The Future of Work Thuy Nguyen September 29 th 2005

Outline Revolution pattern of organizationsRevolution pattern of organizations DecentralizationDecentralization –Loose Hierarchies –Democracies –Markets Organizational & Personal Knowledge ManagementOrganizational & Personal Knowledge Management Conclusions & DiscussionsConclusions & Discussions

Human Society Revolution Band KingdomDemocracy

Organizational Structure Revolution Small Businesses (Independent) Corporate Hierarchies (Centralized) Networks (Decentralized) Declining costs of communication Benefits of bigness Freedom Family businesses Traditional military organizations Research universities Political democracies Free markets Internet

DECENTRALIZATION

The Hierarchy Definition:Definition: –Top-down authority –Abide by direct command from superiors –Please your superiors for incentives Evaluation:Evaluation: –Large-scale systems run with little communication –Good for conflict resolution –Not most efficient use of capabilities –Bottleneck crisis –Low sense of autonomy

Loosening the Hierarchy Principle: delegate more responsibility down the hierarchyPrinciple: delegate more responsibility down the hierarchy Successful stories:Successful stories: –Linux open-source software –Wikipedia –Consulting firms –Research universities

Democracies Between controlled hierarchies and open marketsBetween controlled hierarchies and open markets DefinitionDefinition –Multi-channel communication –Decisions made by voting –Must abide group decision Characteristics:Characteristics: –Participation in decision making –Overall good to control –Lots of communication required for informed voting –Equal right to vote regardless of capabilities

Democracies (Cont’d) eBay:eBay: –Online rating system –Making customers feel they’re in charge of business Mondragon Cooperative CorporationMondragon Cooperative Corporation –Group of 150 companies across disciplines –80% worker-owned –Ratio of highest to lowest pay no more than 6 –Goals: employment stability, regional economic development, social responsibility

Unleashing Markets Let the market decide!Let the market decide! Power & ownership distributed throughout whole marketPower & ownership distributed throughout whole market Stories:Stories: –E-Lance economy (Hollywood) –eBay: thousands of freelance retailers working based on TRUST –The Internet Problem: too much freedom!!!Problem: too much freedom!!!

Unleashing Markets (Cont’d) Strengths:Strengths: –Efficient allocation of resources –Flexibility –Motivation Drawbacks:Drawbacks: –Overall good giving into self-interests –Lots of communication needed in pair-wise negotiaton.

Internal Markets Set up internal market to coordinate efforts within a company (to achieve a certain goal)Set up internal market to coordinate efforts within a company (to achieve a certain goal) Successful stories:Successful stories: –BP: greenhouse gas emission reduction –HP: quasi markets to form project teams

Making your choice Centralized hierarchies when:Centralized hierarchies when: –Economize on communication costs –Lots of conflicts to resolve Markets when:Markets when: –Maximize creativity and motivation –Want to exploit many ideas simultaneously Loose hierarchies and democracies when:Loose hierarchies and democracies when: –All 4 mentioned aspects are important

Decentralize or not? No one in control. How to make decisions quickly and efficiently?No one in control. How to make decisions quickly and efficiently? What about quality control?What about quality control? Are we gonna lose the advantage of economies of scale?Are we gonna lose the advantage of economies of scale? Is knowledge sharing difficult when decentralizing?Is knowledge sharing difficult when decentralizing? COSTS compared to BENEFITS COSTS compared to BENEFITS

Redefine the values of organizations Put human values at the center of business.Put human values at the center of business. Work around what people want from business.Work around what people want from business. Ask the question: What matters to you?Ask the question: What matters to you? COORDINATE & CULTIVATE Instead of COMMAND & CONTROL

Questions for Discussions Author explicitly stated that declining cost of communication is the driving force in decentralization. But limited insightful explanations weaved through the book.Author explicitly stated that declining cost of communication is the driving force in decentralization. But limited insightful explanations weaved through the book. Is decentralization only limited to businesses where certain attributes such as creativity, motivation and flexibility are important? How far will decentralization actually go?Is decentralization only limited to businesses where certain attributes such as creativity, motivation and flexibility are important? How far will decentralization actually go? Successful free markets require a lot of trust and assume that people like to work and enjoy freedom (Theory Y). Are these characteristics general or exceptional to certain groups of professionals?Successful free markets require a lot of trust and assume that people like to work and enjoy freedom (Theory Y). Are these characteristics general or exceptional to certain groups of professionals? How do you know your people are capable of making decisions? And when something fails (such as quality control), how to trace back to where it happened and fix it?How do you know your people are capable of making decisions? And when something fails (such as quality control), how to trace back to where it happened and fix it?