Over the course of the seventeenth and eighteenth centuries, the desire of poorer people in cities across Europe to consume what were once luxuries enjoyed only by the very rich was just as influential in shaping the history of work as the invention of technologies to exploit the energy in fossil fuels. Without it, there would have been no markets for mass-produced items, and without markets the factories would never have been built. It also rewrote the rules by which much of the economy operated. The growth of Britain’s economy increasingly came to depend on people employed in manufacturing and other industries reinvesting their wages in the very same products they and their factory workers manufactured.

The Corporation in the 21st Century- John Kay

PART 1: The Background

1: Love the Product, Hate the Producer

“Some of these billionaire executives are no superstars: individuals such as Philip Green, who extracted nine-figure sums from retailer BHS before selling the company to multiple bankrupt Dominic Chappell for £1, Mike Ashley, the domineering boss of the retailer Sports Direct, and Eddie Lampert, who inflicted similar destruction on Sears, for a century America’s leading store chain. The lifestyle of these executives contrasts with the fate of their businesses. The 90-metre yachts of Green and Lampert make good newspaper pictures. Green’s is moored in the harbour of the tax haven of Monaco, where he is resident, while Lampert’s is named Fountainhead, after Ayn Rand’s turgid paean to individualism.

A new management team and its advisers devised an all too common 1990s business strategy: to sell off boring bits to fund exciting acquisitions. But, like other companies, ICI found it easier to overpay for new businesses than to make rewarding disposals of old ones. Burdened with debt and finding growth elusive, the stock price was only a fraction of what it had been a decade earlier. What remained of Britain’s leading industrial company of the twentieth century was acquired in 2007 by the Dutch company AkzoNobel. Blair resigned the premiership in the same year.

These hollow corporations share the characteristic that the activities of the business have been pared down to the single link in the chain of production at which the corporation holds a distinctive capability and enjoys a competitive advantage. Richard Langlois, a business historian, identifies this as a key reason for the change in the corporate landscape, enabled by the growth of ‘market-supporting institutions’ which enabled entrepreneurs to easily access support for business functions where they didn’t have a comparative advantage. If the assembly line was the defining innovation in business method of twentieth-century manufacturing activity, the hollow corporation may be the defining innovation in business method of twenty-first-century digital activity.

In the early day of the post-war corporation, the question of purpose hardly arose. Companies like DuPont had been given an obvious reason to invest in the production of smokeless gunpowder by the Second World War, and at its end they found themselves in possession of a lot of capital equipment and chemical know-how. They went out looking for new things to do with cellulose and petrochemicals because it would have been strange not to. As they grew more complicated, they had to reorganise their corporate forms and management structures; academic writing in management was really just catching up with the things that engineers and accountants were inventing out of necessity.