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A manager recently voiced his concerns: “Most employees prefer being told what to do. They are willing to accept being treated like children in exchange for reduced stress. They are also willing to obey authority in exchange for job security.” That is the way we have seen it: managers inspire, motivate, and control employees, who need to be inspired, motivated, and controlled. These dynamics create the system of management and justify its continuation.

If we want to meet the challenges of the post-industrial world, this relationship needs to change. The workers changing their role is often seen as a matter of the extent to which the managers are willing to allow it and give up responsibility. In reality it is as much a matter of how much the workers are willing to develop their (management) capacity and take more and wider responsibility.

The dysfunctional relationship between managers and employees creates a self-fulfilling prophecy and a systemic failure in creative, knowledge-based work. What is tragic is that neither side normally understands the predictability of what is going on. The pattern is a mutually reinforcing self-destructive process that manifests itself as a steady decline in the authority of management and productivity of work.

A few researchers have started to dispute the assumption that the present system of management is a fact of life that will always be with us. It may be time for us to question whether the recent problems created by bad management are isolated and should be tolerated. Or to ask whether the fault is in the system itself and not in individual managers?

Luckily, management theory and practice are slowly starting to catch up with the dramatic changes brought about by the loosely coupled, modular nature of creative work and the ideals of social business.

A social business does not behave in the way our dominant management thinking assumes. What is it, then, that has changed?

Organizations are always assemblies of interacting people. The reason for an organization to exist is to simplify, support, and enrich interaction.

At present, there are three types of organizational cultures depending on the type of management and the alternative mechanisms for the coordination of tasks. The different task interdependencies accordingly place different and increasing burdens on our communication practices .

I call these the administrative culture, the industrial culture and the creative, social culture.

G18The administrative culture, which is found in most governmental organizations is about function-specific independent activities. Two functions or tasks are independent if it is believed that they don’t affect each other. The most important communication exists between the employer and the employee, the manager and the worker. The principle is that the execution of two independent tasks does not require communication between the tasks. The architecture consists of black boxes that are not coupled directly, but in an indirect way by higher-level managers, who coordinate the work. Work as interaction is mainly communication between hierarchical levels.

The industrial culture of process-based organizations is about dependent and sequential activities. Manufacturing work is about dependent tasks. Being dependent means that the output of one task is the input of another. The reverse cannot normally take place. In sequential dependence, those performing the following task must comply with the constraints imposed by the execution of the preceding task. Since the process architecture is typically quite clear, management coordination is mostly about measuring and controlling whether the execution conforms to the planned requirements. The architecture consists of tightly coupled tasks and predetermined, repeating activities. Work as interaction is a sequential process with one-way signals.

A creative, social culture is different. It is about loose couplings and modularity, about interdependent people and interdependent tasks. Two people/tasks are interdependent if they affect each another mutually and in parallel. Interdependent tasks call for peer-level responsiveness and coordination by mutual adjustments, not coordination by an outside party such as a manager.

Most of the information that is relevant will be discovered and created during the execution of the task, not before. As a result it is not always possible for a manager and a worker to agree on a coherent approach in advance. Nor is it normally possible to follow a predetermined process map.

The basic unit of corporate information in creative, social work is not content in the form of documents but interaction in the form of conversations. Knowledge is perpetually constructed in interaction. Work as interaction is complex, situational communication between loosely connected nodes of the network! The structure of work resembles the structure of Internet.

The three cultures and corresponding architectures differ in the degree to which their components are loosely or tightly coupled. Coupling is a measure of the degree to which communication between the components is fixed or not. In most creative work, and always in a social business, any node in the network should be able to communicate with any other node on the basis of contextual interdependence and creative participative engagement.

As organizations want to be more creative and social, the focus of management theory should shift towards understanding participative, self-organizing responsibility and the equality of peers. It is a systemic change, much more than just kicking out the bad managers and inviting new, better managers in. It is not about hierarchies vs. networks, but about how all people want to be present and how all people want to communicate in a way that was earlier reserved only for the people we called managers.

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Eric Brynjolfsson video on TED. Steven Johnson video on peer networks. Gary Hamel interview.

Many organizations are trying to ease into the social business environment. They take parts of the agenda in piecemeal fashion following an “easy steps” logic. Often this, in the end, means some additional communication tools inside the organization, or additional content through some additional new channels for customers.

Nothing really changes what comes to the way people work together.

The way in which companies organize themselves and define their boundaries has essentially been determined by the way in which communication between people is planned and access to information is designed. The classic organizational structure was based on the assumption that a manager or worker could have rich interaction and exchange of information only with a limited number of predetermined people.

