February 24, 2013
The quantity and quality of knowledge workers output is correlated with the amount of well-being they get form their work. For this reason the quality of working life has received increased attention lately. We were asked to study well-being in the context of knowledge-work and social business. Here are the first findings:
The most important thing that came up was that participation in relevant decision-making needs to be increased at the same time as social technologies and transparency are introduced. If this is not done successfully, other changes, such as improving communication practices, are only temporary and less effective. At every level of the organization, the quality of a person’s working life is proportional to that person’s participation, first and foremost, in the making of decisions by which she or he is affected.
The need for such participation is unsurprisingly also related to the age, competence and educational level of the individual. The younger, more educated or more competent the worker is, the greater the need to participate is.
Managers cannot be successful anymore unless they understand the difference between “power over people” and “power with people”. Power over is the ability to get people to do things they would not do voluntarily. It is thinking that is based on the (outdated) motivational theory of rewards and punishments. Power with is the ability to connect people and purposes. It is about co-creation and cooperation: doing meaningful things, with meaningful people, in meaningful ways.
Everybody we interviewed recognized several examples of decisions that were diluted or compromised because those who had to do the implementing did not buy into the rulings. Educated people do not respond well to commands or to somebody who tries to exercise dominance through the power their position gives them. Hierarchy does not work that well any more. Managers must depend on the willingness of their subordinates to act voluntarily.
Managers who want authority for its own sake do not fit well into knowledge-based organizations.
A very interesting development we studied was the principle that managers cannot retain their positions, or be appointed to them, without the approval of their subordinates. In one global organization we worked with, managers cannot be appointed unless they have been interviewed and approved by those who will be the subordinates or the future peers of the appointee.
Just as subordinates can make their managers look bad, they can also make them look good. This means that managers cannot hold their positions without the approval of both their bosses and their subordinates.
In industrial settings, and in principal–agent hierarchy structures in general, this did not matter. Subordinates were dependent on the managers, never the other way round. As a consequence many managers now lack support from their subordinates resulting in low productivity and slow learning.
In knowledge work, managers create the subordinates, and, at the same time, subordinates create the managers. Equality and efficiency are not opposites; in fact, they become more and more closely connected as the educational and competence level of the workforce increases and as knowledge work becomes the norm.
The social revolution continues. This revolution, as many before it, may be about equality.
February 21, 2013
I took part in a high-level workshop on the future of work. One of the questions raised was: “If machines can replace people’s minds in knowledge work as well as machines replaced their muscles in manual work, what will ultimately be left for human beings to do? Are we going to run out of jobs?” My answer was that this concern is based on a totally incorrect assumption. Working life does not consist of a finite number of problems and opportunities to which the human mind and human effort can be applied.
The good news, or the bad news, is that the challenges that confront us are unlimited. Every solution to a problem generates several new problems. No matter how many are solved, there will always be an infinite number ahead of us. Although modern technology has reduced the number of things that in the past had to be dealt with by human beings, it increases the complexity of the challenges that require our attention now and in the future.
But technology does change what people should be doing and how organizations come to be what they are. This is why we need to revisit and rethink our conceptualizations of work.
When the Industrial Revolution began, the dominant Newtonian worldview meant that what was happening in the world was thought to be understandable without any reference to the environment in which things happened. Physical laws described what things following a linear, rational causality would do. The dominant view was that there are no significant uncertainties, or unknowns, messing things up. Most academic experiments were constructed accordingly, with the effect of the environment being eliminated. The aim was often to study the effect of one known variable on another.
Business enterprises were consequently thought of as machines. Enterprises conceptualized as machines, like all machines, didn’t have a will of their own. They were serving the intentions of their creator, the owner. The principal purpose was to obtain a return on the investment. Employees were, of course, known to be human beings, but their personal intentions were seen as irrelevant. People were retained as long as they were needed to fulfill the intentions of the employers.
The biological, systemic conceptualization, although it was not always called that, then replaced the notion of an enterprise as a machine. One reason for this was the changing structure of ownership. When a firm went public, its creator disappeared. Owners were seen as anonymous, and too numerous to be reachable. The Industrial Revolution turned into the managerial revolution we are still living through today.
The managerial revolution changed the thinking around the purpose. Like any biological entity, the enterprise now had fitness and longevity as raisons d’être of its very own. Profit came to be thought of as a means, not an end in itself. Success came to be measured by growth. It was seen as essential, just like in nature.
The systemic view was a profound change in thinking compared with the mechanistic view. A biological organism is not goal-oriented in the sense of serving external purposes or moving towards an external goal. The movement is toward a more fit or more mature form of itself in a particular environment. An organism can adapt, but cannot choose to be something else. But humans are creative and humans can choose. In this conceptualization the managers were the ones who exercised free will. Employees did not. The managers were the subjects and employees were the objects.
