Esko Kilpi on Interactive Value Creation

The art of interaction, the design of digital and the science of social complexity

Tag: Digital work

Work is solving problems and learning is answering questions

Studies predict that nearly half of all jobs and over 70% of low-skill jobs could be susceptible to computerization over the next two decades. Our chances of creating work for human beings in this new, demanding environment will be very limited if old and unjustified assumptions about what people can or can’t do are not examined. If we continue to assume that some people are born intelligent, while most are not, and continue to see intelligence as a fixed, personal possession, the options for large-scale systemic changes will be few.

If, on the other hand, we were to visit recent findings of neurosciences, relational psychology and computational social science, we would see intelligence as something more fluid. Then a whole different set of opportunities would become visible. Perhaps a bigger problem than low-skilled people would be the low-skilled occupations we have created.

There is a misunderstanding of the relationship between “nature” and “nurture” as causes of our intelligence. In most cases, genes do not establish limits that determine the space for personal growth. Recent scientific findings show that everyday life plays a role in defining how and when the genes themselves are expressed in us. Genes, the nature, take their cues from nurture. Environmental influences can be less reversible than genetic ones.

There is another argument than the science of genes about whether intelligence is fixed or can be expandable. Many people tend to think that they live their life with a fixed-capacity. Some people think differently. They have a growth mindset, as Stanford professor Carol Dweck calls it. They think that minds are like bodies: people come in different shapes and sizes, but everyone can benefit from exercise.

Individuals who believe that they can grow, tend to enjoy challenges. They like pushing themselves because they think that struggling leads to something good. People who think that their minds are fixed often see challenges as a threat to their imagined level of ability. They don’t like having to try new things, or making mistakes, because they interpret that as evidence of inadequacy.

These mindsets come from the way people around us respond to our successes and failures. Belief systems are contagious. If, over an extended period of time, people are treated as if they are intelligent, they actually become more so. The opposite can also be true.

Success in life has been seen governed by two concepts: skills and effort; how bright you are and how hard you work. Recently, researchers have claimed that there is a third and decisive concept. It is the practice of lifelong curiosity: “knowing what to do when you don’t know what to do” as Piaget put it.

The collective intelligence of our societies depends on the tools that augment human intelligence. We should welcome the fact that people today are smarter in large measure because they have invented and use smarter tools. Making tools is what human beings have always done. The interactions between tools and human minds are so complex that it is very hard to try to draw a line between humans and technology. Neither is it a zero-sum game where the human brain is losing to technological intelligence, but as technology changes, people and what people do, are necessarily changed.

To benefit from technology, we need resourcefulness. It means to be constantly looking for new tools with which to augment our intelligence. It also means new services: if you have a smartphone in your pocket, you should have an easy access to education in your pocket. Smarter and smarter tools surround us, but if we don’t want to learn the new practices and take up the new roles that the new technologies make possible, they might as well not be there. It is sometimes not easy, because the challenge with new technologies is, what is called “functional fixedness”, our inability to see more than the most obvious use cases.

There is more to being intelligent than using the latest technologies; how we interact with others is a crucial element of how smart we are in practice. Intelligence is social and arises in communities and communication. The world has never been a more networked place, and yet schools and workplaces still focus on individuals. That needs to change.

Human behavior is learned in relations. Our brains are wired to notice and imitate others. Computational social science has proved that behavior can be caught like a disease merely by being exposed to other people. Perhaps you can catch intelligence from others the same way? Learning and also non-learning can be found in communication. It is not that people are intelligent and then socially aware. Social intelligence is not a separate type of intelligence. All intelligence emerges from the efforts of the community.

Work starts from problems and learning starts from questions. Work is creating value and learning is creating knowledge. Both work and learning require the same things: interaction and engagement.

Scientists have discovered that learning is learnable. With the help of modern tools, we can create ways for very large numbers of people to become learners. But learning itself has changed, it is not first acquiring skills and then utilizing those skills at work. Post-industrial work is learning. It is figuring out how to solve a particular problem and then scaling up the solution in a reflective and iterative way — both with technology and with other people.


