atomic reforming the business landscape into the new structures of tomorrow

ATOMIC
Reforming the Business Landscape
into the New Structures of Tomorrow
Roger Camrass and Martin Farncombe
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ATOMIC
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ATOMIC
Reforming the Business Landscape
into the New Structures of Tomorrow
Roger Camrass and Martin Farncombe
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Copyright © Roger Camrass and Martin Farncombe 2003.
The rights of Roger Camrass and Martin Farncombe to be identifi ed as the authors of this book
have been asserted in accordance with the Copyright, Designs and Patents Act 1988.
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Contents
Foreword vii
Preface xiii
Acknowledgements xvii
1 The Countdown Begins 1
Part 1 Causes 17
2 New Wave Connections 19
3 Land of the Giants 39
Discontinuity 55
Part 2 Collapse 59
4 What is an Atom? 61
Part 3 Consequences 81
5 Winning Strategies on the Atomic Road 83
6 Atomic Me! 101

7 Industrial (R)evolution 117
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vi CONTENTS
Part 4 Changes 139
8 Relational Capital 141
9 Keep the Best and Ditch the Rest 164
10 Big Is Not Beautiful 183
11 Change IT! 196
12 Atomize Now! 213
Part 5 Corporate Re-formation 233
13 Corporate Re-formation 235
Index 243
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Foreword
by Chris Meyer, author of Blur and It’s Alive
For the past hundred years or so, the fastest growing economies have chosen
to organize themselves into corporations as the most effi cient means of
production. And since most of us reading this book have grown up in that
context, it’s easy for us to think it will always be so, just as feudal serfs,
guild members and farmers did in their respective times. The technologies
that have transformed value creation will likewise revolutionize economic
org anization, thereby shifting power from institutions to the talent they
rely on.
The most important innovation of the Industrial Revolution was not
a technology such as the Bessemer steel-making process or the Newcomen
steam engine – it was the legal creation of limited liability enterprises
– corporations. Why? Because it mobilized the fl ow of capital, which was a
scarce resource in the late nineteenth century.
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viii FOREWORD

A blacksmith might have started a business based on his family’s savings,
or on what could be borrowed from the village he would serve. However,
Andrew Carnegie needed fi nancial capital on a different scale and it’s no
accident that his name is connected to that of Paul Mellon, the founder of
the bank that funded US Steel. The growth of the banking system and the
ability to fund industrial-scale projects were enabled by the development
of the corporate form of organization.
The power of this new economic species proved almost too great. The
industrial technologies that corporations developed on a mass scale – such
as chemistry, electricity and mass production – created so much value and
required so much capital that they eventually acquired enormous leverage.
In fact, they accumulated power so rapidly that democratic societies had
to create new institutions to curb it. First came the antitrust laws, then the
labour movement and associated legal frameworks. Most recently, it has been
consumerism that has again reduced the corporations’ room for manoeuvre.
Even so, the corporation seems to be gaining ground as global enterprises
take on capabilities that used to belong to governments. Few central banks,
for example, can compete with Citicorp in currency markets. What could
change this picture of growing corporate dominance?
The traditional corporation got a bit of a frisson from the dot-com boom.
Right now, of course, that fear has become a sneer as Aeron chairs, the em-
blematic furniture of Silicon Valley, can be picked up for next to nothing at
auctions and individual ‘free agency’ looks more scary than liberating. But
this does not mean the corporation is safe.
Clayton Christensen
1
has recently driven home a forceful point: when a
technology with truly disruptive potential fi rst emerges, it doesn’t work very
well. It gets used only in niches where its specifi c advantages are strongest.
The existing technology is generally too well developed and entrenched in

