions as the corporate headquarters or where the company was founded. As the corporation grows the walls will expand and the company will acquire many residences and properties. But, the knowledge and core competencies of the company will remain in the "corporate mansion." For example, Palo Alto, California, is the headquarters of HP — but HP now operates in 180 companies. As multinationals grow and expand, there is something "sacred" about the location where a company or idea began. Just look at the respect that Mr. Hewlett and Mr. Packard's shed demands. Keep this in mind as the corporate mansion foundations are made clear below.
Social response capitalism seeks to "raise" the knowledge floor of today's multi-national corporations. Historically, products that responded to society's needs were very low in the corporate mansion. In the 21st century products that create value to society as a whole will move closer to the roof of the mansion. Sometimes this can be done by the sheer force of a lead set of executives. Sometimes all this takes is one lucky technical breakthrough. More often, it is the work of three decades of a manager's life spent digging deeply into the recesses of a single department within a single firm. However, it is the knowledge depth or foundation that sustains value over the long-term, as long as it can be properly passed down to the latest generation of leaders. The walls, or knowledge endurance, need to be constantly reinforced while they expand horizontally into new territory. Staff, product, market position and valuation (as perceived by investor groups or Wall Street) alter daily, clearly highlighting the need for the firm to have a strong, yet expandable, shell.
In the end, the ultimate success of any multi-national corporation is revealed to the public on the roof of its mansion: the knowledge dependence. The epitome of success in today's marketplace is when a particular product, process or structural innovation transforms the fundamental rules of the game. When competitors are trying to build the same roof that your mansion has, you know that you have been successful.
The corporate mansion has many occupants. It is organic, capable of immense and rapid growth or decay. It will change for the better, and grow in value, if knowledge flows freely from floor to floor, if accrued knowledge is saved and passed on, and if the pursuit of more knowledge is actively encouraged.