Disrupting Unemployment

The concepts that govern our thinking and language in relation to work are not just semantic entities, but influence what we perceive and what we think is possible or not possible. Usually we are not aware of how these concepts prime our thinking. We simply think and act along certain lines.

A seminal concept related to how we perceive work is the division of labor, the notion of work as activities separated from other activities, as jobs. The industrial management paradigm is based on the presupposition that activities are the independent governing factors of creating value. The organizational structure of jobs comes first. Then an appropriate system of co-ordination and communication is put into effect. The scheme of interaction conforms to the planned division of labor as a secondary feature.

What if the increasing global competition, the Internet and the huge advances in communication technologies made it possible, or even necessary, to think differently? What if interaction was seen as the governing factor? The smartphone has now become information technology’s key product. Surely, then, it has an impact on the way we work. As jobs and communication are mutually dependent, it means that if there are changes in interaction, so the activities will change.

In the mainstream conceptual model of communication (Shannon & Weaver 1948) a thought arising within one individual is translated into words, which are then transmitted to another individual. At the receiving end, the words translate back into the same thought, if the formulation of the words and the transmission of those words are good enough. The meaning is in the words.

Amazingly, our conceptualization of value creation has followed the very same model. Companies transform ideas into offerings that are delivered to customers. At the receiving end, the products translate back into the same value that the company has created. The meaning is in the product.

Management scholars have lately made interesting claims saying that although the product is the same, different customers experience the value potential of the product differently. They say that it is in fact wrong to say that companies create value. It is the way the offering is contextually experienced and used that creates value, more value or less value. The bad news is that our present conceptualizations of work make it very hard to do anything about it. The good news is that for the first time in history we can do something about it. Companies can connect with users and be digitally present when and where their products are used.

Tor Arne

But we need a new conceptualization of communication if we want to have a new conceptualization of work. Luckily, there is one. A completely different approach to communication exists. The alternative view is based on the work of George Herbert Mead. This model does not see communication as messages that are transmitted between senders and receivers, but as complex social action.

In the social act model, communication takes the form of a gesture made by an individual that evokes a response from someone else. The meaning of the gesture can only be known from the response, not from the words. There is no deterministic causality, no transmission, from the gesture to the response. If I smile at you and you respond with a smile, the meaning of the gesture is friendly, but if you respond with a cold stare, the meaning of the gesture is contempt. Gestures and responses cannot be separated but constitute one social act, from which meaning emerges.

Gestures call forth responses and products call forth and evoke responses. Value lies not in the product but in the (customer) response. Accordingly, work should then be conceptualized as an interactive process, a social act, because the value of work cannot be known in the separate “job” activity or be understood through the capabilities of the worker.

If we subscribe to this relational view, it means that people and actions are simultaneously forming and being formed by each other at the same time, all the time, in interaction. Perhaps in the future it will not be meaningful to conceptualize work as jobs or even as organizational (activity) structures like the firms of today. Work will be described as complex patterns of communicative interaction between interdependent individuals.

All interacting imposes constraints on those relating, while at the same time enabling those people to do what they could not otherwise do. Enabling and energizing patterns of interaction may be the most important raison d’être of work.

The relational view is a new conceptualization of work, potentially opening up new opportunities to disrupt unemployment. Perhaps it is time to change the focus from creating jobs to creating customers – in new, innovative ways. To quote Max Planck: “If you change the way you look at things, the things that you look at change.”


Thank you Katri Saarikivi

Work in the Machine Age  –  Humans Need to Apply

The oft-quoted proof of the rise of machines making human work obsolete is games in which humans lose to computers. This happened in checkers in 1994. It happened in chess 1997. Now computers match humans in Scrabble, backgammon, poker, and even Jeopardy. There is still one exception, “Go”. Why is that? What is so special about Go? The game is similar to Chess in many ways, it is a “deterministic, perfect information game”, meaning a game where no information is hidden from either player, and there are no built-in elements of chance, such as throwing a die. But there are some interesting differences.

For the first move in chess, the player has twenty choices. In typical chess positions there will be around 30-plus possible moves. A typical game lasts about 40 moves before the resignation of one party.