But things are changing again. The sciences of uncertainty and complexity have helped us to understand that organizations are patterns of interaction between human beings. These patterns emerge in the interplay of the intentions, choices and actions of absolutely all the parties involved. No one party can plan or control the interplay of these intentions. But even without being able to plan exact outcomes, or control what others do, people accomplish great things together. The thing is that people can only accomplish their work in the necessarily uncertain and ambiguous conditions through ongoing conversations with each other. This is why the next revolution is dawning.
The social revolution is about deeply rethinking the value of human effort. An increase in value can only occur if the “parts” of a system can do something in interaction that they cannot do alone. Social business may be more about complementarity than collaboration.
An enterprise that is conceptualized as a social business should serve the purposes of all its constituents. It should enable its parts to participate in the selection of both the ends and the means that are relevant to them personally. If the parts of a system are treated as purposeful, they must have the freedom to choose and to act. This means that the defining characteristic of a social business is the increased variety of behaviors that is available. It is not necessarily about common goals or shared purposes any more.
Linear/mechanistic and systemic/organic concepts of an enterprise reduced variety. A complex/social business concept increases variety. This leads to greater responsiveness and agility. Instead of people interacting selfishly with each other simply to achieve a goal or in order to survive, people are understood as interacting with each other for the sake of an emerging identity and differences are seen as potential for learning and creativity.
The way our organizations are conceptualized has a great effect on what people do, and what they do affects the way organizations are conceptualized. Enterprises have always consisted of people who have ideas, intentions and purposes of their own, although it was not appreciated. This, in the end, is what makes people different from machines. Human beings working together cannot be seen as objects, but as subjects, interacting with others in the co-evolution of a jointly created reality.
What used to be seen as irrelevant is going to be the most valuable thing tomorrow.
Kevin Kelly: “dream up new work that matters”. The Atlantic: “The Robot Will See You Now”. Russell Ackoff on Systems Thinking. David C. Aron on Systems Thinking, Complexity Theory and Management. Changing the social contract of work. Gary Hamel on the invention of management. McKinsey Quarterly: “The next revolution in interactions”. MIT Technology Review: “The brain is not computable and no engineering can reproduce it”. Race against the machine by Brynjolfsson and McAfee. Greg Satell blog post. Ross Dawson and John Hagel on the humanization of work.
Filed in Digital work, Interactive, iterative value creation, New work
Tags: Agile, Agility, Complexity, Digital work, Emergence, Gary Hamel, George Herbert Mead, Interactive value creation, Internet, John Hagel, Kenneth Gergen, Kevin Kelly, Ralph Stacey, Responsiveness, Russell Ackoff, Self-organizing, Social business, technology, The Atlantic
February 17, 2013
We are in the midst of a shift from the industrial system of supply and demand to social, co-production models. The customer is now seen as being directly and actively involved in the key moments of value creation as opposed to passively consuming value. There are profound implications that result from this change of thinking. Products and services are not reproducible as such any more. Solutions are by default contextual and personalized, but they can be starting points for someone else to create value.
Creative, connected learning is at the core of the social business.
It is not learning related to meeting the requirements set by someone else, but learning that is motivated and expressed through personal, situational needs. As a result, a new meaning of education and learning is emerging.
Business, more than government, is driving the changes in education that are required for the knowledge-based economy. The government-run education systems are lagging behind the transformation in learning that is evolving outside schools. Businesses are even coming to bear the primary responsibility for the kind of education and learning that is necessary for a country to remain competitive in the future.
Gutenberg’s printing press broke the monopoly of the church on what was taught and by whom. Today’s social technologies are doing the same to schools and universities. The learners decide what is taught and by whom. The new technologies are perhaps not making teachers and schools obsolete, but are definitively redefining their roles and breaking local monopolies.
A learning business is not the same as the learning organization made popular by Peter Senge and many others. It is not about systems thinking, or learning how to use technologies and data.
A learning business is one that leverages the economic value of knowledge.
Producing more value than is used is the characteristic of productivity. True learning businesses must therefore be teaching businesses. This means communicating to customers the additional value of learning in the context of the services and products offered. Learners are teachers and teachers are learners. Creating learning connections is more valuable than creating learning content.
Inside an organization, all people must take responsibility for information and communication. Each person needs to take responsibility for his or her own active contribution. Everyone needs to learn to ask three questions continuously. What information do I need? What information do I owe others? With whom should I communicate?
