Changing Role of The Company

Later this week, September 30-October 1, a group is gathering at the Wharton School’s SEI Center for Advanced Studies in management, to explore whether the traditional idea of what constitutes a company is obsolete. Their goal will be to reconcile the ways in which companies do business in the twenty-first century with the company model that first began to take shape with the writings of Adam Smith in the eighteenth century.

That model saw a company as the maker and seller of products. At its height it drove firms toward vertical integration. A company strove to own or control everything from the taking of raw materials out of the earth through the manufacture, distribution, and sale of the products those materials were turned into.

Today’s global companies are more likely to be the managers of value chains in which many different companies control a part of the materials and processes that bring about the creation and distribution of products. That’s not exactly news to anyone watching the business scene. But the results of the change just may be.

For example, it may effect how a company’s value is determined. Bricks and mortar, machine tools, inventory, and other hard assets have historically been the heavyweights on a company’s balance sheet. Today, maybe the strength of the value chain is more important than the real estate a company owns.

The SEI Center is conducting a survey to see how business executives around the world view the changing role of the company. You can participate by answering four questions.

It will be interesting to see what comes out of these discussions, and others like them that are bound to take place in the near future. One thing is for sure. Smaller enterprises are the recipients of much of the opportunity that the shift to a “value-chain economy” is bringing about. With the largest of companies no longer feeling a need for vertical integration, opportunity knocks for the agile, smaller players who can provide part of what the biggies need.

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