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
- 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