0 comments on “The Trajectory of Technology”

The Trajectory of Technology

“Liberated Companies – How to Create Vibrant Organizations in the Digital Age” will be published at the end of this month. The book begins with turning a question that many company leaders ask on it’s head:

It’s not what technology can do for a company – it’s what companies can do to no longer stand in the way of technology.

I hope you like the following excerpt.


Chapter One: The Trajectory of Technology

So, you tell me that you are taking your company digital? I want to hear your idea of technology, not that you introduced this or that app… – Paraphrased from Friedrich Nietzsche, Thus Spoke Zarathustra (1891)[1]

To devise an organizational design that works well in a world increasingly dominated by technology, one has to understand two things. First, we must grasp the essence of technological progress, the direction in which it is leading us—in short, we must understand the “wants” of technology. Second, as technology and humans become ever more closely intertwined, we must ask: how do humans and technology flourish together? Let’s save the first question for later and answer the second question first. 

The three ways of understanding technology

Old truth: technology is just a tool

A hammer, a coffee machine, or a smartphone app is a tool, a technology that we are using. Humans use these tools to manipulate the world around them, to get results. Natural problem-solvers that we are, we look around for the best tool to assist our efforts. If the tool is available, we simply need the skill to use it, and our lives will be easier. The basic thinking of many people in business is similar: tools help to solve problems. All we need to do is to make a tool available to workers and train them how to use it. 

But is this really true? Of course not. For as long as technology has existed, the relationship between tools and people has never been a one-way street. Humans invented and used tools, and their use shaped human culture. No technology was ever inconsequential to human mindsets, values, social systems, even the rise and fall of empires. Anthropologists even divide cultures according to their tools: Stone Age, Bronze Age, Iron Age, Age of the Sail, and Information Age, to name a few. The impact of tools doesn’t have to be as dramatic as gunpowder or printing; even the inconspicuous coffee machine intervenes in the way we structure our day, determines where and when we gather, takes up a prominent place in our homes, changes our biological mode of operation by drugging us slightly, and sends many of us into fits of rage when dysfunctional. 

Tools have shaped us into what we are today. There is every reason to believe that with ever more technology available, the more and more we are shaped by it. As Marshall McLuhan is often attributed to have said, “We shape our tools and thereafter tools shape us.”

Even more true: technology as a maker of decisions

People in companies have already lost control over many things they used to do. In the information age, companies have delegated many tasks to complex systems, be it in production, distribution, accounting, or sales. These systems are so complex that no single person knows what the systems are really doing. Even teams of experts often struggle to make sense of the sheer complexity of modern systems—a fact that is clearly visible in the high failure rates of modern software projects. Humans have set up these systems, but are they fully in control? Are they making the decisions? Our control is limited by design because we want the machines to take over our work, to automate much of what is happening. The algorithms humans have set up mesh with other algorithms to produce the outcomes that we want, and we tend to understand less and less of their inner workings and true complexity. Still, we choose to rely on them out of necessity. 

How much will we be in control tomorrow? Certainly less, as artificial intelligence becomes more pervasive in the workplace. The more we utilize technology, the more that technology will make decisions for us: today, it simple deterministic decisions, those that can be easily automated; tomorrow, more complex decisions, those requiring judgment. Without experts to act as translators between business and technology—be they engineers or highly specialized functional experts in logistics and accounting, for instance—modern businesses could not exist today. Yet even experts are limited in their ability to control, as it takes five things to be in control of complex systems.[2]

This is a five-point recipe for making solid decisions about complex matters. The better an organization is able to apply this recipe, the more it will prosper. The trouble is that hierarchical companies find it hard to apply this recipe effectively, for the following reasons:

Major power differentials between people are systematically detrimental to making sense of complex systems, and this defect has grave consequences. As technology becomes increasingly complex and important for the survival of companies, conventional hierarchical companies will be less and less able to benefit from technology. 

