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Freedom to communicate: Interview with Thomas Malone, MIT Sloan School of Management

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We interview Thomas Malone, Professor at MIT Sloan School of Management on how the falling cost of communication is disrupting conventional hierarchies of control.

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Freedom to communicate: Interview with Thomas Malone, MIT Sloan School of Management

  1. 1. The EIU: Which IT trend will have the greatest impact on the way we work over the next 10-15 years? Professor Malone: The most important thing will be the falling in cost of communication. This will make it easier for people to communicate and coordinate their work in much larger groups and over much longer distances. Will this be driven by new communications technology? Certainly, new technologies will develop. They will get closer to the perfect ideal of free, instant, anywhere, anytime, any-kind of information, and we will probably get more interesting tools for things like videoconferencing. But the basic technologies are already here. What we need are new ways of thinking about organising our work. We are in the early stages of an increase in human freedom in business that may in the long run be as important as democracy was for governments. Why is it such an important change? It’s now possible to have both the economic benefits of very large organisations— such as economies of scale—and the human benefits of small organisations, such as creativity, motivation, and flexibility. It has been cheap communication that made that possible. It means that huge numbers of people, even in very large organisations, have enough information to make intelligent S P O N S O R E D B Y: Freedom to communicate The falling cost of communication is disrupting conventional hierarchies of control In the last 20 years, communications technology has become abundant and pervasive. This has changed forever the flow of information between people. Today, it is possible to share within seconds- quantities of data and information that not long ago would have required access to expensive, centralised infrastructure. Information is power, to a degree, and this democratising of communications has brought with it a distribution of control. As Thomas Malone, the Patrick J. McGovern Professor of Management at the MIT Sloan School of Management, explains in this interview with The Economist Intelligence Unit, cheap access to information allows more people to make decisions for themselves. In business, Professor Malone believes, the continued decline in communication costs will further empower workers to act autonomously. That calls for new approaches to management and, perhaps, new kinds of organisations that provide some of the social benefits currently offered by conventional businesses. This interview is part of an investigation into the future of work by The Economist Intelligence Unit, sponsored by Ricoh Europe. For more, visit http://bit.ly/eiufuturework Thomas Malone MIT Sloan School of Management
  2. 2. decisions for themselves, instead of just following orders from someone above them in a hierarchy that supposedly knows more than they do. And when people are making their own decisions rather than following orders they are often more highly motivated, more dedicated, more creative, more innovative, and more flexible. How is this trend manifesting itself today? In some cases, it’s manifested in what you might call ‘loose hierarchies’. Companies are moving from the strict ‘command-and-control’ hierarchical structures that were perfected in the 20th century to become more network-style organisations. There may still be a boss and chains of command, but more people in the organisation have the freedom to make more decisions for themselves. Another example is the way that work is now being done across company boundaries in ways that are more networked and decentralised. An example of that would be eBay, which is not just an auction company but a giant retailing organisation. However, most of the functions of retailing are not done by eBay the company; they are done by eBay the community, and more particularly, by all of the independent sellers who sell their wares over the eBay infrastructure. In that sense, eBay as a company has provided an infrastructure which a very decentralised network of independent sellers who act collectively as a very large retailing organisation. Are there any downsides to this trend for employees or organisations? There are potential downsides, yes. For example, if you’re a freelance worker in a decentralised organisation, where do you get the benefits that traditional companies provide for their employees? When do you get an opportunity to socialise with other people? Where do you get opportunities to learn and develop your skills, to build your reputation, to get a sense of identity? One solution is to have an independent organisation whose job it is to provide these kinds of benefits to independent workers. You could call these types of organisations hubs or societies, but my colleagues and I like the term “guilds”, harking back to the craft guilds. These guilds might offer its members training, opportunities to socialise, help finding work, or even some sort of unemployment insurance, so that if you pay a percentage of your income in the good times you might get a guaranteed minimum income in the bad times. How should firms ready themselves for this future way of working? One of the most important changes needed is a change in our mindset. Many of us today still have what my colleague at MIT, Mike Resnick, calls the centralised mindset. We assume that if there’s a problem the best way to solve it is to put someone in charge, to have a hierarchy, to have an organisation responsible for solving that problem. In the future, we will need to change our view of the role of management from ‘command and control’ to ‘coordinate and cultivate’. This is not necessarily the opposite of command-and- control, but it allows for the whole spectrum of possibilities from top-down centralised control, in some cases, to bottom-up facilitation in others. And I believe the managers and leaders who will be most successful in this new world will be those who can adapt their management style as appropriate to the circumstances. We are in the early stages of an increase in human freedom in business that may in the long run be as important as democracy was for governments. Thomas Malone MIT Sloan School of Management S P O N S O R E D B Y:

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