Web 2.0 and beyond: the Post-bureaucratic age?

One of the repeating features of the commentary on Web 2.0 is that with the new tools for online collaboration many things can now be done without organisations that previously required bureaucracies. We can crowdsource, we can co-design, co-deliver and openly innovate as never before.

The promise if of politics without parties, businesses without corporations and so on. Is this hype or is there substance to the argument?

At the same time, we find domination of particular facets by large organisations, or at least the appearance of scale. Facebook and Google are obvious examples. In the web 2.0 world we are seeing the same "winner takes all" aspect of the ICT industry we have seen over generations of IT; IBM with mainframes, Digital with the minicomputer, Microsoft with the desktop, Oracle with databases and so on.

That new waves of innovation come from new entrants who displace the old guard is not the same as a change in the economic realities of the market place.

My own view is that there are two parts to understanding what the future might look like.

The first is to learn a lesson from history, particularly the industrial revolution. Waves of technology innovation are followed by waves of organisational innovation. The Victorians were stunning social innovators.

Think of the modern university, the joint stock company, friendly societies, Mutuals,  Public libraries, the co-operative movement to name a few. On oddity is that the term  “Virtual University” is actually 19th Century and was applied to the University of London!

In the 20th century, a unique governance model was created with the BBC to scale and democratise access to radio and TV.

During the 1980s there were a number of terms in use around "virtual organisations", "networked enterprises", "inter organisational systems", "borderless companies"  and  "shamrock organisations" that have now morphed into the notion of the extended enterprise.

The second part is to try to dig into why networked IT may be unique.

When you design an organisation for a particular purpose you break it up into a set of tasks and processes that need to be done to accomplish its goals and then glue it back with the coordination functions that keep the integrity of the whole.

Now most technologies either help you with the task or the coordination part, IT does both.

The word processor and before that the typewriter help automate the task of producing letters and reports. The telephone allows a UK subsidiary to coordinate with its US Head Office.

What networked IT does is to change both dimensions. As the raw cost of computing and communications falls you can buy more coordination per buck or pound.

However, this will only deliver savings cost and improvements in quality if translated into less coordination activity.

The recession of the 1980s lost jobs in the unskilled and semi skilled areas. The 80s saw a thinning out of white collar jobs.

So, if the extended enterprise is for real and Web 2.0 can deliver a post bureaucratic world then there are some really interesting challenges ahead.

What advocates of this notion are effectively saying is that you can outsource the coordination functions of management to next generation organisations who can deliver cost savings and scale.

So, if this is true then it means a world with far fewer roles in middle and senior management. If you have less need for management what happens to management consultancies?

There has always been a need for specific support on strategy and other areas of expertise, but what happens to the “body shopping” aspects of the consultancies?

The problem is that to achieve the benefits of the world I’m describing you have to sell in existing organisations to the people who are likely to lose out. Turkeys voting for Christmas anyone?

So, the likely route to this world is that the economics will favour new entrants in all sectors impacted by new technologies at the expense of large players today. Will that really happen in retail, finance, defence, transport, manufacturing, government and so on?

Now think about another management change, LEAN thinking. It’s been around for 20 years or more and builds on 100 years of development of theory and practice. The benefits are really clear. Yet there is still a difference between organisations that “ do lean” and those that  “live lean”. There are more in the former camp I would argue than in the latter. Yet the real benefits come from living in the latter.

So what’s my guess?  Web 2.0 technologies make possible a new wave of organisational innovations. I don’t believe in technological determinism. Whether the potential translates into outcomes in the real world is about changing the management mindset. That’s slower than changes in technology.

So either we see a wave of new organisations across every sector challenging today’s giants in every sector we touch as an industry, or todays big players  will do enough to limit that risk.

In the post credit crunch world, both are possible. It’s going to be interesting to see how this pans out!

May you live in interesting times!

Comments (6)

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  • 1
    Guy Cosnahan wrote on 29th Sep 2009

    You can take the person out of a bureaucracy but can you take the bureaucracy out of the person?

    Having lived in a post-Soviet, post-Persian 'millet' system country for ten years it was interesting to see the training process applied to heady youngsters who were whisked off to paradise (the USA) for training then re-inserted back into the Govt. ministries.

    It was all about power and control, blame and avoidance of personal risk. So juniors could never make a decision that their boss might later be blamed for, especially as decisions required "rent" to oil the wheels.

    One of the features of Web2.0 is that although the networks look good the process automation in our risk averse times can concentrate decisions (abet quickly and efficiently) into a few hands. I have promoted this my self in various signature type systems.

    In organisations with low risk appetite and nervous leaders Web2.0 can become the control freaks nirvana.