the better-established applications to give way to the interloper in its early,
crude state. Thus transistors were fi rst popularized in tinny radios because,
without the transistor’s low weight and power consumption, a portable radio
wasn’t possible at all, never mind that the radio sounded horrible! But the
new technology learns from its niche, improves and pretty soon names like
DuMont, RCA, Philco and the other vacuum-tube dependent companies
have disappeared. Christensen’s conclusion is this: successful corporations
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FOREWORD ix
are generally managed according to the sort of rules that militate against
investing in new and risky technology.
The foregoing argument relates to product technologies but it applies
equally to new forms of organization. The dot-com economy, comprising
small companies and free agents, bound together by their shared mastery
of new networking technology and an equally shared set of values about
knowledge, relationships and competition, invented an economy perfect for
the rapid proliferation of information-based, non-capital-intensive businesses
– this was the early niche. The collapse of many of these businesses has not
wiped out this way of working, only the recent approach to getting such
companies funded. And ultimately the experiences of the dot-com cohort
will lead to even more startling organizational innovation, as the transistor
led to the microprocessor.
The connected and fl uid labour markets that bred the dot-coms still
exist, just as Internet-based communication still exists among the Chinese
intelligentsia even after Tiananmen Square. In fact this is the disruptive
technology that will eventually weaken the corporation. The corporation’s
last remaining monopoly power is created by the ineffi ciency of the labour
market, which prevents individuals from seeking new jobs as easily as they do
new cars. The Net is changing this rapidly, to the benefi t of the most talented
individuals. As Charles Handy says, ‘the big challenge for the elephants is

that they don’t end up as the home for the second rate’.
The corporation as we know it is now in trouble. There is nothing to
prevent its demise given that what had previously been its advantages are
becoming less and less important. In fact, its accumulation of power will come
to be seen as a kind of historical aberration, like centrally planned economies.
This is the big story for the next decade and it should already be capturing
our attention. The technologies of communication and collaboration will
drive economic power from the institution to the individual, and the deci-
sions about how our resources fulfi l our desires will be revolutionized.
How?
Roger Camrass and Martin Farncombe have done a courageous thing,
and the right one. They have broken the corporation into its constituent
elements, identifi ed the forces that determine how these elements can and
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x FOREWORD
will be put back together, and predicted the combinations that will thrive
over the next ten years.
Rather than picking this or that trend, declaring it universal and ex-
trapolating it, they have created a chemistry of enterprise, allowing atomic
engineers all over the economy to start making their own new compounds,
testing them, and determining those that are the most promising. They have
got the crucial drivers absolutely right: connectivity replacing many of the
advantages of scale; fi nancial capital giving way to human and intellectual
capital; the emergence of new types of entities. But, above all, they have
signalled a critical change in perspective, from an economy of monolithic
and self-contained institutions looking at life from the top down, to a net-
work of atomic entities constantly forming new relationships and creating
value from the bottom up.
In this their latest book, they lay out both the periodic table of ele-
ments and rules for this chemistry, and describe some of the new things

that can be fashioned with it. No doubt, many more things will be created
than anyone can foresee. But the process is essential: deconstruct the ways
that value is added in corporations today, examine the forces that will alter
this picture, and analyse the components that will support value creation
in the future.
This networked, bottom-up perspective parallels powerful currents
in today’s economy (such as individual-based data mining and mass
customization) as well as tomorrow’s, the focus being on value created at
the molecular level through biotechnology, nanotechnology and advances
in materials. The bottom-up view will prevail, and will up-end our views
of resource management.
Corporate power and its pathological cousin, the infl uence of fi nancial
analysts, will be eroded. As we fi nd new ways to organize around our desires,
including how we want to work and manage our own professional lives, we
will create the kind of economic chemistry that Camrass and Farncombe
describe. In the process, an economy of the people, by the people, and for
the people will reappear.
The corporation looks to be in full cry, with corporate executives not
only highly paid but also lionized – Jack Welch got an $8 million book
advance! But the bubble will burst as surely as it did for the dot-coms and,
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FOREWORD xi
if corporations are to extract value from the assets they have built, they
must understand the source of the power of the insurgents and the forms
the alternatives may take. This book is a guide to transforming the value
locked within the corporation into a new form, adapted to the connected
economy and able to continue adapting on its own. It illustrates a challenge
that will face every corporate leader in the decade to come.
Endnotes
1 Clayton Christensen, 1997, The Innovator’s Dilemma, Harvard Business

