Imagine the head of a large corporation who puts a premium on his employees having fun. Not just giving lip service to the concept, but elevating it to a key principle of management. This is exactly the case of AES Corporation, one of the world’s largest suppliers of electric power, which in 2002 had $8.6 billion in revenues and 36,000 employees in 28 countries. Its two founders structured their business around the idea of fun — along with fairness, integrity and social responsibility — positing that when people are responsible for things that matter, fun comes to the fore.
The gist of this scenario — the freedom to decide — conveys what Thomas W. Malone sees when he looks ahead into the future of business. In his recent book, The Future of Work, Malone — the Sloan School’s Patrick J. McGovern Professor of Management and founder and director of the MIT Center for Coordination Science — cites instances of this happening already: Workers electing their own bosses; employees voting on key business decisions; freelancers, living wherever they want, networking electronically with one another in a loose entrepreneurial hierarchy to manage large and complex projects. Based on two decades of research, the book delivers Malone’s take on the nuances and implications of novel and emerging business forms that herald the company of the future.
What makes these new organizational forms possible? Malone points to the dramatically falling costs of communications, reduced by the power of new information technologies such as the Internet, cheap long distance and wireless voice and data. These low-cost communications can empower people, even in very large organizations, to make “sensible decisions for themselves, rather than just following orders from someone above them in a hierarchy,” says Malone. This increase in freedom, he adds, brings profound changes, in the long run as momentous for business as the change to “democracy was for governments.” For the first time in history, information technologies “enable people to have both the economic benefits of very large organizations, like economies of scale and knowledge, and at the same time, to have the human benefits of very small organizations, like freedom, flexibility, creativity and motivation.”
In this business landscape, where decentralization is increasingly desirable, a different approach to management is required. The managerial mindset must shift from “command-and-control” — the traditional model — to“coordinate-and-cultivate,” which brings out “the best in people through the right combination of controlling and letting go,” writes Malone. The “coordinate and cultivate” paradigm includes both a top-down centralized control and its opposite, a bottom-up, decentralized approach. “Effective managers,” he says, “increasingly need to become very good about flexibly moving back and forth along the whole spectrum of managing, to be able to pick the best way for any particular situation.” Whether by reward or punishment, coaxing or coaching, delegating much or little, the good manager must be able to improvise and nimbly select from a grab bag of managerial options. This, says Malone, is a critical skill of the business leader of the future, where the tension between “command-and-control” and “coordinate and cultivate” will grow increasingly central in organizational life, and where the need to resolve the tension will grow increasingly urgent.
GIVE AWAY POWER
Paradoxically, the best way to gain power is often to “give it away,” Malone says. A case in point is eBay. After a period of stalwart resistance to user feedback, eBay’s Senior Manager of Community Strategy, Mary Lou Song, discovered that promoting online democratic discussions about virtually every aspect of its business is a highly effective strategy. Ebay’s immense success — more than 60 million registered users world-wide, $1.2 billion in revenues, and a 30 percent profit margin in 2002 — can be credited in part to these online forums, says Malone, which “stimulate the energy, creativity and sense of ownership of a vast community.”
A critical piece of the puzzle involves values. Many truly successful businesses, those that inspire loyalty and commitment both from workers and customers, embrace more than economic imperatives. To harness people’s creativity, to motivate their best efforts, “you need to appeal to what truly matters to those people,” he writes. Money is a motivator, indeed, but not the only one. As evidence, Malone points to the growth of socially responsible investment funds. Once a tiny niche in the investment universe, socially responsible investment, in some form or fashion, now represents a respectable 12 percent of all professionally-managed funds in the country.
Malone doesn’t prescribe the values that ought to drive business people. Akin to his message of the new work realities on the horizon, his advice is to have business leaders “look within” to find, and be guided by, what is most important to them. Tapping into this realm, he says, is not a superfluous luxury, but key to thriving in the new world of business.
Editor’s Note: Would you like to know more about Tom Malone’s view of the future? Prof. Malone is one of the featured video presentations on MIT World: Take a look.