LEADERSHIP AND CHANGE
IN TRANS-INDUSTRIAL AMERICA*
by
DAVID PEARCE SNYDER
Consulting Futurist
*
First delivered by the author as the Keynote Address to the Raymond E. Mason, Jr. Annual
Community Leadership Symposium, Columbus, Ohio, April 28, 2005
“The future evolves in an orderly
manner, out of the realities of the
past, filtered and shaped by the
decisions of the present.”
David Pearce Snyder, 1969
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
2
LEADERSHIP AND THE “SHORT-LONG PARADOX”
The world’s #1 corporate futurist today is Peter Schwartz, author of the classic work in the
profession, The Art of the Long View (1990). Last year, he published his memoirs, under the
title Inevitable Surprises, in which he remonstrates against the corporate leaders who had
paid him handsome fees over the years to develop scenarios of their future operating
environments, which were subsequently ignored because the leaders were invariably
preoccupied with short-term problems and initiatives. Time and time again, Schwartz
reports, these firms were later taken completely by surprise by inevitable developments that
had been accurately forecast a decade earlier. (Hence the book’s title – “Inevitable
Surprises.”)
“Forecasting the future is easy,” writes Schwartz, “Getting leaders to take foresightful
action is next to impossible!!”
“Leadership” has become a topic of increasing attention over the past several decades,
especially as the smoothly extrapolated change of our mature industrial economy – between
1945 to 1975 – has given way to the increasingly turbulent, dynamic change of the
“Information Revolution.” Management gurus and successful executives routinely intone
rules of leadership, learned either through experience or close observation. Former GE CEO
Jack Welch, for example, set forth eight rules of leadership in his recent book, Winning.
As litanies for leaders go, Mr. Welch’s are, not surprisingly, pretty “macho,” starting with his
long-controversial practice of “relentlessly upgrading your team.” But in a recent Newsweek
article discussing his book, before he talked about his 8 rules, Welch made a point of
stressing the paradoxes inherent in leadership. “The granddaddy of them all,” he states, “is
the ‘short-long’ paradox; as in the question that I often get: ‘How can I manage quarterly
results and still do what’s right for my business five years out?’ My answer,” Welch wrote,
“is ‘Welcome to the job! Performing [that] balancing act every day is leadership.’ That’s the
fun part of leading!”
But, if Peter Schwartz is right in his characterization that corporate leadership is typically
short-sighted – and my own 40-year experience as a futurist absolutely resonates with his –
most leaders don’t do a very good job of balancing the short-long paradox. We live in a
short-term world, and most leaders are preoccupied with immediate considerations – today’s
fiscal crisis, today’s public relations gaffe, today’s labor-relations problem. Mr. Welch may
regard balancing the competing interests of the short and long terms as the “fun part of
leading,” but his “8 Rules” offer no guidance on how to successfully perform that balancing
act.
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
3
EXPLOITING THE INEVITABLE
Another frequently helpful source of guidance for addressing life’s great imponderables can
be found in the timeless wisdom of the early shapers of human civilization. In pursuit of
such wisdom, I did what any modern seeker of truth does today: I did a Google search. I
looked for the oldest attributed quotes on leadership; ancient truths that have stood the test of
time. And, the hands-down winner was the mythic Chinese warlord/philosopher, Sun Tzu, to
whom is attributed the observation, in 320 BCE, that:
“The wise leader exploits the inevitable.”
Straight-forward advice, so long as we know exactly what is “inevitable.” Now, when we do
a Google search for ancient wisdom on “inevitability,” we are immediately directed to what
is widely regarded as the oldest attributed forecast on record; from the Greek historian and
philosopher, Heraclitus, who wrote in 513 BCE that:
“Nothing is inevitable except change.”
Well, if “the wise leader exploits the inevitable,” and “nothing is inevitable except change,”
then it is clear that:
The wise leader exploits change!
As Jimmy Durante used to say, “Now we’re gettin’ somewhere.” Here is exactly where the
leader and the futurist can really collaborate. AFTER ALL, WHERE IS THE LEADER
GOING TO LEAD PEOPLE? Into the “Valley of Death?” Up San Juan Hill? No! They’re
going to lead people into the future. And the futurist can provide the leader with highly
accurate forecasts of inevitable demographic, econometric and technologic changes in the
long-term operating environments of ALL institutions. Of course, not ALL future change
can be forecast. That’s because some important classes of events and developments occur
randomly and cannot be reliably predicted by probabilistic statistics or other consistently
reliable quantitative techniques.
RANDOM CHANGE IS UNPREDICTABLE
All future developments or events can be characterized as being either random or inertial.
Random events, by definition, cannot be reliably forecast, while inertial developments can be
accurately forecast years into the future with considerable consistency. While some random
aspects of the future arise out of the natural environment – hurricanes, earthquakes, meteors,
etc. – most of the randomness in life is the result of the unpredictability of human behavior.
Neither the weather nor voter, consumer nor investor behavior can be reliably predicted,
which means we cannot forecast political developments, stock market behavior or economic
performance with any consistency. Clearly, the future will be subject to numerous
unpredictable realities.