School Press, ISBN 0875845851.
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Preface
The fundamental message of this book is that you are about to become more
important than you can possibly imagine.
In a few years from now, chances are that you will still be doing what you do
today. You are, after all, presumably an expert in whatever your chosen career is.
Whether you’re a lawyer or an accountant or a human resources manager, the
odds are you will still be a lawyer, an accountant or a human resources manager
in ten years’ time.
It is quite possible (even likely) that the way you do your job (the tools you use,
the methodology you employ) will not have changed either. After all, accounting,
for instance, is not a fi eld given to radical innovation or theoretical shake-ups!
You may even be doing this same work in the same way for the self-same
employer.
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xiv PREFACE
Yet, in spite of all this, we predict that everything in your life (that’s right; and
not just your professional life either) is about to change. Why?
Let’s put it this way: for the better part of the two centuries since the Industrial
Revolution, the business world has been governed by the underlying notion that
‘the sum is greater than the parts’. This has led to a theory of the fi rm that says
that power and infl uence will concentrate in an ever-smaller roster of bigger and
exponentially more infl uential companies, super-companies that would do it all,
for whom scale would be everything. Cogs would have an identity only as invisible
parts of the machine.
Sea changes in the world of communications over the last half-dozen years
(which, indeed, continue to take place as we write this book) are reshaping the
world in which we live and work. In fact, they are revolutionizing it. The outcome

of this fact is that the balance of power in the business world is shifting. In very
short order, the theory of the fi rm is going to be turned on its head.
The parts are about to become greater than the sum.
And you are one of the parts.
In the new corporate world, every part will be seen to have value and identity
and, because each part can and will exist in its own independent orbit (connectivity
being both the enabler and the inspiration behind this fact), each part will have a
new relationship with the sum.
We are not saying that all parts in the new world will be equal, or that the
value of some of these newly empowered or respected parts will fundamentally
improve their economic lot. But we are saying that all the parts will be valued
and recognized for what they are. There will be no more ‘cogs’ (a description that
damns by faint praise) because there will be no more ‘machine’.
We call these parts ‘atoms’, and the seeds of the ‘atomic’ corporation are
already growing. The huge, unwieldy companies of today are composed of atoms,
just as companies in the future will be. But today, the atoms are aggregated in a
complex corporate environment that serves to stifl e their effectiveness and ability
to innovate.
In the future world, the world of the ‘Atomic Corporation’, the atoms are
freed and in the process the corporation is redefi ned. Tomorrow’s atom, freed to
achieve greater productivity, may be today’s individual employee, today’s small
department within the company, or today’s contractor. In the future, the work
itself won’t change … but the working relationships will.
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PREFACE xv
Furthermore, even though the parts are the important thing, the atoms of the
future do form a whole. What is important here is that the value of the whole
will amount to more than it does today. The atomic economy will function more
effectively and more cost-effi ciently, and it will be more responsive to changes,
precisely because the focus will be on the parts.

