I have found the Aspen Institute’s paper on The Future of Work to resonate quite strongly with some of my own views on the structure of organization, how work is done, and how we manage it. The foundational work in this paper describes a changing philosophy towards what constitutes work and the relationship between workers, companies and governments. There are many topics in this paper to discuss but in this post, I’m going to focus particularly on the nature of work relationships.
To make a point, prognosticating the future is always guesswork weighted with reasonable logic and foundations of evidence. But, keep in mind, some ideas and examples do not necessary mean that it is the trend; just the possibility. Still, I would not be talking about it if I did not have good reason to vest in those ideas and possibilities. Per their description, The Aspen Institute focuses on fostering values-based leadership and acts as a balanced venue for discussing issues; in this case, the issue begins with future patterns of how we do work.
The participants in the roundtable that produced this paper range from leading thinkers in academia, business and government including organizations such as Albright Capital Management, Deloitte, Goizueta Business School, IBM, Infosys, InnoCentive, Insight Venture Partners, ManPower, Microsoft, McKinsey, Sloan School of Management, Thomson-Reuters and even the President of the Romanian Senate. The author of the report is David Bollier (www.bollier.org), an author, activist, blogger and consultant who has served as rapporteur for Aspen Institute Communications and Society conferences for more than 20 years.
To begin, a particularly fantastic insight in this report (on page 17), challenges Nobel Laureate Economist Ronald Coase’s theory, “The Nature of the Firm”, as below:
Coase’s celebrated “transaction cost” theory of the firm stated that the economic rationale for forming a business enterprise is its ability to manage employees and production more efficiently than by contracting these functions out to the marketplace. A firm can minimize transaction costs, which are otherwise higher if one must buy those goods and services in the marketplace.
But now, if online markets can radically reduce transaction costs, over and above what a firm can achieve, is the economic justification for the business firm disappearing? Does the firm still need to exist?
This insight into transaction cost may become more apparent when we start considering where these costs emerge from the nature of how people are employed. Michael Chui, Senior Fellow with McKinsey described characteristics that differentiate the future possibility from the typical design of the workplace in the 20th century: the “Sloan Age”—referring to the model of scientific management advocated by Alfred P Sloan, former Chairman of General Motors. [Looking back through the literature, you may also recognize it from the management classic, William Whyte’s The Organization Man back first released in 1957--with a reprint linked here on Amazon.]
According to the report, Mr. Chui described this philosophy of work in the Sloan Age as:
“The best way to harness human talent is through full-time, exclusive employment relationships where people are paid for the amount of time they spend at a common location. They should be organized in stable hierarchies where they are evaluated primarily through the judgment of their superiors, and what and how they do their jobs is prescribed.”
I’ve labeled some of the key phrases below:
- How often - “Full-time, exclusive employment relationship.”
- What for - “Paid for the amount of time [spent at work]”
- Where – “A common location”
- For whom – “Organized in stable hierarchies”
- By whom – “Evaluated primarily through judgment of their superiors.”
- How – “What and how they do their jobs is prescribed”
It may be surprising to some how things could be any different from what is described above—regardless of whether one likes it or not. The Aspen Institute paper certainly gives a lot of examples of projects or scenarios that differ from this description. For example, the paper suggests crowdsourcing project work to a large number of people either employees or Internet users allow them to contribute without necessarily getting paid. Crowdsourcing definitely works. However, it may not work for everything. I’m not sure crowdsourcing can even be free for everything—it is pragmatic and specific to both people’s interests and shared values—and some such projects need to pay people as well.
Another example is the focus on moving off from permanent fixed physical locations as places of work. I’d be the last one to argue that remote work is not viable. I also readily agree there are many examples of purely virtual organizations with no physical offices entirely. However, these are also pragmatic based on the type and model of business. Many other businesses will always continue to need physical presences, even those with a large creative workforce. There are always scenarios when permanent venues are a good thing: environmental set up, expensive or large physical equipment, venues near customers, etc.
