Change Hard; Die Hard

Change Hard; Die Hard 

The first international Corporation was the Dutch East India Company [1] (VOC: Verrenigde Oost-IndischeCompagnie), established in 1602. At the time the Netherlands were only 1.5 million people, and they managed to dominate world trade for 50 years. The South China Sea region in Eastern India Ocean was a very valuable region; the VOC was established as a single entity to monopolize the East Indian trade, focusing on spices. It was established with a unique financial structure that involved long term thinking. It was so successful that by 1648 the Netherlands was in better financial shape than any other country in Europe. Dutch people were encouraged to invest in VOC bonds, which were very profitable in a context of low interest rates.  The middle of the 17th century was the Golden Age for the Dutch, and much of that was based on the success of the VOC, but eventually the tastes of Europeans changed and sugar and cotton became the stars. Britain proved in better position to dominate the trade and production in these new and more profitable commodities, and they eventually copied the “Dutch Model”. Ultimately, maintaining the monopoly cost more than the spices were worth, and the company went bankrupt in 1799.   

See how the Dow Jones Industrial Average [2] has developed since it’s creation in 1896. In the beginning the Index was composed by 12 companies: Railroad, Cotton, Sugar, Tobacco, Gas, Cattle, Utilities, Leather, Rubber, Coal & Iron were some of the main industries at that time. Of all these companies, only one survives today: General Electric. The others either disappeared or were merged into other companies. Today, the landscape has changed dramatically, the Index being composed of 30 companies including the following industries: Aerospace & Defense, Construction, Oil & Gas, Computers, Food, Chemicals, Software, Financial Services Pharmaceuticals, Healthcare and Telecommunications. 

Giants like Facebook, Google or Amazon emerged only in the last 20 years, while most of the companies (and industries) created a 100 years ago have perished. The government can do their part by creating the conditions for a business friendly environment. It can intervene by generating better conditions for entrepreneurs, like passing laws and tax benefits. But the ability to generate new employment will be exclusively dependent on the quality of the entrepreneurial spirit. 

Before, it was simpler. Jobs were created at a higher industrial level, many times with government intervention. I am of course talking about heavy industry, which requires long term capital investment. In the new digital economy, people will have to take responsibility for their own lives. A college degree today is what a high school diploma was 30 years ago. Before, being a doctor, an engineer, an accountant was a big thing. Now, there are many of them. Some corporations even require master degrees to join or to climb up the corporate ladder. Let us take the example of the accounting world. Due to informatization, the base of the pyramid is being automated. The invoices that were before processed manually are now automatically imported into the system. This means less work for accountants and more for IT people. However, the relationship is not proportional. For every 3 positions that are lost in the accounting world, only 1 is created in the IT department, just to give some estimation. This means that even if you get a college diploma, your “seat” is not secured in today’s economy. More than ever, people need to take responsibility for their lives. 

Thanks to the internet, information is now available for everyone. The possibility to innovate is easier than ever. This will disrupt corporations at their base who will not resist the competition from the more agile, cost effective and sneaky entrepreneurs. The restructuring of the working landscape will take time but will take place. Not being able to make a bet for job stability, people will be forced to look for creative ways to make a living. The Knowledge Based Economy forces the individual to take responsibility for their own lives. Acquiring skills, abilities and selling them is coming to be more and more important, a large part of the workforce turning “flexible” [3]. A new era of exiting challenges awaits us, the role of corporations and governments becoming less crucial in an economy were an individual can establish himself as an entrepreneur with only a laptop, connection to Internet and minimal investment. Connections will make it easier to globalize and meet people worldwide, were of course taking the risk of trusting people you don’t know will pay off in the long term. Being open minded, multicultural, and creative are not just a plus, but necessary skills not just to thrive but to survive the World of Tomorrow.  

https://en.wikipedia.org/wiki/Dutch_East_India_Company
https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average
https://www.fastcompany.com/3049857/5-major-ways-freelancers-will-change-the-economy-by-2040