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Fresh Thinking for New Business Models

Old Business Models are Getting Redundant

When General Motors filed for Chapter XI protection in 2008, it also marked the closing of a type of business models in modern commerce.

General Motors was seen as the paragon of modern American management theory as popularized by Peter Drucker in the middle of the twentieth century.

It was at this venerable company that Peter Drucker formed his early thoughts about management as a profession, separation of the ownership from management of enterprise, the key functions of management, division of labour, theory of leadership of enterprise, indeed the very concept of the corporation.

His writings were the need of the time, and were picked up by ivy league business schools and corporations alike and formed the basic foundation of management profession.

Indeed there was a time when General Motors and the US commerce were thought of as interchangeable entities with popular aphorism that “what is good for GM is good for America and vice versa.”

Some people still think this is the case.

They see the decline of General Motors as symptomatic of a wider malaise in the US economy.

Others think that General Motors will rise like a phoenix again to become an industrial powerhouse.

While we do not know what will eventually happen to General Motors, we know that new models of commerce, new industries, new technologies and new ways of solving old problems will be required to build a stronger economy on a global level.

All of these will not necessarily come out of one country, one continent or even one region.

Drucker foresaw some of these changes in his writings on the information age, post-capitalist society and post-industrial man.

Prescient as he was, he did not yet fully see majority of the changes that have happened in the last 6 years since his death.

The rise of China and India, the global financial crisis, the zombification of the western economies as a result on intense focus on the rapid gains from FIRE (Finance, Insurance, Real Estate) industries, hollowing out of real capabilities are nowhere to be seen in his writings.

However, this is not just true of Drucker, most of the management thinkers, writers, academics and authors can be painted with the same brush.

It is not a surprise that the established thinkers find it difficult to think outside the box.

Since the times of Aristotle, Socrates and perhaps even before that (for the history of mankind maybe older than that), new thinking must come from new places – from outside the established order of thinking.

No wonder then that the most innovative companies in the US still choose to locate on the west coast, many of the most successful corporations were formed by the college drop outs and the most successful business models do not even have a name yet.

— Excerpted from the introduction of THE 5-STAR BUSINESS NETWORK

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