Marketechnics Report: The Power of Letting Go
By Bill Bittner
The opening session at the Food Marketing Institute’s annual Marketechnics show yesterday stressed how technology will affect how we will work and make decisions in future organizations.
This year, Thomas Malone of the MIT Sloan School of Management addressed the audience on “How the New Order of Business Will Shape Your Organization, Your Management Style, and
Your Life.”
Mr. Malone has written a book, The Future of Work, in which he describes the effect of increased human freedom on business. Increased freedom results in lowered costs
for communicating information throughout the organization, says Mr. Malone.
Going forward, decision-making information will be accessible to frontline personnel who will be able to provide direct and more immediate feedback to the central authority monitoring
results.
Driving decision-making to the frontline means companies must adjust reward structures to align with the goals of the overall organization. Ultimately, organizations may be formed
out of completely independent teams or individuals. Mr. Malone provided the example of eBay, which is formed from individual entrepreneurs who have demonstrated the quality of
their performance through the development of personal histories.
He attributed the evolution of democracy “over the past 200 years” to the discovery of the printing press and the ability to communicate easily with large numbers of people.
This allowed civilizations to move from tribes to monarchies to democracies. Now it is allowing businesses to decentralize their organizations as they move from top-down hierarchies
to democracies and, ultimately, to market structures.
He described AES, which is a large utility company whose loose hierarchy operates through careful hiring practices that allow delegation of decision-making based on employees
seeking “advice” instead of permission from supervisors.
Employee-owned companies such a Publix, and Whole Foods where co-workers vote on new hires, were identified as examples of business democracies. Market organizations were described
as professional services organizations where independent service providers market their own skills. An example was movie production performed by teams of actors, cameramen, directors,
set designers, etc. to complete a production.
The manager of the future must be prepared to move from a role of “Command and Control” to one of “Coordination and Cultivation.” He must be able to explain the paradox of “standards”
as they provide a framework for individual creativity and understand how he can gain power by relinquishing control. People will have more choices in their work and personal lives.
It becomes important that they understand their personal goals and coordinate them with those of their employer.
Moderator’s Comment: During the question and answer session, one of the retailers asked how he can implement some of these ideas in a unionized labor
environment. Mr. Malone said that may be a challenge, but the unions will also be affected by the new communication capability. Do you think it is possible to create a reward
structure in a unionized environment that aligns individual employee goals with those of the company? Conversely, are top-level managers willing to give up power and go from a
command and control structure to one of coordination and cultivation?
It may be more challenging, but I believe union management is beginning to understand that the threat of non-union competitors on the future of their jobs
is becoming more real than in the past. They are beginning to appreciate that their welfare is aligned with the success of the company and they must do more to help the larger
organization succeed. If the reward structure can be designed to allow both employees and the stockholders to benefit from greater success, then everyone will benefit.
–
Bill Bittner – Moderator
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4 Comments on "Marketechnics Report: The Power of Letting Go"
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What a concept! Listening to your front-line employees! Wish I’d thought of that.
Unfortunately, Thomas Malone didn’t take into account some critical features of human nature – power and politics. In the absence of a clear structure for responsibility in a company, strong personalities take over and establish their own fiefdoms. Consider the formation of hierarchies among prison inmates for an extreme example of this type of dynamic. Personality cults are formed and begin to make their own decisions.
More communication is almost always productive. But, businesses still have to be managed. Encouraging entrepreneurship and feedback from employees is commendable. This requires more management, however, rather than less.