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Are you ready for the era of decentralized work?

more stories like thisIn the future, high-tech and knowledge-based businesses will be run as loose hierarchies or self-managed democracies. Skilled workers will organize, disband, and regroup around different assembly projects, much as film and construction workers do today. Even the systems of cars will be designed by competing teams of freelancers, giving automakers a choice of, say, fuel cells or solar cells.

Such is the vision of organization theorist Thomas W. Malone, a professor at MIT’s Sloan School of Management. In a book, “The Future of Work,” to be published next month, Malone synthesizes two decades of research on how information technologies and cheap communications are shrinking, flattening, and democratizing organizations, and changing the nature of work itself.

“The implications for business are much more profound and far-reaching than most people have realized,” Malone wrote. “We are, it seems, on the verge of a new world of work, in which many organizations will no longer have a center at all — or, more precisely, in which they’ll have almost as many ‘centers’ as they have people.” In response, he suggested, managers will need to shift from a command-and-control style to a coordinate-and-cultivate mode.

Malone, who was codirector of a five-year MIT research initiative called “Inventing the Organizations of the 21st Century,” predicted as far back as 1987 — before the Internet had entered the popular lexicon — that goods and services would be bought and sold electronically, intelligent software agents would be applied to commercial use, and many business activities would be outsourced, forcing ordinary workers to become nimbler and more entrepreneurial.

While the liberating features of new technologies were heralded and their dot-com practitioners lionized during the late 1990s, the popping of the Internet bubble temporarily tarnished the idea of technology loosening corporate hierarchies and unleashing the creativity of rank-and-file employees. (Remember those 3 a.m. foosball games?)

Malone, however, believes those notions were not so much wrong as premature. “Just as people overestimated the potential of the technology during the upturn of the boom,” he said in an interview, “so they underestimated the potential of the technology during the bust.”

The current recovery may be a good time to take stock of how much technology already has transformed business. Malone pointed to Linux, the open source operating system designed by programmers around the world, as a model for future development projects. “The thing that interests me most about Linux is not that it’s open source, or even that it’s free,” he said. “It’s the really decentralized structure they have.”

Malone also applauded eBay Inc., the technology-enabled auction house, for empowering buyers and sellers in a market environment. And he noted that some companies, such as Spanish manufacturer Mondragon Cooperative Corp., have become miniature democracies where workers elect directors and vote on other issues. But he conceded such models are in their early stages and won’t always work where economies of scale or rapid decision-making is required.

Still, the decentralizing trend is gaining momentum, as technologies introduce efficiencies that disrupt existing business operations. “The real story is what technology-augmented decentralization is doing to business and society,” said Lotus Notes creator Ray Ozzie, now the founder and chief executive of Groove Networks Inc. in Beverly. “Fundamentally, the technology is being used to reduce the cost of coordination to get a problem solved.”

Ozzie endorsed Malone’s premise, citing voice-over-Internet technology playing havoc with the business model of long-distance telephone carriers, and Groove’s own peer-to-peer software that cuts through organizational barriers to let individuals create a “meeting place” with customers and collaborators on their personal computers.

All of these changes will spur new opportunities. And Malone believes one of them will be enabling individuals to bring a broader range of values to the business world through their choices of work.

“As in any time of dramatic change, small choices will often have big effects. . .” Malone wrote. “You can — if you choose — use your work to help create a world that is not just richer, but better.”

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WORK, says a guru quoted in one of these books, is our “negotiation with death”. That’s putting it a bit strong, but work is clearly something that lots of people love to hate. Yet, in the rich world, work has changed dramatically in the past two or three decades, in ways that have got rid of some of its more disagreeable sides, and made what is left more interesting.

The key changes have been the fading of routine manual work and the rise of jobs that make use of networked computers. Many of the more tedious jobs that most people did a century ago—factory work, farm labouring, mining—are almost gone. Robots, not human beings, now mainly man the production line, which symbolised the more oppressive aspects of the machine age.

Instead, as Frank Levy and Richard Murnane point out, jobs have bifurcated: there has been some growth in the simpler service jobs—flipping hamburgers and cleaning offices, say—but a much greater growth of sophisticated work in management, teaching, medicine, engineering and the law. Many of the jobs that have gone were routine clerical tasks, which have been either taken over by computers or outsourced abroad—or both. The networked computer allows such tasks to be structured in a way so they can be done by folk far away from the final customer.

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But who’s complaining?
May 19th 2004The jobs that remain, say the two economists, are often ones that require complex communication, conveying an interpretation of information rather than just the facts, and making difficult judgments in unpredictable circumstances. Computers, which can cope with simple rule-based jobs, find it far harder to diagnose a sick patient or design a new aircraft. But, by taking over the simple part of many jobs, they improve the productivity of skilled human beings doing complicated things.

Countries must therefore educate their citizens in ways that fit them for such complexities. The trend in pay points the same way: in 1979, a 30-year-old man with a bachelor’s degree averaged 17% more than one with a high-school diploma; today, the gap is 50%.

Networked communications are changing the organisations that people work in too. Thomas Malone, an organisational theorist, describes the way that they allow “dramatically more decentralised ways of organising work [to] become at once possible and desirable”. He is impressed by the way Nike outsources all its manufacturing to other companies; and by the example of eBay, from whose auctions perhaps 150,000 people make a living. Both are instances of the new sort of shapes that organisational life may take. He also argues for the emergence of internal markets and of “democracies”—in which decisions are based on the collective wisdom of the many rather than the top-down instructions of a few.

Companies where employees are given more control over their working conditions seem to generate better returns than those that give their people less responsibility. One of the great benefits of information technology in the workplace, says Mr Malone, is to allow workers to make more choices. That in turn will call for different managerial techniques: not so much command-and-control as “co-ordinate-and-cultivate”. Managers must learn to run loose hierarchies in which much of the decision-making power is pushed down the organisation. If they set clear standards and guidelines, then teams of people can undertake a task without centralised control.

Complex communications and loose hierarchies sound much more fun than life on the traditional production line. Russell Muirhead, searching for a new ethic of work, often seems to assume that work is inherently disagreeable and tedious. He wants it to be fulfilling—but not too fulfilling, lest it take over people’s lives and squeeze out other interests. He concludes that “the dignity of work comes from the way we show, through it, a determination to endure what is difficult for the sake of discharging our responsibilities and contributing to society.” But that surely is too bleak a view. People work for money, for company and for some sense of achievement.

Indeed, even in a badly run organisation, work can have a certain melancholy pleasure. Take the blistering portrait of life in a big British retail bank (NatWest, now part of the Royal Bank of Scotland, pseudonymously appearing as British Armstrong) by John Weeks, an American professor of organisational behaviour. He found that the bank’s staff always described its corporate culture negatively. It was said to be too bureaucratic, too rules-driven, too introverted, too centralised.

He describes various ways used to grouse without appearing too obvious, such as “deniable deprecations”, used to complain about everything from the coffee to career advancement. But the moaning was a ritual. Complaining brought no gains, but, if done in a socially acceptable way, created cohesion among groups of staff. In that respect, networked computers have changed nothing—apart from giving badly managed workers something new to whinge about.