While the dominant narrative about tech today is that human judgment is being replaced by machines, particularly far down on the org chart, the truth is far more nuanced. The authors have conducted research into decentralized firms in which individual employees have more, rather than less, autonomy. They found that in these firms it is precisely technology – AI, sophisticated data systems, blockchain, and so on – which enables employees to exercise greater strategic judgment. For those concerned about automation and tech’s rise in business, this article shows ways that technology can provide guidance, supervision, and governance, while leaving a business’s most critical choices in the hands of humans where they belong.
“They’re Watching You at Work.” “AI Here, There, Everywhere.” “What People Hate About Being Managed by Algorithms.” We are no stranger to headlines conjuring up science fiction images of a future in which human judgment, ingenuity, and initiative are increasingly undermined by machine-based management. The dominant narrative regarding technology at work is that the machines are replacing human judgment and as a result making work more technocratic and controlled.
But there’s another story that’s important to tell here: That of organizations which are using technology to enhance the autonomy of their workers, enabling their leaders to exercise greater strategic judgment.
As scholars of organizational structure, we see evidence that technology in fact lies at the heart of efforts by companies to organize around employees rather than management. Companies that have successfully re-designed their structure, routines, and practices around the drive, ingenuity, and judgment of their frontline workers have in large part been able to do so because of technology. We believe that these exemplars offer important lessons to all companies seeking to foster greater autonomy and horizontal collaboration.
For Coordination Without Coordinators
Take the case of Buurtzorg, the Netherlands’ largest provider of home health care and the only one that provides nationwide coverage. Buurtzorg employs an army of more than 10,000 nurses. But the company doesn’t have a complex, multi-layered hierarchy to manage its operations – only a small corporate office of some 50 staff members and a group of 25 coaches.
Instead, to coordinate the nurses, the company leans on a customized IT platform called BuurtzorgWeb.
But are Buurtzorg’s nurses constantly monitored, managed, and instructed by technology and algorithms set up by management? No. Instead, they are self-organized into a thousand different self-managed teams responsible for providing home care within a specified geographical area. Teams have no assigned leader, they make decisions by consensus, and they hire and fire their own members.
BuurtzorgWeb empowers these teams by providing templates for managing themselves – for running team meetings and managing challenging team dynamics, for example. It also transparently provides all the data each team needs to understand its own performance, such as team productivity, client and team member satisfaction, and team climate scores. Perhaps most importantly, the platform serves as a central hub that connects all the teams and allows each nurse to post problems and questions they have and share ideas with each other. In that way, the platform supports distributed learning and elevates the ideas of those at the front lines.
These functions are far from autocratic; they give teams managerial-style guidance while leaving choice ultimately up to them.
For Supervision Without Supervisors
IT platforms can also help keep teams accountable in the absence of traditional managerial roles. Take Haier, one of the world’s largest appliance producers. Its workers are organized into over 4,000 micro enterprises that each manage their own P&L, hire and fire their own members, and decide which other micro enterprises to collaborate with based on internal market dynamics.
To assure accountability in this elaborate system, Haier has developed its own IT platform called EMC Workbench that automates the process for bidding for jobs and also entering into contracts. Micro enterprises enter their contracts into the system, where everyone who works either in or with that micro enterprise can see the goals they capture as well as members’ performance against those goals. This visibility serves as the basis for holding micro enterprises and their workers to their contracted goals; if a member does not meet their goals, they are eventually replaced. In addition, bonuses, which are based on performance relative to goals, are calculated and disbursed through EMC Workbench automatically using blockchain technology.
While EMC Workbench allows Haier to manage this large complex internal market with minimal corporate overhead and middle management, the system does not actually make choices about what each micro enterprise does; that is left to the employees.
For Direction Without Directors
A third way that decentralized companies leverage IT platforms and tools is to bring frontline workers even closer to customers, allowing those workers to make informed decisions themselves, rather than relying on direction from above.
VkusVill, the fastest-growing retail food chain in Russia, is organized as a network of over 1,200 autonomous convenience stores, with each store run by a team of 5 to 10 people that has far-reaching decision-making authority, including what products and promotions to offer.
To support this level of autonomy, VkusVill relies on their own customized IT platform to connect stores directly to their customers via a set of digital solutions (i.e. apps, social networks). After every visit, customers receive an electronic receipt on which they can rate each item on a scale from 1 to 5 and add comments.
Through these channels each team constantly receives product ratings and customer feedback for their local store, informing their decisions around what items to reorder, where to place them on shelves, and at what price to sell them. While many companies use data to make decisions, what makes VkusVill unique is the dynamic and local nature of the customer feedback it collects and the access to the data it gives to frontline workers. Unlike most retailers, where both data and decision rights are held by headquarters, VkusVill’s model of local decentralized decision making works precisely because of its technological sophistication.
For Governance Without Governors
At its most extreme, we are starting to see the emergence of organizations with no central corporate entity at all. Instead, these corporations are leveraging blockchain technologies to oversee and manage interactions that generally require complex and centralized governance processes and the dreaded red tape inherent within them.
While many people think of blockchains as designed for exchange (such as cryptocurrencies), the same technology that allows two individuals to trustlessly exchange currency without an intermediary is also being used to allow multiple individuals to coordinate their work without a middle manager. Blockchains can provide an organization-less solution to the four fundamental problems of organizing – task division, task allocation, reward distribution, and information exchange – by having the technology, rather than human beings, execute the processes and handoffs involved in getting complex work done.
ShapeShift, which has operated as a centralized organization for the last seven years, just recently announced a shift towards a decentralized framework that maintains fidelity and trust through blockchain technology. While not every organization will be able to become decentralized in the same way, the potential ways that blockchain technology might allow human beings to do their best work, and let the technology chain it together into complex products and solutions, are nearly endless.
While little of the technologies used in these platforms are leading edge, what is truly novel about these cases is that the technologies are being used to elevate the judgment and ingenuity of frontline workers rather than to exert greater control over them or minimize space for their judgment.
While automation is the purest form of decentralization, rather than automating frontline workers, technology’s best use might be to automate the functions of management, especially middle management (e.g., coordination, accountability, direction, and governance). If technology is going to make something redundant, why not replace those things we currently don’t like – such as overly matrixed coordination, red tape bureaucratic processes, command-and-control decision-making (by people who don’t have the best data to make the decisions), and antiquated compliance approaches – rather than those we do (like our human colleagues)?
originally posted on hbr.org by Ethan Bernstein, Michael Y. Lee, and Joost Minnaar
Ethan Bernstein is the Edward W. Conard Associate Professor of Business Administration in the organizational behavior unit at Harvard Business School and a coauthor of “How Intermittent Breaks in Interaction Improve Collective Intelligence” (PNAS, 2018). Twitter: @ethanbernstein
Michael Lee is an assistant professor of organizational behavior at INSEAD. Follow him on Twitter: @yanche.
Joost Minnaar is a cofounder of Corporate Rebels and a coauthor of “Corporate Rebels, Make Work More Fun”. Twitter: @corp_rebels