As mergers such as AOL-Time Warner have surely proved, we are reaching
the point where increasing corporate size seems an end in itself, regardless of the
consequences. Something has to give. It will. The atomic corporation will be the
result.
And you will be the winner.
You will be the winner because the atomic world will be one in which quality
overrides quantity, in which achievement is held in higher regard than paper-push-
ing, and in which you are valued for what you can deliver and nothing else. Today,
work contracts and employee handbooks mostly amount to pointless collections
of rules and regulations few of which have any direct relationship to the quality
of work output. In future, employee/employer relationships will be defi ned simply
through deliverables. Lithe, responsive and expert atoms (whether individuals or
small companies) will focus on productivity and productivity alone. ‘Punching
the clock’ will, not before time, be consigned to history. Ironically, most of us will
achieve more in our professional lives while simultaneously having more to give
to our families.
This book is about the change, and the road on which we have already em-
barked to the ‘Atomic World’.
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Acknowledgements
Background and research
Although the writing of this book was a compressed six-month project, it
is the culmination of a thirty-year journey for the two authors. The jour-
ney starts in 1974, which, according to the Intel Museum in Santa Clara,
California, is the dawn of the digital age – at which time the world’s fi rst
microprocessor was manufactured!
To present a comprehensive snapshot of today’s digital revolution and
to be bold enough to describe some order within the ensuing chaos requires
more than a mere point of view. It calls for credible research and experience

that goes well beyond the combined authority of just two individuals. To
that extent, this book has its origins partially in a moment of inspired vision,
but also in an extensive research project.
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xviii ACKNOWLEDGEMENTS
With regard to the latter – our research – the foundations of this book
are varied and all equally critical. They include the outcome of various stud-
ies that the authors have been involved with over a number of years with a
variety of partners. They also include a study of the works of a number of our
peers (such as the books/articles Blown to Bits; Unbundling the Corporation;
and Break-up!) that have at once enriched and informed our own work and
have thereby advanced our theory of the ‘Atomic Corporation’. Also, we are
particularly indebted to several institutions and related individuals through
which we have gained personal access to the knowledge and collective wis-
dom that provides reliable commentary on today’s profound events.
We acknowledge in particular and with enormous gratitude the following
people and organizations that have contributed the intellectual underpin-
nings to this book.
The Center for Business Innovation in Cambridge, Massachusetts,
and the associated work of its director Chris Meyer and his colleague Stan
Davis have contributed much to our understanding of both the connected
economy and the underlying fi nancial metrics that determine corporate
success in this new era.
Two infl uential studies of the future have provided detailed research
and evidence for our fi ndings:
• ‘Business in the Third Millennium’, undertaken from 1992–1998,
brought together twelve global sponsors to navigate the new digital
landscape. These included organizations such as Chevron, EPRI, GRI
and the US Postal Service in the USA; BP, BT, Fujitsu/ICL and Barclays
in the UK; The European Commission; NTT, DoCoMo and the Fujitsu

Research Institute in Japan. The study was managed and supported by
the Stanford Research Institute (SRI).
• ‘Management in the Nineties’, undertaken by the Massachusetts Insti-
tute of Technology on behalf of twelve industrial sponsors, and the direct
predecessor of ‘Business in the Third Millennium’. This programme led
to the development of business re-engineering that was commercialized
by consulting fi rms such as CSC Index and Gemini Consulting in the
early 1990s. The authors acknowledge the particular work of colleagues
such as James Champy, Michael Hammer and Fried Wiersema of CSC
Index in the intellectual development of atomization.
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ACKNOWLEDGEMENTS xix
Prior to these two programmes, Roger Camrass was intimately involved in
one of the world’s leading CIO programmes. The Butler Cox Foundation
undertook extensive research on behalf of over 500 major corporations
across Europe. Projects covering every aspect of information technology from
database design and distributed processing to IS effi ciency and effectiveness
were meticulously chartered through the 1980s and 1990s on behalf of the
member organizations. The Foundation became one of Europe’s leading IT
forums and is fondly remembered by its charter members.
Acknowledgements and thanks
We do not claim to be the fi rst or only exponents of atomization. Indeed,
several other distinguished authors have described similar concepts over
recent years. We stand on the shoulders of Chris Meyer and Stan Davis,
authors of Blur. We also acknowledge the work of John Hagel III, author of
Harvard Business Review article Unbundling the Corporation; Philip Evans
and Thomas Wurster, authors of Blown to Bits; James Champy, author of
Re-engineering the Corporation and David Sadtler, author of Break-up! and
their respective co-authors.
In researching new topics for this volume, we interviewed specialists from

