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2 THE FUTURE OF W ORKThomas W. Malone

PatrickJ McGovernProfessor of Mana gementMIT SloanSchool of Mana gementCambridge MA U.S.A.

Imagine organizations where bosses give employees eno rmous freedom to decidewh at to do and wh en to do it. Imag ine that wo rkers are allow ed to elect their ownbosses and vote directly on important com pany decisions. Imagine organizations w heremost workers aren't employees at all, but electronically connected freelancers livingwh ereve r they want to. An d imagin e that all this freedom in business lets peop le getmore of whatever they really want in lifemoney, interesting work, helping otherpeo ple, or time with their families. The se things are already happe ning today and ifwe choosethey can happen even more in the future.

W e are now in the early stages of a profound increase in hum an freedom in businessthat may, in the long run, be as important for businesses as the change to democracieswa s for gove rnm ents. Th e key enabler for this rema rkable chang e is informationtechnology. By reducing the costs of comm unication, these technologies now m ake itpossib le for ma ny mo re peo ple, even in huge organiza tions, to have the information theyneed to mak e decisions for them selv es, instead of jus t following orders from abov e.And so, for the first time in human history, we can now have the best of bothworldsthe economic and scale efficiencies of large organizations, and the humanbenefits of small one s: freedom, m otivatio n, creativity, and flexibility.

'Copyright 2 4 ThomasW Malone. Used withpermission.Thispaper summarizes, andis adapted from, the following book: Thomas W. Malone,The FutureofWork:How the NewOrder of Business Will Shape Your Organization Your Mana gement Style and Your Life(Harvard Business School Press, 2004).

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Part1: Keynotes

WHAT W ILL THESE NEW WAYS OFORGANIZING W ORK LOOK LIKE?

There are three basic ways to make decisions in large groups while still givingindividuals substantial freedom: loose hierarchies democra cies and markets.Some companies today, for example, already have loose hierarchies in whichbosses still exist but considerable decision-making authority is delegated to very loworganizational levels. Many management consulting firms, for instance, let theindividual partners and consultants assignedto aprojectmakealmost all the operationaldecisions aboutit AndAESCorp., one ofthew orld's largest electric power producers,lets low-level workers make critical multimillion-dollar decisions about things likeacquiring new subsidiaries. In an even more extreme example, one of the mostimportant computer operating systems in the world todayLinux^was written by aloosely coordinated hierarchy of thousands of volunteer programmers all overtheworld.Going further,somebusinesses today alreadyact likeminiaturedemocracieswheredecisions are made by voting. Many good managers, for instance, informally poll theiremployees about key decisions, and some companies have made the formal polling ofworkers a routine part of their management. In a few cases, such as the MondragonCooperative Corporation in Spain, the workers own the company and, therefore, canelect the equivalent ofaboard of directors and vote on other key issues.The most extreme kind of business freedom occursinmarkets.For example, manycompanies today outsource activitiestheyusedtoperform insidefrom manufacturing,to sales, to human resource management. In some cases, flexible webs of electronicallyconnected free-lancers e-lancers can even do the same things big companies usedto do but more effectively. In other cases, large companies can get many of the benefitsof markets inside their own boundaries. For example, Intel is looking at lettingindividual salespeople and plant managers buy and sell products among themselves inan internal electronic market. This could give the plants imm ediate and dynamicfeedback about which products to make each day, and help the salespeople continuallyfine-tune the prices they offer their customers.To understand why such decentralized approaches to management are likely tohappen more often in the future, we needtounderstand what leads to centralization anddecentralization in the first place.

2 WHY IS THIS HAPPENING?Dozens of factors affect how and where decisionsaremade inabusiness. But thereis one crucial factor that is changing dramatically in the same direction almosteverywhere today. In fact, when we look back carefully at the history of humanity, wecan see that this very same factor has been implicated, time after time, in some of themost important changes in how entire societies were structured.What is this factor?It's thecost of comm unication.

