[MUSIC] In the second part of module five, we are going to change directions. We're going to move from the individual manager and how they manage the company of the future, back to the, the bigger themes of the course. Remember the course is called Managing the Company of the Future, and we spend most of our time talking about managing. And we spent almost no time talking about company, the company. So we're going to spend just a few minutes now talking about the company of the future, whether the company itself is actually the right unit of analysis. So a little word of history here what is the kind of the dominant model for organizing large companies? Well, it is the limited liability corporation. The public limited company or the PLC. Every country has its own version of this. obviously, I'm going to be talking about the kind of the Anglo-American version of it, because that's the one I know best. But every company has, every country has its, its equivalent. What is the limited liability corporation? Go back in time about 130 years ago to when the limited liability corporation was invented. It was a remarkable concept, because what they did was they created this, this legal entity, which was the company. Which was separate from both its owners and its employees. And it existed as a legal thing for essentially, buying and selling of assets. Now, remember the word limited liability matters here, because what it means is that if the company goes bankrupt, you know, there is a limited liability on the people who own the company and the people who work for the company. And what that meant, of course, is that this is you know, 150 years ago when capitalism was really kind of taking off in the, in the, during the Industrial Revolution, it meant that companies could suddenly do things that private, wealthy individuals couldn't do. They could take more risks. They could actually invest in projects without knowing for sure if those things would work, because if the whole thing fell apart, and the company went bankrupt, the people who actually owned the shares in that company would not, themselves, be held accountable for all those losses, if you see what I mean. So obviously, the company shareholders would lose the money that they have in the company, but they wouldn't be subsequently be, be nailed for, for all the other creditor's needs. So the limited liability company created 140, 150 years ago was a dramatic improvement on previous models. And, of course, what we've seen over the last period is that the limited liability company has now become the de facto kind of standard way of managing capitalist, commercial enterprises. It is incredibly effective. And, of course, you could argue that one of the reasons that the economy, the world economy, is growing as fast as it has is because of this vehicle that we call the limited liability company. However, as with all these things, there are benefits, and there are costs. And today, right now, the limited liability company is under a lot of pressure. Why? Because if you think about the way that stock markets work and you think about the way that the observers, the analysts, the press, look at what companies are doing, the people running these companies are incredibly, increasingly short-sighted in terms of what they do. Every single thing a chief executive does, if he or she is leading a PLC, a limited liability company, is under the direct scrutiny of a small army of observers, journalists, and analysts. And essentially, what's happening is that they are becoming incredibly narrow and incredibly short-term because if they want to try doing something a bit long-term and the market doesn't understand it, the shares take a hit. So, what is happening increasingly now, is we're seeing alternative forms of governance and ownership becoming more popular again. Now, all of these forms of governance that I'm about to talk to have existed for some time. It's not like these are completely new forms of governance, but their merits are now being brought back into the spotlight. So if we think of different ways in which ownership can happen in corporate settings, you know, there's, there's, there's at least five this is not an exhaustive list, but there's at least five well-known alternatives. There is the private equity model where a company like Blackstone which paradoxically is itself quoted. But Blackstone is the holding company that then owns the company within its portfolio and protects it from the short-term thinking of the financial markets. Then there is the family model, a company like IKEA or a company like the Mars Group is still controlled by their families. Create all sorts of challenges in terms of succession, but in terms of long-term thinking, it's a very effective model. Then there is the so-called Cooperative model. Nationwide Building Society, Society is owned by its members, by the people who actually invest money. Aria is of Danish food company owned by essentially the the suppliers, by the people who supply milk. That is turned into milk products and, and cheese and butter and stuff. So the cooperative model is, is alive and well. Then there is the, the form of kind of trust. Employee-owned trust, like for example, in India, we have Tata Sons where Tata family continues to have a, a share in the company, but they put most of their shares into a trust which has a responsibility for managing the company for future generations. In the UK, we have a, a company called John, John Lewis, which is, shall we say, controlled by its employees. But ultimately, the shares are held in, in trust for the benefit of the employees, so that's another model. And then finally, you have the, the Partnership model whereby the, the partners to the organization, and think of, of at any sort of Law Firm or Accountancy Firm for example the partners, genuinely and collectively own the company and the, the money that's made is shared between those partners. Now, each of these five models has its own challenges, but they're all longer term in their outlook than the public limited liability company. And what's happening today is, first of all, some of these alternative models are, are starting to make a resurgence, particularly private equities being growing here the last decade. But also we're seeing PLCs. We're seeing limited liability companies say, can we learn from them? Can we actually create alternative models of governance where what whereby we are a little bit more long-term in our own thinking? So one of the ways about thinking about the company of the future is in terms of some of these alternative ownership models that had been around for centuries and are starting to make a resurgence.