New truth: technology as a co-worker

As Kevin Kelly mentions in his book, What Technology Wants, “technology is an independent force in itself. Nobody is in control now and humanity will be less in control tomorrow. The technium is already whispering to itself.”[3]

Today, most companies are already so complex that decisions are made by a mixture of humans and machines. In companies like Amazon, Google, Netflix, and Facebook, most day-to-day business decisions are made by algorithms in real-time. Have you ever tried to talk to their “customer service people”? Overwhelmingly, the product itself, in the form of some specialized algorithm, is in charge of customer interactions—and those algorithms are doing their job extremely well. Much better than the customer service peoples of cable or telecom companies usually do.

People inside technologically advanced companies tend to work more on maintaining and experimenting with algorithms. The algorithm becomes a co-worker—one that is extremely skilled in specific functions. Humans specialize in those things that they are more adept at, such as the holistic perception of contexts and setting purposeful directions. AI researchers have concluded that humans in the digital age will be an asset to any company, as they supply a certain form of specialized intelligence.[4] Supplemented by all the multiple forms of intelligence that AI has to offer, the human-algorithm team can achieve much more than either can alone. Take chess, for example. There is no human on earth today who is able to beat modern chess programs. However, in tournaments where humans are allowed to play assisted by AI, the combination of human and machine tends to beat AI that is not supported by humans. There may, of course, come a point in the future when human interference in chess AI will no longer increase but may actually impair performance, but business is much more complex than chess—its rules are much more fluid, and its streams of information are much more ambiguous. In the context of businesses, human intelligence and machine intelligence are likely to have a productive relationship for a longer period. If humans and machines are more and more equal co-workers, the companies that benefit will be those that manage to create a work environment that fosters this cooperation. 

Today, we work and live with companies that are a reaction to the challenges of the industrial age, and the work-environment design that best suited industrial technologies was bureaucracy. Bureaucracy replaced charismatic domination with legal domination, replaced haphazard arrangements with standardized processes and a clear hierarchical way of making decisions that was focused on analytics, efficiency, consistent outputs, and reduction of waste.[5] At the time of its invention, bureaucracy was considered an antidote to bad management. Max Weber, a German sociologist credited with “inventing” bureaucracy, wrote in 1922 that “organizations are shaped by the relentless march of technological and managerial reality.”[6]

Today we face the relentless march of the algorithm. There is so much benefit inherent in algorithms that we adapt our beliefs, behaviors, values, and social norms) to them, personally, socially, and in companies. According to Max Weber, technology puts us in an “iron cage”: we are defined by technology and will be redefined every time technology changes. In the industrial revolution, the “iron cage” trapped individuals in systems of efficiency, rational analysis, top-down control, and digressional power. Now, with the rise of dematerialized digital technologies and artificial intelligence, we feel the need to adapt our ways once again in order to catch up with technology.

If technology is rapidly evolving and technologies are quickly becoming obsolete, today’s challenge for humanity is not to align itself to any single new technology, but rather to find a method to keep evolving its cooperation with technology continuously and forever. Companies need a work design that is so sensitive and adaptable that technological and social innovation at the workplace occurs naturally and permanently. It is not enough to understand individual technologies: the internet of things, social media, 3D printing, virtual reality, block-chain, self-driving cars, big data, cloud systems, or AI, to name a few emergent technologies of the last decade alone. To overcome the challenge of building a design for human, social, and technological cooperation that is able to flourish in ever more technologically driven times, we need to understand what technology wants and how a company can serve these needs best.

The Trajectory of Technology

Company leaders often ask: What does our company want from technology? How can technology help our company to be more competitive? To answer these questions, companies engage in all kinds of futuristic ideation workshops, creative sessions, company visits, and pilgrimages to Silicon Valley or coastal China. They declare success if they have identified or implemented or invested in this technology or that start-up. This is naïve.

