How it's going to be

I spent yesterday at IBM Research’s annual Almaden Institute. This year’s focus was Work in the Era of the Global, Extensible Enterprise. It was an inspiring day.

Paul Horn, svp and head honcho of IBM Research, posited the question, “What does work mean in today’s world?” Paul’s main point was “Differentiate or die.” To be on the high-margin end of the food chain, IBM must out-innovate. Innovation is the intersection of invention (which IBM does well) and insight. Services is the up-and-comer; if IBM can’t differentiate that, it lets down half the business.

MIT’s Tom Malone shared the essence of his new book, The Future of Work, saying that:

  • We’re in the early stages of an increase in human freedom in organizations at least as important as the shift to democracy in government.
  • Technology enables us to take everything to a human, individual scale.
  • Because people have enough information to make their own decisions, change will be driven by human values. People will use the new-found freedom to get more of whatever they want.

Proof?

  • Wikipedia, huge freedom, global scale. It works.
  • Ebay. 150,000 people making a fulltime living out of it. (if counted as employees, eBay would be among the top 50 employers in the US).

Throughout most of history, humans organized themselves into small, decentralized, unconnected groups (“bands”). Then came kingdoms, with a central authority. In the last two centuries, democracy replaced the kingdoms. (1776, 1789, power to the people.) This evolution rides on the falling cost of communication, hastened along with the invention of writing, the printing press, and the net.

Consider how falling communication costs have changed the structure of business organizations in the 20th century.

When I was growing up in Hope, Arkansas, business was locally owned and operated. Mr. Cox filled our prescriptions at Cox’s Drugstore. The Lagrones sold nails at Lagrone Hardware. The Citizens Bank of Hope had but one location.

At the same time, the “centralized mindset” had taken hold. Bigger was better. People respected General Motors. ITT’s Harold Gineen bragged that he could run hotels, insurance companies, and manufacturers solely by running the numbers. Jimmy Ling built a conglomerate that made airplanes, smelted steel, and played the market. This “progress” made its way to Hope; Mr. Cox and the Lagrones were no match for Wal*Mart.

New organizations are akin to a bag of components that take on different shapes to meet immediate needs. Their goal is to optimize their value chain, some of which they own, other parts they receive from partners, and yet other components they outsource to someone who specializes in that particular function. As in a democracy, decision-making is decentralized. This “no-boss” network is akin to geese flying in a V-formation; the goose in front is not the leader. Rather, each bird flies in relationship to all the other birds.


For a fascinating simulation of leaderless groups, check out Boids (Flocks, Herds, and Schools)

Malone’s narrative reminds me of Stewart Brand’s wonderful book, How Buildings Learn. When you look at a group of buildings, they appear solid and unchanging. If you looked at a time-lapse movie of those buildings over a century, you’d see continual change. In time, every front porch sprouts walls and becomes a front room. Land-use patterns change. Upscale neighborhoods turn into derelict war zones. Bad neighborhoods are gentrified. When you take a long-term perspective, new patterns emerge.

Toward the end of the day, Irving Wladawsky-Berger, IBM’s VP of technology and strategy, took the stage to describe the On Demand enterprise. “On Demand” is IBM’s flavor of what other companies call “organic IT” or “adaptive enterprise.” Many players recognize this model of computing as an inflection point. This is precisely what gave rise to the Workflow Institute; our goal is to optimize the contributions of people in this new environment.

Mind-blowing advances in technology and our evolution to a knowledge-based society are driving the move to On Demand. The Internet showed us the value of connected, integrated technology. An open standards culture plugs all the pieces together. (Consider Web Services, XML, Linux, WSDL, grid computing, services architecture, and valuing interoperability more highly than efficient but unconnected processes.)


What does On Demand get us? Flexible business solutions. The ability to grow organically. The capacity to respond to change in real time. A dynamic business and technical environment. A model that applies to all layers of the stack: systems, apps, and business. Shared processes. Loose coupling. Business objects. More intelligent businesses. Like a fractal patter, the model works at any scale: departmental, enterprise, or ecosystem.

