How will we work tomorrow Organizations of the future

there are great many techniques of

predicting the future

i just don’t master any of them i’m an

organizational scientist and as

scientists we tend to look to the past

in order to predict what might happen in

the future

and admittedly many times we get it

wrong but sometimes we stand a fighting

chance

and that is particularly the case when

all

unquote we have to do is we have to

elaborate on trends

that are already manifesting themselves

while we speak instead of speculating

about what might happen um nobody put

this more beautifully than management

mastermind peter drucker

in an article entitled the futures that

have already happened published in the

economist in

1989. having elaborated on five global

trends and the economy at the time then

he summarizes and i’m quoting now the

trends that i’ve described above are if

you will conclusions

everything discussed here has already

happened

it is only the full impacts that are

still to come

so in trying to draw a picture of the

future of work for you

i would like to adhere to drucker and

spirit by elaborating on trends

and extrapolating trends that are

already gaining momentum while we speak

but once which once they fully kick in

will change the face of work as we’ve

seen it in the past

so the first legitimate question is what

are these trends there are many trends

in the labor market

but four i think are paramount in the

context of today’s talk

and trend number one how could it be any

different these days has to do with

artificial intelligence so prior to

the covet 19 pandemic taking over the

media

there wouldn’t be one single day where

you wouldn’t be reading about another

machine learning based startup in the

news

and yes it’s true you know narrow ai

is becoming more powerful um but it’s

also part of the truth that there will

always be domains

not always but at least in the

foreseeable future when

humans will still govern the activity

and those are domains which require

dexterity perception creativity

trend number two we’ve been living in

the information age for a long while

we continue to do so we produce research

and development every day

knowledge is becoming more abundant and

it’s becoming more complex

it’s a no-brainer trend number three

the world population continues to grow

and with the world population growing

so do markets and finally and very

importantly in the context of today’s

talk

trend number four economic inequality

is rising dramatically in almost every

part of the world

and there are already loads of economies

out there in which salaries these days

can only pay for consumption

but they don’t allow you to create

wealth anymore so that you could live

of the rents as epitomized by this

beautiful metaphor of jumping on the

property ladder

so if i assume now that these four

trends start to fully kick

in and you know interact with one

another how does that potentially change

the phase of work i think when

trend number one starts to kick in

really heavily

we will be seeing that there will be a

great divide in the workforce

unfortunately there will be some who

will lose out in the race against the

machine

and those um you know we will have to

think about as society how we want to

integrate them

those people who can no longer

productively contribute to society in a

traditional sense

but that’s not the topic of my talk

today topic of my talk

today is about those who will still be

part of the workforce and here i assume

that they will invest in abilities and

skills that

will still make them valuable in the

near future so they will

invest in their dexterous skills they

will invest in their perceptive skills

and they will

try to be creative now i think we

shouldn’t

exaggerate here right you know when i

say that people will try to be creative

it would be presumptuous to believe that

we can all go back and be the yuan

wolfgang fonguita types or the leonardo

da vinci types spanning distant domains

of knowledge

such as you know arts and medicine and

physics and literature

the fewest of us can most of us will be

specialists

but we will be different specialists and

the specialists of the last 30 or 40

years

we will no longer you know be rewarded

for carrying out routine tasks

complicated routine tasks instead i

believe we will become something

that i would call creative niche

generalists spanning

and recombining knowledge from adjacent

domains of knowledge

as we already see for example in modern

drug design

between microbiology chemistry and

information technology

now one thing is very clear this type of

staff

is going to push traditional

organizations to their limits

and why is that so traditional

organizations are great

at managing routine output through

managerial control

but when the output is no longer routine

managers would have to be in the know of

a lot of detail which they don’t have

they would have to constantly engage in

exception management something which

you know doesn’t work so the answer to

the question of can

traditional organizations of this type

here still coordinate the type of staff

that will likely emerge from these

trends

is probably badly but what is the

consequence of this then

will we all go back as traditional

writings would suggest to a market-based

society in which everybody sits at home

with their

computers and 3d printers you know

everybody being an entrepreneur

all us of all of us being magically

coordinated by some price mechanism of

procurement prices and sales prices and

so forth

it takes a trained neoclassical

economist

preferably with a phd to believe in

something that unrealistic

jokes aside every scientist with a sense

of realism including selected economists

will immediately say this won’t be the

case because

there are at least two reasons as to why

individuals will still flock

into organizations the first one comes

in the form of trend number three which

i highlighted before