The really important question to ask is: What does technology want from companies? This is an unusual question. Can technology “want” something? There are some thinkers, like Ray Kurzweil, who predict that a “singularity” will occur around 2045[7]—a point where machines become sentient to such an extent that they will be able to self-construct. A point where the power of the kingdom of technology outstrips the power of the kingdom of biology, to which we humans belong. That point will be a point of no return for the human race—a singularity. 

The chances are high that technology will become more independent in the future. Machines are becoming sentient in unexpected ways—it may not be that machines will trump the general versatility of biological human intelligence in the coming years, but machines are already coming up with alien forms of intelligence that make them superior for many specific applications. Recommendation engines determine what we buy, filter algorithms determine how we perceive reality, navigation apps shape the way we experience geography. The sheer numbers of proliferating specialized forms of intelligences are replacing more and more areas where our generalist human intelligence once reigned. Over time, the area where we use our human intelligence will become increasingly focused. This process has already begun. 

What I am getting at here is something else. We know from systems theory that complex systems develop emergent properties, which are behaviors that are revealed on an aggregate level but cannot be observed in any single component of the system. The system of biology, as an example, always moves towards greater specialization of species in a process of evolution determined by its inherent characteristics. The biochemical algorithms surrounding DNA shape the trajectory of biology, pointing toward what biology wants.

The system of technology can be visualized in the same way. Instead of biochemical realities, technology is based on the physical and mathematical realities that the world is made of. The laws of physics and mathematics are the algorithms that technology uses to progress. At first, that may sound outlandish. After all, if my computer bothers me, I can cut its power supply. But I can’t unplug the whole system of technology, everything that surrounds us and that is manmade. No one can unplug the internet. And the more the internet of things becomes a reality, the less it will be possible to disconnect physical reality from virtual reality. 

More shocking and significant is that we do not want to unplug technology because we are already a part of it. The American author Kevin Kelly, who is known as the philosopher of Silicon Valley, has devoted most of his adult life to thinking and writing about technology. Kelly uses his own definition of technology, the Technium, which he defines as “the accumulation of stuff, lore, practices, traditions, and of choices that allow an individual human to generate and participate in a greater number of ideas.”[8]

The Technium is made up of technology and humans. Our current culture still holds onto a human-centric view of the universe—a view that puts the rational human mind in control of technology. But in academia it is generally accepted today that no human, no institution, absolutely no one is in control of technology.[9] Technology is an independent force that worms its way forward as a result of technical, social, political, psychological and commercial forces. It is a system that has inert wants, just as biological evolution has. The wants of technology have been making themselves felt for decades and can only become more prominent over time, especially after artificial intelligence becomes sentient.

Today, many companies are lumbering slowly along the technological highway, only to be smashed by Amazon, smashed by Airbnb, smashed by Netflix, smashed by online pure-plays with their data and algorithms. It can be argued that these major successful companies today do not stand in the way of technology but are simply traveling on the same trajectory as technology. What if we could find a way of organizing a company where the use of technology proliferates naturally? Where the technological, social, and commercial spheres establish self-reinforcing feedback loops and evolve together? That company would be on the same trajectory as technology—and it would be a very powerful design for a company indeed.

To sketch a work design of the future, more is needed than just looking at today’s technologies; sn understanding of the inner workings of technology as a whole is required. So, what does technology want? Kevin Kelly has discerned a number of directions that technology works towards that together make up what he terms the “trajectory of technology” (Table 1). Let’s go through this list and consider its implications for the work design of a company.[10]

Technology wants efficiency

Technology loves efficiency. The more efficient a technology gets, the more it begets other technologies. Take electric cars, for example, which only became a mass-market option with more efficient batteries. Or virtual reality, which was invented in 1989 but became viable only when high-resolution smartphone screens became cheaply available in the 2010s.

