Chapter 15: Businesses in the World of Projects

Rolf A. Lundin, Ph.D.J nk ping International Business School

Novelties in Organization

When Jim March of Stanford University, in the beginning of the '90s, first mentioned and described the notion of "Disposable Organizations", my initial thought was, "Nice idea, but very marginal in practice!" His observation was that in the Silicon Valley area some young, talented engineers, recently graduated from the university, often started small businesses on their own, sometimes together with a few friends around some business idea related to computers and information technology (IT). They did so with the intention to sell off their business at the first opportunity, making a nice profit in virtually no time at all (March 1995). That seemingly odd phenomenon has become an everyday occurrence since then. The brave new economic rally at the turn of the millennium with an IT rally (including volatility of share prices) in the stock exchanges all over the world seems to have strengthened the tendency he described. The hunt is on, not only for young talent—especially in IT related areas—but also for small entrepreneurial companies with promising ventures. A new breed of very young and very well-educated entrepreneurs has arrived to the center stage of the economy in many countries. Making money fast while your talent is "hot" is a different and possibly also a new motive for starting a business. At least it is different if your comparison is with some kind of traditional entrepreneurs often starting companies because they are fed up with their present jobs or in connection with a situation when they have experienced some kind of turbulence in life (like a divorce).

These two types of entrepreneurs obviously have completely different intentions with their activities. For the traditional entrepreneur, the company in a sense is a goal in itself. Traditionally, that kind of entrepreneur has been found to stay with the newly created business for the rest of the life of the entrepreneur. That implicates two things: first, a lifelong engagement for the entrepreneur and second, the company is expected to have a life that might extend well beyond the life-time of the original entrepreneur. For the other type of entrepreneur, the making money fast type, the company is merely a vehicle, not an end in itself. The effort is time limited in the sense that there seems to be a time limit beyond which the entrepreneur and the partners are not willing to put more energy into the venture at hand but move on to something else. It also has some other definite project characteristics with a stress on the task at hand inducing not only high motivation but also a definite preoccupation with success where the entrepreneur is willing to sacrifice what is considered as normal life for the sake of the success of the venture.

The point is that we are witnessing a marked drift in the way an enterprise is perceived. The new kind of entrepreneur is likely to think of the enterprise in a project-like manner or at least as a temporary organization. This is in sharp contrast to the traditional entrepreneur who is solidly rooted in the bureaucratic type of organization likely to be the basic organization type of previous jobs. Most people who grew up during the heydays of industrial success in the post-war era are also likely to think of industrial organizations as ever-lasting entities. Furthermore, the permanency character of those organizations is likely to have been strengthened by at least some of their experiences of working life. In a sense we see some kind of victims of traditions in that generation. Youngsters who come directly from universities are not bound to have become infected by those same traditions. Instead they at times become one with the observed projectization tendency in society (Lundin and Midler 1998). Their mere existence and their way of life lead to an organizational novelty. The explanation to that appears to be too simple. Since most of the experiences of youngsters from schooling are project like, they tend to think in terms of time-limited ventures when setting up what they want to do. A side comment is that one important and significant corollary of this statement is that the much criticized tendency to use youngsters from the university system in experiments concerning industry and industrial practices might become increasingly relevant for the society with heavy projectization and with an increase of the disposable organization phenomena.

The death rate among entrepreneurial companies in the emerging industries has been very high (at least if you adhere to the traditional notion that death occurs when the company disappears as an entity that is legally independent). For Sweden it has been estimated that at the turn of the millennium when bankruptcies overall are relatively low not to say rare, the survival rate as legal entity for the type of companies we are discussing is still considerably less than one out of ten during their first year of existence. It is tempting to think of the death rate in the new industries in Schumpeter (1943, 1996) terms, that is to account for the death rate as a company failure where death is a form of "creative destruction" that leads to a better use of resources tied up in an ailing company. Another view, the one suggested here, is that the companies in question should be thought of as projects where death is always natural. Possibly the outcome is approximately the same, that is the resources become available in a wider context. This remark concludes our discussion about companies becoming project-like. The next section will bring us over to an introduction about notions concerning the roles that traditional organizations have for projects.