Staying Alive

Appearing in today’s Link&Learn eNewsletter:

Staying Alive
By Jay Cross

Business firms evolve or die. Many organizations will not survive the journey from the industrial age to the network era.

Until a few hundred years ago, most people lived in the countryside, farming the land with their families. Then the industrial revolution came along, and farmers became factory workers. Machines took over the physical work, and managers improved efficiency. This is what most of us are accustomed to.

Brains are replacing machines. We are in the midst of a great transition to an era of networks and service. Einstein’s relativity has replaced Newton’s clockwork universe, not just in physics, but in the way we regard the world. Reality emerges from the interaction of complex adaptive systems; the future is unpredictable; nothing is certain. As in nature, everything is connected to everything else. Nothing is ever finished: the world is in perpetual beta, always evolving.

Ideas and relationships have become more valuable than tangible assets. Shareholders owned the factories; workers own their minds. Information spreading through network connections empowers workers to take responsibility for their own decisions.

As Jan Carlzon wrote in Moments of Truth, “An individual without information can’t take responsibility. An individual with information can’t help but take responsibility.”

Why would a manager want to give up control? Carlzon again: “Problems are solved on the spot, as soon as they arise. No front-line employee has to wait for a supervisor’s permission.”

Hierarchies are like the children’s game of telephone, where a message is whispered from one person to the next, becoming unintelligible in the process. Networks enable direct, static-free, one-to-one communication.

Today’s executives grew up in a business world managed by industrial-age rules. Many pay unquestioned allegiance to the vestiges of the industrial paradigm. They believe in hierarchical organization structures, top-down control, information hoarding, lack of collaboration, rigidity, formality, competition, and undervaluing intangibles.

In the opposite corner, most network age business people support flat organizations, shared responsibility, information sharing, extreme collaboration, flexibility, informality, cooperation, and the importance of social capital and reputation.

The industrial-agers see the network folk as undisciplined techno-optimists. The network-agers think of the industry people as clueless reactionaries. The conflict between the two groups is building.

As people accustomed to the internet join the workforce, they bring with them network technologies such as instant messenger and social networks. Imagine an old-style organization where new hires in the local ranks swap information with colleagues in other silos and with customers. They will be better informed. As the say goes, “networks subvert hierarchy.”

This is not to say that networks will replace all hierarchies, for that leads to chaos. Someone has to sign the paychecks and mediate among the stakeholders. Organizations’ challenge is to achieve the right balance, applying command-and-control as appropriate for stability and networks when it improves performance.

What is learning when knowledge is liquid? We used to learn in order to get along in the environments we take part in. Familiarity with how things worked enabled us to adapt, and adapting to one’s surroundings is still the goal of learning.

Gary Hamel writes, in his recent book, The Future of Management: “The most bruising skirmishes in the new millennium won’t be fought along the battle lines that separate one competitor, ecosystem or economic bloc from another. Rather, they will be fought along the lines that separate those who seek to defend the prerogatives, power and prestige of their bureaucratic caste from those who hope to build less structured, less tightly managed organizations that elicit and merit the very best that human beings have to give.”