Go players begin with a choice of 55 possible moves. This number rises quickly and soon almost all of the 361 points of the board must be evaluated. Some are much more popular than others, some are almost never played, but all are possible. That makes for 129,960 possible board positions after just the first round of moves. A typical game of Go lasts about 200 moves. As a game of chess progresses, as well as in many other games such as checkers, pieces disappear from the board, simplifying the game. Go begins with an empty board. Each new Go move adds new complexities and possibilities to the situation. The key here is the number of choices available.

The more choices there are, the harder it gets for computers.

The industrial logic was most vividly captured in the idea of the value chain. Value-creating activities were sequential, unidirectional and linear. Those performing the following task must comply with the constraints imposed by the execution of the preceding task. The reverse cannot normally take place. The architecture consists of tightly coupled tasks and predetermined, repeating activities. The output of one task was the input of another. If-this-then-that. Work was algorithmic.

Workers in industrial-age firms were used to the rules that limited choices. The burden of decision making, with the consequent need to communicate and gather costly information, was minimized. Furthermore, by narrowing the scope of choices, the learning requirements for workers were limited. In part, the efficiency-enhancing contribution of mass-production was derived from these lower learning costs.

Work has been designed as a very, very simple game.

Is it then fair to draw the conclusion that the microchip may well replace the human race? Or have we just designed human work plain wrong? Could we, and should we, change the rules of our game?

The most important reason why we need a new concept of work/games is because the players and their contributions in the real world are, at best, too diverse to rank. They are, and should be, too qualitatively different to compare quantitatively as labor. Unlike mechanical systems, human systems thrive on variety and diversity. An exact replication of behavior in nature would be disastrous and seen as neurotic in social life.

The problem we face today is not in the capabilities of humans but in the outdated and limiting conceptualization of work. Work as we know it is mainly designed for machines, not for human beings.

Human life is non-deterministic, full of uncertainty, unknowns and surprises. Creative learning is the fundamental process of socialization and being a human. For a human being, the number of choices or moves in the game of life, in any situation, is unlimited. This is the very hard to copy difference between men and machines.


Men and machines

I took part in a meeting on technological intelligence and the future of work. One of the questions raised was: “If machines can replace people’s minds in knowledge work as effectively as machines replaced their muscles in manual work, what will ultimately be left for human beings to do? Are we going to run out of jobs?” My answer was that this concern is based on a totally incorrect assumption. Working life does not consist of a finite number of things to which the human mind and human effort can be applied.

The challenges that confront us every day are unlimited. Every solution to a problem generates several new problems and unforeseen opportunities. No matter how many are solved, there will always be an infinite number ahead of us. Although modern technology has reduced the number of things that in the past had to be dealt with by human beings, it increases the complexity of the challenges that require human attention now and in the future.

Technology: robotics, machine intelligence and cognitive computing do change what people should be doing and how organizations come to be what they are. This is why we need to revisit and rethink our conceptualizations of work.

When the Industrial Revolution began, the dominant Newtonian worldview meant that there were no significant uncertainties, or unknowns, messing things up. Physical laws described what things, following a linear, rational causality, would do. Most academic experiments were constructed accordingly, and still are today. The aim was often to study the effect of one known variable on another.

Business enterprises were consequently thought of as algorithmic processes, as machines. Enterprises conceptualized as machines, like all machines, didn’t have a will of their own. They served the intentions of their creator, the owner. Employees were, of course, known to be human beings, but their personal intentions were seen as irrelevant. People were retained as long as they were needed to fulfill the intentions of the creators.

The systemic and biological conceptualization then replaced the notion of an enterprise as a machine. One often overlooked reason for this was the changing structure of ownership. When a firm went public, its creator disappeared. Owners were seen as anonymous, and too numerous to be reachable. The Industrial Revolution turned into the Managerial Revolution we are still living through today.

The Managerial Revolution changed the thinking around the purpose of the firm. Like any biological entity, the enterprise now had fitness and longevity as raisons d’être of its very own. Profit came to be thought of as a means, not an end in itself. Success came to be measured by growth. It was seen as essential, just like in nature.

