Why Do We Have Companies? – Ndubuisi Ekekwe Explains

Question: “Why Do We Have Companies?”

My Response: The question of why companies exist takes us into the mechanics of markets and the thermodynamics of human civilization. If we see the world as a system of energies, ideas are merely potential energy; yes, dormant, unexpressed, and incapable on their own of fixing hunger, disease, or broken infrastructure. A company, therefore, is not just a legal entity registered with a government; it is a business transducer. Just as a transducer converts energy from one form to another, a company exists to convert a business idea into a product or service that customers can use to overcome real frictions.

Across markets, from the open stalls of Oriendu Market in Ovim to the digital corridors of global trade in New York, frictions are everywhere. These frictions are the ordinary problems of daily life: food scarcity, unreliable electricity, unsafe water, weak connectivity, and inefficient transportation. Because markets are imperfect in nature, and are saturated with information asymmetry, demand and supply rarely meet naturally or smoothly. (Think of this: If there were no restaurants, in all forms, in Lagos, a hungry person might not know who has food to buy from, and the person with food to sell might not know who is hungry; a restaurant is a business)

Therefore, for markets to work, something must disturb that state of disequilibrium between demand and supply. Yes, there must be a perturbation, something to stir the system, so that an equilibrium can emerge. Companies serve that purpose in the market, removing that imperfect system and the associated information asymmetry; they create products and services.

Firms organize people, processes, and tools to deploy products as forces, and when customers consume those products, frictions are reduced or eliminated. At their core, great companies rest on three pillars: People, Processes, and Tools. Every competitive advantage in the market is built by strengthening or reconfiguring these pillars. When the mix is right, the outcome is simple and powerful:

A Great Company =: Awesome Products + Superior Execution.

Note: a brilliant invention alone is not enough. Until it is commercialized and adopted by customers, it remains an academic artifact. This is why we say:

Innovation =: Invention + Commercialization.

Companies provide the framework that converts the physics of an idea into the economics of a product. From elementary physics, we learned a simple rule: only forces overcome frictions. Markets obey the same law. When customers face friction, you must deploy the force of a product or service to overcome it.

In this 2026, the mandate is clear: build forces for the market. Create great products and services, because frictions cannot be wished away; they must be conquered. Only companies are designed to create those forces, and that is why companies exist!

(If you can, join Tekedia Mini-MBA and we will explain over 12 weeks how to build companies)

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