Christmas Letter
December 23, 2011
2011 was a year of major breakthroughs. The creative economy is here and looks very different from what we have been used to. I try to sum up some of the most important findings of the year.
The industrial logic was most vividly captured in the idea of the value chain. Value creating activities were sequential, unidirectional and linear. In the model, value was not really created but added step by step. The output of one task was the input of another. The image of work was the assembly line, meaning that work could be fragmented and individual performance goals could be set for each worker. The world was all about people and boxes separated from one another.
Physical tasks can be broken up in a reductionist way. Bigger tasks can be divided by assigning people to different smaller parts of the whole. For intellectual tasks, it is much harder to find parts that make for an efficient division of labour. Intellectual tasks are by default linked and complex.
Reductionism does not work any more.
Knowledge workers are often put in a position where they have to negotiate some understanding of what they face. The same event means different things to different people. The cognitive opportunity lies in the fact that as we don’t all select the same things, we don’t all miss the same things. If we can pool our insights in a creative, enriching way we can thrive in the complex world we live in. The challenge is that people often treat the existence of multiple views as a symptom of a weakness and conflict rather than as an accurate and needed sign of uncertainty.
Higher performance occurs through the combination of different perspectives and supportive, enriching communication.
Social interactions also play a role in shaping our brain. Repeated experiences sculpt the synaptic connections and rewire the brain. Accordingly, our relationships gradually frame the neural circuitry. Being chronically depressed by others or being emotionally nourished and enriched has lifelong impacts. Our mental life is co-created in an interconnected network. The human mind is not located and stored in an individual. Rather, what we have called the individual mind is something that arises continuously in relationships between people.
Supportive, energizing and enabling patterns of interaction have proven to be the most important explanation behind creativity and business success. The quality of action is always constrained/enabled by the quality of the interaction. The lines between the boxes matter more than the boxes! Communication either accelerates or slows down. Communication either creates value or creates waste. Communication either creates energy and inspiration or demeans and demotivates.
Communication forms much more than informs.
What is now needed is to unlearn the reductionist organizing principles that are still the mainstream. Knowledge used to be understood as the internal property of an individual. Today knowledge should be seen as networked communication.
Work is interaction between interdependent people and the network is the amplifier, and at best a supportive and enriching enabler.
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Winning games
December 20, 2011
In most games who wins and who loses is the whole point of playing. It would be hard to imagine a more unpopular outcome in a reality TV series, than an announcement that all the players ended up as winners! It is, of course, beneficial that better-motivated and more enterprising players take the place of the lazy, the incompetent, and the unmotivated.
But zero-sum thinking and the winner-takes-all philosophy do not serve us any more. As there are more losers than winners in our games losers multiply as winning behaviours are replicated in the smaller winners’ circles and losing behaviours are replicated in the bigger losers’ circles.
The biggest problem is that as losers are excluded from the game, they are not allowed to learn. The divide between winners and losers grows constantly. This is why, in the end, the winners have to pay the price of winning in one way or another. The bigger the divide is, the bigger the price that has to be paid. The winners end up having to take care of the losers, or two totally different cultures start to form, as is happening today in many developed countries and cities.
Psychologically, competitive games create shadow games of losers competing at losing.
The games we play have been played under the assumption that the unit of survival is the individual, a team of people or a company. However, the reality is that the unit of survival is the players in the game being played. Following Darwinian rhetoric, the unit of survival is the species in its environment. Who wins and who loses is of minor importance compared to the decay of the (game) environment as a result of the competition.
We need a new concept of games in the creative economy. The players and their contributions in the real world are, and should be, too qualitatively different to be compared quantitatively. Unless all the players are comparable and want the very same thing, there cannot be a genuine contest.
Zero-sum games were the offspring of scarcity. In the era of creativity and abundance, new approaches are desperately needed.
As there simply cannot be pre-existing rules for every conceivable situation that might arise, we have to move beyond seeing the players and the rule-makers as separate parties. Real-life games are too complex to be governed totally from outside. We need participation based on values- and strong ethics as a prerequisite for taking part.
The players have the responsibility not only for adhering to the existing rules, but also for developing the rules further – specifically when the game (environment) decays as a result of the actions of the players.
