Blurring the lines inside a corporation

In 1937, 26-year-old economist, Ronald Coase, published an article called "The Nature of the Firm." He wouldn't win the Nobel Prize for this work until 1991. Unfortunately, this is usually what happens when someone predicts a major change to people terrified by it.

In his article, Coase points out when companies will choose to do their own work rather than contracting it out to another firm. He shares that apart from the actual means of production, there are other transaction costs to consider like searching for suppliers, researching their offerings, negotiating price and terms, checking their quality and maintaining the relationship. Coase states that when a company can produce a widget (considering all these others costs), they will decide to do that work themselves rather than contract another company.

However, with the increasing popularity of the telephone in business, Coase assumed these other transaction costs would get so low that it would be commonplace for firms to partner with other companies on almost anything. He expected the number of firms to skyrocket as a result of this increased connection between people and their businesses. That's exactly what happened, no matter the political, economic or social climate. The 1977 US Census saw a 27% increase in the number of companies between 1967-77, after the phone was finally the norm in the business and at home. As Claude Fischer points out in his 1992 book, America Calling, up until the mid-20th century the phone was not really taken seriously. It was seen as a toy. It went from toy to something that intimidated businesses everywhere.

The internet had the same journey. It was a toy to most and a godsend to a few. In 1991, the world Coase had predicted was in full maturity, as companies had been embracing the internet for some time. It was starting to embed itself in our homes, but most of all, this "hyper-connectedness" was finally embedding itself on our consciousness. 

It was at this time, people understood what the profound implications were when you connected billions of people.

If you work inside of a corporation, you are experiencing what Coase saw eighty years ago when he was a young economist. Your company needs you to be more elastic. They need you to learn things you never thought you'd need to know. You will be expected to work with people you never would've expected. In order to work best with others, you will need to have high emotional intelligence and the ability to explain dense concepts to others in a meaningful way.

The technology infrastructure is in place for us to work together. But just like people were afraid to speak into the phone, we have people who are afraid to embrace our connectedness. There is a premium on people who can actually work with people who think, work, and exist in completely different worlds than our own.