I asked Irving if the evolution of this new computing model were not directly parallel to the model of human organizations Tom Malone had begun the morning with. He replied that we were looking at precisely the same thing.

IBM has been a factor in my life since college days, when I struggled to write Fortran IV programs to run on Princeton’s IBM 7094 mod 2. When I was with NCR and later UNIVAC, IBM was the competition. They were haughty. After all, “No one ever got fired for choosing IBM.” In fact, one guy I sold an NCR mainframe to got fired for not choosing IBM. THINK. Hubris. FUD. IBM knew more than the customer would ever fathom. IBM always had the answer.

At the Almaden Institute, I met friends from numerous other companies. IBM no longer claims to have all the answers. Jim Spohrer, Paul Horn, Irving Wladawsky-Berger, Robert Morris, and a bevy of other IBMers shared their concepts generously and invited us to build on them. Entering an era when “coordinate and cultivate” takes precedence over “command and control,” IBM is eating their own cooking.

This is but the tip of the iceberg. We talked about all manner of things throughout the day. As Arnold says, “I’ll be back.”

Excerpt from The Future of Work in HBS Working Knowledge Other takes on the day:
http://www.corante.com/brainwaves/archives/002664.html http://www.corante.com/brainwaves/archives/002662.html http://www.corante.com/brainwaves/archives/002671.html http://www.corante.com/brainwaves/archives/002644.html http://www.corante.com/brainwaves/archives/002648.html

Posted by Jay Cross at March 25, 2004 02:30 PM | TrackBack
Comments

I appreciate your notes from IBM and also reading beyond (back in time). I suppose I should leave this note on your site too!

IBM Institute was interesting. I didn't feel like it had the "meat" that last year's meeting had. But the people were as great as ever...including you JAY.

Posted by: Bill Daul at March 26, 2004 02:37 AM

Your note about DigitalThink is relevant here. I suspect (don’t sue me if I am wrong) that EDS defaulted on their deal with DigitalThink because they are trying to cut costs to minimize the impact of a huge pending default by one of their own largest clients (rumored to be Dow Chemical). I have bumped into outsourced IT a number of times recently at some of my clients. It seems to me that EDS and others may still be operating in the old centrally-controlled (kingdom) mode of outsourcing instead of becoming a web of decentralized localized autonomous resources. I hear many people moan that they need to implement technology-based learning projects with an ASP because it is way too slow and complicated to put together the business case for getting their IT outsourcing company to collaborate. So, ironically, these IT outsource companies are becoming disintermediated by the ease of networking.

It strikes me that there is a parallel between the evolution of the communication models you describe and the evolution of global companies. A global company is, after all, nothing more than a set of communication processes. We started out as “international” with relatively autonomous partners or agents in different countries. Then we went “multinational” with centrally controlled branches in those countries. Then we went “global” with more autonomy granted to those local operations, which were still clones of head-office. Now we are “multi-local” or (ghastly term) “glocalized” which takes us back to the first stage, but with dotted lines holding the network together. (I think there is a case to be made that national influence has followed a similar path, enabled by communication breakthroughs, from feudalism to monarchy to empire to ‘netpire’ – but it’s too early in the morning to play with that one).

Outsourcing companies should look at this evolution and learn from it. Your clients are not generic companies but foreign countries, with their own needs, preferences, economies, and cultures. Use the old ‘multinational’ model at your peril. Decentralize and localize operations and decision-making, and you stand a better chance of success. FedEx does a good job of this, as does American Express Travel Services – if you are a big enough customer, they put an office inside your office and act like employees. Those ‘multi-local’ operations are networked, flexible, and responsive, not bureaucratized, slow, and intimidating. Viva netocracy!

Posted by: Godfrey Parkin at March 26, 2004 06:18 AM

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