Each level of management and each process step is a relay. That was OK when the speed of learning was not an issue. It was also OK that businesses were hierarchy-based, because transparency was not possible. In a learning business each relay means cutting the potential for learning in half and doubling the noise. Hierarchy used to speed things up, now it slows down.
The most important principle of a social, learning business is to build the organization around information and communication instead of around a hierarchy.
There is a debate going on that focuses on the distinction between ethical and practical education. There are people who emphasize moral values and those who underline the practical reasons for education. There are voices that are concerned that business-driven learning would mean less moral and ethical education than under government-led learning. But there are also people who stress that in order for any business to thrive in the new economy, it needs to show a new, intense and honest interest in values and sustainable ethics. Some people I know inside the church have been surprised that leading corporations dedicate more time to education about values than they, or schools do.
We have moved to a new economy, but we have yet to develop a new educational paradigm.
Andrew Ng on the importance of universal access to education. Clayton Christensen on disrupting the education industry. Joi Ito on formal vs. informal education. Clay Shirky on social reading. Paul Graham: “Large organizations will start to do worse now because for the first time in history they are no longer getting the best people“
Filed in Interactive, iterative value creation, New work
Tags: Andrew Ng, business, Clayton Christensen, Co-creation, co-production, Education, Interactive value creation, Internet, Joi Ito, Knowledge management, Knowledge work, Learning, Paul Graham, Peter Senge, Social business, supply and demand, technology
February 3, 2013
Last week I met with executives from large traditional manufacturing firms. They asked me what the ideas of social business might mean for them. What kind of changes might be ahead?
There is a saying that without customers, you have no business being in business. Accordingly, customer focus has been the dominant idea in business since the 1960s. Businesses have focused on customers as an audience for products, services and marketing messages.
But unfortunately, many businesses consistently miss the big shift: customers have transformed from an audience to actors. Firms don’t create value for customers. The way customers use the products and services creates value. It is a process of co-creation, not consumption. There are no consumers any more!
Many troubled companies still focus mainly on the wrong things. Their turnaround efforts don’t typically involve the customer. Managers streamline the businesses mainly through cutting costs; they re-engineer the internal processes to make them more cost-efficient. But they regularly leave out the most important part of the equation. They don’t start from the outside, the customer, and work in. They don’t create customers first. Instead, they work from the inside out. Many of these initiatives save money, but don’t affect the revenue side.
There is a revolution going on at this very moment as a result of the new interactive tools and social platforms. Every organization, no matter how big, now has for the first time the ability to interact directly with its end customers. Every company has the potential to consolidate customer insights and to gain a much better picture of who its customers are, how customers use the products, which products they discuss, and where they discuss them?
The problem for many traditional businesses is the definition of who the customer is. The real customer for any business is the end user of the offering, the person or company who uses the product, not the ones who distribute the product to the user or even, necessarily, the ones who pay for it. If your actual end customers don’t value your product or service, sooner or later you’ll be out of business. The length of time it takes for customer dissatisfaction to put you out of business depends on the number of steps, the degree to which you are away from direct customer contact.
This was one of the main concerns that the executives raised in our discussions.
Many companies I met had delegated customer interaction to their distribution channel as part of the overall value chain set-up. Very often the distribution channel “owns” the customer in exchange for the services given. The problem here is often letting that channel withhold information about customers as part of the trade-off.
In most markets, the demand for a direct relationship between producers and customers becomes more and more intense as the channels of distribution become shorter and more varied.
The marketing and sales departments used to be the customer’s proxy, with the exclusive role of interpreting changing customer needs. Social business necessarily transforms the marketing function and sales specialists by formally integrating the customer into every part of the organization.
The customer of tomorrow interacts with, and should influence, every process.
For routine retail transactions, as we have known them, such direct customer influence may seem all but impossible. But improvements in interaction technologies and companies’ ability to handle big data, and customer-specific small data make it feasible to claim that the number one thing shaping the performance of the traditional manufacturing enterprise is the interactive capacity between producers and customers.
The good news is that I have seen a new breed of executives coming to power. The people I meet are technology-literate. They are not only the early adopters of the next hot gadgets. They are pragmatists. They are frustrated by antiquated information and CRM systems, firewalls and organizational silos that get in the way of streamlining customer-facing business processes. “There are no back offices any more”, said one of the executives. “All processes need to be customer-facing in order for us to be competitive and serve the new active customers.”
The Internet is not a simplistic agenda reserved for the Internet companies any more. Perhaps we should accordingly stop talking about social business. The timing is now right for those leaders who are willing to doubt accepted wisdom regarding how things are done and are prepared to experiment and interact with their customers in new ways.