In creative games the winners would be all those whose participation, comments and contributions were incorporated into the development of the game.
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The future of work – the way I see it
November 13, 2011
Technology does not determine social and organizational change, but it does create new opportunity spaces for social innovations like new employment forms. Partial employment for young unemployed people is becoming much easier than before, and truly global task-based work is becoming possible, perhaps for the first time in history.
The opportunity today is in new relational forms that don’t mimic the governance models of industrial, hierarchical firms. We are already witnessing the rise of very large-scale efforts that create tremendous value in a very new way. Coordinated value in the cases of helping Haiti or building Wikipedia type of platforms is the result of uncoordinated actions by a large number of individuals. People with different goals, different values and different motivations take part and co-create together.
The characteristics of the network economy are different from what we are used to: the industrial production of physical goods was financial capital-intensive, leading to centralized management and manufacturing facilities where you needed to be at during predetermined hours. The industrial era also created the shareholder capitalism we now experience. Having a great idea, or simply wanting to do something, was not enough to get one going. You needed a lot of money. In the network economy, individuals, interacting with each other by utilizing free or low cost social platforms and relatively cheap mobile, smart devices, can now create information products.
The production of information goods requires more human capital than financial capital. It is more about connecting with brains than connecting with money. And the good news is that you are not limited to the local supply. Work on information products does not need to be co-located. The architecture of work does not resemble a factory any more.
This is why decentralized action plays a much more important role today than ever before. The architecture of work is the network and the basic unit of work is not a process or a job role but a task.
Our management and organizational thinking is derived from the era of tangible goods production and high-cost/low-quality communications. These mindsets are not helpful in a world of widely distributed ownership of means of production/smart devices and ubiquitous connectivity.
“A corporation/employer exists to make money and the employee goes to work for the employer to make money.” Almost all economic theories have made the same assumption: the employer – employee relationship is necessary to make work possible.
We have taken that relationship as given. The other taken for granted assumption is that it is the independent employer/manager who exercises freedom of choice in choosing the goals and designing the rules that the members of the organization are to follow. The employees of the organization are not seen autonomous, with a choice of their own, but are seen as rule-following, dependent entities. People are resources.
Dependence is the opposite of taking responsibility. It is getting the daily tasks that are given to you done, or at least out of the way. We are as used to the employer choosing the work objectives as we are used to the teacher choosing the learning objectives. The manager directs the way in which the employee engages with work, and manages the timing and duration of the work. This image of work is easy to grasp because it has been taught at school where the model is the same.
In contrast to the above, digital work has brought about circumstances in which the employee in effect chooses the purpose of work, voluntarily selects the tasks, determines the modes and timing of engagement, and designs the outcomes. The worker here might be said to be largely independent of some other person’s management, but is in effect interdependent. Interdependence here means that the worker is free to choose what tasks to take up, and when to take them up, but is not independent in the sense that she would not need to make the choice.
The interdependent, task-based worker negotiates her work based on her own purposes, not the goals of somebody else, and chooses her fellow workers based on her network, not a given organization. The aim is to do meaningful things with meaningful people utilizing networks and voluntary participation.
It is not the corporation that is in the center, but the intentions and choices of individuals. This view of work focuses attention on the way ordinary, everyday work-tasks enrich life and perpetually create the future through continuous learning.
The architecture of work is not the structure of a corporation, but the structure of the IT-network. The organization is not a given hierarchy, but an ongoing process of organizing. The basis of work is not financial self-interest, but people’s different and yet, complementary expectations of the future, conditioned by their accounts of the past and developed skills.
The factory logic of mass production forced people to come to where the work is. The crowdsourcing logic of mass communication makes it possible to distribute work to where the people are, no matter where on the globe they may be.
Knowledge work is not about jobs or job roles but about tasks. Most importantly knowledge work can, if we want, be human-centric. Through mobile smart devices and ubiquitous connectivity, we can create new opportunities and a better future for millions of unemployed people.
It is possible!
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Thank you Ralph Stacey, Doug Griffin and Yochai Benkler
Networks and the value of what is public
March 28, 2010
According to simplistic management thinking stimulus and response processes control human behavior: you get what you measure; you get what you reward. This means that people are understood as having no real connection to what they are actually doing.