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
4
INERTIAL CHANGE IS INEVITABLE!
Inertial trends and developments, on the other hand, are implicit in the physical realities of
the present and the recent past. For the United States, the inertial forces that will most
powerfully shape our future during the next ten to twenty years can be accurately
extrapolated from the current size and make-up of our 293 million population, our twenty
million private and public enterprises, our $11 trillion annual economy and an R&D pipeline
filled with emerging new technologies. The forces of inertial continuity and change in our
world are so powerful that random developments almost never alter them. However,
unpredictable random events often serve to hasten or delay the long-term certainties of our
future. In their Year 2000 Long-Range Plan, for example, the U.S. Postal Service projected
that steadily growing use of on-line banking and bill-payment would cause 1st Class letter
volumes to begin dropping in 2004. But the September, 2001, anthrax attacks hastened that
future by prompting millions of people to start using electronic payment systems, causing 1st
Class mail volumes to drop 5% – literally overnight.
Among the inertial realities that will shape the future for America’s private and public sector
enterprises, there are three instrumentally important sets of reliable forecasts:
• Demographic Forecasts – The future size and make-up of the U.S. adult population –
including our labor pool and our consumer markets – can be accurately forecast fifteen
years out. (Everybody who will be an adult during the next 15 years has already been born,
so there’s no guesswork involved in forecasting the adult population.)
• Econometric Forecasts – The future size and make-up of the U.S. economy and workforce
can be accurately forecast ten years out, based on the Census Bureau’s highly accurate
population forecasts.
• Technologic Forecasts – Mass-market applications of new technology can be accurately
forecast seven to eight years out, based on the content of the new product development
pipeline.
DEMOGRAPHIC INEVITABILITIES
1.
A 4-generation workforce:
• The Birth Dearth (born 1927-45)
• The Baby Boom (born 1946-64)
• The Baby Bust (born 1965-85)
• The Baby Boom Echo (born 1986-2002)
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
5
Source: U.S. Census Bureau
The entry-level labor pool (age 18 to 29) will not grow significantly during the current
decade. (Baby Busters)
2.
The exit-level labor pool (workers over age 55) will grow 50% during the current decade,
surpassing the number of entry-level workers by 2011. During most of the 20th Century, over
85% of workers aged 55 to 64 have chosen to retire. But, since the mid-1980s, growing
numbers of exit-level employees have elected to “age-on-the-job” instead of retiring.
3.
Today, of employees over 50 tell pollsters that they plan to keep working into their 70s
or 80s, whether or not their finances require it. Average age at retirement has risen from
58 in 1980 to 61 in 2002, and can be expected to rise to 67 by 2015.
4.
The labor force participation rates for over-55 year old workers rose from 30% in 1992 to
35% in 2002, and is expected to rise to 40% by 2012. The IRS has announced plans to
change the rules governing defined-benefit pensions to permit employees over 59 to work
part-time and receive a pro-rata portion of their pensions. This arrangement is called “phased
retirement.” By 2015, over-55 year olds – now 15% of the U.S. workforce – will make up
20% of all U.S. workers – 1 out of 5 – while 18 to 25 year olds will have fallen from 16% to
15% of the labor pool. The U.S. workforce really will be aging.
5.
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
6
6. While growing numbers of aging Baby Boomers are expected to put off retirement an
average of 5 or 6 years, the warranty will eventually begin to expire on their parts – in spite
of soaring numbers of knee and hip replacements and triple by-passes – and they will
eventually begin to leave the workforce. This demographic “Perfect Storm,” combining
Baby Boomer retirements with a stagnant entry-level labor pool, has led the BLS to forecast
an absolute labor shortfall of 3 to 4 million employees by 2015. America will clearly need to
either import more workers, export more jobs, or dramatically increase its labor productivity.
Just as America imports two-thirds of its petroleum today, we are already heavily
dependent on imports to meet our labor requirements. One-half of all new hires in the U.S.
during the past decade were foreign born. A small but vocal minority of Americans have
begun to clamor for the reduction – or elimination – of immigration quotas, but labor
economists warn that such restrictions would be as catastrophic for the Nation, as would a
restriction on our imports of foreign oil. Immigrants currently make up 12% of the U.S.
population, 15% of our workforce, and fill over 20% of our minimum wage jobs.
7.
8. Sustaining our current levels of immigration will guarantee the continued increase in
America’s cultural and ethnic diversity. African-Americans are expected to increase their
share of the workforce from 12% to 13% by 2015, while Hispanics will grow from 11% to
14%, and Asians from 2% to 4%. By 2020, well over 1/3 of all American workers – and
consumers – will be non-Euro-descended!
Because the most rapidly shrinking occupations in the U.S. over the past 25 years have
been in male dominated sectors of the workplace – manufacturing, mining, commercial
fishing and farming, etc. – overall male workplace participation rates have decreased over the
past 3 decades, while greater career opportunities have boosted female workforce
participation rates. The BLS projects that women – who make up about 47.5% of the
workforce today – will make up over half of all U.S. employees by 2020.
9.
