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Effectiveness - Jay Cross

Published February 2008

Adaptation

  Jay Cross

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Business firms evolve or die. The network era is crowding out the industrial era. Some organizations will not survive the journey.

Until a few hundred years ago, most people lived in the countryside, farming the land with their families. Then the industrial revolution created the greatest accumulation of wealth the world had ever seen. Farmers became factory workers.

Machines took over the physical work, and managers improved efficiency, eventually creating enough value to improve the circumstances of workers and dominate the First World’s economies. This is what most of us are accustomed to.

Nowadays, though, networks are replacing industry. 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.

As a result, organizations are more like living organisms than machines. Knowledge workers have replaced factory workers. Ideas and relationships are more valuable than tangible assets. Shareholders owned the factories, but workers own their minds. Information spreading through network connections empowers workers to make decisions and take responsibility for them.

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.” Managers will give up control because it speeds up service to customers.

Today’s executives grew up in a business world managed by industrial-age rules. Deeply ingrained beliefs are difficult, if not impossible to unlearn. Many managers pay unquestioned allegiance to the vestiges of the industrial paradigm. They believe in hierarchical organizational structures, top-down control, information hoarding, rigidity, formality, competition and undervaluing intangibles.

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

Few people have a foot in both camps. 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 an appreciation of technologies such as instant messaging and social networks. Imagine an old-school 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 saying 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. The challenge is to achieve the right balance, applying command-and-control as appropriate for stability and networks when they improve performance.

Traditional learning is bursting at the seams because there is always more to learn and unlearn. The amount of knowledge in the world doubles every three years. New discoveries invalidate former truths.

What is learning when knowledge is liquid and any curriculum dies in infancy? 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.

Comments

Posted By Ted Henson Thursday February 14, 2008 02:31:55 AM Knowledge based industries will be the first to realize the power or influence of the network. While not mentioned in this article, "old" management works on the idea that if you cannot measure it you cannot management it. This reminded me of something that I learned in the Marine Corps 40 years ago; "You cannot manage people, you can only lead them." Knowledge industries are going to need some very good leaders.

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