A somewhat more modern way of thinking states that human beings actively create meaning in life through attempts to understand their own experiences. Intrinsic motivation – peoples’ relation to what they do, the meaning of work – replaces extrinsic rewards. People connect with what they are actually doing.
A new third way of thinking is enfolding. Since we cannot experience everything ourselves, other people become the co-creators of information, experience and meaning. Relations, connecting with others, create a new, networked way of knowing and learning.
Knowing as connecting
As a result, people can now connect both with what they do and with their peers, their network, making them much more knowledgeable than their colleagues who lack these capabilities.
Information is, paradoxically, simultaneously both social and personal, with multiple, variable goals and constantly negotiated premises. Information creators, publishers and curators, are not the traditional verified experts; rather, information is created by a broad collection of reflexive practitioners sharing in the construction and ongoing evolution of a given field.
Information becomes a process of continuous facilitation and networked negotiation. Information networks are a valuable, shared resource making the interactive movement of thought possible.
From valuing scarcity to valuing abundance
These networks are the new commons. Sociologists call such shared resources public goods. A private good is one that the owners can exclude others from using. Private has been valuable and public without much value during the era of scarcity economics. This is now changing in a dramatic way, creating the confusion we are in the midst of today.
On the new commons, people with many ties become better informed and have more signaling power, while those outside and with few ties may be left behind. This may be the new digital divide.
Network inequality creates and reinforces inequality of opportunity.
In the age of abundance economics, public is much more valuable than private.
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From who I am to what I do, and back
February 7, 2010
It is astonishing to realize that until quite recently, most human beings lacked a concept that is so obvious to all of us: earning money. The vast majority of people lived on the land. A peasant worked all day. He probably had a little money, but that was not what he worked for. He worked because life was work and work was life. It was as simple as that. A peasant did not have a job for which he was paid. Nor could he quit his work and take another position that was more highly paid, if one were offered. People were tied to the land they were born on. As they worked for the land, they worked for themselves and for the landowner, if they did not own the land.
The situation was fairly similar from the landowner’s point of view. The landowners also worked for the land, not for the money. The expectation was not to lose any of the land. The means they had in their possession to increase their resources were limited: cultivate the land, have children, marry in return for increases in the amount of land they owned, or fight other land owners whose land they wanted.
The explanation of Aristotle
Aristotle had interesting ideas to explain what was going on. According to him, the basic economic activities are domestic. This involved the production and consumption of all the things human beings needed in order to live. This is what Aristotle called “Oikos”, meaning a house. It was about house-holding, a kind of an entrepreneurial calling for the wellbeing of the family. “Oikos” together with another word “Nomos”, roughly meaning laws, are the ancient Greek backgrounds to our concept of “Economy”.
Aristotle makes a distinction between two kinds of value added – one that we get from nature’s resources to sustain our lives, and another, which we create to facilitate our interpersonal relationships and trade. The value added in the latter does not begin from nature, but from the promises we make to one another.
The first, for Aristotle, includes things like wood, animals, tools, stones for houses, yarn for weaving etc., and the second is – money. The interesting thing was that the essence of money was to him a promise!
The economy based on promises
There are limits to what we can get from nature, but, according to Aristotle, since money is promises, there is no end to the amount of money we can aspire to collect. What is special about money, Aristotle says, is, that its value is set by agreement. It has no intrinsic use value, only an exchange value, and it keeps that value only as long as people agree to accept it in payment. It is a convention of trust.
Therefore it is understandable that the system of trust always seeks a limit until it reaches a point where promises are not believed any more. This is the point at which fear replaces trust. After that limit is reached, the result is a rapid, sudden and deep drop, a (credit) crunch. The whole house of cards crashes, because it is made of promises that don’t have any value any more. The hot air turns into – just air.
The change that has taken place in a fairly short period of time in history has been remarkable. Money was invisible then, today it is omnipresent. Work existed then as it exists now, but the idea of work being life and life being work has disappeared. We mostly work to earn a living. We even dream of the day when we don’t need to work any more, in order to have time to really live. Work and life, instead of being inseparable parts of our lives, have become conflicting, almost contradictory ideas.
