Saturday, August 1, 2015

Should businesses be forced to die?

As business and technology cycles quicken, would there be a benefit to pre-planning the death of companies? Business charters and contracts could establish a pre-arranged "lifetime" of 3, 5, 10, or 20 years as appropriate, in order to establish and stabilize expectations of employees, consumers, investors, governments, etc. Rather than randomized chaos; thoughtful life-cycle business charters could allow all actors and stakeholders to make plans for the end of a business's life.

Free markets are powerful and efficient because individual agents (i.e. employees and businesses) make decisions in their own best interest, self-organizing to perform specialized functions aligning with their strengths. This mirrors the behavior of cells, organisms, and populations in the natural world.

Free markets are also considered an improvement over centrally-controlled economic systems because poor performers can be fired, go bankrupt, or otherwise "die."  This makes way for new growth and a stronger "gene pool" over time. This also mirrors the nature's paradigms of natural selection, genetics, and evolution - but with one important difference -

While employees have a natural cadence of retirement, job changes, etc; Businesses themselves do not. When and if a business dies, it is often a shuddering spasm like Lehman Brothers or Enron that rocks its employees and industry; rather than a normal, expected event for which people are able to prepare. Job training, relocation, and transition are long processes that individuals and communities often require years to complete.  Some businesses are successful at reinventing themselves from within and helping employees evolve, but this may be the exception rather than the rule.

If a brand or business line is still prospering as the end of the life-cycle charter approaches, it could be perpetuated by rolling-over into a new charter company or selling it to another company.  Assets could be sold off or re-distributed.  Employees could prepare for transition at agreed-upon intervals.

It may not be the ideal arrangement for all cases, but life-cycle business charters may allow businesses and industries in select cases to grow and evolve more efficiently, while providing stability and predictability for employees and stakeholders. 

CATEGORY: Political / Economic / Social
IDEATION: December 27, 2014

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