CI Consulting - a Virtual Corporation Case Study
CI Consulting Inc. is a relatively new company that focuses on selling software named SalesLogix. The company is a Virtual Corporation (or VC for short) that was founded by several different companies from various countries worldwide, who prior to the foundation of the VC, sold their products independently.
Josh Margolis, one of the original instigators of the VC, defines it as a “‘loose band’ of individuals, and notes that partners also work outside of the corporations”. He added that the organization is made up of 10 small businesses, US & foreign based; each employing between 4-8 people. According to Margolis, the advantage of the VC lies within its ability to provide information to the separate clients of each of the smaller companies whenever the respective company can’t answer the client’s requests on its own.
Founding the VC was no easy task: after eight months it became clear to the members that a CEO has to be appointed since none of them could overseer the VC’s activity without harming their own companies in the process. Issues also arose regarding profit sharing, especially in cases where one company brought the client; another provided the software and a third the tech support. A clear methodology of profit sharing according to the relative contribution to the entire project had to be institutionalized.
The CI Consulting case study brings to light some interesting lessons to be learned:
First and foremost, it appears that the strength of the VC relies heavily on the synergy between its members, in a way that allows each and every one of them to exhaust their relative advantage and eventually reach a whole that is greater than the sum of its parts.
Secondly, despite the will to cooperate, one must remember that at the end of the day each player is fueled by his own personal interests. Not that there is anything wrong with that assessment, but it must be taken into consideration when forming this type of organization ; for example, when you set up a system that rewards each player according to his contribution to the project as a whole.
Last, one must ensure that between the various members of the organization there is not only business compatibility but also a personal compatibility. For if not, an unhealthy situation may occur in which there is a clear separation between “Hunter” members - who bring clients and close contracts; and “Skinners” members – who feed off the clients brought in by the “Hunters”. Cases of relative contribution inequality such as this might seriously compromise the core of the corporation and eventually even dissolve it.