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Book Review: Thomas W. Malone's The Future of Work

Book Review: “The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style, and Your Life,” by Thomas W. Malone Reviewed by Jay Einhorn, Ph.D. "The Future of Work" began changing my thinking and attitudes about work from its very first pages. It clarified and extended my understanding of myself as a worker, as well as of friends and colleagues, many of whom are either, like me, self-employed, or have entrepreneurial-type positions within organizations. I've already begun using Malone’s ideas in consulting with individual clients and organizations, and found them relevant, productive, and fun. Malone is the Parick J. McGovern Professor of Management at the MIT Sloan School of Management, and founder and Director of the MIT Center for Coordination Science. He was one of the two founding co-directors of the MIT Initiative “Inventing the Organizations of the 21st Century,” has been cofounder of three software companies, and consulted and served as a board member for other organizations. Malone's central tenet is that the nature of organizations has been substantially influenced throughout history by the cost of communication. It makes sense, although i’d never thought about it before. He writes: Back when the only form of communication was face-to-face conversation, our distant hunting-and-gathering ancestors organized themselves in small, egalitarian, decentralized groups called bands. Over many millennia, as hunting and gathering gave way to agricul- ture, and as our ancestors learned to communicate over long distances more efficiently--by writing--they were able to form larger and larger societies ruled by kings, emperors, and other central rulers. These new societies had many economic and military advantages over the hunting-and-gathering bands, but their members had to give up some of their freedom--sometimes a great deal of it--to obtain those benefits. Then, only a few hundred years ago, our ancestors invented a new communication technology, the printing press, which reduced even further the costs of communicating to large numbers of people. This breakthrough allowed people to reverse their millennia-long march toward greater centralization. Soon after the printing press came into wide use, the democratic revolution began... Malone traces a similar evolution in the structure of business: ...throughout most of history, up until the 1800s, most businesses were organized as small, local, often family affairs, similar in many ways to the early bands of hunters and gatherers. But by the 1900s, new communication technologies like the telegraph, the telephone, the typewriter, and carbon paper finally provided enough communication capacity to allow businesses to grow and centralize on a large scale, as governments had begun to do many millennia earlier. By taking advantage of economies of scale and knowledge, these large business “kingdoms” achieved an unprecedented level of material prosperity... ...Just as new technologies helped spur the rise of democracies, reversing the long trend toward centralization in societies, today’s technological advances are beginning to spur a similar reversal in business. With new communication technologies like e-mail, instant messaging, and the Internet, it is now becoming economically feasible--for the first time in history--to give huge numbers of workers the information they need to make more choices for themselves... As the cost of communication declines so much that people can communicate almost instantly at any distance for very little cost, the advantages to organizations of centralization, which were substantially (though not entirely) about having the information necessary to make decisions when information was hard to find, collect, transmit, store, and retrieve, will tend to be outweighed by the disadvantages, such as being out of touch with rapidly changing situations in the field, being too slow and cumbersome to respond to challenges and opportunities, and underutilizing the talents and teamwork of people below the very top levels of the organization. Malone defines “decentralization” as the ”participation of people in making the decisions that matter to them.” Thus, he descries a much more decentralized structure evolving in organizations throughout the world, in which many more workers will be either self-employed contractors or employees who function semi-autonomously within their organizations. This change amounts to a revolution in our attitudes about organizational leadership, and calls for commensurate shifts in our understanding of what management means. “We need to shift our thinking from command-and-control to coordinate-and-cultivate,” Malone writes, calling for a profound change in our understanding of the very nature of leadership. “Good cultivation involves finding the right balance between centralized and decentralized management, between controlling and letting go...Coordinating and cultivating are not the opposite of commanding and controlling; they are the supersets. That is, they include the whole range of possibilities for management...To be an effective manager in the world we’re entering, you can’t be stuck in a centralized mind-set.” Leadership becomes seen as potentially more distributed throughout the organization than centralized at the top: “For instance, developing your capacities for visioning, sense-making, relating, and inventing can help you exercise effective leadership from wherever you are in an organization--the top, the bottom, or anywhere in between.” Smart management creates the ability to “decentralize in a way that gives you both the benefits of bigness, like scale economies, and the benefits of smallness, like motivation and flexibility.” Malone includes lots of examples of large companies with relatively decentralized management structures that cover both bases, capitalizing on accumulated resources, on the one hand, and also the “motivation, creativity, flexibility, and other benefits of smallness” on the other. In such organizations, many employees have the status of semi-autonomous independent contractors. Simultaneously, Malone confirms the trend toward growing numbers of self-employed independent contractors, and expects it to continue. For them, the loss of employment benefits