The systemic view was a profound change in thinking compared with the mechanistic view. A biological organism is not goal-oriented in the sense of serving external purposes or moving towards an external goal. The movement is toward a more fit or more mature form of itself in a particular environment. An organism can adapt, but cannot leave or choose to be something else.

But humans are creative and humans can choose and you never know what they will do next.

This is why things are changing again. The sciences of uncertainty and complexity have helped us to understand that organizations are patterns of interaction between human beings. These patterns emerge in the interplay of the intentions, choices and actions of absolutely all the parties involved. No one party can plan or control the interplay of these intentions. But even without being able to plan exact outcomes, or control what others do, people can accomplish great things together.

The thing is that people can only accomplish their work in the necessarily uncertain and ambiguous conditions through ongoing conversations with each other. Work is negotiation. This is why the next revolution is dawning.

The social revolution, the human-centric revolution, is about deeply rethinking the value of human effort. An increase in value can only occur if people can do something in interaction that they cannot do alone. Social business may be more about complementarity and coordination than collaboration.

An enterprise that is conceptualized as a social business, should (1) serve the purposes, the will, of all its constituents. It should (2) enable its parts to participate in the selection of both the ends and the means that are relevant to them personally. If the parts of a system are (3) treated as purposeful, they must (4) have the freedom to choose and to act, not independently, but interdependently. This is because the basic unit of work is (5) interaction between interdependent people.

This means that the defining characteristic of a social business is the increased, non-algorithmic, variety of behaviors that is available. It is not necessarily about common goals or shared purposes any more. It is a common movement of thought that always surprises us.

The way our organizations are conceptualized has a great effect on what people do, and what they do affects the way organizations are conceptualized. Enterprises have always consisted of people who have ideas, intentions and a will of their own. Now it really matters. All people can be creators. All people are creators!

This, in the end, is what makes people different from machines.

From jobs to tasks and from the value chain to the Internet

Economic theories are derived from the era of the production of tangible goods and high-cost communications. These mind-sets are not only unhelpful, but wrong in a world of information products and ubiquitous, low-cost/high-quality connectivity.

New communication technologies have always had a strong impact on industries and the logistics around production. But this time, with information products, the societal changes are potentially even bigger than before.

The Internet is the first communication environment that decentralizes the financial capital requirements of production. Much of the capital is not only distributed, but also largely owned by the workers, the individuals, who themselves own the smartphones and other smart devices, the new machines of work. When computers were expensive, the economics of mass industrialization and its centralized management structures ruled them. Not any more!

The factory logic of mass production forced people to come to where the machines were. In knowledge work, the machines are where the people are making it possible to distribute work to where they are. Architectures of work differ in the degree to which their components are loosely or tightly coupled. Coupling is a measure of the degree to which communication between the components is predetermined and fixed or not. It was relatively easy to define in repetitive work what needed to be done and by whom as a definition of the quantity of labor and quality of capabilities. As a result, management theory and practice created two communication designs: the hierarchy and the process chart.

In a hierarchy the most important communication and dependence exists between the employer and the employee, the manager and the worker.

Manufacturing work is perhaps amazingly not about hierarchical, but horizontal, sequential dependence. Those performing the following task must comply with the constraints imposed by the execution of the preceding task. The reverse cannot normally take place. The architecture consists of tightly coupled tasks and predetermined, repeating activities. Communication typically resembles one-way signals.

Creative, highly contextual work creates a third design. It is about loose couplings and modularity, about networked tasks. In creative work, any node in the network should be able to communicate with any other node on the basis of contextual interdependence and creative, participative engagement.

The architecture of the Internet is based on the very same principle of loose couplings and modularity. Modularity is the only design principle that intentionally makes nodes of the network able to be highly responsive. The logic of modularity and ubiquitous communication make it possible for the first time to create truly network-based organizations.

Creative network-based work in the future is not about jobs, but about modular tasks and interdependence between people. You don’t need to be present in a factory any more, or in an office, but you need to be present for other people.

In an economy, people essentially produce goods and services for people. Companies are theoretically intermediary organizational forms that arrange the development, production and delivery processes. Companies can perhaps be in some cases be replaced by apps? Or managers can be replaced by apps? Or perhaps the new companies look a lot like apps like Uber or Airbnb already do. Many of these new companies see themselves as market makers rather than as service providers.

