What are organisational costs?
Many companies including many corporates and SMEs are in great financial trouble since the beginning of Covid-19 and especilly since the launch of Midjourney, Stable Diffusion, Dall-E 2 and ChatGPT in 2022: the democratization of AI.
One of the main problems they face is that their organisational costs are much too high. What are organisational costs?
Organisational costs are the costs or expenses of creating an organization and running an organization measured in money, time and energy.
Many large corporates and public institutions are used to be able to charge out all their costs including organizational costs in terms of money, time and energy to their customers.
Managing, coordinating and collaborating internally and externally cost money, time and energy.
There are actually two types of organisational costs looking at it from a revenue model perspective: necessary organisational costs and unnecessary organisational costs. Especially if you want to want to become an AI-leader in the AI-powered economy.
More: Generative AI, AI-Powered Company & The Future Of Work
Two important examples of that last category of unnecessary organisational costs are 1) the possession of expensive physical assets like expensive office space in the centre of very expensive towns and 2) many layers of unnecessary senior management and middle managers.
Many C-level executives and senior and middle managers ‘discovered’ afer the start of the Covid-19 pandemic that everybody could actually work and collaborate very well working from home and using tools like Zoom, Skype and Teams hybrid working, working at home across the organisation.
Something you can learn quickly using this short ebook including free checklists and a free random multiple-choice test:
Something, by the way many people like myself since 2001, side-hustling, millions of solopreneurs worldwide, startups, scaleups and other new companies using the virtual organisation as a basic organizational design, already discovered a long time ago.
Many non-corporate and public authority organisations have much lower organisational costs than those ‘Fat’ corporates and public institutions. And that explains why they are much faster than large traditional organisations in implementing Generative AI in their new AI-powered business model since 2022.
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If you want to learn how you can lower your organisational costs using ICT and in particular AI to design and implement a new AI-powered business model incuding a new aligned AI-powered organisational design including the right culture and the right digital strategy, please do not hesitate to call me on Skype on tony.de.bree, on 0031634387806 or email me here.
Kind regards,
Tony de Bree
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