ECONOMETRIC INEVITABILITIES
The first econometric inevitability of our long-term future is a product of demographic
inertia: The U.S. population is projected to grow by over 3 million new citizens every year
over the next 10 to 15 years. Concomitantly, the U.S. Bureau of Labor Statistics (BLS)
expects private and public enterprise in the U.S. to grow sufficiently to provide those tens of
millions of new Americans with at least the current levels of per capita consumer and
constituent products and services. This is the basis for the BLS’s consistently reliable 10year forecasts of U.S. economic growth and change. These forecasts, broken out by 384 types
of industry and over 840 distinct occupations, are available free on-line at:
10.
www.bls.gov/emp .
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
7
THE CHANGING AMERICAN WORKFORCE – 2002 TO 2012
EMPLOYMENT
(1,000's)
2002
2012
OCCUPATION
% of Total Employees
2002
2012
GROWTH
Number
%
(1,000's)
Change
Total - Labor Force
144,900
162,300
100.0
100.0
17,400
+12.0
Total - All Occupations
144,014
165,319
100.0
100.0
21,305
+14.8
10,056
11,277
7.0
6.8
1,221
+12.1
5,445
6,606
3.8
4.0
1,162
+21.3
Professional Workers
27,687
34,147
19.2
20.7
6,459
+23.3
Service Workers
21,084
25,519
14.6
15.4
4,435
+21.0
Sales Workers
15,260
17,231
10.6
10.4
1,971
+12.9
Office & Administrative
Support Workers
23,851
25,464
16.6
15.4
1,613
+6.8
6,780
7,937
4.7
4.8
1,157
+17.1
12,842
13,170
8.9
8.0
328
+2.6
Transportation &
Materials Moving
9,828
11,111
6.8
6.7
1,282
+13.1
Business Services
11,181
12,858
7.8
7.8
1,677
+17.1
Management
Business & Financial Workers
Construction Workers
Production, Farming
& Mining Workers
Source: U.S. Bureau of Labor Statistics, DOL
February 11, 2004
HARD DATA ABOUT THE FUTURE
(I’m always a little awestruck whenever I look at it.)
Unfortunately, what this data tells us at the moment is not entirely cheerful. To be sure,
employment is expected to grow robustly during the current decade (2002 to 2012); more
than it did during the 1990s: 21.3 million new jobs now vs. 20.7 million then. But the quality
of the new jobs to be created – as measured by their median wages and benefits – is forecast
to be no better than the mix of jobs created since the end of the 2001 Recession, and not
nearly so good as the mix of jobs created during the second half of the 1990s. The macroeconomists at the Federal Reserve and the world’s merchant banks confidently assert that
maturing computer technology – like the steam power and electrical technologies that it –
will eventually generate a surge in high value employment. But this assertion is an article
of faith, not a data-based probabilistic statistical forecast.
11.
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
8
To date, the net workplace impact of the automation, info-mation and globalization made
possible by matured IT has been to reduce the proportions of median and upper-income jobs
in America, as a share of all jobs, from over 60% in 1970 to just over 40% today (see graph,
below). Income in America is more concentrated than it has been since the 1930s, and
wealth more concentrated than at any time sine the 1880s and 1890s.
12.
Schumpeter’s “wave of creative destruction . . . .”
13. Economic historian Joseph Schumpeter called techno-economic revolutions “waves of
creative destruction,” because newly-matured technologies are initially used to improve the
operations of existing enterprises before they are used to create new high value products and
services. New technologies typically enhance existing operations by increasing unit labor
output, reducing total labor input and eliminating millions of rank-and-file jobs, (a
reasonably straight-forward management task). The creation of new technology-based highvalue mass-market products and services requiring large numbers of technology-wielding
high value-adding workers is a much less straight-forward task, involving entrepreneurs,
venture capitalists, vested interests, politicians, inventors, false starts, dead ends and high
risks.
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
9
Historically, a broad rise in general prosperity is one of the last major effects of a
techno-economic revolution -- typically following by a generation the concentration of
wealth and income that characteristically accompanies the initial introduction of a newlymatured technology. Eventually, any free-market, capitalist economy can be expected to
realize the full productive potential of a new technology by restructuring its existing
enterprises and redesigning its existing rank-and-file jobs. The resulting tide of rising
prosperity will, in turn, “lift most boats” higher than they have ever been before. Until this
happens, however, roughly two-thirds of all U.S. workers will continue to earn less than the
average wage.
14.
15.
The restructuring of our existing productive enterprises is already well under way. The
outsourcing revolution – the dismantling of our pyramidal, hierarchical, self-servicing
Industrial Era bureaucracies into flat, agile, distributed networks of collaborative specialists –
has been made possible by the World Wide Web, the communications efficiencies of which
permit the “virtual integration” of the efforts of disparate, independent outsourced experts
and specialists into a seamless stream of superior, low-cost goods and services (see Exhibits
1-6).
16.
