Thought Leadership

The virtual corporation

Wim Elfrink,Executive Vice President, Cisco Services & Chief Globalization Officer,Cisco Systems, Inc.

Imagine an executive who needs to pull together an impromptu meeting with a globally dispersed team simply clicking on a link that transforms the sides of his office into display screens. He then interacts with clear, 3-D-like images of his counterparts-one in China working from home, one in India traveling in a car, and one in the United Kingdom sitting outside in a park.

With one click he has effectively eliminated geography as a barrier to collaborative decision making or standardization of processes. For senior executives, this means that the age-old debate between decentralized and innovative or centralized and efficient will soon dissipate. The future will bring a network of ubiquitous devices, collaborative technologies, and omnipresent and enormous bandwidth that will be so strong and seamless that thousands of geographically decentralized offices and people will actually feel and act like one, dense, centralized entity.

Corporate headquarters will make way for thousands of independent, empowered, and highly specialized office nodes that will connect to each other in a peer to peer network. Top management can then be dispersed globally instead of congregating around the CEO and offices will be able to tap global talent and react to customers and changing environments quickly and more effectively.

This new corporate structure will enable a companywide network effect: as more locations are added, the value and capacity of the entire network exponentially increases. And as the network grows, it will be increasingly virtualized-information will no longer be tied to a physical location. Additionally, if an office or person drops out of the network, there is reduced risk of a communication breakdown. Similar to mesh-networking of computers, a company’s connected peer-offices can simply find another path to communicate with the network.

Of course, for this peer-to-peer corporate structure to work, we need seamless, strong, real-time communication. The future of the network promises unlimited bandwidth, abundant collaboration models, strong search capabilities, sophisticated yet easy-to-deploy enterprise software solutions, and the convergence of voice, data, and video on every device. Corporations that couple these technological advancements with the re-thinking and reorganizing of various internal structures will be able to enjoy the benefits of real-life, in-person collaboration and knowledge-sharing.  

The challenge going forward for every multinational will be to become global and local, decentralized and centralized, all at the same time. While technology and the network will make this all possible, the adaptation of mindsets, laws, and cultural norms to these new realities will prove to be the true challenge.

For one, the transformation from a client-server model to peer-to-peer calls for an entirely new way of thinking and doing business. Currently, most multinational R&D teams reside in the same geographic vicinity as the chief executive. Many innovators believe that this kind of physical closeness is necessary for true teamwork and collaboration. While advanced video-conferencing technologies will soon allow far-flung employees to feel as if they are in the same room, the mindset change that must occur simultaneously poses the trickier hurdle. Companies will have to convince R&D executives that their teams can and should be spread around the world.

A major factor contributing to the dislike of splitting up R&D teams is trust. If the future of innovation is about sharing ideas, not hoarding them, then the reflective corporate mantra will be collaborate or die. For this to actually work, though, individual contributors must trust each other, and trust the system. Similar to how eBay has created a model of trust within its ecosystems of participants, corporations will need to develop new ways of rewarding ideas and motivating employees to disclose their works-in progress openly with others.

Protecting employees will not be the only difficulty going forward. In a truly networked, collaborative model, corporations open themselves up to various intellectual property protection issues. With work decentralized and people able to switch jobs more easily, corporations and regulators will have to devise ways to safeguard intellectual property. We will see companies around the world initiating advocacy groups and creating new governance standards.

Last, multinationals will need to help their employees understand that no matter what, they will still be forced to accept asynchronous synchronization-with the challenge of time. As a company’s network of nodes spreads to include an increasing number of locations, each node-office will have to respect cultural differences, time sensitivities, and working norms.

While companies figure out how to deal with globalization’s many hurdles, the winners will embrace forward thinking leaders who fearlessly work to create new business structures, and who quickly utilize all that technology and the network have to offer.

Wim Elfrink

Wim Elfrink
Executive Vice President, Cisco Services & Chief Globalization Officer
Cisco Systems, Inc.

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