If the transaction costs of creating value go down radically, the form and logic of economic entities need to change. The new landscape of work is alien territory for most of today’s business leaders and business schools, but things are already moving towards a new world. The new topography consists of the network as the architecture of work and work as coordinated, contextual problem solving between non-co-located but interdependent people.
The still dominant industrial “value model” is based on controlling and leveraging assets, whether those assets are land, capital or competences . The asset focus has led to a production and a supply driven paradigm with a huge effort given to managing the internal organization, the value chain. Thus it is understandable that the key operational measures are all related to asset leverage. This pattern has existed, in essence, unchanged since the very early years of the industrial age.
Four fairly new insights are challenging our traditional beliefs:
1. Value creation happens at the point of use, not the point of production;
2. Mass solutions are not as competitive as contextual solutions;
3. Transactions are replaced by interactions because contextual value creation cannot take place without interaction;
4. Open networks and reach and richness of networking are more valuable than control of proprietary assets.
Work is turning into defining and solving contextual problems in interaction. The astonishing thing is that we can find an existing, efficient, working model for this kind of work. It is games.
The game environment may be one of the case examples that are now available for creating a deeper understanding of the future of digital work.
Then what does it look like?
The pace of games is normally fast and requires fast decision-making. Decisions are typically based on incomplete information and are always iterated as more data become available. You can’t take a lengthy pause to strategize and to weigh up the options. The culture needs to embrace changing decisions, learning and adopting constant corrections to the course that was initially chosen.
Acting is then always based on uncertainty. You can’t succeed in an uncertain environment without trial and error, without taking risks. You can’t embrace risk taking without accepting failures. Here the game environment is fundamentally different from most corporate cultures. Frequent risk taking and confronting risks routinely help players to learn to keep paradoxes alive calmly and to live efficiently with continuous change.
Management/hierarchy in games is often temporary and context specific. People switch roles. They direct others one minute and take orders the next. Management is a task. It is not a position, a role or part of the identity of an individual. Companies often identify people as leaders because of the high level of potential they show early in their careers. That model may not work in the future. The growing complexity of business means that no single leader can handle all the different challenges any more. Treating management as a temporary state and a task can be the new model of the future. The whole assumption that leadership resides within an individual may not be correct at all. Leadership should be understood as a relationship between leaders and followers. Followers choose their leaders as much as the leaders choose their followers.
Getting the network environment right for cooperation is imperative. Efficient digital environments make information open and transparent to all of the players, all the time. This information may include quantified-self type statistics and trend information for reflexive work. Real-time status updates on operations make responsiveness and planning the next move easy.
The mainstream corporate approach to management has assumed that thinking and doing are more or less separated. In the game environment a player is expected to act on information, without waiting for instructions.
The most interesting thing in the game environment is that it allows people to take responsibility, to assume leadership as and when needed.
The widespread adoption of game mechanics for coordination and taking responsibility would require a dramatic change in mainstream organizational culture. However, the games are here today and the generation that has grown up playing the games is growing up and joining corporations. They are very likely going to be the drivers of the change towards a more creative, productive and more fun work environment.
To capture the new logic of value creation companies must begin to think of themselves as service marketplaces and service market makers and to accept that their source of value creation is no longer in their balance sheet.
Network reach and richness become more important than any and all other assets. Maximizing network interactions becomes the route to maximizing value.