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Malone TheFuture ofWork 19

Back when the only form of communication was face-to-face conversation, ourdistant hunting-and-gathering ancestors organized themselves in small, egalitarian,decentralized groups called bands. Over many millennia, as our ancestors learned tocomm unicate over long distancesby w riting they wereable toform largerandlargersocieties ruled by kings, emperors, and other centralized rulers. Then, only a fewhundred years ago, our ancestors invented a new communication technology, theprintingpress,which reduced even furtherthecosts of communicating to large numbersof people. This breakthrough allowed people to reverse their millennia-long marchtoward greater centralization. Soon after the printing press came into wide use, thedemocratic revolution began. Ordinary people^now much better informed aboutpohtical matterscame to have more say in their own government than they had hadsince the hunting-and-gathering days.Remarkably, this very same three-stage pattern appears to be repeating itselfnowat a much faster ratein the history of business organizations.Throughout most of human history, up until the 1800s, most businesses wereorganized as small, local, often family affairsfarmers, shopkeepers, craftspeoplesimilarinmany ways to the early bands of hunters and gatherers. Butby the1900s, newcommunication technologies like the telegraph and the telephone finally providedenough communication capacity to allow businesses to grow and centralize on a largescale, as governments had begun to do many millennia earlier. Because thesekingdoms ofthebusiness world were so successful, many of us still unconsciouslyassociate success in business with bigness and centralization.But now, just as new technologies helped spur the rise of democracies, today'stechnological advances are beginning to spur a similar change in business. With newcommunication technologies like e-mail, instant messaging, and the Internet, it'sbecoming economically feasiblefor the first time in historyto give huge numbersof workers the information they needtomake more choices for themselves. That meansthat many more people can have the kinds of freedom in business that used to becommon only in small organizations. And that can be very good news for bothproductivity and quality of life. When people are making their own decisions, forinstance, rather than just following orders, they often work harder and show morededication and more creativity.Of course, reduced communication costs won't always lead to this kind ofdecentralization.Inplaces wherethebenefits of economies of scaleareoverwhelminglyimportantlike some kinds of semiconductor manufacturingwe will probably seeeven more centralization. But in our increasingly knowledge- and innovation-basedeconomy, the benefits of decentralizationflexibility, freedom, creativity, andmotivationare becoming important in more andmoreplaces. And in all those places,we should expect to see information technology leading to more and moredecentralization.

3 WHAT DOES THIS MEAN FOR YOU?If decentralization becomes increasingly desirable in business, then we'll need tomanage in new ways. But most of us still havedeep in our mindsmodels of

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20 Part1: Keynotes

management basedonthe classic centralized philosophy of command and control. Tobe successful in the world we're entering, we'll need a new set of mental models. Weneed to shift our thinking from command-and-control to coordinate-and-cultivate.Coordinating and cultivatingarenottheopposites of commanding and controlling; theyarethe supersets. Thatis,they include the whole range of possibilities for m anagement,from the completely top-down and centralized to the completely bottom-up anddecentralized. To be an effective m anager in the world we're entering, you can 't bestuck in a centralized m indset. You need to be able to move flexibly back and forth onthe centralization continuum as the situation demands.If more people have m ore freedom in business, this also means they will naturallyseek the things they value. Of course, one thing people value is money and the thingsyou can buy with it, but most people value other things, too: time with their families,a feeling of achievement, a sense of meaning in their lives. That means companies willincreasingly need to compete for workers, investors, and customers, not just in themarketplace for products and prices, but also in the marketplace for values.And as individuals, we need to think m ore deeply than we usually do about whatwe really want from ourlivesand howour businesschoices can helpusgetthosethings.Because you will have more choices in this world, you'll be able to bring a broaderrange of your values, not just the economic ones, into your thinking about business.And that means, you canif you chooseuse your work to help create a world that isnot just richer, but better.

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