Our mainstream management theories are derived from the era of the production of tangible goods and high-cost/low-quality communications. These mind-sets are not only unhelpful, but wrong in a world of information products and ubiquitous, low-cost/high-quality connectivity.

New communication technologies have always had a strong impact on industries and the logistics around production. But this time, with information products, the societal changes are even bigger than before. The Internet is the first communication environment that decentralizes the financial capital requirements of production. Much of the capital is not only distributed, but largely owned by the workers, the individuals, who themselves own the smart devices, the machines of work.

Strange flowers 3The factory logic of mass production forced people to come to where the machines were. In knowledge work, the machines are where the people are. The logic of ubiquitous communication makes it possible for the first time to distribute work to where the willing people are, no matter where on the globe they may be. Knowledge work is not about jobs, but about tasks and interdependence between people. You don’t need to be present in a factory, or an office, but you need to connect with, and be present for other people.

Work is communication and cooperation, and there are so many new ways to do that.

We are living in a world that is built on the centrality of information and radically distributed contributions. As a result, the organization is not a given entity or structure, but an ongoing process of organizing. The accumulating failures of attempts at organizational resilience can be traced to the fundamental but mistaken assumption that organizations are vertical and/or horizontal arrangements, that guide and, as a consequence, limit interaction.

Information is the power plant that has the ability to change the organization. When information is transparent, people can organize effectively around changes and differences, around customers and new opportunities. Different people see different things and new interdependencies are created, thus changing the organization.  The easier the access that people have to one another and to information is, the more possibilities there are.

Rather than thinking of organization as an imposed structure, plan or design, organization arises from the interactions of interdependent individuals who need to come together. Sometimes people stay together for a long time, sometimes for a very, very short time. This is because any higher-value activity involves complementary and parallel contributions from more than one person, team, function, or a firm.

The focus of industrial management was on division of labor and the design of vertical/horizontal communication channels. The focus should now be on cooperation and emergent interaction based on transparency, interdependence and responsiveness.

What comes to the productivity of work, these may be the most important points on the social business agenda. The really big objective of social business is to reconfigure agency in a way that brings relationships into the center.

Success today is increasingly a result from skillful participation: it is about how we are present and how we communicate. Through new technologies, applications and ubiquitous connectivity, we have totally new opportunities for participation and communication – potentially changing the way we work together.

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More: the trend from routine to nonroutine work.

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Many people say that open source software developers have the most efficient ecosystems for learning that have ever existed. What is it, then, that is so special about the way developers do things? Is there something that could act as a model for the future of work, or the future of education?

What takes place in open source projects is typically not the result of choices made by a few powerful people that others implement. Instead, what emerges is the consequence of the choices of all involved in the whole interconnected network, “the connective“, as Stowe Boyd puts it. What happens does not follow a plan or a design. It is about self-organization.

The problem is that we believe that the unit of work is the independent individual. Self-organization is then thought to mean that individuals organize themselves without the direction of managers. People think that it is a form of empowerment, or a do-whatever-you-like environment, in which anybody can choose freely what to do. But connected, interdependent people can never simply do what they like. If this happened, they would very soon be excluded. Interdependence means that individuals constrain and enable each other all the time. Cooperating individuals are not independent.

Inside companies the logic is thought to be different. According to the present approach to management, organizational outcomes are first chosen by a few top executives and then implemented by the rest. Here, planning and enactment of the plans are two separate domains that follow a linear causality from plans to actions. From the perspective of open source development, organizational outcomes emerge in a way that is never just determined by a few people, but arises in the ongoing local interaction of all the people taking part. For example GitHub “encourages individuals to fix things and own those fixes just as much as they own the projects they start”.

Here, emergence means that there is no linear causal link from a plan to the execution of the plan. What emerges is, paradoxically, predictable and unpredictable, knowable and unknowable at the same time. This does not mean dismissing planning as pointless, but means that the long-term future always contains surprises.

Emergence is often understood as things which just happen and there is nothing we can do about it. But emergence means the exact opposite. The patterns that emerge do so precisely because of what everybody is doing, and not doing. It is what many, many local interactions produce. This is what self-organization means. Each of us is forming plans and making decisions about our next steps all the time. “What each of us does affects others and what they do affects each of us.”

No one can step outside this interaction to design interaction, because designs and plans exist only in the ways people make sense of them and take them up in their local situations.

Learning organizations cannot be understood through spatial metaphors such as process maps or organizational charts. We need to move towards temporality to understand what is happening in time. An organization is not a whole consisting of parts. An organization is a pattern in time. Sometimes these patterns get stuck, or they are repetitive and dull; sometimes they are rich, inspiring, and full of energy. What we can learn from the open source ecosystems is that developing things always means developing people. “All learning is open and public, leaving tracks that others can follow.” Doing and learning then mean the same thing.

