Oct 29, 2004

Communication factors and future organizational structure

From Fortune: (yeah, it's a little old !)

Get ready to choose your own boss.
MIT visionary Tom Malone sees big changes coming to the workplace.

Malone sees a parallel between the evolution of human society and the evolution of business. "For millenia," he says, "all human societieswere organized as small, autonomous, egalitarian groups called bands.Then we saw the rise of bigger and bigger, more centralized societies called kingdoms. Only in the last 200 years have we seen the rise on a large scale of the third way of organizing human society-democracy." Each of those stages, Malone says, can be explained by a change in a single factor--the cost of communication. In his view,writing is what enabled hierarchically organized kingdoms to arise.Printing led to democracy.
Likewise, he says, "until a couple hundred years ago businesses were still organized like bands. It was only when new communications technologies like telegraph and telephone and even the Xerox machine made communication cheap enough to coordinate larger groups of people that we saw the rise of the centralized corporation--the kingdoms ofthe business world." I like the way this guy thinks. So where are we now? It's the revolution, he says. "Near the end ofthe 20th century, it became possible for the first time to exchangethe detailed kind of information necessary to coordinate a businesson a very large scale even as lots of individuals made decisions for themselves. When communications costs fall it becomes possible forvastly more people to be well-enough informed to make decisions instead of just following orders from their uniquely well-informedsuperiors."For most of our lives, Malone says, "the big message of business history was that getting bigger and more centralized was the way yousucceed. But now you can have both the economic benefits of bigness and the human benefits of smallness."

He's really talking about a new era of empowerment, and how companies and workers will inevitably have to adapt to these new realities inorder to thrive."When people are making decisions for themselves a lot of other good things happen," he continues. "People are often more motivated,creative, flexible, and just plain happier."This is by no means the death-knell for big companies and their managers, but it may be a test. Malone thinks adapting to this inevitable decentralized decision-making may be hard, but he posits four different ways companies will be organized in the future. First are what he calls "loose hierarchies," organizations that still have managers but in which a lot of decision-making is delegated to lower-level workers. The open-source software-development model embodies an extreme form of this, he says. Second, he expects to see the rise of literal democracy atwork, "where employees actually vote on who their managers will be."As appealing as this sounds, you might think it far-fetched. Don't.As an example of how it can work, he cites fabric-maker W.L. Gore,where managers have to recruit employees for a project. "If you don'tget any employees you aren't a manager," he explains. Another radical example is Brazilian conglomerate Semco, where workers decide ontheir own where, when, and on what projects they will work. To get ajob at Semco, you have to be interviewed by the people who will be working for you.