Some times material is too good merely to link to. here in full is a recent article from Fortune Magazine.
Now I am impressed - a great conversation on the new organizational structure that is emerging.
If you don't go here you are sunk!
BRAINSTORM 2004
Will Every Company Be Like eBay?
Five tech leaders weigh in on what developing technology means for corporations and workers.
Jul 30 2004
By David Kirkpatrick
Fortune.com
At Brainstorm, the annual conference jointly run by FORTUNE and the Aspen Institute, many of our proceedings are panels. Rather than report to you on miscellaneous news that came out of this year's conference, which concluded two weeks ago, I want to share the flavor of the event. The following excerpts are from a panel entitled, "Technology and the Modern Corporation: How Different Will It Become?" It was a room-wide conversation, as is the aim at Brainstorm, though there were five official panelists: Tom Malone, professor at MIT's Sloan School and author of the newly published book The Future of Work; Tony Scott, chief technology officer at General Motors; Vivek Paul, CEO of Indian software firm Wipro; Jonathan Schwartz, president of Sun Microsystems; and Mark Anderson, publisher of the influential Strategic News Service technology newsletter. I served as moderator.
As always, each panelist came at the topic from his own point of view. Wipro's Paul talked about how companies were virtualizing—becoming focused on their core competence and outsourcing the rest (to companies like Wipro, of course). Malone talked about his belief, reported here not long ago, that the balance of power in business is shifting from management to the employee. GM's Scott made some surprising remarks about how the new balance of power was manifested at the carmaker. That company really does seem to be moving toward becoming virtual. Schwartz of Sun explained how his company is concretely reacting to the breakdown in the hierarchy of business—everybody there is now blogging, including him. That means secrets just aren't what they used to be. Anderson threw in some cautionary words urging everybody else to avoid becoming too utopian. And finally, from the floor came surprising voices—CEO Meg Whitman explaining how she governs eBay, everybody's favorite example of today's paradigmatic company; and Wal-Mart board member Jim Breyer on the challenges of adapting to the new world of empowerment while simultaneously operating in an increasingly regulated environment.
Malone: We're in the early stages of a change toward more human freedom in business. It may in the long run be as important as the change to democracy was for government. Information technology is reducing the cost of communication. It's now possible for far more people to have enough information to make decisions for themselves, instead of just following orders from somebody who supposedly knows more than they do. Now in some ways eBay is like a democracy. Or W. L. Gore-you don't get to be a manager there unless a bunch of people say they want to work for you. They essentially elect their managers.
Jim Barksdale (speaks out from audience): That's also been true at Federal Express for the past 15 years. [He was CIO there, and later served as CEO of Netscape.]
Scott: At GM, instead of the traditional top-down hierarchy, what we have today is a process-oriented architecture. In 1996 our engineering process was 48 months long, in what is essentially a fashion business. Technology enabled us to link all those already-automated processes together but do it globally. So now we design a car in one place, manufacture it in nine places, and sell it in 60 or 70 countries around the world. Technology enables a small group of engineers to collaborate with a much broader set of people in this whole community. I don't know if you call that democracy but it certainly changed the character of how we think about designing and building new cars.
Paul: Technology enables a reduction in transaction costs. It's changing the way people collaborate across companies and across continents. In the past what corporations did internally were those things that had higher transaction costs than doing it externally. Now that dynamic has changed. And to follow that one more step, over the next few years it is going to be really critical for a corporation to understand what it is. What does a company need to be doing itself? Now its transaction costs have come down, so the ability to collaborate across regions and across continents has increased.
The transaction cost reduction has also enabled more efficient markets. eBay is a classic example. These extremely dynamic markets can in some sense govern themselves. So it is no longer a matter of your trying to figure out what the market wants as much as staying on top of this runaway horse.
Me: Does that mean every company is becoming a little more like eBay?