“There is no business without rich customer interaction,” as one executive put it.
In the end it is about being closer to things that matter.
Thank you Tore Strandvik
Developing more effective systems of digital engagement.
Filed in Interactive, iterative value creation, New work
Tags: big data, CRM, customer insights, customer interaction, Customer relationship management, customers, Interaction, interaction technologies, Interactive capacity, Interactive value creation, Internet, marketing, passive audience, processes, Sales, small data, Social business, Tore Strandvik
January 27, 2013
Industrial-era thinking consists of cultural metaphors that have guided the development of firms and societies for the past 100 years. These habitual mindsets act as intellectual and emotional standards for determining what is the right way to think and what are the right things to do.
Lately I have had a series of conversations with a group of leaders of global high-tech companies. It became very clear during my conversations that their vocabulary reflected a new way of thinking about work. The executives emphasized that the key to success in the new digital economy is likely to be a new position for knowledge professionals and a wide social acceptance of more sustainable values.
These people represented a very different set of standards from those the mainstream thinking portrays.
We still think according to a mindset, in which capital is the key resource and the investor is the ultimate boss. Accordingly, the modeling approach we still use in corporate governance is the principal-agent model, in which managers are viewed as agents of the shareholders, the principals. It is a chain of authority that leads to the knowledge worker only at the end of the chain.
But once acquired, knowledge and skills that are specialized to a given enterprise are assets that are at risk in the very same way that financial assets are at risk. If one can’t continue for some reason, the value of context-specific knowledge and competencies may be much lower somewhere else. Human capital then follows very much the same logic as financial capital and should be treated accordingly.
There is, however, one major difference. Human capital is by definition always linked, social and contextual.
The capabilities of the members of a team are worth more together than when applied alone. With context-specific human capital, the productivity of a particular individual depends not just on being part of a community, but on being part of a particular group engaged in a particular task.
The contextual and social aspects of business matter much more than we have understood.
The ten principles of digital work, the new standards, that the leaders acknowledged:
- informed free choice, rather than compliance, is the basis for decisions
- active participation, rather than passively accepting instructions, is the basis of growth and development
- work activities are carried out within a framework of personal responsibility and goals for self-direction rather than direction from outside
- activities are carried out in a transparent way with the goal of distributing the cognitive load of work rather than work being based on reductionist principles and social isolation
- one is responsible for one’s own actions rather than being responsible to someone else
- a worker is engaging in complex, responsive activities with others in contrast with engaging in closed repetitions of the same activity
- the network, rather than offices or organizational hierarchies, is the main architecture of work
- productivity is a result of creative learning rather than doing more of the same. Increasing the quality and speed of learning matter more than increasing the quantitative output of work
- knowledge work can be understood as investments of human capital following the same logic we have used to understand financial investments. Workers should share the responsibilities and possible upsides that used to belong only to the investors of financial capital.
- knowledge work is about interdependent people in interaction. Intelligence, competence and learning are not any more about the attributes and qualities of individuals but about the attributes and quality of interaction
The impact of technology on industrial jobs.
Filed in Digital work, New work
Tags: Architecture of work, business, Communication patterns, Digital work, Human capital, Interactive value creation, Internet, Knowledge work, Network, Peter Drucker, Ronald Coase, science, Self-organizing, Social business, technology, Transaction costs
January 19, 2013
Industrial work clearly determined the tasks that had to be done. The machine and the ways to work with the machine were given. People served the machine. Workers did not need to be concerned and feel responsible for the results. They just did what they were told.
Knowledge work is very different. The first thing for a knowledge worker is to try to answer these questions: What am I here for? What is my responsibility? What should I achieve? What should I do next? Key questions for a knowledge worker have to do with how to do things and what tools to use. This time, the machines, the tools, need to serve the worker. It is, in fact, a change from only following instructions to also writing the instructions.
Historians claim that the invention of the printing press led to a society of readers, not a society of writers despite the huge potential of the new technology. Access to printing presses was a much, much harder and more expensive thing than access to books. Broadcasting systems such as radio and television continued the same pattern. People were not active producers, but passive receivers.
Computer literacy or the idea of being a digital native still often follow the same model. In practice it means the capability to use the given tools of a modern workplace – or a modern home. But literacy to just use, to be the consumer of, the technologies and the programs is not what we need. The perspective of the consumer/user was the perspective of the industrial age. Success meant learning how to behave in the way the machine needed you to behave.
That should not be the goal today.
As a result of Internet-based ICT we have learned how to speak and how to listen; we have learned how to write and how to read. But in the digital world, it is not enough if we know how to use the programs, if we don’t know how to make them.