The modern firm has developed into a perfect vehicle for financial contributions and as a toolkit serves the needs of financial investors well, at least in good times. As creativity and knowledge define success today, access to capabilities is at least as important for a firm as access to money. The Internet may prove to be an extinction-level event for the corporations as we have known them. In the network economy, individuals, interacting with each other by utilizing the new apps together with relatively cheap mobile, smart devices, can now create information products.

But many things need to change!

We are as used to the employer choosing the work objectives as we are used to the teacher choosing the learning objectives. The manager directs the way in which the employee engages with work. This image of work is easy to grasp because it has been taught at school where the model is the same.

In contrast to the above, creative, digital work and the Internet have brought about circumstances in which the employee in effect chooses the purpose of work, voluntarily selects the tasks, determines the modes and timing of engagement, and designs the outcomes. The worker might be said to be largely independent of some other person’s management, but is in effect interdependent. Interdependence here means that the worker is free to choose what tasks to take up, and when to take them up, but is not independent in the sense that she would not need to make the choice.

The interdependent, task-based worker negotiates her work based on her own purposes, not the goals of somebody else, and negotiates who her fellow workers are based on cognitive complementarity and her personal network, not a given organization.

The architecture of work is not the structure of a corporation, but the structure of the network. The organization is not a given hierarchy or a predictive process, but an ongoing process of organizing. The Internet-based firm sees work and cognitive capability as networked communication.

The effects of Moore’s law on the growth of the ICT industry and computing are well known. A lesser-known but potentially more weighty law is starting to replace Moore’s law in strategic influence. Metcalfe’s law is named after Bob Metcalfe, the inventor of the Ethernet. The law states that the cost of a network expands linearly with increases in the size of the network, but the value of the network increases exponentially. When this is combined with Moore’s law, we are in a world where at the same time as the value of the network goes up with its size the average costs of technology are falling. This is one of the most important business drivers today. The implication is that there is an ever-widening gap between network-economy companies and those driven by traditional asset leverage models. The industrial economy was based on economies of scale inside the corporation. The new focus is outside, in network economies.

The most important model is a network structure where the value of all interactions is raised by all interactions; where every interaction benefits from the total number of interactions. These are the new network businesses.

In practice this means that digital services can attain the level of customer reach and network size, required to capture almost any market, even as the size of the company stays relatively small. This is why network-economy based start-ups have such a huge advantage over asset leverage based incumbents.

The key understanding is that it is now the customers or members of the network who create value, not the network owner.

Yes, customer focus has been the dominant mantra in business. Up to now, business has focused on the customer as an audience for products, services and marketing communications. In the world of digital networks, the customer will be transformed from being an audience to an actor.

The central aggregator of enterprise value will no longer be a value chain. The Internet is a viable model for making sense of the value creating constellations of tomorrow.


From productivity to social innovations

The printing press constituted a true revolution in communication. But what really happened as a wider consequence of that revolution? Let’s try to reconstruct the circumstances that preceded printing. We know that there was a strong, although very divergent scribal culture before the printing press. The cultural texture was quite thin outside monasteries, libraries, and cities such as Bologna. That led to a heavy reliance on the vocal transmission of information, on storytelling.

The information culture was half-spoken, half-written.

The influence of the scribe was greatly enhanced because of a complementary character, the copyist. At first, the shift from script to print produced a social culture that was not very different from the culture produced by scribes. The writer – printer process was not very different from the scribe – copyist process, if looked at from the outside. Of course there was a huge increase in the output of books and a drastic reduction in the man-hours required to turn them out.

The first change was a remarkable increase in productivity. But then, the communications revolution of print caused remarkable changes in information-related practices that led to even wider social changes.

The well-informed man had to spend a part of each day in temporary isolation from his fellow men – reading. Another development was the Sunday papers replacing church going.  Sermons used to be coupled with news about local and foreign affairs. The new media players handled news gathering and circulation logistics much more efficiently.