The free-trade movement set in motion by the 1948 General Agreement on Trade and
Tariffs (GATT) led to the exporting of several million U.S. industrial jobs between the mid1960s and the early 1990s. But it wasn’t until the creation of the WorldWideWeb – a global
information infrastructure (or “info-structure”) – that large-scale international trade in
information products and services was practicable. Now that the Internet constitutes a single
electronic marketplace for the “global village,” information workers worldwide will
increasingly compete directly with one another. Because human resources typically
represent 70% or more of business operating costs, there will be growing pressure for laborintensive information work to “migrate” to low-cost labor pools, and for labor markets
everywhere to gravitate toward paying “comparable wages for comparable information
work.”
THIS IS A SOBERING THOUGHT! Globalization is already raising the incomes of
information workers in the developing countries. But, unless American programmers, British
actuaries and Japanese engineers are able to add INcomparable value to their services that
their 2nd and 3rd world counterparts cannot, their future employment and compensation will
be at risk. This stark reality at last fixes our attention on the real challenge confronting
the leadership of private and public enterprise in America today: we must significantly
increase the economic value added by ordinary employees.
17.
TECHNOLOGIC INEVITABILITIES
A careful reading of economic history makes it clear that mature new technologies do not
produce a surge in prosperity simply by creating large new classes of high value-adding
occupations. The long-term surge in prosperity arises primarily from the redesign of existing
jobs to enable huge swathes of the nation’s workforce to add more value through their use of
newly matured technology. Thus, the singular strategic question for the leaders of every
enterprise to ask today is . . .
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
10
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
18.
“How can our ordinary rank-and-file employees use information technology (IT) to add
more value to what we do?”
To consider the answer to that question, we need to take a quick look at the IT applications
that will enter common use during the next 5 to 10 years. The following 9 IT applications –
most of them rolled-out since 2000 – are widely forecast to be universal within 10 years.
WEB-BASED PRODUCTIVITY-ENHANCING OPERATIONAL APPLICATIONS OF IT
• ELECTRONIC TRANSACTIONS (reduces unit overhead costs
from $1.07 to 1 cent)
• PAPERLESS PROCUREMENT (reduces purchase order overhead
costs from $50 - $125/ea. to $5 - $25/ea.)
• WEB PHONING (avg. 30% cost reduction from traditional phone service)
• GRID COMPUTING (reduces cost of new computing capacity 25% - 35% )
• OPEN SOURCE SOFTWARE (30% - 40% avg. reduction in
computer systems operating costs from proprietary software)
• INFORMATION UTILITIES (avg. 25% to 55% savings
over in-house computer systems)
• VIRTUAL TRAVEL/VIDEO CONFERENCING/TELE-COMMUTING
(95%+ savings over actual travel)
• WIRELESS WEB ACCESS (cuts overhead cost of high speed Net
access 75% to 100%)
In 2000, merchant banker Goldman Sachs forecast that the straight-forward info-mation
of existing organizational operations made possible by the Web will steadily increase
productivity and reduce labor requirements throughout the global economy – at least through
2010 – increasing the growth rates of all major industrial economies by an average of 5% per
year. But techno-economic historians have demonstrated that previous great surges in human
progress have not come about simply from the application of new physical technologies to
existing institutions and operations. The “rising tides” that have previously “lifted all boats”
have been the combined products of new physical technologies (machines, structures and
processes) and new social technologies (institutions, laws and common practices) that are
made possible – or desirable – by new physical technologies (see Exhibit 7).
19.
20.
The improved communications efficiencies of our high speed Internet info-structure, for
example, are making possible both the outsourcing and off-shoring revolutions that are
creating distributed enterprises – a new social technology – that will continue to improve the
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
11
total-factor productivity of mature industrial-era businesses, while further reducing
employment in the developed economies. Now, a new class of applied IT – “groupware” –
will enable individual employees not merely to perform their existing jobs more efficiently,
but to perform new functions and add new value that had not previously been possible.
GROUPWARE
The principal new groupware tools include:
• Peer-to-Peer file-sharing (P2P) – Invented for on-line workplace
collaboration, but first used by 37 million teenagers around the world to nearly
bankrupt the global music industry; now a mainstay of project management
throughout business, and gaining currency in government, especially for interorganizational work.
• Instant Messaging (IM) – A real-time variation of e-mail for immediate
communication among two or more people while actually on-line; use of IM has
dramatically reduced long-distance business telephone call volumes and is
quickly turning cyberspace into a virtual “bull pen.” Since 2000, IM has
become the fastest-adopted technical innovation in the history of U.S.
business; 84% of large North American firms report making formal use of IM
by December, 2003. And in 2005, IM’s original text-messaging capabilities
were augmented to include instant video-conferencing. (Strikingly, it has been
rank and file employees who have brought IM into the workplace, not
management. Some managements have banned employees from using IM,
since groupware breaches the firewalls and filters of corporate information
systems. It also cuts across official channels and violates lines of authority. On
the other hand, employees have threatened job actions when prohibited from
using IM. The technology is so productive that almost all large employers are
regularizing its use by making groupware secure.)