We are typically always one step behind what technology can offer. We can now participate actively through tweets, status updates and profile pages, but the thing to remember is that somebody else has made the programs that make it possible. And often the real goal of that somebody is to create a new advertising model. Nothing wrong with that.
The underlying capability of the knowledge era is programming, not reading or writing. It is a change from using things to making things. Creating things for yourself and sharing them.
I have met many people who think that programming is a kind of a modern version of a working-class skill. It can well be outsourced to some far-away, poor nation while we here do higher value things. Nothing could be further from the truth, more wrong, and more dangerous for us. Today the code is the main domain of creativity and innovations. It is a new language. Writing code is the number one high leverage activity in a creative, digital society.
The primary capability of the knowledge era is not using computers, but programming computers. It is not using software, but writing software.
Mitch Resnick talks about the new challenge: “After people have learned to read they can read to learn. And after people have learned to code, they can code to learn.”
It is time for a human response to technology.
Thank you Mika Okkola
Filed in Digital work, New work
Tags: code, computer literacy, digital native, Digital work, Douglas Rushkoff, Games, Industrial work, information era, Internet, Kevin Kelly, Knowledge work, Learning, Mitch Resnick, Network, Peter Drucker, programming, Social business, software, The machine
January 12, 2013
Few figures in the history of management have had a greater impact than Frederick Winslow Taylor. The irony is that there have also been few who have been so greatly misunderstood and so gravely misquoted.
Frederick Winslow Taylor was born in 1856 to a wealthy family in Philadelphia. Poor eyesight forced the very talented young man to give up on the idea of going to Harvard and becoming a lawyer like his father. Instead, almost by accident, he went to work in a pump-manufacturing company whose owners were friends of the Taylor family. At that time, industrial work was far beneath the attention and interest of wealthy and educated people. Taylor, very exceptionally, started as a manual worker and gained shop-floor experience at the Enterprise Hydraulic Works. He experienced the conditions personally and saw from the inside what was going on. As a result, he was the first person to talk openly about poor manual work efficiency. What ultimately started his study of work was not interest in productivity, but his disgust with the growing hatred between employers and employees. Taylor thought, contrary to Karl Marx, that this conflict was unnecessary.
His mission was to make workers more productive so that they could earn more money. In contrast to what many writers claim, Taylor’s main motivation was not efficiency, but the creation of a society in which owners and workers had a common interest.
It did not go very well.
Workers unions at the time were craft monopolies. Membership was often restricted to the sons and relatives of existing members. They required an apprenticeship of many years and had no systematic training. At that time, you were not allowed to write down instructions. Some historians claim that normally there were not even drawings of the work to be done. It was widely accepted that there was a mystique to craft skills. The members were sworn to secrecy and were not permitted to discuss their work with non-members. Before Taylor, people took it for granted that it took years and years of experience before you could turn out high quality products.
Taylor’s crime in the eyes of the unions was his revolutionary idea that there is no skilled work based on some mystique, there is just work. All manual work could be studied and divided into series of repetitive motions that could be taught. Work-related training was a genuine innovation. Any worker who was willing to be educated and followed the “one right way” of doing things should be called a “first-class” worker deserving a first-class pay. This was much more than the worker got during their long years of apprenticeship.
Taylor offended everybody. He also insulted the owners. Among other things, he publicly called them “hogs”. The biggest insult was that the authority in the plants should not be based on ownership but on something he called superior knowledge. Taylor insisted that the workers should also benefit from the increased productivity that his scientific management produced. He wrote in 1911: “The principal object of management should be to secure the maximum prosperity of the employer, coupled with the maximum prosperity for each employee”.
He was the first person to demand that managers should be educated. He thought that management should be a profession and managers should be professionals. This led the owners’ associations to attack him bitterly as a socialist and a troublemaker. Again he was seen as a criminal!
But he was right! The application of knowledge to manual work created a tremendous boost in productivity. By the 1940s Scientific Management had swept the industrialized world despite the early resistance. As a result the workers, rather than the capitalists were the true beneficiaries of the industrial revolution that was changing society. The working class largely became transformed into a new social structure, the middle class.
When Taylor started working, nine out of ten people were manual workers. Today, nine out of ten people are knowledge workers. We ask some of the same questions, but the world is totally different. Taylor’s revolutionary ideas are over 100 years old. His thinking was based on Newtonian mechanics and his ways of understanding human behavior are not up to the task any more.
Scientific Management as a concept is not only unhelpful, but totally outdated. Still the struggles we face with productivity may be the same. If you look at what the labor unions and employers’ organizations are opposing today, you may find the seeds for the next revolution in productivity.