The most noteworthy social change took place on the community level. To hear, you have to come together. To read encourages you to draw apart. The notion that a society can be regarded as a bundle of discrete units supported the principle that detached people can be represented through a system of disconnected political parties. The reading public was very different from the one before. It was not only dispersed, it was very atomistic and individualistic. As a result, the present political system was born.

Learning, which used to take place through vocal interaction in groups, was now the activity of a solitary, independent individual. The picture of the student in the library reading room was transferred to classrooms and the architectures of education.

According to some researchers, print silenced the spoken word. The orators of Rome gave way to the men of letters. Written text was now about facts and talk was cheap.

From this point on, people have tended to see information and communication technologies as two separate domains, not only for technological reasons, but because of the historical developments described above.

We are again going through another revolution in communication. The way the written word is used on Twitter or on Facebook is much closer to the vocal transmission of information than to writing. Through closely combining communication and information technologies, we are creating a much richer cognitive tapestry than the present separate ICT-systems are capable of.  Second, instead of drawing apart, we can now come (digitally) together. The culture is again half-spoken, half-written. The printing press separated information and communication. The Internet and the new social technologies are causing the two to converge.

The first change is again a remarkable increase in productivity, but again, it does not end there. The real promise of the Internet is in the new information-related practices and the social innovations that are still ahead of us.


The wiki way of working

Physical tasks can normally be broken up in a reductionist way. Bigger tasks can be divided by assigning people to different smaller parts of the whole. For intellectual tasks, it is much harder to find parts that make for an efficient workflow. Intellectual tasks are by default complex and linked. Knowledge work is a social construct.

The machine metaphor led to the belief that if we can only arrange the parts in the right way, we optimize efficiency. The demands of work are different now: how efficient an organization is reflects the number of links people have and the quality of the links they have to the contexts of value, the things that matter.

How many handshakes separate them from one another and from the things that matter most? We are beginning to see the world in terms of  relations.

We have examples of new social architectures that redefine some basic beliefs about work and cooperation between people.

At the moment the wiki is the best departure from the division of labor and workflows. Wikis let people work digitally together in the very same way they would work face-to-face. In a physical meeting, there are always more or less the wrong people present and the transaction costs are very high. Unlike email, which pushes copies of the same information to people to work on or edit separately, a wiki pulls non co-located people together to work cooperatively, and with very low transaction costs. Email and physical meetings are methods which exclude. They always leave people out. A wiki, depending on the topic, the context and the people taking part, is always inviting and including. The goal is to enable groups to form around shared contexts without preset organizational walls, or rules of engagement.

In 1995 Ward Cunningham described his invention as the simplest online database that could possibly work. An important principle of the wiki is the conscious emphasis on using as little structure as possible to get the job done. A wiki does not force a hierarchy on people. In this case, less structure and less hierarchy mean lower transaction costs. A wiki always starts out flat, with all the pages on the same level. This allows people to dynamically create the organization and, yes, also the hierarchy that makes most sense in the situation at hand.

People work together to reach a balance of different viewpoints through interaction as they iterate the content of work. The wiki way of working is essentially a digital and more advanced version of a meeting or a workshop. It enables multiple people to inhabit the same space, see the same thing and participate freely. Some might just listen, some make comments or small edits, while others might make more significant contributions and draw more significant conclusions.

New work is about responsive, free and voluntary participation by people who contribute as little, or as much as they like, and who are motivated by something much more elusive than only money. Society has moved away from the era of boxes to the time of networks and linked, social individualism. Being connected to people, also from elsewhere, is a cultural necessity and links, not boxes, are the new texture of value creation.


Architectures of work and Internet-based firms

The characteristics of work in the network economy are different from what we are used to: the industrial production of physical goods was financial capital-intensive, leading to centralized management and manufacturing facilities where you needed to be at during predetermined hours. The industrial era also created the shareholder capitalism we now experience. In the network economy, individuals, interacting with each other by utilizing free or low cost social platforms and relatively cheap mobile, smart devices, can now create information products.

The production of information goods requires more human capital than financial capital. And the good news is that you are not limited to the local supply. Because of the Internet, work on information products does not need to be co-located. The infrastructure of work does not resemble a factory but a network.

Decentralized action plays a much more important role today than ever before.

