May 4, 2023

Small Businesses in New Zealand - And Elsewhere.

The particular comment I was responding to was in a private group hosted in New Zealand - hence the opening paragraph. BUT - I think it pertains to any country. In that post, this link was provided — I think New Zealand has more businesses (and hence ‘small’ businesses) per capita than pretty much any New Zealand just doesn’t have the people to support it.

BUT - when you leave New Zealand … there has been something happening for a while now. I will try to discover the article I wrote a while back ….

Here’s the nub … In the US (but I am pretty sure this applies to most countries) 50 to 60 years ago, big employers like GM and GE were the dominant market cap companies on the financial exchanges. Not entirely un-coincidentally, they were also the companies that employed the most people. Fast forward to today … the market caps of the biggest companies are an order of magnitude higher than the ones back then and the number of people they employ is an order of magnitude less. Meanwhile the population of America has doubled? Tripled?

So where are all those people now working? Answer small … or at least smallER businesses.

Some of this has been achieved by improved efficiencies … we no longer need banks of people directing calls, typing up documents, manufacturing cars …. But also … since the 70s there has been a steady drip of those organizations getting those people ‘off the books’ .. why employ people if you can off shore, outsource, automate processes … and the new one - use AI. The result is that more and more people are in smaller and smaller businesses but often working in service to a larger organization.

Quite simply - If I am building a house (actually - or metaphorically) .. do I employ everyone full time … or contract with the right resources at the right time to get the job done?

Tongue in cheek .. but for the longest time, I have had this vision of the ideal company comprising a single individual with ‘agents’ managing their ‘virtual supply chain’ that they need to deliver value to their customers.

This thought informs the graphic below - ‘The Business Equation’ - and is foundational thinking in the People First domain.

The Business Equation 001The-Business-Equation.001.png

business equation Work

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