author: people of God were excited, from the title figure: “Ordinary Glory” stills

1. When the company loses its spatial shapestate

Some cognitions and habits of people, once changed, will never return to their original state.

For example, remote office, it used to say that it affects efficiency, affects collaboration, has no atmosphere, and lacks trust in customers. But under the epidemic, after many companies were forced to “remote”, everyone felt that these problems were not as serious as imagined, and they began to get used to remote office and remote business.

The United States was originally relatively developed telecommuting. The epidemic has become more and more serious in the past six months. Many companies simply telecommute indefinitely. As a result, employees suffering from the pressure of housing prices and commuting suddenly feel that they are all at home anyway. Office, why don’t I move to a cheap and livable place? So the employees moved to other states and even to Canada.

If employees don’t come to work, the company’s departments lose their spatial form, leaving only the meaning of the organizational structure.

Next, the CEO may think, why does the company have to have a physical office address? This rent can be saved completely.

Once the company becomes a virtual space for a group of people separated by thousands of mountains and rivers, then it may be just a place for you to receive work tasks and pay.

However, this way of working has existed in the past, isn’t it a freelancer freelancer? Many companies will cooperate with some individual freelancers for a long time. This year, many third-party human resource management companies’ “short-term flexible employment” business has doubled, including high-paying professional and technical positions such as medical and IT.

Of course, we also know that even if the company loses its physical form one day, all employees will go to work remotely throughout the whole journey, which is still different from “freelance”.

This is not the same, that is—The essence of the company is also the subject of this article.

If you are a social animal, this thinking about the nature of the company can help you understand it at a deeper level. What is your understanding of the value of the company?

If you are a professional investor like me, this article will also involve an important question: Which company is a good company to invest in.

Second, the significance of an enterprise is to reduce transaction costs

The company is a product of modern society, why should there be a company? What is the meaning of company existence?

Following the question we posed above, there is also no need to “go to work” in a spatial form. What is the difference between telecommuting and long-term company freelancers?

For the company’s tasks, freelancers can refuse on the grounds of “no time” or “too little money”; but employees can’t, no matter whether you work remotely or not, as long as the work itself is not illegal and does not violate the company’s regulations. You can’t refuse, unless you quit your job.

The biggest difference between the internal work of an enterprise and the external collaboration of an enterprise is: Outside the enterprise, all cooperation is a market behavior based on price. You cannot force anyone to trade with you; but the internal enterprise is a typical centralized power According to the system, all production plans and work tasks are assigned from top to bottom, level by level, and are enforced without compensation. Subordinates unconditionally obey their superiors within the scope permitted by laws, regulations and corporate systems, and the company unconditionally pays remuneration in accordance with the contract.

To give an extreme example, if the boss of a company wants to ask someone to take a child to walk the dog, he will have to pay a labor fee, but they often ask their subordinates for free in various names. (Only for “bringing children to walk the dog”) do these things.

This “compulsory resource allocation” feature of the company has always been regarded as justified and unconcerned until an economist suddenly questioned the nature of the company:

Since the market-oriented resource allocation is the most effective, why is there still such an “anti-market” planning system for enterprises?

This is the question raised in one of the most famous articles by Coase, the founder of institutional economics-“The Nature of the Enterprise”.

The reason for this question is that this “planning order” system has a big drawback: opening the door of the company, on the surface every employee is working, but in fact a lot of time is “pretending Work”-Even if you go to work remotely, you often need to pretend to work.

From an economic point of view, full-time work is an inefficient way of resource allocation. The company pays employees for the time they “pretend to work”; employees “pretend to work” instead of doing what they like. It is also a waste.

Theoretically, all positions in the company can be turned into freelance short-term employment. All jobs are temporary staffing, which can improve the efficiency of the company and satisfy the workers.

Some people may think this is impossible. In fact, in the era of big data, after a task, the system automatically allocates suitable jobs in the talent pool, sends out task invitations, and freelancers grab orders. Everything is possible.

But in the era of Coase, the answer is obvious. The cost of market-based allocation of work resources is too high. All the salaries you save are not enough to hire HR, especially in modern companies that require long-term team cooperation. work.

So Coase believes that the fundamental significance of the company’s existence lies in the use of highly centralized organizational forms, planning and ordering production methods to improve operating efficiency and reduce production costs.

For example, the sales department is an indispensable core department for most companies, but many small manufacturing or R&D companies will hand over their products to a sales company to act as an agent, or even direct the sales company to buy out, and only Leave one or two docking personnel.

Which one is better?

It is a market-oriented act to let a sales company act as an agent. It tests the bargaining power of your product. You must be a technology-centric company or have a monopoly of some unique resources.

Selling by yourself is equivalent to turning a sales company into an internal sales department of the company, incorporating sales into the company’s development strategy, and turning market-oriented cooperation into internal planning instructions for the company. Your business scale has increased, but also Increasing the business chain, increasing the cost, it tests your management ability, you not only organize development and production, but also organize sales and customer service.

The expansion of the company’s scale requires that external market-oriented resources become internal planned resources. First of all, we must ask ourselves, has the new company’s operating efficiency increased?

Three, the boundary of the enterprise

As mentioned earlier, the ultimate meaning of the existence of an enterprise is to reduce transaction costs and improve the efficiency of resource allocation. Otherwise, it is better to return resources to the market.