Work systems differ in the degree to which their components are loosely or tightly coupled. Coupling is a measure of the degree to which communication between the components is predetermined and fixed or not. The architecture of the Internet is based on loose couplings and modularity. Modularity is the design principle that intentionally makes nodes of the network able to be highly responsive.

The Internet-based firm sees work and cognitive capability as networked communication. Any node in the network should be able to communicate with any other node on the basis of contextual interdependence and creative participative engagement. Work takes place in a transparent digital environment.

As organizations want to be more creative and knowledge-based, the focus of management thinking should shift towards understanding participative, self-organizing responsiveness.

The Internet is a viable model for making sense of the new value creating constellations of tomorrow.

But something crucially important needs to change:

The taken for granted assumption is that it is the independent employer/manager who exercises freedom of choice in choosing what is done and by whom. The employees of the organization are not seen autonomous, with a choice of their own, but are seen as rule-following, dependent entities. People are resources.

Dependence is the opposite of taking responsibility. It is getting the daily tasks that are given to you done, or at least out of the way. We are as used to the employer choosing the work objectives as we are used to the teacher choosing the learning objectives. The manager directs the way in which the employee engages with work, and manages the timing and duration of the work. This image of work is easy to grasp because it has been taught at school where the model is the same.

In contrast to the above, digital work and the Internet have brought about circumstances in which the employee in effect chooses the purpose of work, voluntarily selects the tasks, determines the modes and timing of engagement, and designs the outcomes. The worker here might be said to be largely independent of some other person’s management, but is in effect interdependent. Interdependence here means that the worker is free to choose what tasks to take up, and when to take them up, but is not independent in the sense that she would not need to make the choice.

The interdependent, task-based worker negotiates her work based on her own purposes, not the goals of somebody else, and chooses her fellow workers based on her network, not a given organization. The aim is to do meaningful things with meaningful people in meaningful ways utilizing networks and voluntary participation.

It is not the corporation that is in the center, but the intentions and choices of individuals. This view of work focuses attention on the way ordinary, everyday work-tasks enrich life and perpetually create the future we truly want through continuous learning.

The architecture of work is not the structure of a corporation, but the structure of the network. The organization is not a given hierarchy, but an ongoing process of organizing. The main motivation of work is not financial self-interest, but people’s different and yet, complementary expectations of the future.

The factory logic of mass production forced people to come to where the work is. The crowdsourcing logic of mass communication makes it possible to distribute work/tasks to where the right/willing/inspired people are, no matter where on the globe they may be.

Knowledge work is not about jobs or job roles but about tasks. Most importantly knowledge work can, if we want, be human-centric. Through mobile smart devices and ubiquitous connectivity, we can also create new opportunities and a better future for millions of presently unemployed people.

It is possible!



The Social Graph of Work

The approach of the industrial era to getting something done is first to create an organization. If something new and different needs to be done, a new and different kind of organizational form needs to be put into effect. Changing the lines of accountability and reporting is the epitome of change in firms. When a new manager enters the picture, the organizational outline is typically changed into a “new” organization. But does changing the organization really change what is done? Does the change actually change anything?

An organization is metaphorically still a picture of walls defining who is inside and who is outside a particular box. Who is included and who is excluded. Who “we” are and who “they” are.

This way of thinking was acceptable in repetitive work where it was relatively easy to define what needed to be done and by whom as a definition of the quantity of labor and quality of capabilities.

As a result, organizational design created two things: the process chart and reporting lines, the hierarchy.

In creative, knowledge based work it is increasingly difficult to know the best mix of people, capabilities and tasks in advance. In many firms reporting routines are the least important part of communication. Much more flexibility than the process maps allow is needed. Interdependence between peers involves, almost by default, crossing boundaries. The walls seem to be in the wrong position or in the way, making work harder to do. What, then, is the use of the organizational theatre when it is literally impossible to define the organization before we actually do something?

What if the organization really should be an ongoing process of emergent self-organizing? Instead of thinking about the organization, let’s think about organizing.