Furthermore, some of these are very new ideas which have yet to last decades of trial. We often need that degree of stability to agree that new conditions are relevant, practical and viable as a business model.
I however think there is plenty of evidence in another area which has existed arguably longer than the “Sloan Age” worker: the freelance worker. Before there were guilds (Medieval Age precursors to organizations), there were independent workers who ran their own businesses and worked for different customers or masters. What we are seeing today is a rebirth of that notion of freelancing because the costs of doing business this way becoming much more affordable to a larger population than ever before.
We still realize that there are significant benefits of working in groups and organizations, but many now realize that the pendulum swung too far to force work behavior to fit into the limitations once ascribed by the lack of communications, geographical location limitations, growing employee bases, diversity of job roles, and on measuring individual contributions to completed work. The forces of automation, communications, globalization, and competition have created practical solutions to minimize or eliminate many of these.
In the report, Thomas W. Malone, Director of the MIT Center for Collective Intelligence, suggests what is happening in a rebound from that pendulum swing:
“I think we are in the early stages of an increase in human freedom in business that may, in the long run, be as important a change for business as the change to democracy was for governments. This is happening because cheap communication lets more people have enough information that they can make sensible decisions for themselves instead of just following orders from people above them in the hierarchy. And that means we can have the economic benefits of large-scale enterprises, such as efficiency and scale, and at the same time have the human benefits of small scale, such as motivation, creativity and flexibility.”
Regardless of how much easier man has become, there are still many elements of freelance work that makes it appealing. The freedom or flexibility that it affords can also come with distinct pains like looking for work on an ongoing basis, the overhead of organizing and running one’s own business. For all the arguments of the pain of bureaucracy within organizations, what we sometimes forget the fact of how much this kind of work is handled by other parts of the business. We need to find a good balance point.
Let’s take a look at the qualities of working in the Sloan Age, the freelance model, and one possibility of what work of the future may look like. Figure 1 is my view of the two models as possible extremes with a blended concept in the middle. My description of freelancing here is the extreme with individuals doing work entirely for themselves and not into other organizational constructs.
Figure 1. Comparing Sloan Age, Freelancing and Flexible work models (Click to expand to a larger... [+]
Let’s take a look at the qualities of working in the Sloan Age, the freelance model, and one possibility of what work of the future may look like. Figure 1 is my view of the two models as possible extremes with a blended concept in the middle. My description of freelancing here is the extreme with individuals doing work entirely for themselves and not into other organizational constructs.
This middle view that I’ve loosely termed as flexible work accounts for differences from the Sloan Age model as described in The Aspen Institute paper. In some cases, it takes an aspect from either side as identified by the solid color from the side it represents; for example, a focus on outcomes (from freelancing) rather than on time spent; or benefits still offered by a parent organization versus completely negotiating and managing one’s own benefit plan.
Then there are aspects that are somewhere in between; it is neither quite the same the original from either side but some blend of the two. This is an attempt to negotiate the advantages of each. Hopefully, each of these aspects is fairly self-explanatory.
This is not an attempt to prove this model in any way, but an offer of ideas to discuss and debate. Unlike the production method of the Sloan Age, I also consider another aspect of this new work environment as employing iterative methods to continually improve ideas, rather than focus only on fixed ideas.
I’ll leave you with these parting thoughts, sourced from the report:
Aside from IBM and Amazon, Michel Chui … is skeptical of the ability of large firms to change their business models.
Robert Morris, Vice President of Services Research for IBM Research, agreed that “transformation is the hardest thing.” It can occur through external disruptions or through induced internal disruptions, but the latter are quite difficult to pull off. “It’s all about talent management, and it’s very hard to transform talent,” he said.
As described by Shami Khorana, President of HCL America, “Everything in the company has to revolve around empowerment and transparency.” Management must strive to “create value for the employee,” so that the employee will be motivated to interact with customers (both “internal customers” within the company and conventional customers) in honest, effective ways. The point is to improve the interface between the customer and the company, the so-called “value zone.”
