Full article at: http://www.infobeat.com/fullArticle?article=408354299
One thing is sure. The organizations of the next century are going to be very different from the ones which we knew in this one. Much of the past analysis and writing on the subject will be, frankly, wrong or at best irrelevant. That leaves us with a huge challenge. We have to rethink what an organization is, conceptually, and why it exists, for what and for whom. This is a task for a philosopher more than a researcher, for philosophers pose questions which have yet to be asked and suggest answers which are often too new to be studied in action. I write, therefore, as a self-styled social philosopher intrigued by the future, its possibilities, and its problems.
Virtuality and the New Science
Margaret Wheatley, in Leadership and the New Science, has written of the danger of believing in Newtonian organizations in a quantum age. Newton wasn't wrong. He just wasn't right enough to cope with the dilemmas of science now. Similarly, the old way of looking at organizations wasn't wrong; it just does not capture the real essence of what it means to organize today. Organizations aren't the visible, tangible, obvious places which they used to be. No longer, for instance, do you have to have everyone in the same place at the same time in order to get things done. Place and time are now independent of one another. Global organizations will pass a project to a chain of groups around the world to keep pace with the time zones. More mundanely, people can work together connected only by phone, fax, or E-mail. If information is the raw material of the work, then there need he no common space at all. Already the office blocks of our cities are being turned into apartments as their previous inhabitants find it too expensive to keep an asset available for 168 hours a week and yet have most of their people doing their work elsewhere--on the train, in the plane, with the client, in their homes, or on assignment.
More important, organizations no longer feel that they have to own all the people needed to get the work done, let alone have them where they can see them. Partnerships, outsourcing, flexible labor, and interim managers are a way of keeping risks within bounds and of exporting the slack needed to cope with the peaks or the emergencies. A favored formula today is 1/2 x 2 x 3, which means that half as many people will be employed in the future as are now employed, paid on average twice as well (and working twice as hard), but producing three times as much. Some organizations are, in reality, little more than "boxes of contracts," contracts with suppliers, agents, and specialists of one sort or another, with no visible presence at all. The new library created in Dubrovnik, Croatia, to replace the one destroyed in the fighting a few years ago, is tiny, but it is computer-linked to all the libraries in the world. It has few books or journals of its own and needs no large acres of shelves to satisfy its readers, who, in fact, do not need to go near the place at all if they have the necessary technology in their own homes. It is not so very different, in fact, from the Open University in Great Britain, which is, for its students, only a conceptual space, not a physical one.
Such organizations are increasingly "virtual"; you can describe what they do but cannot see them. What, then, is this thing called an organization? The word seems to be more of a verb these days than a noun, a means of organizing instead of a thing or a body. And how do we manage something we cannot see or people whom we never meet? For many a manager, these new organizations are something to be kept as far away as possible for as long as possible. Most of us prefer to walk backward into the future, a posture which may be uncomfortable but which at least allows us to keep on looking at familiar things as long as we can.
Unfortunately for our comfort, neither quantum theory nor the new order can be ignored. We have to try to understand it so that we can live with it and use it, as we do with science. In the new science, matter is not something which is fixed; it is a mix of particles and waves, a mix which can never be completely captured because the two can never be measured at the same time. In the same way, the new organizations are more properly viewed, I suggest, as patterns of relationships, an ever-changing mix of particles (or people), and waves (or transactions). Physicists speak of particles as "bundles of potentiality." I see that as quite a good description of the people we want in the new organizations, no longer role occupants in prescribed boxes but would-be butterflies, as in chaos theory, capable of starting perturbations which ripple out to cause a thunderstorm across the world.
Prediction and uniformity are no longer, now, possible in any detail. Just as Werner Karl Heisenberg pointed out that the very act of observation changes the thing observed, so, too, the way we see someone affects the way they behave, and our own actions often help to create the environment we think we are responding to. Power, in the new organizations, comes from relationships, not from structures. Those who have established reputations acquire authority which was not handed down from above; those who are open to others create positive energy around themselves, energy which did not exist before. Love, or, to give it a more corporately respectable title, "Unconditional positive regard," may not make the world go around, but it can certainly release unsuspected potential. This makes for an untidy world but one with its positive side. Unlike physical systems and older models of organizations, the new organizations do not obey the Second Law of Thermodynarnics, with its relentless downward drag, but have the capacity to find new sources of energy and so to renew themselves. They contain within themselves the real clue to a so-called learning organization.
To heighten the unpredictability, isolated events can cause unanticipated major changes, as they do in science; for example, a customer inquiry, a mistake, or an unexpected experimental result can lead to a whole new product range. There is order, of a sort, in the world, or daily life would he impossible, and there has to be order in its organizations, but order no longer implies control. The new organizations are, in fact, always tending to be slightly out of control, their structures flexing, their people innovating. Nonlinear systems, a concept which includes people, tend to feed back on themselves, creating unforeseen results, rather like what often happens in marriage. In these new organizations, therefore, some older ideas, such as management hierarchies, spans of control, grading systems, job descriptions, or career planning can seem as time-bound and out of place as trying to send a telegram in the world of E-mail, nostalgic but unreal. instead, a new language is emerging, a language which would seem strange and weird to the old order, a language of metaphor and simile, low in definition but rich in suggestion.