with increasing demand people will need

to pool their resources in order to

cater

to the market size but much more

importantly

as we’ve shown in decades of research

individuals

want to be part of a group they want to

be part of a private group but they also

want to be part of a work group

and so it’s the sense of belonging which

will ultimately

you know make them flock again in

organizations in the future

so the future of work is going to be a

future of organizations the question is

just which type of organization

okay and uh here i think it’s important

to bear in mind what i said about trend

number four

so trend number four uh ultimately will

mean that your generation earlier than

any other generation

before you will reach the point where an

additional

five percent 10 15 of increase in salary

is not going to mean much to you anymore

and why is that because once your

consumption needs are fulfilled you know

what do you do with the money well let

me put this slightly differently whereas

your fathers mothers aunts uncles big

sisters big big brothers you know could

still legitimately

hope that in exchange for working the

better parts of their bodies off for 10

15 years they would be buying their

country house or their city apartment

that’s not going to happen for

you let me break the bad news for you

salaries won’t

buy city apartments in vienna in the

near future

so it’s obvious that it’s a very

rational response

that people will look for other types of

rewards than money

and yes of course we already see that

now you know they ask for work life

balance they ask for other types of

rewards but i think an important point

has been neglected and the point is that

you want to work in an organization

which actually you know sort of make

sure that your ideas and your

power you know make it to the top and

that obviously won’t be happening in

these

rigid multi-layered hierarchies of the

past

so instead i think you know what is

going to happen is you will be looking

for places that

give you something which is important

has always been important to any

generation of worker but is going to be

earlier important to you than to any

other generation of workers before

you’ll be looking for work satisfaction

work satisfaction is going to become

paramount and it’s precisely for that

reason that i predict

that the well-trained of you will

eventually flock

together in organizations which i would

call

novel forms of organizing and these

novel forms of organizing

are organizations that essentially have

the following feature

this traditional managerial output

control is increasingly giving way to a

decentralized way of decision making

or let me visualize that for you you

will be

far less likely winding up in a scenario

of the left-hand side there where

managerial authorities

people who can legitimately demand

obedient behavior from you

within a certain domain and stacked

systems there of hierarchies

will govern the work that you conduct

and much more likely will you be winding

up in a scenario of the

right-hand side from your perspective

where teams of people

peers equals potentially together with

temporary team leaders legitimized by

competence and so forth

will be conducting the work now let me

put in an important disclaimer here

let’s not be so naive to believe that

these organizations there on the right

side are without problems

they have their own problems okay but

the reason why i still predict that they

will be taking over

and will be paramount is because despite

all the problems they have

they at least offer a chance for you to

attain the work satisfaction that you

would want to have

okay and why is that so well because

they address

the five fundamental problems of

organizing in a way that permits

creating motivation for employees of the

type which we just discussed before

what are these five fundamental problems

of organizing

they’re always the same no matter which

type of organization you look at because

organizations need to

make sure that jointly the individuals

will attain more than the sum

of you know the individuals so they have

to divide labor and integrate effort and

in order to do so they have to ask

themselves the following question how do

we split the work

who does what who gets how much who

needs to know what

and how do we resolve an argument if

there is one

and what i would like to discuss or

maybe rather showcase for you over the

next couple of minutes is just that

these

flat organizations despite all the

issues that they have at least offer the

potential

through the decentralization along these

questions of giving you the motivation

making the firm more effective and

potentially even more efficient

than a traditional organization so let’s

start with the first question you know

how we split the work

if you think of a traditional

organization a manager may dream up a

project okay

so let’s say she comes up with a project

of creating watches and then she

decomposes that big goal into subtas and

she comes up with her task list of

producing the face the case and the arms

of a watch

in a non-traditional organization that

may look very different first of all

peers may have different ideas

and secondly they may come up with

different task lists now your question

is why might this be good and my answer

to you is because of the nature of the

creative niche generalist we described

above if the person actually knows

better what

the demand would be what the technology

can do let them decide

so that not only makes the firm more

effective but as a matter of fact also

and that’s the reinforcing cycle

may instill a sense of autonomy and

motivation among the peer

and make the firm a better place same

logic holds for task allocation and a

traditional organization

a manager would based on her best

knowledge what people are good at

and what they want to do allocate the

different tasks

in a non-traditional form usually you

know this kind of

choice is left to self-selection because

