The Future of Work
Thuy Nguyen
September 29th 2005
Outline
• Revolution pattern of organizations
• Decentralization
– Loose Hierarchies
– Democracies
– Markets
• Organizational & Personal Knowledge
Management
• Conclusions & Discussions
Human Society Revolution
Band
Kingdom
Democracy
Organizational Structure Revolution
Research universities
Political democracies
Free markets
Internet
Traditional military
organizations
Family businesses
Small
Businesses
(Independent)
Corporate
Hierarchies
(Centralized)
Declining costs of
communication
Networks
(Decentralized)
Declining costs of
communication
Benefits of bigness
Freedom
DECENTRALIZATION
The Hierarchy
• Definition:
– Top-down authority
– Abide by direct command from superiors
– Please your superiors for incentives
• 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
hierarchy
• Successful stories:
–
–
–
–
Linux open-source software
Wikipedia
Consulting firms
Research universities
Democracies
• Between controlled hierarchies and open markets
• Definition
– Multi-channel communication
– Decisions made by voting
– Must abide group decision
• 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:
– Online rating system
– Making customers feel they’re in charge of business
• Mondragon 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!
• Power & ownership distributed throughout
whole market
• Stories:
– E-Lance economy (Hollywood)
– eBay: thousands of freelance retailers working based
on TRUST
– The Internet
• Problem: too much freedom!!!
Unleashing Markets (Cont’d)
• Strengths:
– Efficient allocation of resources
– Flexibility
– Motivation
• 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)
• Successful stories:
– BP: greenhouse gas emission reduction
– HP: quasi markets to form project teams
Making your choice
• Centralized hierarchies when:
– Economize on communication costs
– Lots of conflicts to resolve
• Markets when:
– Maximize creativity and motivation
– Want to exploit many ideas simultaneously
• 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?
• What about quality control?
• Are we gonna lose the advantage of economies
of scale?
• Is knowledge sharing difficult when
decentralizing?
COSTS compared to BENEFITS
Redefine the values of organizations
• Put human values at the center of business.
• Work around what people want from business.
• 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.
• 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?
• 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?