Our current approaches to doing business are fundamentally broken

It hard to both argue with and do justice to John Hagel's work on the Shift Index and his finding that returns on assets in US public companies have been falling since 1965.

Extracts follow and the full pdf is online here. From a HR point of view however, the takeaway seems to be twofold;

  • New technologies and organisational designs lead to improved performance
  • Collaboration curves may make it possible to enable larger numbers of people to create greater levels of value, increasing returns to scale in the process

From John's blog;

The real challenge is to figure out how firms, caught in a pincer move between more powerful customers and talent, can create more economic value and improve their own profitability.

Given the profound performance deterioration that firms have experienced over decades, it is time to step back and reassess our most fundamental assumptions about what is required to be successful in business. If we have any hope of turning this longer-term trend around, we must be prepared to challenge our current approaches to business.

In particular, we believe that the two foundational catalysts driving intensified competition – digital infrastructures and public policy shifts favoring economic liberalization- also create the conditions for dramatic performance improvement.

We believe that for the first time, given a combination of new digital infrastructures and new institutional architectures, it may be possible to turn the experience curve on its side and for the first time generate performance curves with increasing returns – the more participants, the more rapidly performance improves. We use the term collaboration curves to describe this new opportunity.

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