people know better what they’re good at

and people know better what they like

and again the same logic of a

reinforcement cycle of effectiveness and

motivation

starts to occur but let’s not only focus

on the employees let’s also think about

the managers for a second here okay

so managers at least to the extent that

they redefine their roles

of no longer wanting to see the troops

march and feeling great but it’s

you know managers who actually perceive

of themselves as facilitators

arbitrators coordinators and so forth

may actually gain a lot from these flat

organizations in the sense that

it reduces workload for them okay

how can this reduce workload for them

let’s start with the simplest example

salary setting

one of the notorious problems when you

want to assign

bonuses to team members is that as a

manager you need to know who did what

if you don’t have that detail you may

end up with an outcome which is being

perceived as unfair

that’s why novel forms of organizing

have very successfully experimented

around with

democratic voting rules where peers

actually vote on each other’s salary

it’s this lack of knowledge on the part

of the manager which also

makes otherwise super efficient

information hierarchies

where information is being disseminated

top down

inefficient yes if a manager knows

precisely what a subordinate needs to

know

hierarchy is the most efficient way of

disseminating the information but what

if the top

agent doesn’t know what a certain member

within the organization may need to know

at a given point in time

then you end up with an ineffective

outcome and there’s

no more efficiency consideration that’s

why novel forms of organizing usually

rely on peer-to-peer information

a very laborious exchange time taking

for the employees but leading to more

information aggregation

and nicely taken away some work for the

manager

but nowhere is this efficiency and

taking a liberating time for the manager

for other things

more visible than in a context of

conflict resolution

anybody who’s ever dealt with you know

employee disputes knows that it is one

of the most

laborious tasks to engage in mitigating

between

you know sort of sorry in deciding on

disputes between two employees

b there’s an incentive conflict where

people may actually really have

different preferences or a coordination

conflict where

they may want to do the same thing but

they have different views on how to get

there

novel forms of organizing therefore rely

on peer-to-peer resolution mechanisms

and these peer-to-peer resolution

mechanisms are those where

usually peers initially discuss with one

another then use an extended board and

only as

sort of an ultima ratio case will rely

on the intervention

of an authority which is usually

legitimized by a lot of competence

and just decides on one case

so hopefully you know these last

examples these fictitious examples have

made one point clear

you know at least there is the potential

for flat organizations to create

motivation

be effective and efficient but hopefully

they’ve also highlighted a different

point which i think is very important

you have the choice to decentralize or

centralize along at least five

dimensions

and that’s why there’s not going to be

one flat organization as a matter of

fact

there’s going to be a plethora of

different flat organizations some of

which will work better in the context of

one organization some will work better

in the context of another

some won’t work at all but my

credo and coming to the end of this

presentation is

the future of work will be colorful okay

it will be colorful

there will be many different types of

flat organizations i

dare to predict which all have one thing

in common that they thrive on

well-trained staff

well-trained staff who appreciates

autonomy and the ability to participate

and in exchange

is willing to put up with a burden of

being accountable

because there’s no such thing as a free

lunch as you know so being accountable

for your actions is part of the equation

and that’s also why in this color scheme

there’s going to be

light gray pale gray dark gray black so

the

traditional organizations are not going

to disappear why because of course you

know there will always be people who

prefer to follow orders

and delegate responsibility than be

responsible themselves

admittedly there’s also another reason

why traditional organizations will

survive and that’s because they are

superior at one thing

and that’s what we call super scaling so

when we’re talking about

really large organizations you know you

will almost

always see that some hierarchical

element will prevail

and that’s because the information costs

just explode when you move to a lot of

people

so let me just visualize that here if

you only think about an information

exchange among nine peers

okay it takes 36 information exchanges

for everyone to talk to one another

and you can achieve the same thing in a

two-layered hierarchy with just eight

information exchanges now

talking about this size of organization

that’s not a problem talking about 10

000 employees

you may run into limits so that’s why

there will be hierarchical elements out

there

but within them there will be pockets of

flat organizations and that will

aside from those be flat organizations

autonomous of significantly large size

so what i’m trying to say is you know

novel forms of organizing

will increasingly matter and that is

because decentralization

can be very powerful and let me stress

the can be part here as i said before

it’s not that they are without problems

as a matter of fact they have all sorts

of problems

jostling for power creating in-group

biases what have you

but these are problems that can be

overcome and once they are overcome

they offer opportunities that other

organizations can’t i’m sure that

the future workers that is you will be

able to overcome them so and that spirit

more power to you and thank you for your

attention

you