The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style, and Your Life.
By Thomas W. Malone
In this book, Thomas Malone highlights the similarities between societal and organizational growth. His theory is that the declining costs of communication have made possible man’s historical change from independent hunter/gatherer to member of a decentralized organization. Combined with the increased value of information communication, organizations are able to consider more decentralized organizational structures such as loose hierarchies, democracies, and free markets. According to Malone, these structures are the building blocks for creating a successful organization in our evolving society.
Many businesses today operate in a traditional centralized operational structure, with all orders and decisions coming from the top. In the first two parts of the book, Malone illustrates several examples of companies moving away from this traditional style to try something new. First he discusses loose hierarchies. One example he cites is Wikipedia. Wikipedia meets all three criteria Malone lists as common to this type of organization. First is the need for constant and heavy communications between members. Next is a lack of centralized control. Last is the ability for an employee to choose whether or not to participate in a project at all. Loose hierarchies offer a way to balance the strengths and weaknesses of the basic hierarchical structure. When they are in place, power is disseminated throughout the organization, preventing apathy and the undermining of a workgroup’s enthusiasm about their current project. Malone lists as the strengths of this type of structure the ability to coordinate large-scale systems with little communication and the ability to resolve individual differences for the good of the group quickly and with minimal discussion. For the weaknesses, he cites the lack of a view of the ‘big picture’, the possibility of information bottlenecks, too narrow of a focus on solution options, and the difficulty in people maintaining a sense of autonomy.
Next Malone discusses democracy. Organizations using a democratic style agree that they will accept decisions voted for by the group. Decisions are made by a majority vote of the group, not just by the company leaders. In a democratic hierarchy, group member have to look past their personal preferences in favor of the greater good. This style is very similar to the federal structure of the United States, which is a republic. The people vote for leaders to represent and make decisions on their behalf, and if they do not serve them well, those leaders can be removed (not always easily!) by a majority vote. For this type of structure to work, there is a need for heavy and constant communication, just like in the loose hierarchy. Malone uses Hewlett Packard (HP) as one of his examples of a democratic company. Knowing the importance of having the support of their employees, HP polled them to see if they were in favor of a buyout of Compaq Computer. Prior to the final vote, the company had been doing periodic surveys to get a feel for where their employees stood on the issue. The results of the surveys and the final vote were favorable, so the buyout went forward. This example illustrates how in a democratic hierarchy the source of the power originates from the bottom instead of the top. Malone lists as the strengths of this style employee participation in all decision making and individuals joining with groups to make decisions they may not have made on their own. The weaknesses include a requirement for heavy and constant communication and people making decisions they may not be qualified to decide.
The third style that Malone introduces is the market structure. This is the most decentralized structure presented in the book. Malone discusses outsourcing or free lancing and the creation of internal markets as examples of market style. Outsourcing is not really a new idea. Many companies streamline their processes and save money by having other companies handle specific jobs in their production process. An example from the book of just such a company is Topsy Tail. All that Topsy Tail does is develop new products and plan marketing strategy. All other tasks from production to shipping are done by other companies. Another example involves the use of outside contractors. This is mostly seen in the service industry. A good example is in construction. A company bids for a contract to build a strip mall. If the company wins the bid, they then hire sub-contractors who specialize in certain facets of the job like plumbing and electrical. These companies all work together until the job is completed, then they separate and regroup with others for another job. The creation of internal markets is a way for companies to ensure that their employees’ talents are allocated efficiently throughout the organization. Instead of having people assigned to a specific department, they can move from team to team and project to project on demand. The strengths of the market style include efficiency, flexibility, and motivation. The weaknesses are incentive problems and communication needs.
Malone wraps up part two of his book with an analysis on decentralization. He discusses what factors to consider before making a move to decentralization. He details the advantages and disadvantages of the different structures. To summarize, if a company requires quick decisions, and wants to keep communications costs very low, it is best to stay with the centralized operational structure. If a company wants highly motivated and autonomous employees, the market option is the obvious choice. Loose hierarchies and democracies are combinations of these two extremes, and if a company is willing to move the power base to the employees while retaining a modicum of control, either of these would be a reasonable choice.
Part three outlines how managers of companies moving from centralized to decentralized organizations can continue to manage. Malone believes that a new management model needs to be created. The old model is known as command-and-control. He proposes a new model called coordinate-and-cultivate. In his book he defines coordination as a way to “…organize work so that good things happen” (p. 129). It is a way of focusing on business activities and how they relate to each other. Cultivation is about the people. It is what needs to be done to bring out the best in them, to learn what their strengths are, and to put them with others who have complementary skills. The best way to achieve that is to find the balance between control and motivation.
Malone makes a great case for his theory in this book. However, it is definitely a theory. He uses great examples of companies that have moved to one of these different styles, but they are too few or too recent to be considered definitive. The book would be more useful if there were more of a focus on the practical rather than theory. It is not an instruction manual for how implement and manage these different styles. Managers could become very excited by the glamour of the move to decentralization, and it could be devastating to their businesses. The book definitely has a great deal of excellent information, and could be a valuable tool if used wisely.
This book definitely presents some interesting ideas that should be considered. As evidenced by the examples presented, many businesses are effectively making the changes to these new management styles. One would not necessarily have connected the falling costs of communication to the social and organizational changes that that man has experienced. It definitely gives a different point of view.
Communication costs have decreased in many ways through our history, but more recently because of the creation of the internet. With the advent of email, blogs, and other forms of e-communication, it has become virtually costless to quickly and easily communicate with others. Since our course is all about doing business using all available computer resources, this book shows an example of how companies can use those resources to work smarter.