These words are now commonplace in organizations as they fumble for ways to hold the thing together, to give it a common thrust when a tight plan is no longer feasible, a central ethic takes the place of control, and norms of behavior exist instead of rules. One such field is that of trust.
Francis Fukuyama, in Trust: The Social Virtues and the Creation of Prosperity, argues that societies of high trust do better economically. I would extend his idea to organizations. Organizations which rely on trust as their principal means of control are more effective, more creative, more fun, and cheaper to operate. They are, however, very different from the organizations we know today, most of which are based on hierarchical control systems, with an unspoken undercurrent of fear. Nor are these organizations easy places to run. Trust imposes its own constraints and has its own rules. I have written elsewhere about these rules, rules which make it clear that running trust-based organizations requires their leaders to adopt radically different attitudes and assumptions.
Trust is one example of the way a field can be used as a way to obtain some leverage on the new disaggregated organization. Field theory works best, however, if it is combined with another metaphor from the new science, that of the "strange attractor," which, in chaos theory, becomes the organizing focus of the emerging patterns, the way out of chaos, the thing which gives meaning to movement. Chaotic and energetic but uncontrolled organizations can exhibit movement without meaning unless they have found their strange attractor, which gives them point and purpose. Some have called this the "soul" of the organization, another soft but pregnant word which fits the new language of organizations. It is, I now believe, the principal task of leadership to find the strange attractor which will give meaning to movement, and around which a field of trust can be built which will allow the organization to devote most of its energies to its product instead of to its own entrails. Underlying it all, however, will be the emergence of a new organizational contract.
Self-directing assets are a new phenomenon in organizational behavior. Karl Marx would be amused. He longed for the day when the workers would own the means of production. Now they do. He meant, of course, that the workers would, through revolution, become the financial owners. Instead, they are literal owners, because the means of production in most organizations these days resides in the heads and hands of the workers themselves; if they leave, almost nothing is left.
We need a new contract, a new way of spelling out the responsibilities of financiers, workers, and managers and of their relationship to each other. In the process we will probably rediscover that a "company," if the organization is a business, is, in law, much more than a mere instrument of the owners. In English law the company is equivalent to a person. It can be sued as a person, charged as a person with criminal offenses, held responsible for good behavior, and required to conform to regulations. A company has always been more than a piece of property, although common usage has tended to forget that; it has allowed instrumentalism to pervade our way of thinking, turning people into things or, at best, into human resources.
A new contract will probably forgo the language of property and property rights in favor of talking about membership, associates, and investors. Members belong to a company, as they would to any association or club. No one owns a voluntary association; no one needs to, but members have a feeling of psychological ownership which becomes crucial when they are themselves the principal assets. Members have rights, which eventually need to he defined by law, but investors also should have rights, although ones which are not as all-embracing as they are at present, as should associates such as suppliers or agents. No one, for instance, should have the right to dispose of the company over the heads of the members any more than a club could be sold along with its members.
A membership contract along these lines would redefine the role of management. The managers now become the agents of the members rather than their bosses. They manage because, in a sense, the workers want them to manage. They draw their authority from the people over whom it is to be exercised. That is already the way it is in many organizations which are struggling to find a way to harness the talents and skills of the people who are now their principal assets rather than their instruments. It makes the job of the manager more difficult but much more legitimate.
It is more legitimate, for instance, for the managers to question what should be the driving purpose of the organization, the strange attractor which will give it meaning. No longer will it be possible to evade the question by maintaining that the sole purpose of the business is to enrich its owners, for there will be no owners, only investors. Clearly the business, any business, needs to reward its investors and to provide for its future, but that has always begged the question: What future? For what and for whom does the organization exist? Under the new contract, there will be no evading that crucial question. No standard answers will be possible, just as in future no standard organizations will exist. It will be for each organization to determine its own destiny, its own strange attractor.
They will certainly be less predictable, less measurable, less amenable to the traditional disciplines. But we cannot reject the future just because it is uncomfortable. What we have to do is find a way to understand it so that we can make the new organizations work for us. The first step to that understanding is a new conceptual vocabulary and a new way of defining these strange creations.
The developed world is in the process of committing collective national suicide. Its citizens are not producing enough babies to reproduce themselves, and the cause is quite clear. Its younger people are no longer able to bear the increasing burden of supporting a growing Population of older, nonworking people. They can only offset that rising burden by cutting back at the other end of the dependence spectrum, which means having fewer or no children.