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  • 2
    Antony Hirst wrote on 1st Oct 2009

    Chris,

    Thanks for your most throught provoking and interesting blog. I'm motivated reply as I have had similar thoughts, but for slightly different reasons. Let me start with saying that I don't believe Web 2.0 is that significant. In it self, Web 2.0 won't change much. I believe that in reality Web 2.0 is more about the delivery of functionality than the philosophical paradigm used to create that functionality or use it.

    My observation is that business does not do preemptive paradigm shifts - management talks but seldom walks due to the risk factors mentioned by Guy. Unfortunately, very little has actually changed in the last few decades. IT has however, promoted flatter organisational hierarchies, but not significantly so for most large enterprises.

    Businesses primarily adapt reactively in response to threats over opportunities. In terms of online collaboration, a minor threat to consultancies has been Open Source Software (OSS). OSS has shown how complex and coordinated activities can be achieved through light touch decentralised coordination, little management and virtually zero bureaucracy; almost entirely due to the harnessing of individual motivation. But most organisations that enjoy the fruits of OSS continue with their established ways for their core business.

    On the whole, managers are generally faced with a relatively unmotivated workforce in a potentially litigious environment, which is why workplace processes, procedures, constraints, responsibilities and authority (and other such bureaucractic tendencies) remain in force. It is far easier to tell somebody what to do rather than make them love their work. As an example, despite the kilometers of articles promoting home working, it remains elusive, something only really employed by sales people and consultants (or those on the road). Home working remains fundementally untrusted.

    I remember mentioning to my boss, that perhaps we could learn from the ability of OSS projects to quickly deliver complex working software. He gave me one of those looks which suggested any further discussion along that track could prove career limiting.

    Plus ce change plus ce la meme chose!

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  • 3
    Charles Chang wrote on 1st Oct 2009

    I am persuaded to agree with Guy and Antony. Look at all the 'new business models' that preceded and flowered during the so-called dot.com era: telephone banking, internet banking/insurance, salesman-less travel bookings etc. Many of them survived: just. Direct Line, First Direct, egg, eSure, lastminute.com and so forth. But did they bring down established players? None of significance that I can think of. Did they force established players to change their traditional business models? Only in that many adopted small divisions to mimic the up-starts (No, that was no a typo for start-ups). But I cannot think of one major player who then dropped the old model and the minor division then took over the business. Can anyone?

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  • 4
    David Flint wrote on 8th Oct 2009

    I have to agree that the dot.com bubble led to few major bankruptcies. But it did make profound changes in the way we all do business. A great deal of banking, travel booking and information retrieval has gone online or is done by phone. Banks and travel agents have had to change. So have bookshops, supermarkets, TV channels, etc. Moreover, these changes are still incomplete.

    There are many reasons for this but I'll pick out two. Brands have value. People feel safer buying from Tesco or Aldi than from 'Startup Ltd'.

    Physicality has value. People like to meet people and meeting creates trust much better than chat or even video-conferencing. In shopping, a physical store gives me confidence that there's somewhere to take my new but broken vacumn cleaner to!

    Bob Heinlein said that we overestimate the impact of technology in the short-term but underestimate the long-term impacts. I think he was right.

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  • 5
    catherine wrote on 14th Oct 2009

    It is amazing to see the profound effect of the web technologies. In the third world, the effect is felt both in the social and business environment both positively and negatively. In the business environment the management hierachy is becoming flattened threatening employment, in the social environment, we have more of a negative influence on the content accessible to the youth. We are yet to achieve the real benefits of this technologies in our part of the world.

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  • 6
    Kieron O'Hara wrote on 27th Oct 2009

    Thanks Chris, thought-provoking as ever.

    It occurs to me that a key point here is how information gets valued. Our world is structured in such a way that information receives its value from scarcity, enforced by mechanisms such as copyrights, patents and trade secrets. On the Web, the value of information comes from abundance, from the possibility of serendipitous reuse of information in novel contexts. My information is made all the more valuable because someone can put it into the context of their information.

    Many aspects of business and management are moving online, but most business models are still fundamentally motivated by the scarcity model.

    The same is true of government, in spades. At the moment, Tim Berners-Lee and Nigel Shadbolt are advising the government on information policy, trying to get government data released in order to allow the sort of advance that Chris has written about. It will be interesting to see how they do, and indeed whether the initiative is allowed to continue if there is a new government.

    Final point: it's particularly good timing that Oliver Williamson has won the Nobel Prize for Economics this year, as he has done so much high-quality research into why organisations are structured as they are, and how this is affected by transaction costs.

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About the author
Chris is a technology and policy futurologist. Chris has been in the IT industry since 1980. His roles have spanned Honeywell, ICL, HP, Microsoft and Capgemini. He is a Fellow of the BCS and a Fellow of the RSA.

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