• WEB LOGS (”Blogs”) – Originally an on-line platform for IT wonks, Blogware is now used to host on-line experts as to serve as information sources for
customers, employees, and the media. Available both as software and as an online service, Web logs also loom large as future gatherers of market research, as
a powerful news medium, and an unusually effective teaching/training tool.
• Wi-Kis – Freely down-loadable software for collaboratively creating new
knowledge bases – dictionaries, glossaries, encyclopedias, etc. – for previously
un-examined issues, problems or fields of study (TWiki.org; Wikipedia.com).
The need for such systems will increase exponentially throughout the
foreseeable future, as the accelerated advance of human knowledge – made
possible by our rapidly-spreading use of IT – forces us to study new problems,
apply new technologies and explore new options. Wikis will be crucial to
organizational learning.
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
12
Together – P2P/File-Sharing, Instant Messaging, Blogs and Wi-Kis – now provide the means
for quickly establishing on-line “open knowledge” and “open innovation” systems to
mobilize information and knowledgeable practitioners with respect to any topic, project or
problem in any field of operation.
COMMUNITIES OF PRACTICE
In his 1999 book, Smart Business, Harvard Professor Jim Botkin shows that highlyproductive knowledge workers in all fields maintain “communities of practice;” collegial
networks of past and present co-workers, former class-mates and instructors, current and past
customers and suppliers, etc. These employees use their networks of colleagues as a readilyavailable, trustworthy source of technical-professional information, guidance and mutual
assistance. In general, employees do this without the knowledge or approval of their
employers!
21.
Until recently, “communities of practice” have typically been informal. But the
unexpectedly successful open source software (OSS) movement has provided the world’s
ordinary rank-and-file workers – in every industry, trade and profession – with a formal
process that will enable them to establish their own on-line open communities of practice.
The world’s largest formal community of practice is the collaborative on-line network at
www.sourceforge.net that develops and improves Linux open source software. With more
than 300,000 registered members working on over 10,000 projects, the open source
community has demonstrated the enormous productive capacity of a self-policing volunteer
meritocracy based on peer collaboration and intrinsic rewards. As a consequence, the opensource model is quickly being adopted as a new social technology for generating streams of
productive innovations in a growing number of fields – ranging from semi-conductors,
pediatrics and oil exploration to pharmaceuticals, automotives and consumer goods.
John Seely Brown, former Director of Xerox PARC, echoes the
judgment of many experienced in workplace technology when he asserts that the new
family of on-line groupware tools (physical technologies) is about to supercharge the
way communities of practice (social technologies) solve problems, answer questions
and push forward the frontiers of knowledge. (It is genuinely exciting to read
accounts of these early initiatives. Let me urge you to grab a new report off the Web
by the British think tank Demos: WIDE OPEN: OPEN SOURCE METHODS AND THEIR
FUTURE POTENTIAL. at www.demos.co.uk .)
AUTHOR’S NOTE:
From now on, operational realities will call for a workplace in which everyone must be
attuned to the consequences of innovation, and where rank-and-file workers must be
encouraged to share their experiences and insights with their peers both inside and outside
their firms or governmental agencies. Only in an environment of open collaboration can
we possibly expect to constructively assimilate such pervasive innovation and change
22.
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
13
without serious dysfunctions.
(Remember Edward Tenner’s “law of unintended
consequences”!) And, it is only in an environment of open collaboration – where individual
employees are empowered to “learn locally and share globally” – that ordinary workers –
nurses, farmers, machinists, janitors, bus drivers, etc. – will be able to add “incomparable”
value on the job, and thereby merit compensation that is INcomparable with the global
market wages earned by their counterparts for comparable work elsewhere in the world.
Such arrangements will be much more purposeful than “participatory management;” it will
be participatory R&D. Unlike participatory management, participatory R&D taps the
particular and unique productive competencies of rank-and-file employees.
OPEN COLLABORATION FOR THE MASSES
While open knowledge-sharing networks are springing up among a rich mix of
occupations – from theoretical physicists, greens-keepers and computer hackers to paramedics and museum model makers – there is scant evidence of such on-line collaboration
among blue and gray collar workers. The absence of on-line knowledge-sharing among
craft, trade and wage-and-hour workers is easy to understand. To begin with, many first tier
employees – bus drivers, letter carriers, janitors, assembly line workers, etc. – have no onthe-job Internet access. But, this circumstance will change dramatically over the next 5
years, as telephone service is merged into the Internet, and every cellular phone becomes a
Web-access terminal. Internet access will be mobile and universal before 2015, reaching
every back-hoe operator, auto mechanic and insurance claims adjuster wherever they may be.
23.
Another common reason for the failure of ordinary production and service workers to
form collaborative networks is that their jobs are neither “high tech” nor involved in
knowledge work. Because the workplace activities of such employees are typically
prescribed by detailed work rules, management commonly assumes that such workers have
no valuable knowledge to share. But research in the newly-established discipline of
knowledge management has established that the economic value added by all enterprises is
based primarily on organization-specific knowledge, including the work practices, databases, and the experience-based know-how of their employees. By mobilizing this
“institutional capital,” firms such as Holcim, the world’s largest cement maker, and Highland
Supply Corp., America’s principal producer of packaging for florists, have dramatically
increased the market share and profitability of their distinctly non-high-tech businesses.
