The effects of scandals like Enron in the US and Skandia here in Sweden are that many companies and governments now excels in applying new and better regulations and control mechanisms to avoid similar crises in the future. This is currently a really strong driving force which can be symbolized with SOX which is the most famous of these initiatives.
One direct corporate effect of this is that it certainly reinforces the hierarchical structures and effectively stops the movement towards more open and less hierarchic structures based on empowered knowledge workers.
In some companies like e g Ford the management are even threatening employees with consequences if they don’t give out information about suspicious behavior from their coworkers. A system which is not dissimilar to what existed in East Germany during the cold war period when half of the population was giving information about the other half to the secret police.
This will probably have the long term effects that large companies are going to be more of closed shops where only a certain kind of people will thrive. Already employed creative and horizontally thinking people will most likely flee and what is more important the young who is creative and hungry will probably not even touch them even with 5′ poles.
Part from this direct consequences we can already see some interesting second order side effects even if they are not visible on a large scale yet.
In my home town Göteborg the politicians are nurturing an agenda to make the city more known to the world by being a center for different kinds of events. For that purpose the city is encourage bringing as many international rock artists as possible to our arenas as well as arrange other events which attract media and is making the name Göteborg more famous. For example the other day Volvo Ocean Race finished for the first time in our harbor and in August 2006 we will arrange European Championship in Athletics. Events are really important to the city marketing strategy.
What we see happen is that many ethical and reinforced legal restrictions on company gifts makes it difficult for a company to invite anyone to these events for free by giving away tickets. If you are having a commercial or political relation it could easily be considered a bribe or otherwise a subject for some kind of tax. A friend of mine recently got an invitation from a large corporation to participate in a major event. Instead of getting ticket by mail he just got an invitation and was expected to pay a full (?) entrance fee to participate, something he will have a problem arguing for in his current position.
The result is that many expensive tickets most likely will be remain unsold since few individuals can afford them and companies are not able to buy them to invite their customers or even their own employees without paying tax or what not. If we see this as a general trend it will clearly affect the total revenue in the global event industry in the future. An interesting question is how much? Will it be decreased by 10% or even more? The margins in the industry are most likely in the most expensive tickets and the additional service of catering for companies.
The other day we recognized another phenomenon as a result of this control mania. When I worked for a large corporation some years ago, one major way of developing yourself as a manager or specialist and cross breed your company’s knowledge with others was to visit other companies. Then you got a chance to present and discuss your experiences, expand your network and most often learn something. In order to do this efficient and keeping administration down the common procedure was and have been for some time that the inviting company was making all reservations and payed for tickets and hotel. That way no money changed hands and as an invited visitor you avoided the administrative burden of booking and paying your tickets yourself and later send an invoice for that amount to the inviting company.
Today new rules and regulations makes this simple shortcut impossible. The time it will take to do it the correct way i e prepare and hold your presentation AND travel AND administer the trip AND administer the following payment procedure (from a company which probably not is one of your ordinary customers or suppliers) will be so long it is probably much more easy to decline than to accept the invitation.
If this phenomenon is as widespread as I think it will definitely scale up and make exchange of knowledge between companies a rare occurrence and further isolate the already isolated corporations from each other.
Most of these activities that aims at making it impossible to behave bad has the overall objective to make corporations trustworthy again. The problem I see is that it in the long run this strategy will push the corporations into a negative and isolationist path which actually leads to the opposite. With the side effect it will also strike at other industries like e g the event industry.