Of course, birthrates may go up again, though so far there is not the slightest sign of a new baby boom in any developed country. But even if birthrates increased overnight to 'the three-plus figure of the U.S. baby boom of 50 years ago, it would take 25 years before those new babies would become fully educated and' productive adults. For the next 25 years, in other words, the underpopUlation of' the developed Countries is accomplished fact and thus has the following implications for their societies and economics:
* Actual retirement age--the age at which people stop working--will go up in all developed countries to 75 for healthy people, who are the great majority. That rise in retirement age will occur well before the year 2010.
* Economic growth can no longer come from either putting more people to work--that is, from more resource input, as much of it has come in the past--nor from greater consumer demand. It can come only from a very sharp and continuing in crease in the productivity of the one resource in which the developed countries stilt have an edge (and which they are likely to maintain for a few more decades): the productivity of knowledge work and of knowledge workers.
* There will be no single dominant world economic power, because no developed country has the population base to support such a role. There can be no long-term competitive advantage for any country, industry, or company, because neither money nor technology can, for any length of time, offset the growing imbalances in labor resources. The training methodologies developed during the two world wars--mostly in the U.S.--now make it possible to raise the productivity of a preindustrial and unskilled manual labor force to world-class levels in virtually no time, as Korea demonstrated 30 years ago and Thailand is demonstrating now. Technology--brand-new technology--is available, as a rule, quite cheaply on the open market. The only comparative advantage of the developed countries is in the supply of knowledge workers. It is not a qualitative advantage; the educated people in emerging countries are every whit as knowledgeable as their counterparts in the developed world. But quantitatively, the developed countries have an enormous lead. To convert this quantitative into a qualitative lead is one--and perhaps the only--way for the developed countries to maintain their competitive position in the world economy. This means continual, systematic work on the productivity of knowledge and knowledge workers, which is still neglected and abysmally low.
The productivity of knowledge and knowledge workers will not be the only competitive factor in the world economy. It is, however, likely to become the decisive factor, at least for most industries in the developed countries. The likelihood of this prediction holds implications for businesses and for executives.
* The first--and overarching--implication is that the world economy will continue to be highly turbulent and highly competitive, prone to abrupt shifts as both the nature and the content of relevant knowledge continually and unpredictably change.
* The information needs of businesses and of executives are likely to change rapidly. We have concentrated these past years on improving traditional information, which is almost exclusively information about what goes on inside an organization. Accounting, the traditional information system and the one on which most executives still depend, records what happens within the firm. All recent changes and improvements in accounting--such as activity-based accounting, the executive scorecard, and economic value analysis (EVA)--still aim at providing better information about events inside the company. The data produced by most new information systems also have that purpose. In fact, approximately 90 percent or more of the data any organization collects is information about inside events. Increasingly, a winning strategy will demand information about events and conditions outside the institution: noncustomers, technologies other than those currently used by the firm and its present competitors, markets not presently served, and so on. Only with this information can a business decide how to allocate its knowledge resources to produce the highest yield. Only with such information can a business also prepare for new changes and challenges arising from sudden shifts in the world economy and in the nature and the content of knowledge itself. The development of rigorous methods for gathering and analyzing outside information will increasingly become a major challenge for businesses and for information experts.
Knowledge makes resources mobile. Knowledge workers, unlike manual workers in manufacturing own the means of production: they carry that knowledge in their heads and can therefore take it with them. At the same time, the knowledge needs of organizations are likely to change continually. As a result, in developed countries more and more of the critical work force--and the most highly paid part of it--will increasingly consist of people who cannot be "managed" in the traditional sense of the word. In many cases, they will not even be employees of the organizations for which they work, but rather contractors, experts, consultants, part-timers, joint- venture partners, and so on. An increasing number of these people will identify themselves by their own knowledge rather than by the organization that pays them.
* Implicit in all this is a change in the very meaning of organization. For more than a century--from J. P. Morgan and John D. Rockefeller in the U.S., to George Siemens in Germany, to Henri Favol in France, through Alfred Sloan at GM, and up to the present infatuation with teams--we have been searching for the one right organization for our companies. There can no longer be any such thing. There will be only "organizations"--as different from one other as a petroleum refinery, a cathedral, and a suburban bungalow are, even though all three are "buildings." Each organization in the developed countries (and not only businesses) will have to be designed for a specific task, time, and place (or culture).
* There are also implications for the art and science of management. Management will increasingly extend beyond business enterprises, where it originated some 125 years ago as an attempt to organize the production of things. The most important area for developing new concepts, methods, and practices will be in the management of society's knowledge resources--specifically, education and health care, both of which are today overadministered and undermanaged.
For more exploration of unimagined futures see my examples from the news PDF file.
“The greatest danger in times of turbulence is not turbulence; it is to act with yesterday’s logic”. — Peter Drucker
The shift from manual workers who do as they are being told — either by the task or by the boss — to knowledge workers who have to manage themselves ↓ profoundly challenges social structure …
“Managing Oneself is a REVOLUTION in human affairs.” … “It also requires an almost 180-degree change in the knowledge workers’ thoughts and actions from what most of us—even of the younger generation—still take for granted as the way to think and the way to act.” …
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