Esko Kilpi on Interactive Value Creation

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

Tag: Douglas Rushkoff

The future of ICT?

Industrial work clearly determined the tasks that had to be done. The machine and the ways to work with the machine were given. People served the machine. Workers did not need to be concerned and feel responsible for the results. They just did what they were told.

Knowledge work is very different. The first thing for a knowledge worker is to try to answer these questions:  What am I here for? What is my responsibility? What should I achieve? What should I do next? Key questions for a knowledge worker have to do with how to do things and what tools to use. This time, the machines, the tools, need to serve the worker. It is, in fact, a change from only following instructions to also writing the instructions.

Historians claim that the invention of the printing press led to a society of readers, not a society of writers despite the huge potential of the new technology. Access to printing presses was a much, much harder and more expensive thing than access to books. Broadcasting systems such as radio and television continued the same pattern. People were not active producers, but passive receivers.

Computer literacy or the idea of being a digital native still often follow the same model. In practice it means the capability to use the given tools of a modern workplace – or a modern home. But literacy to just use, to be the consumer of, the technologies and the programs is not what we need. The perspective of the consumer/user was the perspective of the industrial age. Success meant learning how to behave in the way the machine needed you to behave.

That should not be the goal today.

As a result of Internet-based ICT we have learned how to speak and how to listen; we have learned how to write and how to read. But in the digital world, it is not enough if we know how to use the programs, if we don’t know how to make them.

We are typically always one step behind what technology can offer. We can now participate actively through tweets, status updates and profile pages, but the thing to remember is that somebody else has made the programs that make it possible. And often the real goal of that somebody is to create a new advertising model. Nothing wrong with that.

The underlying capability of the knowledge era is programming, not reading or writing. It is a change from using things to making things. Creating things for yourself and sharing them.

I have met many people who think that programming is a kind of a modern version of a working-class skill. It can well be outsourced to some far-away, poor nation while we here do higher value things. Nothing could be further from the truth, more wrong, and more dangerous for us. Today the code is the main domain of creativity and innovations. It is a new language. Writing code is the number one high leverage activity in a creative, digital society.

The primary capability of the knowledge era is not using computers, but programming computers. It is not using software, but writing software.

Mitch Resnick talks about the new challenge: “After people have learned to read they can read to learn. And after people have learned to code, they can code to learn.”

It is time for a human response to technology.

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Thank you Mika Okkola

More on the subject: On software productivity. The Finnish ICT 2015 report. How to start learning programming. Codecademy. Linda Liukas. The Estonian approach. On GitHub. On data democracy.

The social business redefining what binds individuals together

Almost all leadership concepts start with the assumption that a key role for the leader is to set a direction. This usually means designing and communicating a vision and a set of goals. Traditionally, the roles of vision and goals have been there to help people to understand the direction of the enterprise and how they can contribute to it. Today we need something more.

We need to redefine what binds individuals together. Separate individuals subscribing to the vision may not be enough if people don’t connect with one another. What we are striving to do is not enough if there is no discussion about who we are, and why we do the things we do. We cannot talk about an organization of people without referring to what makes them a collective.

Leadership in the era of the social business should be about providing a platform for discussing the meaning of work and the collective identity.

Leadership should address the human search for being part of something larger than one’s self. The more gifted people are, the more they want to connect with meaningful people doing meaningful things together.

As almost all organizations are becoming increasingly diverse and network-like, and as all boundaries are increasingly flexible, the notion of what brings people together is becoming even more critical.

When we think of intelligence, we usually think of extraordinary individuals. We imagine the thought processes of independent geniuses innovating in isolation. Nothing could be further away from the reality. Creativity is an interactive and social process for even the most gifted. Significant creative breakthroughs almost always represent years of sustained collaboration with others. Creative individuals need both independence and interdependence to do their best work. A creative organization thrives on the tension that arises from widely different but complementary abilities and views working with one another.

