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Network logic many sectors we categorise as services, such as processing insurance claims or sorting cheques, these are low-value activities. Value added in service and manufacturing sectors alike lies more and more in individualisation, not standardisation. Ultimately that means a transaction between individual customers and individual employees, using the vastly increased flow of information available to both. For all the hype about employee empowerment and being a ‘people business’, very few companies have delegated genuine decision-making authority to the level of the individual employee. The parameters for making judgements without referring up what’s left of the hierarchy are usually tightly circumscribed. Implications Delegating real judgement to permit individualised service would be a radical departure from the organisational forms prevalent in most private businesses and all of the public sector today. Indeed, public services are still in the Model T Ford era, and the debate on ‘standards’ – the adjective ‘high’ is implicit – indicates that nobody is really thinking beyond standardisation. Yet many people are unlikely to be satisfied for much longer with the Fordist model as citizens when as consumers they are increasingly offered the Dell model. And as consumers they are also increasingly dissatisfied with, say, a standard call-centre script. They want an individual response. The information is available to permit it – it is the organisational form that lags behind. And understandably so, for this kind of radical organisational devolution demands a high level of mutual trust between employees and managers – and ultimately investors and owners. Remember, the transactions that take place within organisations are those it is too difficult to transact in a market because of the informational constraints. Yet it is extremely difficult to monitor the productivity and quality of a non-standard service inside an organisation too. The companies that add the most value will be the ones with the highest levels of internal trust. 174 Demos
Organising for success This is a profound management challenge. In theory, the new information and communications technologies permit any employee of a business to have real-time access to all kinds of information that would allow her or him to make better – more profitable – decisions. But very few companies indeed take advantage of this possibility. The evidence is, though, that all the productivity gains from the technologies are concentrated among companies that have undergone organisational change. No change, no gain – but if work is reorganised, the level of productivity in the business can jump by 25 or 30 per cent according to case study evidence. 4 Such figures are a measure of how much consumers are willing to pay for improved quality and customisation. The transition from the type of company and employment relationship we have now to the type suggested by the logic of a freeinformation world is going to be at least as radical – and as slow – as the shift from Victorian entrepreneurialism to 1950s corporatism. And yet the logic is there. With the average company life now down to under 20 years, any business that can trace its roots back to the nineteenth century and which hopes to survive through the twentyfirst century should start struggling with it now. Diane Coyle runs Enlightenment Economics and is a visiting professor at Manchester University’s Institute for Political and Economic Governance. She is the author of, among other books, Paradoxes of Prosperity and The Weightless World. Notes 1 B van Ark and E Monnikhof, ‘Size distribution of output and employment: a data set for five OECD countries 1960s–1990’, Economics Department Working Paper no 166 (Paris: OECD, 1996). 2 E Brynjolfsson, MD Smith and Y Hu, ‘Consumer surplus in the digital economy: estimating the value of increased product variety at online booksellers’, MIT Working Paper, April (2003). 3 C Sheerin, ‘UK material flow accounting’, Economic Trends 583, June (2002). 4 See, for example, T Bresnahan, E Brynjolfsson and L Hitt, ‘IT, workplace organisation and the demand for skilled labor: a firm-level analysis’, MIT Working Paper (2002); E Brynjolfsson and L Hitt, ‘Paradox lost? Firm-level Demos 175
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Network Logic Who governs in an int
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About Demos Demos is a greenhouse f
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Open access. Some rights reserved.
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Network logic 10. Your friendship n
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Copyright 226 Demos DEMOS - Licence
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