Separating work and life
Adam Smith, in the Wealth of Nations, which was published in 1776, was one of the first to write about what we are experiencing now. He gave form to a new phenomenon: the labour market. In a sense, before he named it and before he explained how it worked, it did not exist. In a situation where life is work and work is life, a man cannot separate his work from himself. Adam Smith claimed that labour is something separate from the worker. This was the point at which work and life separated. It was no longer about who I am, but what I do. Labour was the new resource of the industrial age. As a resource, labour could now be bought and sold like any other resource. In fact, everything has been for sale since then. The emphasis of the economy shifted to trade, buying and selling, and away from (domestic) work. The sign of efficiency was now profit, which was measured in money. Thus the modern world came about.
This led to the situation we are in at present: buying and selling are no longer confined to resources, to trade. The world economy mostly consists of buying and selling money, buying and selling promises according to Aristotle. We believe that this is the natural order of things. Perhaps it is. But we should not forget that only about two centuries ago, it was not thought to be the natural order. It would be interesting to know what the situation we are in at the moment will look like two centuries from now.
The time after labour markets
Adam Smith is not helpful any more. We know now that the inputs of knowledge workers cannot be understood as generic labour. It matters more and more who does what, when, and with whom. The concept of a job role is giving way to tasks as the unit of value creation. Labour markets are turning into task markets. We also know that in the era of creativity and knowledge intensive work, the peasants are also the landowners. What is missing is a new theory explaining what is going on. Perhaps the future is going to look a bit like the past, not our industrial past, but the time before that. Perhaps the theory of social media and the Internet comes from ancient Greece. Perhaps Yochai Benkler is the new Adam Smith. Anyway, in social media, it is not what we do, but who we are.
Life and work have come together again.
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Thank you Charles van Doren, Stephen B Young and Douglas @rushkoff
The agile organization
January 14, 2010
The management approach to getting something done is to create an organization. If something new and different needs to be done, a new and different kind of organizational form needs to be put into effect. Changing the lines of accountability and reporting is the epitome of change in firms. When a new manager enters the picture, the organizational outline is very often changed into a “new” organization. But does changing the organization really change what is done? Does the change actually change anything?
An organization is metaphorically a picture of walls defining who is inside and who is outside a particular box. Who is included and who is excluded. Who we are and who they are. This way of thinking was fine in repetitive work where it was relatively easy to define what needed to be done and by whom as a definition of the quantity of labour and quality of capabilities. As a result, communication design created two things: the process chart and reporting lines.
In creative, knowledge based work it is increasingly difficult to know the best mix of capabilities and tasks in advance. In many firms reporting routines are the least important part of communication. Much more flexibility than the process maps allow is needed. Interdependence between peers involves, almost by default, crossing boundaries. The walls seem to be in the wrong position or in the way making work harder to do. What then is the use of the organizational theatre when it is literally impossible to define the “organization” before we actually do something?
What if the organization really should be an ongoing process of emergent self-organizing? Instead of thinking about the organization let’s think about organizing. If we take this view we don’t think about walls but we think about what we do and how groups are formed around what is actually going on or what should be going on. The role of management is then to define tasks and outcomes but not to say who does what. The new task for managers is to make possible a very easy and very fast emergent formation of groups and to make it as easy as possible for the best contributions from the whole network to find the applicable tasks, without knowing beforehand who knows.
The focal point in organizing is not the organizational entity one belongs to, or the manager one reports to, but the reason that brings people together. What activities and tasks unite us? What is the cause for interdependence and group formation? My friend Jyri Engeström calls this a social object. My understanding of “social object” as an idea is more derived from the work of George Herbert Mead and my friend and mentor Doug Griffin. Because of this different background, a social object, in my vocabulary, is more often called a context or even an attractor. Although the word attractor has a different and very specific meaning in the sciences of complexity, I like the picture of an organization without walls, rather like magnetic fields defined by gradually fading rings of attraction.
These contexts create transparent, permeable boundaries between them, not walls. Instead of the topology or organizational boxes that are often the visual representation of work, the architecture of work is a live social graph of interdependence and accountability. Our thinking about organizations is very much based on the old expensive and low-quality communication. The reality today is very different. Communication as the key driver in organizing is both high-quality and cheap. One of the biggest promises of social media is easy and efficient group formation! It is just our thinking that is in the way of bringing down the walls.