In industrial management, employees were taken for granted and had no choice or voice. The foundations of work relationships are still largely built on asymmetrical relationships between the employer and the employee, the manager and the worker. This antagonism is already affecting labor markets in developed countries: firms are finding it increasingly hard to hire good people. Younger people are more and more attracted to self-employment and entrepreneurial possibilities instead of joining a corporation.

The ideas and technological solutions around the social enterprise can help renew and refresh outdated approaches to work.

The social business is very different from the industrial corporation. In order to be successful, the firm needs to listen and involve people in the same manner that we are today trying to do with one group – customers. Successful corporations, no matter how large and established, are evolving collectives of talented, passionate and diverse individuals in interaction

Knowledge workers want to have a say in what they do in life; where and when they work and most importantly – why and with whom!

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More on the subject: New social networks. David Weinberger on impractical knowledge and knowledge is the network. Douglas Rushkoff on the future of jobs.

Coworking spaces in London, and Amsterdam and co-working as a phenomena.

A firm as a nexus of different contributions

Corporations are the dominant mechanism by which economic activity is organized in our economies. How companies perform and what helps them to perform better are hence questions of huge importance. Corporations have such an enormous influence on our lives that corporate decision-making and actions might well deserve more attention right now than does discussing the new social tools. Or, to put it in another way: what kind of changes in our corporate thinking would enable maximum benefits to be gained from new technologies?

One key question in corporate governance is, who should have the right to make what decisions, and why.

Instead of thinking that we already know the answer, let’s look at what is going on. Companies that focus on their share price, which is the business press doctrine, have the incentive to shut down, or move operations that are not generating the best possible profits for their shareholders, even though those operations are still generating substantial economic value in the geographical area they are located in.

From the point of view of the people who are employed, and the society where those corporations are located, this is obviously not very efficient. It is doubtful whether maximizing the value of shares, maximizes social wealth. Can it be that the idea of maximizing of shareholder value is an incomplete performance standard in post-industrial economies?

I am not talking about social responsibility here. What I am claiming is that there are other parties, other than shareholders, who have made an investment in the enterprise. In order to understand this, we should start by asking who is contributing to the enterprise, and what, and who is bearing what risk. The question I am raising here is whether we can think of employees as generic labour any more.

It matters in a very specific way who does what. The contributions of knowledge workers cannot be understood as fixed-wage generic inputs, but they can easily be understood as risk investments, in the very same way as we today understand shareholders’ financial contributions. We should ask whether the current social construct of allocating risks and rewards is inevitable for some reason, or whether it is an outdated industrial artefact that should be redesigned?

A large part of the economic surplus that a company creates is paid to the employees as wages. This is treated as an operating cost. Naturally, costs should be lowered. The picture would look somewhat different if we understood employees as being investors of (human) capital, and treated them accordingly. Our system of industrial management creates a systemic inefficiency in knowledge-based work. It can only be removed if the worker’s role included a more active (managerial) responsibility leading to responsive, agile practices. This cannot be achieved unless our mental construct of the employer employee relationship changes radically.

The change would mean that employees would explicitly bear the entrepreneurial accountability for the success or failure of the company, as they do any way in the end and additionally benefit from any possible upside, just as shareholders do. From the point of view of corporate governance, it would mean that companies should be run in the interests of all their investors.

I don’t think that future firms have that many employees, more contributors of different resources – mainly financial capital and human capital. Some investors invest for a long term, some for a very short term.

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Thank you Gary Becker, Margaret Blair and Yochai Benkler

From who I am to what I do, and back

It is astonishing to realize that until quite recently, most human beings lacked a concept that is so obvious to all of us: earning money. The vast majority of people lived on the land. A peasant worked all day. He probably had a little money, but that was not what he worked for.  He worked because life was work and work was life. It was as simple as that. A peasant did not have a job for which he was paid. Nor could he quit his work and take another position that was more highly paid, if one were offered. People were tied to the land they were born on. As they worked for the land, they worked for themselves and for the landowner, if they did not own the land.

