Not too long ago it was possible for a company to make long-term detailed plans and then execute those plans over a period of several years. They could -- with fairly good accuracy -- predict the demand of their products or services over years, and match supply accordingly. Consumers remained fairly stable in their attitudes and behaviors towards products and services. Everybody needed to buy a new fridge, car or television set every 10 years or so. Since the needs didn’t change that much over the years, neither did the products -- all that was required were some new features and an updated design.
A hierarchy of managers made sure that plans were followed and executed. The role of management was to execute the business model as efficiently as possible, focusing on cutting cost in order to increase market share through competitive pricing and increase profits and returns to shareholders. Management created and refined policies and procedures to make sure that operations ran like a well-oiled machine, and all measures of success and incentive systems were geared towards efficient execution.
Needless to say, today's business environment is very different.
Responding to Challenges
A large part of the change is due to the rapid development and adoption of new digital information technology. Competition is global and the barriers to enter a new industry or market segment are getting lower and lower. Consumer's attitudes and behaviors towards products and services are changing. As a result, companies are operating in an increasingly complex, unpredictable and rapidly changing environment.
Companies face challenges that often require the participation and close collaboration of many people, with different professions and skillsets, coming from different geographies, organizations and backgrounds. Whether the goal is to serve a customer, solve a problem or develop a new product, the company relies heavily on its ability to quickly mobilize and coordinate the right people, and to get the best and most out of the people available.
Many companies perform poorly in both these respects, especially those that are large or growing rapidly, and have a physically dispersed workforce. They need to respond and adapt quickly to changes in the business environment, while at the same time remaining productive and efficient.
The Network Solution
To deal with these challenges a company needs to work more like a network. It's easy to think that working like a network is about using social software, but it goes much deeper than that. Social technology enables and accelerates the needed change, but working like a network is really an entirely new model for organizing collaborative non-routine knowledge work -- one that empowers people to build and use the social capital in their social networks to get their work done.
People’s ability to access new information, knowledge and ideas is highly dependent on their social capital, and so is their ability to be productive when engaging in collaborative non-routine knowledge work. From the perspective of the company, the strength of people’s social networks can have a great impact on the organization’s performance and ability to innovate.
Social technology has a key role to play in this transformation: it provides people with the ability to create and maintain their social networks and access their social capital on a global scale. It also helps people in large and distributed organizations build community, culture and social identity, making the large company feel small and showing the role each employee plays in day-to-day operations and in the company's future.
From the company’s perspective, this is perhaps the most important aspect of this new model of work. One might even go as far as to call it a new operating system for companies. As Chris Anderson, former chief editor of Wired recently expressed it: “The company’s interests are for the short term. The community’s interests are for the long term. If you get the community right, opportunities will present themselves for the company. If you get the community wrong, the engine of innovation will dissolve, and then you won’t have a company anymore.”