Principal Investigator Thomas Malone
Imagine organizations where bosses give employees enormous freedom to decide what to do and when to do it. Imagine that workers are allowed to elect their own bosses and vote directly on important company decisions. Imagine organizations where most workers aren’t employees at all, but electronically connected freelancers living wherever they want to. And imagine that all this freedom in business lets people get more of whatever they really want in life—money, interesting work, helping other people, or time with their families.
These things are already happening today and -- if we choose -- they can happen even more in the future.We are now in the early stages of a profound increase in human freedom in business that may, in the long run, be as important for businesses as the change to democracies was for governments.
The key enabler for this remarkable change is information technology. By reducing the costs of communication, these technologies now make it possible for many more people, even in huge organizations, to have the information they need to make decisions for themselves, instead of just following orders from above. And so, for the first time in human history, we now can have the best of both worlds—the economic and scale efficiencies of large organizations, and the human benefits of small ones: freedom, motivation, creativity, and flexibility.
What Will These New Ways of Organizing Work Look Like?
There are three basic ways to make decisions in large groups while still giving individuals substantial freedom: loose hierarchies, democracies, and markets. Some companies today, for example, already have loose hierarchies in which bosses still exist but considerable decision-making authority is delegated to very low organizational levels. Many management consulting firms, for instance, let the individual partners and consultants assigned to a project make almost all the operational decisions about it. And AES Corp., one of the world’s largest electric power producers, lets low-level workers make critical multi-million-dollar decisions about things like acquiring new subsidiaries. In an even more extreme example, one of the most important computer operating systems in the world today -- Linux -- was written by a loosely coordinated hierarchy of thousands of volunteer programmers all over the world.
Why Is This Happening?
Dozens of factors affect how and where decisions are made in a business. But there is one crucial factor that is changing dramatically in the same direction almost everywhere today. In fact, when we look back carefully at the history of humanity, we can see that this very same factor has been implicated, time after time, in some of the most important changes in how entire societies were structured.What is this factor? It’s the cost of communication.
Back when the only form of communication was face-to-face conversation, our distant hunting-and-gathering ancestors organized themselves in small, egalitarian, decentralized groups called bands. Over many millennia, as our ancestors learned to communicate over long distances—by writing— they were able to form larger and larger societies ruled by kings, emperors, and other centralized rulers. Then, only a few hundred years ago, our ancestors invented a new communication technology, the printing press, which reduced even further the costs of communicating to large numbers of people. This breakthrough allowed people to reverse their millennia- long march toward greater centralization. Soon after the printing press came into wide use, the democratic revolution began. Ordinary people—now much better informed about political matters—came to have more say in their own government than they had had since the hunting-and-gathering days.
Remarkably, this very same three-stage pattern appears to be repeating itself now -- at a much faster rate -- in the history of business organizations.
Just as new technologies helped spur the rise of democracies, today’s technological advances are beginning to spur a similar change in business.With new communication technologies like email, instant messaging, and the Internet, it’s becoming economically feasible—for the first time in history— to give huge numbers of workers the information they need to make more choices for themselves. That means that many more people can have the kinds of freedom in business that used to be common only in small organizations. And that can be very good news for both productivity and quality of life.When people are making their own decisions, for instance, rather than just following orders, they often work harder and show more dedication and more creativity.
Of course, reduced communication costs will not always lead to this kind of decentralization. In places where the benefits of economies of scale are overwhelmingly important -- like some kinds of semiconductor manufacturing -- we will probably see even more centralization. But in our increasingly knowledge- and innovation-based economy, the benefits of decentralization—flexibility, freedom, creativity, and motivation— are becoming important in more and more places. And in all those places, we should expect to see information technology leading to more and more decentralization.
What Does This Mean for You?
If decentralization becomes increasingly desirable in business, then we’ll need to manage in new ways. But most of us still have—deep in our minds—models of management based on the classic centralized philosophy of “command and control.” To be successful in the world we’re entering, we’ll need a new set of mental models.We need to shift our thinking from “command-and-control” to “coordinate-and-cultivate.”
Coordinating and cultivating are not the opposites of commanding and controlling; they are the supersets. That is, they include the whole range of possibilities for management, from the completely top-down and centralized to the completely bottom-up and decentralized. To be an effective manager in the world we’re entering, you can’t be stuck in a centralized mindset. You need to be able to move flexibly back and forth on the centralization continuum as the situation demands.
If more people have more freedom in business, this also means they will naturally seek the things they value. Of course, one thing people value is money and the things you can buy with it, but most people value other things, too: time with their families, a feeling of achievement, a sense of meaning in their lives. That means companies will increasingly need to compete for workers, investors, and customers, not just in the marketplace for products and prices, but also in the marketplace for values.
And as individuals, we need to think more deeply than we usually do about what we really want from our lives and how our business choices can help us get those things. Because you will have more choices in this world, you’ll be able to bring a broader range of your values, not just the economic ones, into your thinking about business. And that means, you can -- if you choose -- use your work to help create a world that is not just richer, but better.