Technology of the marketplace

For the last thousand years, there are only two technologies for doing that. One was the technology of the marketplace. Markets are very good at amplifying human capabilities, at drawing people in who have passion to do things, to sell things, to make things. We talk about the animal spirits of the marketplace. But markets are not very good at aggregating human capabilities. A market is not going to build a Boeing 787. Aggregating human capabilities since the pyramids were built was based on the technology bureaucracy. That's part of management: hierarchy, planning systems, reporting, standard operating procedures, tight job definitions, role definitions and so on. Yet, the development of autocracy has no place for human imagination, creativity and passion. [The autocracy] wants people who are mostly docile, who would do as they are told, who follow instructions and not screw up. But now, when you look at the Web, what you find is fundamentally a new technology for amplifying human imagination, [a technology] built around the notion of community.

Technology makes it possible to organize and manage in new ways, but it usually takes companies and individuals quite a while to find a way to exploit that new technology. Not only are there new problems but we have new tools that allow us to compound human effort in ways we never could have done before, something like open source.

The last time I checked, there were over 150,000 open source projects around the world with 1.5 million participants. You could aggregate human effort with almost no hierarchy, no job descriptions, mobilizing an army of volunteers around the world. That is management innovation and it was simply inconceivable 15 years ago.

What will managers actually do?

The answer is less and less. We are always going to be focusing efforts, setting priorities, allocating resources and building nurturing commercial relationships, so the work is not going to go away. But it's going to be pushed much more to the periphery of organizations and less and less will the work of management be done by the bureaucratic class, you know, the graduates of the top-level business schools and perhaps a particular set of titles and credentials.

More of the work of management will be distributed to anyone across the organization or beyond the organization who is capable of doing that work. Think about the old telephone system, a centralized architecture with all these intelligences built into the big central switches. What happened over the last 15 to 20 years is that it basically got blown up and all these intelligences moved to the periphery of the network to PCs, routers, and hubs. No longer were a few people at the center writing code that would run the entire telephone system.

The reason the Internet has been so adaptable is that when you write a blog or upload a video, nobody asks, did you go to journalism school? If you have a great idea, nobody asks, are you a senior vice president ?

What they are interested in is the quality of the idea and whether it can attract the interests and the passion of others. The typical Fortune 500 company today is the organizational analogue of AT&T's telephone system of the 1970s. We are going to see as dramatic change in our management architecture over the next 30 to 40 years as we've seen in the information architecture over the last 10 to 20 years.

When Google made available the APIs for Google Maps and Google Earth, people put together thousands of mashups. We are discovering how broadly distributed human creativity is in the population. How many people if you give them the tools can do something new and interesting?

This article was originally published on 09-13-2007
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