January 8, 2013
Corporations as we know them arose around 150 years ago. They were modelled on the most successful organization of the time – the army. The army was then, out of necessity, based on a familiar management model: a few well-trained people at the top commanded a very large number of unskilled people, the “employees”, who were drilled in a few repetitive motions.
This organizational model reached its peak around the time of the Second World War. By that time it had become clear that the command and control organization was rapidly becoming outdated, even for the needs of the army. It was actually in the military that the transformation towards the knowledge worker paradigm first began. Contrary to mainstream thinking, there are examples of armed forces developing furthest from being based on command and control to being based on knowledge and responsibility.
Just as industrial society became a society of corporations, it developed into a society of employers and employees. These were two different ways to explain the same phenomenon. An employee is by definition somebody who is dependent on access to an organization, access to an employer.
Many people still think that one can only work if there is an organization – a “machine” to operate.
Corporate ICT systems are the machines of today. They are too often used in essentially the same way as machines were used in factories. Machine operators in the factory did as they were told. The machine dictated not only what to do but how to do things. The worker was dependent on the machine and served the machine.
To become a social business and to improve the productivity of work will require very different thinking and big changes to ICT-systems, management, and even, the structure of society. In knowledge work the “machines” necessarily have to serve the workers. It is the knowledge workers who decide what to do next and how to do it.
Economic theory and industrial management practice see workers as a cost. A social business, wanting to increase productivity, has to consider knowledge workers as a capital asset. There is a huge difference. Costs need to be reduced, but assets need to be made to grow.
Our present system of industrial management creates systemic inefficiency in knowledge-based work. It can only be removed if the knowledge worker’s role includes a more active responsibility leading to responsive, agile practices. This cannot be achieved unless our mental constructs and the societal structure of work changes radically.
We should ask whether the current social construct of employers and employees is inevitable for some reason, or whether it is a social artefact that is over 100 years old, and should be redesigned.
The change would mean that employees/knowledge workers would explicitly bear the entrepreneurial responsibility for the success or failure of the company, as they do anyway in the end, and, additionally, benefit from any possible upside, just as shareholders do.
From the point of view of corporate governance, it would mean that companies should be run in the interests of workers, as much as in the interests of their owners. That’s what the change from command and control to knowledge and responsibility really means.
And that’s what is needed to become a social business.