Paul: Absolutely. Somebody mentioned that we may be seeing the end of command-and-control types of business. What's going to end up happening is that even the brightest, most charismatic and dynamic individual will not be able to tell everybody what to do….
Schwartz: We had a pretty interesting change in our HR strategies at Sun recently. We allowed blogging for 100% of the workforce. If you're not familiar with blogging it's when you basically keep your diary online and talk to the world perpetually. There is no more distinction anymore between the Intranet and the Extranet. It's just the Net. Traditionally, the people who spoke to the marketplace were the folks in communications or the key executives who were in power at the top. Now it's the 32,000 employees of Sun.
Ultimately you have to govern by policy. We have to have a policy that says at Sun this is what's appropriate to say on a blog versus this.
So I started my own blog. Now, think about Reg FD [a recent SEC rule requiring full and open disclosure of corporate data]. I had a long discussion with our general counsel. Either Reg FD mandates that I must have a blog, or it prohibits me from having a blog.
But if you're no longer allowed to have private discussions of material issues, then at some point we're all going to have to use a blog as a means of communicating and of managing. That changes the role of the senior executive. You're not just a guy making decisions all day long; you're now a part of the ecosystem in a community.
Malone: I have a slogan for that. We need to change our thinking from "command and control" to "coordinate and cultivate." Command and control won't go away completely. But there'll be a lot more times than in the past when being very decentralized, very bottom-up, and very empowered will be the right thing.
Anderson: I'd like to be a little less cheery. We all have our handheld devices. I don't call this freedom. We talk about how free we are to go to the beach. You see all these guys at the beach with cellphones doing transactions on Wall Street. The fact is they don't get a vacation. We don't even count all the hours that we work. We're working harder than our parents or our grandparents. Technology is running amok. We're not really in charge.
Another thought, about globalization: The super trend is that corporations trump nations. It's not necessarily in the corporation's interest to have all the jobs in one country. It's tough on America. But corporations don't have those issues. So what's the future in 50 years? If corporations trump nations, what happens?
Malone: How many people actually make their living selling on eBay?
Meg Whitman [eBay CEO, from audience]: It's hard to know exactly, but about 430,000 people.
Malone: Is that a company, or is it a town, or what? eBay is a community of 41-plus million people and Meg is like the mayor.
Scott: People have an image of GM as a really big company. But we're really a thin layer at the top. Then we're a whole bunch of suppliers and a global supply team held together, and a lot of parts are flying through the air at once. You're going to see more of the GM model where there's a thin layer of stuff at the top that provides the big rules, the government, the policy, the coordination. But the real work is done by lots of other folks.
GM spends about $3 billion a year on technology. The company has $190 billion in sales. We have a total of 1700 IT employees globally doing business in 19 countries.
Several in audience: Seventeen hundred or seventeen thousand?
Scott: Seventeen hundred. We're 100% outsourced. Our people manage all of IT in GM by contract.
Jim Breyer [a venture capitalist from Accel Partners, from audience]: My comment is related to my role as board member at Wal-Mart. Even if decentralization and localization is the right business ethic and strategy, corporate boards and CEOs need to sign off on financial statements. Sarbanes-Oxley [the congressional act that requires companies to document their actions much more carefully] has pushed it the other way. It forces boards and CEOs to take much more of a command-and-control perspective, when in fact a decentralized perspective is the right way to build a business.
Whitman: I play two roles in eBay. One is sort of an elected political role of the marketplace. The marketplace is very democratized and self-organizing. It is the R&D lab. We have a phrase regarding the marketplace: "Enable, don't direct." But the company itself is not as democratized.
Google, on the other hand, is a self-organizing company, to a large degree. We're gonna see how well that works. I would be somewhat concerned, with the scale of eBay, whether we could actually run the company like we run the marketplace. The values that run the marketplace and the company are the same. But to Jim's point, it's not completely self-organized internally as yet.
Questions? Comments? E-mail them to me at [email protected].
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