that have traditionally been provided by employers can be made up by professional guilds, which could use their large aggregate membership to negotiate competitive benefit options for members to buy into. Malone’s vision of the evolutionary impact of declining cost of communication extends beyond organizations to the markets within which they function. When information was centralized in great hierarchical organizations, whether political (governments) or economic (corporations), markets could be controlled by a relatively few players who had the necessary information and power. In an era of radically declining cost of communication, information is almost instantly accessible to almost anyone who wants it, and markets become much more fundamentally democratic; the people and organizations who select the most germane information to their task, acquire it most expeditiously and apply it most effectively, win in the marketplace. Organizations themselves can function as marketplaces for specific purposes, as British Petroleum did between 1998, when it set a goal of reducing its greenhouse gas emissions by 10% by 2010, and 2001, when it achieved that goal nine years ahead of deadline through the power of internal markets. Malone doesn’t see centralization as always inferior to decentralization. There are advantages and disadvantages to each kind of organizational structure, and the trick is to know which kind of organization will be most effective in a given situation. The benefits of decentralization are powerful, and include increasing motivation and creativity among the workforce, bringing many minds to bear on finding solutions to important problems, and unleashing the power of flexibility and individualization. But there are costs: decentralization can result in difficulties making decisions quickly, problems in managing risk and quality, obstacles to exploiting economies of scale, and inefficiencies in sharing knowledge. In each organization, and in each situation, the benefits and risks of both decentralization and centralization need to be weighed. Sometimes ways of compensating for decentralization must be developed before it can be successfully implemented. Reading “The Future of Work” has set me to thinking about the political implications of Malone’s vision of the future, and the kind of human being who will be necessary to bring it about. Malone grew up on a farm, and his vision of self-employed (or loosely employed) freelancers evokes the same kinds of values--very independent in many ways, necessarily interdependent in others, and fundamentally reality-oriented--that characterize people who work the land. Thomas Jefferson saw the educated independent farmer as the backbone of the American experiment in democracy; the person whose ownership and working of his own land, together with his knowledge of history and culture, led to common sense about what was good for his community and country. The Jeffersonian polity has been fundamentally altered by the evolution of large, hierarchically organized, centrally managed companies, in which only those at or near the top have the same sense of personal stake in their work that characterizes the independent farmer. This has contributed to the growth of an electorate characterized by widespread apathy about its political leadership, or else the desire to be lead without having to think about the consequences of executive decisions. Malone’s vision of a nation of independent or semi-autonomous freelancers and “e-lancers” might presage a return to Jefferson's vision and values among a substantially larger portion of the electorate than is currently the case. The other implication in “The Future of Work” that I’ve been pondering is Malone’s essentially optimistic vision of human nature. Although he doesn’t spell it out, he seems to assume that, given information and opportunity, and markets in which to apply them, people will find ways to make things work for both their own benefit and that of the general community. But how many people, raised in current cultures, are really prepared to learn how to function in a more independent way? I loaned “The Future of Work” to a client who is the CEO of his own successful company and sits on the boards of others. He agreed that Malone’s vision was optimal and appealing, but felt that only about 1/4 of the people he knew could actually thrive with that level of independence. Most people, he felt, needed to have their hands held and be told more or less what to do. Malone seems to acknowledge that the function of centralized hierarchies in limiting autonomy can protect against stupidity down the ranks, but I wonder if he doesn’t underestimate how widespread that stupidity is. As a leading management professor at one of America's, and the world's, foremost scientific, educational and research institutions, with a career research interest in the future of organizations, Malone has been rubbing shoulders with people at the top of the planetary organizational learning curve for some time now. His stories about how they've grown their companies, both in America and internationally, provide delightful and inspiring examples of the growing edge of organizational achievement. But, as someone who has been rather closer to the bottom of things, my observation is that human ignorance, stupidity, cupidity, duplicity, unwarranted self-certainty, addiction to ritual for its own sake, hidebound thinking, blinkered perceptions, false pride, obsequiousness and blundering, are much greater forces to be reckoned with than he seems to allow for in this book. Rebutting this argument, if I can imagine his reply, I can hear Malone say that such behavior is also frequent at the top of organizations, and that democratizing things will lead to better decision-making everywhere in the long run. And I agree: the challenge is to find out how to get there, one organization and one person at a time. Of course, I could be too pessimistic. In any case, Malone’s is a refreshing, insightful, and inspiring vision of human nature, history, and future, and of the power of organizations and markets to maximize human efficiency and ingenuity, for whatever proportion, larger or smaller, of humanity who are, or may become, ready, willing and able to take their economic fates into their own hands and make their future work.