If you've been following my recent set of postings on books, you might have noticed a trend (more on that in another post). Here's the latest installment in the series.

I first heard about Tom Malone's "The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style and Your Life" via the IT Conversations recording of his SuperNova presentation.

Malone observes that the introduction of various communications technologies influences the way that we structure work and organizations. He follows this trend from the pre 1800s when "most businesses were organized as small, local, often family affairs", through the introduction of broadcast communications capabilities in the 1900s, when "the telegraph, the telephone, the typewriter, and carbon paper finally provided enough communications capacity to allow businesses to grow and centralize on a large scale, as governments had begun to to do many millennia earlier". Which brings us the present day and the central assumption of the book:

Just as new technologies helped spur the rise of democracies, reversing the long trend toward centralization in societies, today's technological advances are beginning to spur a similar reversal in business. With new communication technologies like e-mail, instant messaging and the Internet, it is now becoming economically feasible -- for the first time in history -- to give large numbers of workers the information they need to make more choices for themselves. Today, many more people in business can have the kinds of freedom that used to be common only in small organizations. And that can be very good news for both productivity and quality of life. When people are making their own decisions, for instance, rather than just following orders, the often work harder and show more dedication and more creativity

Even as they encourage greater freedom, however, these new decentralized businesses can escape the limitations that hampered small isolated businesses in the past. Because the new organizations have access to the best information available anywhere in the world, they retain many of the advantages of large organizations. If there are economies of scale in parts of their business, for instance, they can find the best suppliers in the world to fulfill their needs for those raw materials and components. They can also find customers all over the world, using electronic reputation systems to establish credibility with them. And if someone on the other side of the globe has figured out how to do a particular activity or process in a better way, the businesses can tap into that person's expertise too.

The first three chapters examine the trends and so forth behind these paragraphs. The remainder of the book is broken into two parts. Part 2 looks at ways for structuring decentralized organizations: one chapter each on loose hierarchies, democracies and two on markets. In each chapter, Malone uses several organizations as examples of the structuring mechanism and then draws some conclusions about the form. I was particularly interested in the examples of the W.L Gore company, and the Mondragon Cooperative Corporation (MCC) in Spain's Basque region, both in the chapter on democracy. In the Gore section, a team leader says

I'm a leader only if there are people willing to follow me

This is closer to my notion of leadership. Giving someone a title doesn't make them a leader; it's their ability to persuade, motivate, etc which truly makes them a leader.

The MCC has a very interesting structure where "lower level" cooperatives own the larger corporation instead of the other way around. Individual members/owners of a cooperative elect that cooperative's governing council (which among other things, hires and fires the CEO) and participate in a general assembly where they vote on relevant issues. The cooperatives are grouped by industry sectors, and each sector also has a governing council and generally assembly. The standing committee (the governing council of the MCC itself) is similarly determined.

MCC also uses a financial compensation structure which grants individual employees ownership and profit sharing in a way that seems much better than most other companies.

One interesting idea from the democracy chapter is the notion of approval voting, where voters can vote for as many candidates as they want. The person with the highest number of approval votes wins. The notion of continuous approval voting in which voters can change their votes and thereby change a person's standing in the rankings is also kind of interesting. Approval voting and the single transferable vote (STV) system that we use at the ASF has got me interested in learning about other voting mechanisms (pointers appreciated).

The first chapter on Markets included a few sections on a freelance or e-lance economy.

In an e-lance economy, the fundamental unit is not the corporation, but the individual. Tasks are not assigned and controlled through a stable chain of management, but rather are carried out autonomously by independent contractors. These freelancers join together into fluid and temporary networks to produce and sell goods and services.

He makes the connection to the physical construction industry (just like Doc)

The construction industry is often organized this way, too. Plumbers, electricians, carpenters, and other specialists, many of whom work independently or for small companies, join together to make a building. When the building is finished, they regroup in different ways to make other buildings

This is the way that our current home was built back in 2000-2001, and before I joined OSAF I was one of those independent specialists. I was fortunate to have a good web of relationships that made it easy to find jobs and also work with others to do larger jobs than I could do myself. So I was glad to see a section entitled "Taking Care of People: The Guilds of the Future":

Growing out of tradesmen's fraternities and mutual assistance clubs, medieval guilds served a number of functions: They trained apprentices and helped them find work. They cemented social bonds -- guild members worshipped together and marched as a group in town pageants. The offered loans and schooling. And if misfortune struck, they provided an income for members' families.

