Corporation Zero, AI, and Designing for Digital
In executive suites across the globe, information technology (IT) induced stress levels keep rising. On the one hand, executives are bombarded with talk of exponential technologies, becoming an infinitely flexible artificial intelligence (AI) centric enterprise, and the need to embrace blockchain, the crypto economy, and metaverses. On the other hand,…
In executive suites across the globe, information technology (IT) induced stress levels keep rising. On the one hand, executives are bombarded with talk of exponential technologies, becoming an infinitely flexible artificial intelligence (AI) centric enterprise, and the need to embrace blockchain, the crypto economy, and metaverses. On the other hand, the stark reality is that most digital transformation initiatives are failing to deliver on their $500M – $1Bn+ price tags. At the same time, security risks and budgets are rising, critical innovations are delayed, and business units are complaining that data management is such a mess that customers have a better view of the relationship than the organisation. The concern is that our culture, processes, and organisations are just too complex, and attempts to overlay technology on them are destined to fall short of overly optimistic expectations and business cases.
Despite the current gloom, the potential rewards for getting IT right remain attractive. The next decade could see multiple iterations in our thinking on organisational purpose, business models, strategy, products and services, operations, and structures. Technology is likely to play an increasing role in shaping these. Examples of the possibilities are already starting to emerge – such as decentralised autonomous organisations (DAOs) and venture ecosystems where a federation of investee businesses are run using a common set of systems, processes, and management tools provided by the venture fund.
‘Designed for digital’ is already a reality and the speed of innovation and new venture creation in the crypto economy, in particular, is capturing the attention of mainstream businesses. Many crypto ventures are run as AI-enabled DAOs. These are entirely digital entities with few or no employees and management and no organizational structure. Everything about these businesses – from operating principles to process design – is built into the system as rules to be executed automatically. In effect, ‘the business answers only to its own code.’ Governance and decision making is done by the community of token holders. Examples here would include Teambrella in insurance and exchanges such as Uniswap and Aave. Outside the crypto economy, we have also seen an explosion of ‘born digital’ ventures in every sector.
These new ventures start with a digital model of how they want their business to run and a data model to monitor how it is doing. The focus is on taking advantage of everything that the latest developments in digital technologies such as AI, IoT, 5G, big data, and cloud computing can offer. They are not constrained by the management structure, capabilities, past investments, culture, history, ways of thinking, and legacy assumptions that shape the strategies and behaviours of existing organisations. Together these developments are providing powerful demonstrations of what technology can enable and how fast it can be delivered if the right mindset is brought to bear. Businesses are starting to take note, and a wave of new thinking is building about how we reimagine and run existing organizations in an increasingly technology-centric world.
The most exciting possibility is the notion of ‘corporation zero’ designed for digital organizational models. In such entities, there are no predetermined assumptions or legacy constraints – the corporation is literally starting from zero and the design process starts with a clean sheet of paper. The entity then defines the desired outcomes, the core processes and supporting applications required to deliver the outputs, a data model, and the set of measures, indicators, regulatory requirements, and rules required to assess and optimize the performance and achievement of targets. The business is then built from the bottom up in software and tested in AI simulations to see the extent to which it can be run as a fully automated DAO style entity and where the model needs to be tweaked.
In most cases, corporation zero will still require some physical elements – such as people, manufacturing equipment, buildings. These are considered a vital part of the ecosystem – providing data that feeds into the system, helping to assess performance and identify changing requirements. None of the existing constraints, outdated assumptions, internal conflicts, and legacy processes needs to be carried into the new model. Clearly this is a massive shift from how most organisations operate today. Past attempts to start a parallel ‘newco’ have tended to fail or become an inefficient compromise when they come up against those in the existing organisation who try to recreate the past because they don’t fully grasp what the technology enables.
This notion of corporation zero is very much in its infancy but could accelerate rapidly as organisations seek to create more cost-efficient and responsive structures in the face of a rapidly changing operating environment. Critical enablers to pursue this designed for digital path include deep digital literacy throughout the organisation, a clear understanding of the target operating model and how it will work, high levels of technology delivery capability, respect for data as the lifeblood of the entity, and an emphasis on continuous experimentation to get the system right. Major challenges will include what the organisation does with all the employees who will be displaced, how to manage the transition from the existing organisation to the new one, and convincing the board that this is a step worth taking to remain competitive. Perhaps the biggest concern will be how society might react to brands that follow the corporation zero path and the potentially devastating reduction in workforce requirements.