The biggest change in thinking that is now needed is that the unit of work is not the independent individual, but interdependent people in interaction.

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Thank you David Weinberger, Ken Gergen, Ralph Stacey and Doug Griffin

More on the subject: the GitHub generation, Sugata Mitra. Video: “Knowledge in a MOOC” Steve Denning on complexity. The mundanity of excellence.

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.

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.

KonserttiThe 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.

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.

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, creativity and purposes of their own.

This, in the end, is what makes people different from machines.

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Background:

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.

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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:

  1. informed free choice, rather than compliance, is the basis for decisions
  2. active participation, rather than passively accepting instructions, is the basis of growth and development
  3. work activities are carried out within a framework of personal responsibility and goals for self-direction rather than direction from outside
  4. 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
  5. one is responsible for one’s own actions rather than being responsible to someone else
  6. a worker is engaging in complex, responsive activities with others in contrast with engaging in closed repetitions of the same activity
  7. the network, rather than offices or organizational hierarchies, is the main architecture of work
  8. 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
  9. 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.
  10. 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

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The impact of technology on industrial jobs.

Redesigning work

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.

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Every young person is an entrepreneur now” and a short video presentation by Peter Senge.

All of us have at some point in our lives experienced performance appraisals where we as individuals were evaluated. This approach to judgment was the same in school and at work: individuals separated from other individuals.

As a result of recent developments in psychology and sociology, we are now leaving behind the preoccupation with the autonomous individual and beginning to appreciate the importance of relational processes and interdependence. The way we perceive organizations is changing accordingly. Rather than an organization being though of as an imposed structure of separate, autonomous functions, today’s organization arises from the interactions of individuals who need to come together. An organization is a continuous process of organizing.

This shift in the way we see organizations changes the way we perceive competitive advantages. The new competitive edge comes from openness and interactive capacity: the ability to participate and connect, as and when needed.

Live organizations and open, live information

Similarly produced products with the same product features are used by different customers in different ways. Just because a product is a commodity doesn’t mean that customers can’t be diverse in their needs and the way they use the product.

Companies used to have no mechanisms for connecting with the end users in order to understand and influence this. Social media and mobile technologies are now changing this.

Organizations are creative, responsive processes of communication. All creative, responsive processes have the capacity to constantly self-organize and re-organize. Change is not a problem or anomaly. Solutions are always temporary and contextual.

In this view, it is information that is the energy of organizing. Or, as Gregory Bateson wrote, “information is a difference, which makes a difference”. When we see information as a power plant that has the ability to organize and change the organization, we realize the power of openness. When information is transparent to everybody, people can organize effectively around changes and differences, around customers, products and new technologies.

When information is transparent, different people see different things and new interdependencies are created, thus changing the organization.  The easier the access that people have to one another and to (different) information is, the more possibilities there are.  What we have still not understood is that people need to have access to information streams that no one could predict they would want to know about. Even they themselves did not know they needed it – before they needed it. Thus information architectures can never be fully planned in advance.

Engagement and participation

No one person or function can meet today’s challenges alone. We need a community of people who willingly participate and provide their insights to address increasingly interdependent issues. Collaboration is necessary because one person no longer has the answer. Answers reside in the interaction, between all of us.

Therefore the challenges of today are engagement and reducing the transaction costs of participation. Widening the circle of involvement means expanding who gets to participate, comment and contribute. It is about inviting and including relevant, new and different voices.

The unfortunate misunderstanding is that engaging people requires managers to let go. As managers contemplate widening the circle of involvement they sometimes believe that it means to have less ability to provide input based on their knowledge and experience. Paradoxically, engaging more people requires more from managers than the current management paradigm.

Instead of being responsible for identifying both the problem and the solution, they are now responsible for identifying the problem and identifying the other people whose voices need to be heard. Who else needs to be here? How do I invite people who do not report to me? How do I invite customers and other people from outside our organization?

Success today is increasingly the result of skilful management of participation: who is included and who is not. Who is needlessly excluded from the information streams and the subsequent interaction?

A common misunderstanding is that productivity will suffer if larger numbers of people are involved. The new social platforms and interaction technologies have dramatically reduced the cost of communication and participation. Temporary, flash communities can be formed to solve a problem or to tackle an opportunity more easily, more cheaply and faster than ever before – if there is openness and people are invited and if people want to engage. It is about distributing the intellectual tasks at hand and integrating the contributions of many resulting in creative learning.

Creative learning is the new productivity. In creative, interactive work, productivity cannot be measured in quantitative terms or as a difference between input and output, but as the speed and quality of learning.

The management task is not to understand people better, but to understand better what happens, and can happen between people. Our world is co-created in relations.

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