24.
25. A third reason why rank-and-file workers have shown little inclination to form
collaborative networks is that, while they may be equally motivated by intrinsic rewards as
are their professional and scientific co-workers, front-line employees are much less likely to
have discretionary on-the-job time to devote to uncompensated work. Moreover, the
shattering of the industrial era social contract – e.g. falling rank and file wages, shrinking
benefits and the loss of job security, etc. – has reduced worker loyalty and their propensity to
give their time and creative energies to their employers. As managers struggle to adapt in the
face of the twin revolutions of info-mation and globalization, rank and file employees’
contribution to corporate survival has largely been reduced to the sacrifice of their wages and
benefits.
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
14
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
26.
Now that many managers have come to regard labor primarily as a cost to be eliminated
rather than an asset to be nurtured, they are even less likely to make the investments
necessary to provide their rank and file workers with Internet access – or to enlist them as
allies in their efforts to cut costs and increase productivity – by empowering them to
participate in on-line communities of practice. And, of course, there are no such on-line
collaborations for the vast majority of rank and file workers to join. But, if America’s front
line employees are not given their opportunity to mobilize their job-specific, experiencebased intellectual capital to improve the productivity and the quality of their output, they will
have lost any hope of outperforming their global competitors. And so will their employers.
Research by the National Science Foundation (NSF) has shown that the average return
on investment (ROI) from new product R&D is 15%, while the ROI from new process R&D
is 25%. New product R&D, on which corporate America spends most of its research budget,
is crucial to creating and dominating new markets. New process R&D, on which much less
money is spent, is crucial to maintaining and expanding market share for existing products
and services. Moreover, in his research into R&D efficiency, Eric von Hippel at the Wharton
School has found that outsiders – e.g. software engineers, management analysts, consultants,
etc. – have difficulty in designing process improvements largely because, in order to fully
understand the “sticky” details of an operation, the analyst must “dwell in the context of the
[system] user for a prolonged period.” Employees themselves, of course, already dwell in
the context of their own jobs, and are intimately familiar with the sticky details.
27.
While hundreds of on-line collaborative networks have already sprung-up spontaneously
among scientists, school teachers, scholars, software writers and artists, similar systems for
most types of rank and file workers will almost certainly have to be sponsored and operated
by large institutions with a nationwide presence. Three institutions would be well-suited to
such a task:
28.
• Trade and industrial associations could establish on-line open collaboration networks for
the employees of their members. Association sponsorship would be especially beneficial
for industries with a large number of small firms – e.g. machine shops, independent auto
mechanics, full service restaurants, etc. – that have little or no resources to spend on R&D.
• Labor unions could offer an open-collaboration capability in addition to the other on-line
services that many already offer their members. Unions also have standing to promote
employer adoption of worker-initiated productivity-enhancing process innovations, along
with concomitant wage increases. The successful outputs of open collaboration systems
can also e directly linked to performance-based systems. In recent years, organized labor
has remained strongest in the public sector and in business services – both sectors of the
economy where productivity improvements have lagged
far behind those in
manufacturing, communications, banking and finance.
• Employment agencies like Kelly and Manpower, Inc., who provide temporary employees
to factories, stores and offices, have recently developed massive on-line training systems to
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
15
permit the millions of workers they handle to continuously up-grade or change their skills
to meet the changing demands of the labor market. Employment agencies could also train
and equip their workers to share workplace experience and insight, and to develop
productive practices for common operations or using common types of equipment.
Employers might hire such temporary workers specifically to analyze and improve existing
work practices.
Once such collaborative on-line networks become commonplace, they will also be
tapped by equipment manufacturers and service providers for help in improving their
products. Researchers and consultants could also use the networks to conduct studies on a
wide range of workplace issues. Most important of all, individual workers themselves would
use open collaboration to speed up their own mastery of new equipment and fabrication
materials, and to solve common logistics problems. Once employee collaborations become
well established, firms will increasingly contract with them for evaluations of competing
types of equipment or software, or to help redesign production operations and facilities.
29.
Eventually, as labor and management each increasingly concentrate on improving their
respective core competencies, the management of growing numbers of enterprises will begin
to contract out their production operations to their own rank and file employees. Freed of
high cost management overhead, such self-improving employee-owned and operated
production facilities are likely to be highly competitive in the global marketplace. The
outsourcing of production will be the logical final step in the process of disaggregating our
integrated Industrial Era organizations into distributed networks of individual components,
each specializing in their individual core competencies. The IT-based transformation of
enterprise will then be complete.
30.
LEADERLESS IN REVOLUTIONARY TIMES
In closing, it is worth noting that, while there is a broad consensus among economists,
business leaders and the general public that the industrial world is passing through a
technology-driven revolution, political leaders throughout the industrial world – including
America – make scant mention of this momentous reality. The word “revolution” almost
never passes a politicians lips. (It almost seems as if they are afraid to say it.) Firms that
lose market share to foreign competition are simply admonished to cut their costs.