The situation was fairly similar from the landowner’s point of view. The landowners also worked for the land, not for the money. The expectation was not to lose any of the land. The means they had in their possession to increase their resources were limited: cultivate the land, have children, marry in return for increases in the amount of land they owned, or fight other land owners whose land they wanted.

The explanation of Aristotle

Aristotle had interesting ideas to explain what was going on. According to him, the basic economic activities are domestic. This involved the production and consumption of all the things human beings needed in order to live. This is what Aristotle called “Oikos”, meaning a house. It was about house-holding, a kind of an entrepreneurial calling for the wellbeing of the family. “Oikos” together with another word “Nomos”, roughly meaning laws, are the ancient Greek backgrounds to our concept of  “Economy”.

Aristotle makes a distinction between two kinds of value added – one that we get from nature’s resources to sustain our lives, and another, which we create to facilitate our interpersonal relationships and trade. The value added in the latter does not begin from nature, but from the promises we make to one another.

The first, for Aristotle, includes things like wood, animals, tools, stones for houses, yarn for weaving etc., and the second is – money. The interesting thing was that the essence of money was to him a promise!

The economy based on promises

There are limits to what we can get from nature, but, according to Aristotle, since money is promises, there is no end to the amount of money we can aspire to collect. What is special about money, Aristotle says, is, that its value is set by agreement. It has no intrinsic use value, only an exchange value, and it keeps that value only as long as people agree to accept it in payment. It is a convention of trust.

Therefore it is understandable that the system of trust always seeks a limit until it reaches a point where promises are not believed any more. This is the point at which fear replaces trust. After that limit is reached, the result is a rapid, sudden and deep drop, a (credit) crunch.  The whole house of cards crashes, because it is made of promises that don’t have any value any more. The hot air turns into – just air.

The change that has taken place in a fairly short period of time in history has been remarkable. Money was invisible then, today it is omnipresent. Work existed then as it exists now, but the idea of work being life and life being work has disappeared. We mostly work to earn a living.  We even dream of the day when we don’t need to work any more, in order to have time to really live. Work and life, instead of being inseparable parts of our lives, have become conflicting, almost contradictory ideas.

Separating work and life

Adam Smith, in the Wealth of Nations, which was published in 1776, was one of the first to write about what we are experiencing now. He gave form to a new phenomenon: the labour market. In a sense, before he named it and before he explained how it worked, it did not exist. In a situation where life is work and work is life, a man cannot separate his work from himself.  Adam Smith claimed that labour is something separate from the worker. This was the point at which work and life separated. It was no longer about who I am, but what I do. Labour was the new resource of the industrial age. As a resource, labour could now be bought and sold like any other resource. In fact, everything  has been for sale since then. The emphasis of the economy shifted to trade, buying and selling, and away from (domestic) work. The sign of efficiency was now profit, which was measured in money. Thus the modern world came about.

This led to the situation we are in at present: buying and selling are no longer confined to resources, to trade. The world economy mostly consists of buying and selling money, buying and selling promises according to Aristotle. We believe that this is the natural order of things. Perhaps it is. But we should not forget that only about two centuries ago, it was not thought to be the natural order. It would be interesting to know what the situation we are in at the moment will look like two centuries from now.

The time after labour markets

Adam Smith is not helpful any more. We know now that the inputs of knowledge workers cannot be understood as generic labour. It matters more and more who does what, when, and with whom. The concept of a job role is giving way to tasks as the unit of value creation. Labour markets are turning into task markets. We also know that in the era of creativity and knowledge intensive work, the peasants are also the landowners. What is missing is a new theory explaining what is going on. Perhaps the future is going to look a bit like the past, not our industrial past, but the time before that. Perhaps the theory of social media and the Internet comes from ancient Greece. Perhaps Yochai Benkler is the new Adam Smith. Anyway, in social media, it is not what we do, but who we are.

Life and work have come together again.

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Thank you Charles van Doren, Stephen B Young and Douglas @rushkoff