Technology influences economies at the same time economies point to the next technology that can be monetized. In The Nature of Technology: What It Is and How It Evolves (Free Press, 2009), Brian Arthur goes a step further suggesting that economies are defined by and structured around technologies. He argues that the daily encounters between technologies and economies cause economic and social arrangements to morph continuously.
Taking this one step further, I’d suggest that technology, in particularly information technology, defines the next generation of organization architectures and leadership opportunities. Those who see these opportunities first, have a chance to leap ahead. Here’s how this works.
Control is fundamental to leadership and information is fundamental to control. Information technology changes how information is collected, who get’s it and how it’s used. Furthermore, information technology plays an increasingly critical analytical role that sifts large data streams for useful information that can be honed into knowledge that eventually drives action.
Now let’s look at four generations of information technology. We’ll start with mainframes followed by mini-computers, client/server/PC’s and end with peer-to-peer/cloud computing. Then we’ll identify four of today’s leading IT trends and define their implications and opportunities.
During the mainframe era, the economy was dominated by large, often vertically integrated firms where control rested firmly in central corporate structures. Expensive and requiring careful tending, mainframes were centralized and used primarily for financial control. Information was sucked from the organization into the mainframe. Output was distributed to corporate leaders who then distributed directives to the rest of the firm. Control, like the mainframes themselves, was centralized.
Mini-computers enabled companies to distribute more control to divisions. Hewlett-Packard demonstrated how to use entrepreneurial divisions to drive rapid growth throughout the 1980’s. Once an HP division reached a certain size, it was cleaved to foster further growth. Becoming a general manager at HP became a coveted role because you got to run your own business. This strategy worked particularly well when discrete test and measurement businesses were the dominant component of HP’s revenue.
Client-servers and PC’s pushed information technology from divisions into the hands of individual users across the enterprise. Not only was computing power more broadly distributed but specialized software emerged to support functions such as HR, Sales and manufacturing. This was accompanied by the emergence of networks and decentralized IT support. This combination dramatically increased individual’s and functions’ ability to independently control their work while still insuring overall integration. Increased local control also increased corporate expectations and accountability from local leaders.
Peer-to-peer computing (including the Internet and cloud computing) extended the capabilities of companies and individuals to independently reach across corporate and systems boundaries to form and control extra-organizational work structures. This has given birth to network-like organization structures that include alliances, idea exchanges, ad-hoc groupings as well as finer supply chain control.
In summary, the evolution of information technology has:
- Continuously pushed the locus of computing from the center towards the edge
- Shifted operating control from IT professionals to business users/individuals
- Expanded the breadth of data collection and analysis from financial control to broader business and technical support
- Dramatically increased the real-time, bi-directional connectivity between work groups and the environment
In parallel, organizations shifted from vertically structured hierarchies to today’s globally distributed, networked organization models. For our purposes, the critical question is what are the next trends and their implications for leaders and organizations?
Mobility – The cell phone has surpassed the PC as the most widely distributed computing device on the planet. With power far greater than the original PC, more people will be connecting to the Internet via cell phone and running applications.
- Implications: Mobility doesn’t shift boundaries, it obliterates them. Boundaries between work and play become irrelevant. Accessibility will be more important than location or device. The default location for meetings becomes “virtual” and the choice becomes face-to-face. Of course the ongoing leadership challenges of creating and communicating vision, community and values will undergo tremendous change.
Now – In a constantly connected world, we’re all Jack Bauer from the TV series 24: everything happens in real-time. More importantly, there’s no hiding and competitive advantage might last only for seconds versus days or months. Leaders can’t know everything that’s happening but they’re now expected to have immediate access to answers because the information necessary is likely available somewhere. “Now” makes multi-tasking the default and deeper engagement becomes a choice.
- Implication: Leaders will rely on real-time sense making, pattern recognition and framing skills to create context for others. Center-edge structures will grow in favor pushing initiative, adaptation and coordination accountability to the edge. New norms of initiative and accountability will raise the importance and recognition of ad-hoc citizen leadership. Edge leaders will be accountable for pulling in capabilities and capacity as well as coordinating directly with other edges. Centers will exercise power by designing values-driven, information and communications architectures more than decision-making.
Connected & Embedded Intelligence – The business enterprise will mimic today’s Formula 1 race teams on a larger scale. Formula 1 cars are loaded with telemetry sensors and computers that constantly inform pit leaders of precise fuel levels, consumption, traction tolerances, aerodynamics; and discriminate between driver error versus a car problem. Companies such as IBM are actively pursuing the “Internet of things” as they connect the sensors and local computational capabilities that already exist in our lives such as street sensors, point of sale checkouts, smart electric meters, etc. For a snapshot, just look at how GPS has exploded from a missile guidance technology to cell phone-based location services that can find which of your friends are at each of the 3 Starbucks near you.
- Implication: Think of the leader as a drone fighter pilot controlling assets and interacting with others thousands of miles away. Where leadership skills are needed, where assets are place and where they are controlled will become distinct strategic choices. Leaders will be expected to look for and seize “combinatorial” innovation opportunities that create value by linking individuals, companies, information and assets in new ways. Think of these as the business analog of today’s Internet “mashup” sites. This will increase requirements on leaders for finer boundary management, privacy and security skills.
Next Generation Analytics – A new generation of analytics and visualizations will be essential to transform massive streams of real-time data into actionable insight. Leaders will need to look in and between these insights for new opportunities. Just as columnists at the N.Y. Times’ David Brooks or Tom Friedman help make sense of what’s happening in the world, leaders will increasingly influence by engaging others in their interpretation of emerging patterns.
- Implication: When Peter Senge outlined the learning organization in The Fifth Discipline, he addressed the dilemmas facing people. In the future, the learning edge will be the person-informatics interface. A company or for that matter, a nation’s competitiveness, will be increasingly dependent on serious analytical and modeling skills. As Brown and Hagel point out in their “Big Shift” concept, competitive advantage will go to those firms that can fully harness the growing digital infrastructure to unleash creativity and expand the pie versus fight over increasingly smaller slices.
The dilemma facing leaders is that the technical changes are far easier to foresee than how exactly and effectively people will adapt. Remember the “re-engineering” craze. That was all about changing behaviors to take advantage of information technology from both the mini-computer and client/server/PC era. Social change lags technology BUT those leaders and people that start experimenting first, typically become the new leaders. Be it today’s heroes such as Amazon or Google, or yesterday’s legends such as FedEx, each used new technologies to unleash people in ways never before seen.