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TechWatch: How Far Will Decentralization Go?

Telecommuting. Work at home. Work anywhere. Outsourcing. Subcontracting. Where will all of this end? Some have predicted almost everyone will become an entrepreneur working on a project-by-project basis, rather than having full-time employment for a large company.

Technology is making this possible as it continues to intrude on the way work is done. It does this in two quite different ways.

Technology Replacing People

First, technology eats jobs, automating tasks that once required human beings. This is what enables far fewer people to be able to produce much more output (with more complicated products and services at the same time).

One example of this is robots, which continue to take over human tasks. Prabhu Guptara wrote about this in his essay, “Will Robots Take Your Job,” Ethix48, July/August 2006, p. 19. You may be thinking that there are many jobs that technology cannot take away. Guptara has offered the observation that technology has taken away far more Western jobs than outsourcing or offshoring.

Ray Kurzweil, in his book The Age of Spiritual Machines (p. 156) offers a sobering look at the limits of technology automation. He has a picture of a room with notes on the wall stating: “Only a human can play baseball,” “Only a human can hold press conferences,” “Only people have common sense,” etc. But on the floor are similar notes crossed out: “Only a human musician can compose in the style of Bach,” Only humans can play ping pong,” “Only humans can play master chess,” etc. Technology indeed is able to address tasks once thought the exclusive province of humans.

A “future talk” blog site offers this observation: “Technology is indeed a job killer. The whole idea of tools, machines, and systems is to do things easier, faster, or better than barehanded humans can; so industry, by its very nature, is motivated to reduce human labor. Automated systems will soon cause more job losses than all of America’s outsourcing to Third World countries combined.”

And the job loss is not confined to the West. Business Automation Managing Editor Wes Iversen reported on a December 2003 panel on automation:

“Over the past decade, U.S. manufacturing jobs have declined by more than 11 percent, according to Dan Miklovic of Gartner Group. But at the same time, Japan’s manufacturing employment base has dropped by 16 percent, while the number of manufacturing jobs in countries including Brazil have declined by some 20 percent, he pointed out. And one of the largest losers of manufacturing jobs has been China. ‘We like to pick on China and say that all of these jobs are going to China, but they’re losing jobs in manufacturing as well,’ Milklovic said. The reason for the job losses? Miklovic summed it up in one word: automation.”

Technology Enabling People

Second, technology allows collaboration and data to flow over distance. Because of this, we can work anywhere, outsource work to a lower-wage company, etc. Jobs that can be done better by humans than the computer can still be done by a human in another location.

Of course we have experienced the outsourcing of certain kinds of work for many years. But now it is possible to outsource even very small, simple tasks. Amazon has created an auction website that allows people to bid on tasks much like eBay allows people to bid on stuff. At www.mechanicalturk.com you can find all sorts of tasks “that people do better than computers,” to bid on and get paid to do.

In late September when I was writing this, the site offered 42,650 HITs (human intelligence tasks) for bid.

One of the tasks involves looking for things “of interest” in a series of photographs. Another asks for the applicant to look at products available through a particular website and write headlines and reviews of these products. Another site is looking for creative questions about female boxing. There is success criteria for doing these tasks, a bidding process for being awarded a task, and a rating system (much like eBay) that evaluates the quality of your work. And you are bidding to do this work against anyone else who can access the website anywhere in the world.

This is just one example of a more “fine-grained” outsourcing of work.

The End Result?

Several authors have suggested this continued “disaggregation” of work will lead to the limit point where most people work as free agents, selling their services to projects. This is the way much of the film industry works today, enabling a small company such as Walden Media (about 70 full-time employees) to create large numbers of films per year, each involving thousands of people. The actors, directors, and support people sign on for the particular film, and their job ends when the production is complete. This is discussed in the Ethix Conversation with Micheal Flaherty, president of Walden Media, starting on p. 6 of this issue.

Will this disaggregation also continue to happen at large manufacturing companies, banks, hospitals, and universities? Even government?

Of course it has happened to some extent already. Manufacturing companies have been subcontracting more and more of their core work. Internet banks show that it doesn’t take bricks and mortar and a large staff to run a financial institution. Many people who used to work at the hospital are now “free agent techs” or small businesses providing the same service.

The trend toward having more and more adjuncts teaching, and the outsourcing of many of the services (food service, cleaning services) show the same at universities. Some have even suggested that lecturing could be done once by the best lecturers in the world using technology for broadcast, discussion groups could be led by others, while grading could be done by yet another group. The University of Phoenix represents one present-day version of this disaggregation in education. And the privatization of certain activities that used to be done by government employees shows the same trend in government. But will this trend go further, almost like the movie industry? Several authors have argued this case.

Prabhu Guptara pictures the day when all razors are manufactured in one “lights out” (no people) plant in Brazil (see the Ethix Conversation with Prabhu Guptara, January/February 2004, p. 10).

Thomas Malone, in The Future of Work (2004), suggests technology will enable businesses to transform from hierarchal, autocratic organizations to democratic, decentralized organizations. The level of decentralization will reach a very fine grain, if not completely individuals acting as free agents. And it is all rooted in the declining costs of communications made possible by technology.

Phillip Evans and Thomas S. Wurster in Blown to Bits (2000) build the case for disaggregation and further disintermediation of work. They argue that the glue that will continue will not be the large corporations, but the guilds that professionals would join. They generalize on the phenomenon of Silicon Valley, where engineers move from company to company, having more loyalty to their professions than to any company they happen to be working for at the moment.

Their key factor is technology breaking down the tradeoff between reach (how many people could get the information) and richness (how nuanced and complete the information could be). Their picture is the past century when long-distance messages (e.g., the telegraph) were necessarily simple while local messages (meeting face to face) could be more complex but reached fewer people. Now with high bandwidth, very complex information including video (e.g., YouTube) can be shared by many people across geographies.

A Reverse Trend?

But some see limits, even reversals to this trend. Steve Reinemund (recently retired chairman and CEO of Pepsico) even suggests the idea of people moving from company to company (let alone acting as a free agent outside of any company) will reverse for people wanting a leadership career. “I believe that people who are going to lead companies in the future are going to be much more tenured people. When you have grown up in an organization, and are sitting in the corner office, you will make better decisions than someone who is coming from another industry,” he said in the Ethix Conversation, March/April 2007, p. 12.

Even technology-giant Intel is starting to see things differently. Pat Gelsinger, Intel senior vice president and general manager says trust is fundamental to teams in large complex projects like chip design. They are moving to have fewer locations so that more of their people can be co-located for these design teams, he says (see Ethix Conversation, next issue).

Conclusion

Just because technology makes work over distance possible, doesn’t make it the right thing for all circumstances. The new business leader must know his or her core business, and what can be outsourced. He or she must know how to use technology to enable distributed teams to work together, but when not to use this technology and actually have people in the same location.

There is little question that technology is reshaping work. But the final shape is still in flux. Knowing both what technology can do, and when it should not be used, becomes a new essential tool in the leader’s tool kit.

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Al Erisman is executive editor of Ethix, which he co-founded in 1998.
He spent 32 years at The Boeing Company, the last 11 as director of technology.
He was selected as a senior technical fellow of The Boeing Company in 1990,
and received his Ph.D. in applied mathematics from Iowa State University.

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