If we take this view we don’t think about walls but we think about what we do and how groups are formed around what is actually going on or what should be going on. The new management task is to make possible the very easy and very fast emergent formation of groups and to make it as easy as possible for the best contributions from the whole network to find the applicable tasks, without knowing beforehand who knows.

The focal point in organizing is not the organizational entity one belongs to, or the manager one reports to, but the reason that brings people together. What purposes, activities and tasks unite us? What is the cause of interdependence and group formation?

It is a picture of an organization without walls, rather like contextual magnetic fields defined by gradually fading rings of attraction.

Instead of the topology of organizational boxes that are still often the visual representation of work, the architecture of work is a live social graph of networked interdependence and accountability. One of the most promising features of social technologies is the easy and efficient group formation that makes this kind of organizing possible for the first time!

It is just our thinking that is in the way of bringing down the walls.


The Internet of Things

Industrial era enterprises viewed customers through the lens of a fairly uniform set of features, leading to customers being seen as having relatively uniform needs. But even commodity products are always a bundle of use contexts, buying patterns, complementary goods and delivery options. Just because a product is a commodity doesn’t mean that customers can’t be diverse in the ways they use the product.

All use cases are somewhat the same and somewhat different. This means that different customers and processes use products that are manufactured in the same way, with the same product features, differently. It is contextual. Customers and the way products are used, are today understood to be active contributors to value creation. The word “consumption” really means value creation, not value destruction. Companies don’t create value for customers, the way the products are used creates value, more value or less value.

The parties explicitly or implicitly “help each other to help each other”. Value creation is a process of interaction. As the goal is to create more value together, a critically important element would be to implant context aware intelligence and interaction capability to a product.

The Internet of Things refers to embedded computing power and networking capability of the physical objects through the use of sensors, microprocessors and software that can collect, actuate and transmit data about the products and their environment. The gathered data can then be analyzed to optimize, develop and design products, processes and customer services. IoT is often about two new digital “layers” for all products: (1) an algorithmic layer and (2) a network layer.

The algorithmic layer “teaches” the customer and the product itself to create more value in a context-aware way, and accordingly teaches the maker the product to develop. As a result, the customer’s need set is expanded beyond the pre-set physical features of the offering. This changes the conceptual definition of the product and it becomes more complex. The more complex the product, the more opportunities there are for the maker to learn something that will later make a difference.

From a marketing standpoint, when a customer teaches the firm behind the product how she uses the product, what she wants or how she wants it, the customer and the firm are also cooperating on the sale of a product, changing the industrial approach to sales and marketing. The marketing and sales departments used to be the customer’s proxy, with the exclusive role of interpreting changing customer needs. Internet-based business necessarily transforms the marketing function and sales specialists by formally integrating the customer use case into every part of the organization. Thus the customer of tomorrow interacts with, and should influence, every process of the maker through the connected, intelligent products.

In the age of the Internet of Things, all products are software products. The value of the code, computing power and connectivity, may determine the value potential of a product more than the physical product itself. The effectiveness of an offering is related to how well it packages the learning from past activities, other use cases and from other similar products and how it increases the users options for value creation through network connections in the present. The offering actuates data via algorithmic smartness and through live presence (in the Internet). Connectivity also enables some functions of the product to exist outside the physical product in the product system, the cloud.

A product or a service should today be pictured as a node in a network with links to supplementary services and complementary features surrounding the product. The task today is to visualize the product in the broadest sense possible.

Visualizing these connections changes the strategic opportunity space dramatically. The study of isolated parts offers little help in understanding how connected parts work in combination and what emerges as the result of network connections. Every link and relationship serves as a model for what might be possible in the future. What new relational technologies are making possible for manufacturing industries is a much, much richer repertoire of business opportunities than what we were used to in a traditional industrial firm.

The ability to create value in a remarkably more efficient and resource-wise way corresponds to possibilities for interaction with relevant actors, information and products. If interdependent links are few, poor, or constraining, the activity and value potential will be limited.

The Internet of Things and technological intelligence in general, create transformative opportunities for more efficient and more sustainable, resource-wise, practices and also higher margins!


Thank you Rafael Ramirez

More on the subject: Ford’s OpenXC. Bosch. Kari A. Hintikka (In Finnish)