leading consulting fi rms and public institutions. We would like to acknowl-
edge the help of the following individuals: Ian Brinkley, Chief Economist of
the Trades Union Congress; Andy Mulholland, Chief Technology Offi cer
of Cap Gemini Ernst & Young; Angus Knowles-Cutler, Partner of Deloitte
and Touche; Jason Rabinowitz, Director, McKinsey & Company; Jacky Ross,
Vice-President of IBM Global Services; Charles Snodgrass, Managing Di-
rector of Outsourcing Advisors Ltd; and David Sadtler, Fellow of Ashridge
Strategic Management Centre.
We are also grateful for the help and encouragement of our original
publisher, Mark Allin, for being an instant believer, and his successor, John
Moseley. Our editors, Sancha Dunstan and Keith Brody, brought our words
to life in this new edition.
And fi nally, we could not have produced this work without the active
support of our wives and families. Thank you, Susi Camrass and Judy Farn-
combe, and sorry about the missed vacations!
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1
The Countdown Begins
Delta revolution
Delta. That’s the word engineers use to describe change. Change in direc-
tion, change in speed, change in volume.
But the volume of changes today is greater than at any time in recent
history. We are facing huge, and huge numbers of, alterations in the geo-
political world, in our social environments, in our personal lives. Face it,
our world is changing, and it’s changing dramatically.
We all recognize that the world that we are used to is not, in its famil-
iar form, going to be around for much longer. Most of us have yet to really
grasp the nature and the true extent of the changes that we are about to
experience, and that’s because we can only see a few pieces of the jigsaw

– the picture is hidden from us.
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2 THE COUNTDOWN BEGINS
Moore’s Law, for instance, is one piece of this jigsaw of delta. It estab-
lishes the principle that the price/performance ratio of computer chips will
roughly double every eighteen months. That’s a one thousandfold increase
in power every ten years. Look at it another way: the $1000 laptop you use
today is equivalent to the billion-dollar brain of thirty years ago.
Big deal. It still just does email, right? Wrong. Moore’s Law (and its
bastard child, the Internet) doesn’t just mean faster word processing. It
means the downfall of the corporation you work for.
Don’t believe us? The printing press nearly killed off one of the largest
corporations in history – the Catholic Church. At the start of the sixteenth
century, Martin Luther nailed his colours to his church door, fuelled by his
revulsion at a money-raising scheme. This initiated a torrent of reform – the
virtual atomization of the Church – not because of Luther’s zeal but because
the printing press had made the Bible available to anyone who could read.
The power of the priests had been broken (more on this in Chapter 13).
In today’s world, the corporation and not the Church is the institution
at the centre of most of our lives. And the corporate world is now embarking
on a reformation of its own. Just like poor Pope Leo X back in 1517, today’s
CEOs have little real grasp of the magnitude of the threat they face and the
extent of the changes to come.
This corporate reformation – like all radical changes – is not 100%
predictable, but we can offer you a chance to adapt to the future before it
buries you. This reformation also has a name: atomization.
Our fi rst book, The Atomic Corporation, was published during the fi rst
week of September 2001. The horror of the Twin Towers changed our outlook
to an even greater extent than we could have ever predicted. Even apart from
its geopolitical consequences – increasingly nasty and still unclear – we have

seen a crisis of trust along with some of the largest bankruptcies in history.
Enron (one of our previous case studies), Arthur Andersen, WorldCom,
Marconi and a whole fl eet of airlines have all hit the wall.
Since then, we’ve taken our message to leading corporations and
opinion formers all over the world – from BP, Henkel and Prudential in
Europe to Coca-Cola, AT&T and American Express in the USA. We have
experienced events fi rst-hand that have shaken global confi dence and chal-
lenged established wisdom. We are more convinced than ever that bloated
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