I have yet to see an organization that operates the way that I think a modern day guild ought to. As Malone points out, there are many organizations that provide some of the functions of a guild, but none that provide all of them.

The second chapter on Markets talked about the use of Markets inside of organizations, which is a topic that I was not as interested in. There was some overlap in material with Suriwieki's treatment of markets in "The Wisdom of Crowds". The last chapter of section two covered the question "When Should You Decentralize"? The top level criteria looked like this.

• Decentralize when the motivation and creativity of many people is critical
• Centralize when resolving conflicts is critical
• Centralize when it's critical to have lots of detail -- down to a very low level -- united by a single vision
• Centralize when only a few people are capable of making good decisions

I found it interesting that there are more points dealing with centralization than for decentralization. In the context of open source projects, I think that it is useful to look at how these criteria match up against the various open source projects. (That's probably a topic for a whole post by itself).

Malone also makes a prediction for how decentralization will proceed:

These then, are the three main ways that decentralization with spread: First, senior executives of centralized firms will voluntarily make their hierarchies looser. Second, decentralized competitors will take market share away from centralized firms. Finally, centralized firms will outsource more of their work to decentralized ones. Even though the transitions to decentralization will be far from easy, they will happen, as managers and entrepreneurs discover and exploit the places in the economy where decentralization is most useful.

The last part of the book s devoted to the change in mindset that management must undergo in order to be effective in the decentralized world: moving away from a command and control mindset and towards a coordinate and cultivate mindset.

To coordinate is to organize work so that good things happen, whether you're in control or not. Some kinds of coordination are centralized, others are decentralized. Either way, coordinating focuses on the activities that need to be done and the relationships among them. Cultivation, by contrast, focuses on the people doing the activities: what they want, what they are good at, and how they can help each other. To cultivate is to bring out the best in people through the right combination of controlling and letting go.

Here's a smattering of related quotes on coordination:

For incentives to help coordinate a group's actions, they have to be coherent. If everyone has incompatible incentives, even a team of highly capable, highly motivated people won't achieve strong results. The various incentives, therefore, need to be tied to and support overarching goals shared by the entire group

The final key to coordination is good connections between activities and information

Transparency, or the open source way.

right standards in the right parts of a system can enable much more flexibility and decentralization in other parts of the system.

He calls these standards, I call them culture.

As the preceding section explained, coordination means managing dependencies between activities.

One of the problems of coordination is determining whether or not work has been done in a satisfactory manner. Malone proposes the use of independent rating services analogous to Consumer Reports or J. D. Powers. Now you know part of the reason that I'm interested in reputation and recommendation systems.

And here are a few quotes on cultivation:

To cultivate something successfully -- whether it's your farm, our garden, your child, or your organization -- you need to understand and respect its natural tendencies at the same time that you try to shape it in ways you value. More specifically, you try to discover and encourage its positive potential and limit the harm caused by its negative tendencies. Rather than impose your will on the system, you try to balance he right kinds of control with the right kinds of letting go.

This conflict between centralized and decentralized control -- between being in control and being out of control -- will increasingly be one of the fundamental tensions of organizational life.

Malone also outlines "Principles for Cultivating Organizations"

1. Harness People's Natural Tendencies
2. Let a Thousand Flowers Bloom
3. Encourage Cross-Fertilization
4. Improvise

In addition he outlines four "Core Capabilities for Distributed Leadership"

1. Visioning
2. Sense-Making
3. Inventing
4. Relating
5. (Managing your own time/priorities)

The last chapter is titled "Putting Human Values at the Center of Business". There's a tie here to "The Soul of Capitalism", which I reviewed earlier this month. One point that he makes is

As more businesses try to pursue noneconomic goals, one of the most obvious dangers is that some people will cynically try to exploit others' good intentions. Malone believes that increased transparency is the only way to combat this danger, and cites IdealsWork as an example of an independent web site that

helps consumers compare the social and environmental performance of thousands of product brands according to the user's own individual values.

Malone wrote the following about cultivating one's own values particularly in the realm of business.:

If you are trying to control a system, you apply all your effort to making the outcomes of the system be what you want. If, on the other hand, you are trying to cultivate a system, you are not attached to the outcomes in the same way.
...
Similarly, in business, if you try too hard to accomplish particular goals you think are good, you may fail to see even better things that are emerging.

This is true in realms besides business as well.

Overall, this is an excellent book. If you are interested in commons-based peer production (open source) I think that you'd be well served by giving this book a read and then thinking about its relevance to that topic.