By The Editors

Extrapolate. Or be extravagant. That neither the 20C corporation nor BT can possibly prepare to enter the 21C without envisioning the coming 100-not to mention the next 1,000-years of management is obvious. The choice, however, is between forward-integrating from the here-and-now to predict only a slightly-altered future, and leaping over logical barriers to prophesy a transformed tomorrow-for the corporation, for the CEO, for the manager...indeed, for each and every activity of your company. Each of the 100-plus experts-the biggest names in business you could ever expect to find in a single assembly-who present their seminal prognoses of what it will be like to manage in the trimillennium has, obviously, made his or her own choice. And woven around the pronouncements of these strategic soothsayers is the Trimillennium Value Chain. We offer, before you embark on your exhilarating odyssey of the future, a short detour through this value chain-which forms the backbone of this, our preview of the Third Millennium.

Only its extremities will look familiar to you. At one end will remain the core need of your customer; at the other, the core offering of your company. But everything else is set to change. Our contributors use two terms to describe this change: deconstruction and disintermediation. The once-seamless set of activities that, in 20C, connected the core need and the core offering-the value chain-will soon be replaced by a discrete series of functions performed by several specialist independent entities.

Thus, bought-out research and off-the-shelf designs will replace in-house product design. Manufacturers will leverage economies of scale in sourcing and production to make a range of products for several companies, the latter only owning the brands. Specialist logistics companies will ferry raw materials to companies, and finished products, to intermediaries in the distribution channels-and even to customers. Experts in service and maintenance will take care of the post-sales experience.

Several questions emerge at this juncture: why should the value chain remain the metric of management in this century? What will the 21C equivalent of today's integrated monolith do? What will a company have to do to control the deconstructed value chain? Will value chains fragment across industry-types and markets?

First things first. Even in the late 1990s, companies no longer competed with one another. Value chains did. The ability of an offering to add on a service envelope to the core product, overcome the constraints related to time and place of delivery, and, thereby, satisfy the customer's need, was already a function of the different capabilities of the value chain-and not of those of any single company on that chain. Tomorrow, therefore, a company that scores over its competitors will do so because it is part of a value chain that is more efficient than those of its competitors.

But that's not all. The real change will come from the fact that some nodes of the value chain face the threat of becoming redundant through disintermediation. For instance, if e-commerce becomes the preferred way of transacting business, then brick-and-mortar retailers could-unless they find a way to re-configure their business models-go out of business. As an adjunct, the 21C Value Chain will be driven by the flow of information between its constituent nodes, while its predecessor was driven by the physical flow of products. Any link that adds nothing to this information will, thus, become redundant.

The company that will control this disaggregated value chain will control proprietary resources. This could take several forms: brands, unique knowledge of the customer, control of intellectual properties like product and process patents, exclusive access to buyer-interfaces, and relationships with customers. The exact resource that will serve as the fount of competitive advantage for a company will depend on the industry and the market in which it operates, and the nature of its offering.

Initially, therefore, companies will get smaller and smarter. But demand-side dynamics will almost certainly change that. The only way that the corporation will ultimately be able to cope with rapid fluctuations in demand and still protect its profits will be by leveraging economies of scale, in sourcing, manufacturing, and selling. Thus, individual entities of the deconstructed value chain will grow larger, become immensely profitable, and enjoy huge cash-flows. These one-dimensional monoliths will seek to expand their operations into other nodes of the value chain, resulting in the re-emergence of the vertically-integrated company. That, in fact, will be the direction in which M&A will flow: integration will replace consolidation.

However, these gigantic corporations will be closer to conglos-amalgamations of several corporations with different core competencies, united only by common ownership-than to the diversified, many-businesses-under-one-roof companies that died. And then, after the fusion, the fission will start all over again. Obviously, to get there, companies will first have to ensure that they are leaders on the deconstructed value chain; only then can they aspire to build scale in the node in which they operate, and move to other nodes too. But-and it's a big but-each node of the value chain, and the activities associated with that node, will be significantly different in this century.

RESEARCH. Companies will, increasingly, outsource their R&D requirements from boutiques. As the degree of expertise involved in R&D intensifies, CEOs will find it difficult to maintain in-house R&D departments. Not only will they find it a strain on their resources, but the best brains in the business will prefer to work in specialist boutiques which offer them enough scope to expand their horizons. Of course, it is the boutiques that will have to take on the risks: their clients will only pay for successful explorations. Even companies operating in knowledge-intensive areas like pharmaceuticals will exercise the contract-research option: the use of multiple contract-research firms will allow them to launch a stream of new products. What of those value-chains where the maximum value is resident in the R&D node? Well, that's where the R&D specialist will be the principal player.