Employees who lose their jobs to corporate cost-cutting are advised to acquire higher order
skills. Unemployed engineers and programmers are told to go back to school and learn
alternative or complementary skills. Our national enterprise is expected to adjust to
wrenching techno-economic change through the life-altering decisions of tens of millions of
citizens who are simply being told: “Get more education.” “Go into high tech.”
Abraham Lincoln noted in his diary that, “If we could first know where we are and whither
we are tending, we could better judge what to do and how to do it.” By failing to provide
America’s citizens with a clear appreciation of the true scale and implications of the
“Information Revolution,” our national leaders have left society not knowing exactly “where
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
16
we are and whither we are tending;” and thus, without guidance regarding “what we should
do and how we should do it.” America is, in this respect, leaderless in revolutionary times.
Fortunately this condition only exists at the National level – inside the corporate boardrooms
and the Capital Beltway – but not throughout our common enterprise. A quick look at the
media – the daily news, the business pages, the trade magazines, professional and scholarly
journals, etc. – reveals increasingly frequent reports of performance-enhancing innovations
in every field of economic endeavor. Clearly, many American small businesses, professional
practitioners and local governments have an appreciation of “where we are and whither we
are tending,” even if our national leadership wont talk about it.
Revolutions do not typically start in a nation’s legislature or its corporate boardrooms.
Revolutions are characteristically grassroots events that start in the marketplace – at the
bottom of the economic system. The accumulating consequences of these spontaneous
innovations rise up through society and the economy, eventually provoking system-wide
changes in basic institutions, economic structures and public polices. The framers of
America’s Constitution understood this reality, and provided for it in the “reserved powers”
Amendment of the Constitution.
THE 200 YEAR-OLD PLAN FOR AMERICA’S SUCCESS IN THE 21ST CENTURY
When the first draft of the U.S. Constitution was circulated for discussion, two of the most
important founding fathers were out of the Country. John Adams was in London as U.S.
Ambassador to Great Britain, and Thomas Jefferson was in Paris, serving as our Ambassador
to the French. The first draft of the Constitution was considerably different – and simpler –
than the one which was ultimately adopted. In particular, the draft provided that essentially
all significant governmental power would be vested in Congress – the legislative branch of
the Federal government. The Federal Executive Branch, plus the States and local
governments were allotted little discretionary authority to act beyond what Congress
explicitly stipulated.
John Adams, the resident cynic among the founding fathers, knew that Jefferson had been
primary author of the draft, and suspected (correctly) that Jefferson’s populist distrust of
institutional power had led him to place the bulk of discretionary authority in the hands of the
popularly elected National legislature, rather than trust the Nation’s future to spoils system
politicians, bureaucrats or regional interests. The glaring imbalance in the proposed
distribution of governmental authority prompted Adams, in London, to write to Jefferson in
Paris:
“My dear Sir:
I doubt me that any body of men, including this Congress of yours, should be so
wise as to correctly resolve each and every problem with which it is presented. I
therefore believe that you would give over much power to these gentlemen.”
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
17
Jefferson wrote back:
“My dear friend:
I believe you are right. I shall therefore propose that substantial powers be
reserved to the State and Local governments, that they may serve as civic
laboratories, to solve such problems as the future is likely to present us with.”
Thus was born the “reserved powers” clause of the U.S. Constitution; the 10th Amendment,
adopted at the same time as the Constitution, reads:
“THE POWERS NOT DELEGATED TO THE UNITED STATES BY THE
CONSTITUTION, NOR PROHIBITED BY IT TO THE STATES, ARE RESERVED
TO THE STATES RESPECTIVELY, OR TO THE PEOPLE.”
If only Jefferson had kept the language about “civic laboratories” in the Constitution, it
would have been clear to succeeding generations that the “Founding Fathers” had intended
the States and the citizens at large to lead the Nation into the future through their innovative
adaptations to circumstances that the Founders could not foresee.
Thus, America is not leaderless at this revolutionary moment in our history after all. We’ve
just been looking in the wrong place for innovative leadership – at the apex of national
politics and corporate power rather than at successful small and medium-sized businesses, at
states and local communities and among our rank-and-file workers – where creativity born
of necessity and competence is beginning to re-invent America.
Now is the time for local grassroots leadership throughout business and government – and
among the professions, non-profits and the unions – to begin to work together to consolidate
the successful innovations of the past decade in education and health care, in business
management and community action – and to integrate those institutions with the next
generation of technology to invent the purposeful new institutions and practices that will
become the hallmarks of America’s post-industrial prosperity.
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
18
Exhibit 1
COASE’s LAW:
“The cost of gathering information
determines the size of organizations.”
Prof. Ronald Coase, in
The Nature of the Firm, lecture to the
College of Economics and Commerce,
Dundee, Scotland – 1931
Throughout most of the 20th Century, inter-organizational
communication was slow, expensive and time-consuming, leading most
large organizations to be self-sufficient. But, as the Internet has made
communications fast, cheap and convenient, large enterprises have
begun to outsource non-critical overhead activities to superior specialist
suppliers, while concentrating resources and management attention on
their core competitive competencies.