In the early days of reform and opening up, private enterprises were not allowed. At that time, there was an unwritten rule that one person can hire 7 employees, and more than 8 people are capitalists.

But many people risked going to jail and hired more than 8 employees. Some people say that this is an example of capitalists willing to take risks for high profits, but the business owner’s idea is actually very simple. There is a business and no one works. It is a pity that the opportunity to make money is wasted. I can offer a higher salary and the other party is willing to work. Why not?

From an economic point of view, the reason why entrepreneurs take the risk of hiring people is because they have not reduced their efficiency after the expansion of their scale; for the employed, working in a company makes more money than working independently. More.

This is the fundamental meaning of an enterprise. If an enterprise can increase its efficiency by expanding its scale, the enterprise will continue to expand. Until its scale increases, it can no longer reduce transaction costs.

So once the country releases policy restrictions, the scale of private enterprises suddenly rises and expands to a scale that business owners cannot manage. Entrepreneurs either stop there or continue to expand blindly and go bankrupt.

This is also the reason for the formation of business boundaries.

Intel’s semiconductor business includes both design and manufacturing. However, because semiconductor design and manufacturing are two completely different types of work, specialized semiconductor design companies such as Qualcomm and Nvidia and specialized semiconductor manufacturing companies such as TSMC appeared later. At present, in terms of the advanced nature of the manufacturing process, Intel is at least five to ten years behind TSMC, and the gap is widening because of the higher manufacturing efficiency of the latter.

Entrepreneurs not only want to make money, but also hope that their business can continue to grow, including recruiting more employees, raising more capital, and expanding more businesses. However, scale is the natural enemy of efficiency. Entrepreneurs must constantly prove that their management capabilities can enable enterprises to expand in scale while maintaining operational efficiency.

People are also resources of an enterprise, so the value of employees can also be measured by this standard.

Four. What determines the value of employees

Any employee has value, even those who seem to be incompetent. But your value is not the reason the company hires you.

For example, the company needs to handle some legal affairs by one person. If it is a long-term, non-standardized, repetitive work that requires a lot of internal communication, it is more cost-effective to hire people; if it is temporary, complicated, and legal professional For a very strong job, it is more reasonable to hire someone temporarily.

The development of the company requires the investment of employees and other resources. Every time the company adds an employee (resources), efficiency is either improved or reduced, and unit cost Either increase or decrease. For any position, any department, and any business, whether to outsource or hire employees, the boss has to settle the accounts.

So, do you join to increase efficiency and reduce unit cost, or vice versa? This represents your value.

What kind of ability represents value? To give an example, I wrote in the previous article “Low-level people sum up experience, high There is a point in the “Level of People Use Model”: The type of thinking model you master determines your level of life.

Some readers disagree, thinking that sensory ability is a more advanced ability than model ability.

Whether it is right or not, analyze it directly from the perspective of the value of the company. If you are the boss of a company, which of the following two employees do you think is more valuable(Can help you make more money):

A. Very thoughtful and capable of execution, often one person does all the work, no one knows how he thinks;

B. There is a complete working methodology, which can form a set of work processes, so that new employees can quickly mature in actual work.

These two types of employees are very capable and hard to distinguish between them, but if you have experience in running a company, you must know that B is the more valuable employee and can often become the core node of the working relationship , And A’s role is more like a “freelancer”.

The essence is that B is the key node for the company to achieve scale, and is a value magnifier; A is using market-oriented means to exchange value with the company.

The value of B is a variable, which is multiplication, and expands with the expansion of the company’s scale, while the value of A is constant, which is an addition, but it becomes smaller as the scale of the company expands.

Management is the self-replication of an enterprise, and scale expansion is accelerated copying and iterative copying. Whoever can solve the problem of “copy without distortion” can bring the greatest value to the enterprise. This is my last article Talk about the value of “model thinking”.

Employees can ask themselves a question. Did I enter this company to reduce its unit cost or increase its efficiency, or vice versa? This question has nothing to do with your ability, but because it is the most favorable judgment standard for corporate interests.

Fifth, the limit of growth

Peter’s theorem says: All employees will eventually be promoted to positions that he is unable to hold.

The same is true for the company. Coase said in “The Nature of the Enterprise”: “When we consider how big the enterprise should be, the marginal principle will work smoothly. At the marginal point (the limit of growth), the cost of organizing a transaction within a company is either equal to the cost of organizing in another company, or equal to the cost involved in “organizing” the transaction by the price mechanism.”

Not only is there competition between the company and the company, but the company’s internal plan management efficiency is also competing with the external market exchange efficiency. If the management ability is strong and the plan management efficiency is high, the scale of the company will expand. If the efficiency of external market-based exchange is high, the size of the company will shrink.

Ren Zhengfei once introduced “entropy” in physics into Huawei. Companies, like nature, will go from order to disorder and eventually to extinction. The demise of companies is also a natural law, so we must delay this as much as possible through management. The arrival of the turning point includes activating the organization, activating the organization’s people, and establishing a dissipative structure.

author: people of God were excited, starting in the “people of God co-Fen (ID: tongyipaocha)” micro-channel public number, focus personal growth