Hi! Managers: The revolution is upon us

Large enterprises are finding it harder today to run on cash flow alone. Forced to place bigger bets to beat the slump, they have loaded up with more debt and have ended up with higher costs. Even the trusted vertical integration, created to minimise transactional costs, is adding its weight to the overall burden.

Today's new breed is more likely to be found in small companies or start-ups. They are emerging as the digital age delivers them a more level playing field. Their overhead costs are falling. Cloud computing and open-source software are helping minimise their IT-equipment costs, and a Web-based supply chain allows them to order or supply globally.

Even the career path is changing for the new breed. Through distributed-information networks, virtual firms can now be created from a number of small suppliers and workers. They form a critical mass for one product or project, then disband and reform, perhaps in a different combination, for another task.

These workers are essentially free agents. Clients and consumers enjoy increased involvement in the design and delivery of products. In Silicon Valley, this career mode is becoming the norm for many who once accepted only permanent employment.

Large conglomerates once assumed the role of mother companies, concentrating on branding and sales and outsourcing design and production. We have witnessed a role reversal in the case of netbooks, which did not trickle down from PC giants but emerged from an unheralded contract manufacturer that once worked on small-screen devices.

There are many more examples of role reversal and game change. Start-up artists armed only with a laptop are now able to accomplish most of what the large record labels of old did. The game is also changing for major publishing houses: hardbound textbooks costing more than US$100 (Bt3,300) each are being replaced by online notes and study guides written and edited by a community of established and first-time authors and fast being embraced by both instructors and students.

We must be mindful of the fact that the large conglomerates were in no way restrained from becoming nimble and taking risks themselves. Many of them simply held on to the good things they had for too long. High-margin gas-guzzlers, as we know, have become relics. We are now watching the fate of high-end computing, formerly intended for the masses, in the face of competition from low-priced netware more attuned to real needs.

The future does not necessarily favour the small, or any particular size of business. Rather, it favours the nimble and the risk-takers. The business-model change has been so rapid in the past few years alone - as illustrated by the cases above - that we may consider ourselves in the midst of a revolution. It behoves each of us to ensure that we are not overcome by these changes.

Don Bhasavanich is a councillor at the Thailand Management Association. Follow his articles in Hi! Managers on the first Wednesday of each month.