Dr. Coase was awarded the 1991 Nobel Prize in Economics for his
1931 insight, and the resulting notoriety helped launch the outsourcing
revolution.
Business worldwide is abandoning vertical integration
for virtual integration (because Adam Smith was right);
“Specialists Always Outperform Generalists!”
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
19
Exhibit 2
D ISM EM B ERING V ERTICA LLY -I NTEG RA TED
I NDUSTRIA L E RA E N TERPRISES
A Glossary
disaggregate – to disperse previously-integrated components of a
coherent, self-sufficient operational system to one or more
independent performers.
disintermediate – to eliminate organizational “gate-keepers”
between the in-house purchasers of common goods and services and
the marketplace vendors of those goods and services (e.g. office
supplies, travel, etc.).
un-bundle – to separate different outputs of a single enterprise into
distinct organizations to serve distinct markets, constituencies,
functions, etc.
off-shore – to transfer an activity from a domestic to a foreign source
or site.
outsource – commonly used to refer to all of the above.
privatize – when any of the above involve moving an activity from
the public sector to the private sector.
virtual integration – continuous co-ordination/collaboration among
the individual components of a disaggregated enterprise over the
internet.
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
20
Exhibit 3
Staffing the Virtual Enterprise in 2015
(after 25 years of outsourcing & franchising).
% of total
Workforce
IN-HOUSE –
Core Functions/Competencies . . . . . . . 35%
Core Enterprise – Executives, Managerial, Professional
& Technical Leadership Cadre, R&D, Planning,
Operations/Production Personnel and Staff Functions
OUT-SOURCED –
Complementary Functions/Competencies . . 25%
Component and Service Suppliers – HR Management,
IT Systems, Product Assembly, Franchises, Logistics,
Administrative Services, etc.
CONTINGENT –
Commodity Competencies . . . . . . . . . .25%
Intermittent Employees – Part-Time, Temporary & Flex-place
SELF-EMPLOYED –
Special Competencies . . . . . . . . . . . . . .15%
Contract Consultants – Self-Employed
Professional/Technical/Hybrid Expertise, Creative
Producer Services, etc.
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
21
Exhibit 4
BECOMING A DISTRIBUTED ENTERPRISE
1. Outsource the things that you ARE NOT
particularly good at to people who ARE
(i.e. specialists);
2. Focus freed-up resources and management
attention on your core competencies, (the
things you do well);
3. Collaborate on-line with your contract
partners & suppliers to create a virtually
integrated network of superior performers;
4. Dialogue on-line with your customers and
stakeholders to continuously improve all
aspects of your performance.
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
22
Exhibit 5
21st CENTURY ENTERPRISE*
Networked Organizations with Collective Leadership
Between now and 2020,
"most larger companies will become networks of outsourced
resources, partnerships, alliances, contractors and franchisees
linked by real-time information exchanges,"
and
"business leadership will become collective rather than
individual, as the role of the CEO as sole leader will have been
overtaken by developments in management practices,
marketplace forces and information technology."
*Summary conclusions from “Adapt and Survive,” a Global Futures Forum
Delphi survey of 180 futurists, corporate strategic planners and industry
analysts/consultants; published May 2003.
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
23
Exhibit 6
COLLECTIVE LEADERSHIP*
Because more and more work is being done in cross-functional and
trans-organizational teams, leadership will increasingly need to be
shared among team members. To succeed at shared leadership, team
managers must create a culture of collaboration by:
• explaining that shared leadership is a performance
expectation, and will be rewarded;
• requiring team members to accept responsibility for
providing – and responding to – peer-leadership;
• encouraging team problem-solving and decision making;
• deferring critical decisions to the group;
• assuming a facilitative leadership style, instead of a directive
leadership style;
• coaching and developing their team’s individual and
collective leadership skills.
*from: “People Skills Still Rule the Virtual Company,” by Jay Conger and
Edward Lawlor, in The Financial Times, August 25, 2005, p.7
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
24
Exhibit 7
THE DYNAMICS OF LONG-TERM
TECHNO-ECONOMIC INNOVATION
Physical technologies are ways of organizing natural forces,
materials and phenomena: e.g. machinery, structures, processes.
Social technologies are ways of organizing people, capital and
knowledge: e.g. institutions, laws, common practices.
The continuing interplay of our co-evolving physical
and social technologies is the forge of human progress!
KEY SOCIAL TECHNOLOGIES
OF THE INDUSTRIAL AGE
• Limited Liability Corporations (1855-1870)
• Vertically-Integrated Industrial Bureaucracies (1850-1880)
• Scientific Industrial Management (1881)
• Labor Unions (Legalized -1825; Empowered – 1860s)
• Workman’s Compensation (1890s –- 1920s)
• Unemployment Insurance (1890s – 1930s)
• Social Security (1890s – 1935)
• Health Insurance (1990 – 1950s)
©David Pearce Snyder • The Snyder Family Enterprise • www.the-futurist.com
8628 Garfield Street, Bethesda, MD 20817 • phone: 301-530-5807 • david@the-futurist.com
25