SOURCING & MANUFACTURING. 21C will see virtually every company outsourcing even its outsourcing. An independent sourcing company can leverage economies of scale to drive better bargains with its suppliers, and can, consequently, offer better terms to its customers. Over time, companies will find that it makes more sense to outsource manufacturing too. Large contract-manufacturers will emerge. In most cases, these will be third-party sourcing companies forward-integrating into manufacturing. These megaliths will manufacture products for several companies, who could even be competitors for the customer's spending. This sheer volume will enable them to derive cost benefits of a magnitude that no company doing its own manufacturing can. Indeed, these giants will form the vanguard of the move towards vertical integration.

LOGISTICS. 21C will mark the coming of age of logistics as a management discipline in its own right. In the first part of this century, this will come from disaggregation: as value chains unravel, activities that were performed within one company will increasingly have to be performed across several. And, in the manufacturing industry, this will mean increased physical flows. In the latter part of this century, the volumes will come from aggregation: contract-manufacturers will locate themselves in one area, source inputs from around the world, and sell finished products to customers around the globe. Logistics companies, therefore, will have to acquire the ability to deal with several transactions involving small volumes in the first half of this century, and as many transactions involving large volumes in the second half.

MARKETING. Brands started their lives as substitutes for perfect information. With the Net making perfect information available to all customers, they should become redundant, but they will not. Rival offerings will reach a parity-situation in terms of cost and features, and customers will increasingly base their purchase-decision on intangible benefits. But, crucially, the experience that a brand offers will not be a standardised one, but will vary from customer to customer: a successful brand will mean the same thing to all its customers only in terms of the satisfaction it generates, not in terms of the actual experience it generates. The total brand experience will include pre- and post-purchase behaviour, and companies that own brands will use them to control the entire value chain. However, product life-cycles will crash and companies will have to continuously find-read: shop for-new ways to keep their offerings contemporary.

SALES & DISTRIBUTION. In 20C, sales and distribution were extensions of manufacturing for several companies. Tomorrow, marketing will be in charge of brand-management and customer-relationships, making critical decisions related to markets and channels. Sales and distribution? Outsourced from specialists in those fields. Companies offering those services will be responsible for the flow of information and of physical products between customers and channel intermediaries at one end, and the company at the other. And those among these specialists who manage to acquire unique insights into their customers will be able to make a play at seizing control of the entire value chain.

STAFF FUNCTIONS. Companies will outsource, almost entirely, staff functions like hr and finance, freeing their in-house resources for value-added work. However, some companies will start viewing their staff functions as profit-centres: their hr and finance departments will offer services to other companies that wish to outsource these functions.

The future, as that capsule preview demonstrates, is overwhelming. Psychological as the threshold to transition into a New Millennium might be-after all, change will not change just because the first digit of the 4 that locate us in time has rolled over from 1 to 2-it provides a vantage point to pause and fast-forward. That was why BT asked India's leading CEOs, consultants, academics-and, to provide a truly futuristic perspective-students, to present their predictions on just what managing in the New Millennium will be like. The outcome is BT's Eighth Special Anniversary Edition-and the first in the 1,000-year period that starts with the numeral 2. Using the framework of the generic value-chain as we know it today, each of the guest contributors-India's finest business brains-gaze into the crystal ball, at the future of one of the 21 links on it.

Not surprisingly, their predictions converge on more than one certainty:

• Intellectual capital, not physical assets, will drive the new economy.

• The Net will usher in an era of connectedness between companies, suppliers, employees, customers, and other stakeholders.

• Command- and control-structures will be replaced by team-structures even as the number of part-timers increases.

• Companies will have to not just make good products and deliver good services, but also practise good governance.

• Creativity, flexibility, and adaptability will be the parameters that decide who wins.

• The value chain will be re-defined with the customer's core need at one extreme, and the company's core offering at another.

• People will focus less on work and more on getting the most out of life, making work-life management a crucial organisational issue.

One thing, though, emerges from the 84 perspectives that make up this special edition: 21C will, certainly, be different from its predecessors, but the changes will be both evolutionary and revolutionary. The ways in which companies function will change, gradually as well as suddenly. And the result will be so dramatic that companies will look back at the way they operated in 1999, and wonder...

Welcome to your future.

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