Coordination Theory in a Flat World

Submitted by admin on Fri, 05/06/2005 - 09:35

Follow me here for my understanding of what this flat world business is about, and what we can do about it as individuals, employees, business founders, owners, stakeholders, and as managers.

Doc Searls has a provocative post, the "Long Tail" about his interview with Tom Friedman, author of The Flat World and the subsequent discussion with other bloggers about the ideas Mr. Friedman puts forth in his new book. Not many people can ignite such passion in people like Doc. Julie Leung, "Thanks to Doc Searls, I burned the soup..but it was worth it" Check it out:

"Later last night, while the pan was soaking and the kids were sleeping, I returned to read Getting Flat, Part 2 from Linux Journal. Doc's piece, with references to works by Thomas Friedman and John Taylor Gatto hit me with its truth immediately, in a way that soaks into the soul. Although I had other duties that needed to get done last night, I wanted to post on it ASAP. While I sorted through piles of papers and evaluated bills, Doc's words continued to cook in my mind..."

Ideas are exploding in the blogosphere around Friedman's, Doc's, Dan Gillmor's, Dave Pollard's, et al. Hugh, from gapingvoid has opened a pandora's box with his post on "Culture and Technology", which lead to this "new gapingvoid rule", and "What level of transparency can a company live with?" and now "more hamish". He is all over the place, but drives home several good points that jibe with the ideas in Friedman's book, Doc's discussion, as well as what we are trying to accomplish at Advancing Insights with Ideascape. 

Early last year I came across Dr. Thomas Malone's work on coordination theory at MIT. Dr. Thomas Malone, Professor of Management, MIT Sloan School of Management (bio, projects and working papers) and from IT Conversations, a perspective podcast with Dr. Malone. "We are in the early stages of an increase in human freedom in business that may in the long run be as important a change for business as the change to democracy was for governments. New technologies are making it possible for the first time in human history to have the economic benefits of very large organizations and, at the same time, to have the human benefits of very small organizations, things like freedom, flexibility, motivation and creativity. Information technology is reducing the costs of communication to such a low level that it's now possible for huge numbers of people even in very large organizations to have all the information they need about the big picture to make their own decisions for themselves about what they do rather than waiting for people above them in some hierarchy to tell them what to do."

Want more? Dr. Malone has a book "The Future of Work" that delves into the how-to's for organizations to implement these ideas using "coordination theory".

The title of this book is misleading. A better title would have been: The Future of Organizational Structure. This book takes that concept about how business is in the process of changing from a dense, centralized hierarchies to loose, decentralized networks of workers, specialists, and consultants. Like the transition from kingdoms to democracies, he feels that the rise in accessible communication technology [similar to Friedman's ideas and to what we know is true in the blogosphere - things are changing fast] will give employees a greater degree of control in how their companies are run.

From "The Future of Work": Part I: The Coming Revolution

1. A Time to Choose
2. An Amazing Pattern
3. The Amazing Pattern in Business

Part II: How Many People Can Fit at the Center of an Organization?

4. Loosening the Hierarchy
5. Harnessing Democracy
6. Unleashing Markets
7. Bringing Markets Inside
8. When Should You Decentralize?

Part III: From Command-and-Control to Coordinate-and-Cultivate

9. Coordinating Activities
10. Cultivating People
11. Putting Human Values at the Center of Business

"How Many People Can Fit at the Center of an Organization? Potential Problems with Decentralized Decision Making and Possible Solutions"

POSSIBLE SOLUTIONS
Problem Loose Hierarchies Democracies Markets
Making Decisions

Quickly and Efficiently
Managers occasionally force decisions.
People vote on some decisions and elect managers to make others.
People buy and sell only when there's mutual agreement, but every one
abides by rules.
Guaranteeing

Quality and

Protecting Against

Catastrophic Loss
Managers control

quality of people and

results (e.g., with

standards) but don't

control actions.
Same as for loose

hierarchies, except

people vote on some decisions and elect managers to make others.
Companies use reputation systems, insurance, performance bonds,

collateral.
Taking Advantage of Economies of Scale Managers occasion-

ally force people to

take advantage of

economies of scale.
Voting (and elected

managers) occasion-

ally forces people to

take advantage of

economies of scale.
Buyers and sellers dis

cover and exploit

economies of scale for themselves. Rules

occasionally encourage large-scale activities (e.g., utilities) or restrict
them (e.g., monopolies).
Taking Advantage of Knowledge Sharing
Managers provide

channels and incentives for wide sharing of knowledge.
Same as for loose

hierarchies. Incentives include rewards for sharing knowledge determined
by voting.
Rules provide effective

ways of protecting,

pricing, and selling

knowledge.

So, let's play the market angle. Suppose a person has excellent skills and talents as a PR person and desires to make those skills and talents available to an internal market for $500 per month and that there are forty contracts available for one month. How would it work and benefit the PR person, me and you as potential clients, and existing clients in the organization?