Humans are in love with efficiency, too. Efficiency has been our faithful companion since the industrial revolution, and it won’t leave us now that we have passed into the digital age. Efficiency is clarity; it is rational and comforting in a world of uncertainty. Efficiency gives us a problem to solve. Dealing with the brother of efficiency—effectiveness—is much more tedious. Effectiveness, which is about choosing what to do rather than how to do it, comes with too many options and is less rationally computable for us than efficiency. It is not only humans’ laziness that lets us seek efficiency; it is technology itself that seeks efficiency. The quest for ever more efficient solutions is one we share with technology. Companies will continue to seek efficiency today and tomorrow. The change is that there will be much more potential to find efficiencies as technology has more and more to offer over time. Therefore, the way work is done in companies—their “work design,” a term we will use extensively throughout this book—needs to adapt more and more often. Organizing must become more of a process of evolution and less of an incremental exercise.

Technology wants opportunity

Over time, technologies offer more and more opportunities to do things differently. The Amazon bookstore begot the Amazon marketplace, which begot Amazon Prime, Kindle Unlimited, and Amazon Dash, which begot Amazon Web Services, and so on. The peer-to-peer file-sharing technology underpinning Napster begot the streaming mediums of Youtube, Netflix, and Spotify, which begot advanced artificial intelligence used for recommendations, which begot social collaboration on videos and music with friends. Youtube, Netflix, and Spotify in turn became possible because of cloud technologies such as those offered by Amazon Web Services, Google Cloud, and similar cloud services that offered server capacity on demand.

As options for technologies to progress increases, so too does the number of options companies have for solving problems. This is increasingly true not only for the design of products but also for the way companies do their internal work. In the 1990s, companies grew a nervous system for the processing of information, called enterprise resource planning (ERP) systems, in the form of packages like SAP or Oracle. These core systems contributed a great deal to a company’s ability to go global and outsource work. Today, web technology has joined ERP systems as the backbone of internal and external collaboration, enabling real-time business and new forms of combining humans and algorithms into new creative solutions.

As we discussed earlier, humans are problem-solvers. Companies are always desperate for better solutions, and technology provides them. An organizational design that is to stand the test of the technological tsunami must ensure that people are aware of the solutions technology has to offer. The need for more opportunity is the same for technology, for companies, and for people: they all want more opportunities. It is up to the work design of a company to transform opportunity into benefits. If people feel encouraged to be on the lookout for new opportunities, can conduct experiments without fear of failure, and have the autonomy to decide on their own to include this or that technology in their daily work, the needs of technology and companies will be aligned.

Technology wants diversity and specialization

One technology begets another, but no technology will ever go away. They stick with us as part of the Technium, forever offering an option of how to do things. Even once-obsolete technologies may be rediscovered and suddenly become attractive again if they are combined with new technologies. The Technium never forgets.

More than that, technologies come in multiple variants. For example, they change form according to their area of application. Google’s search algorithms are both similar and different for searching pictures, videos, geographies, or medical scans.[11] They are similar to and different from filter algorithms used by Facebook, Tinder, or Amazon. Every technology is adapted to the specifics of a situation and becomes ever more specialized, thereby increasing diversity.

The more diverse and specialized the technologies on offer are, the more decentralized and varied a company must become to make good use of the richness of the technological environment—more varied than can be supported by company hierarchies, which are designed to suppress variance, as we shall see in Chapter 2: The Corrosive Impact of Power Differentials.

Technology wants complexity

Technology is one of the main reasons why doing business is becoming more and more complex. Companies must organize themselves in such a way as to handle this complexity, but ever-increasing complexity cannot be controlled; it can only be worked with. Failures will be unavoidable, but research has shown that competent people who are in close proximity with technology, and who are authorized to make decisions, can prevent failures from becoming disasters.[12] Two proven methods to increase a company’s ability to handle complexity are to let the people who are closest to the problem make the decisions, and to ensure that they are competent. Give them competence and freedom, then trust them to act.

Technology wants emergence and sentience

Handling the increasing complexity caused by technology is difficult—so we use technology to stay on top of it. Intelligent agents that keep technologies in check are already at work in every smartphone, every computer center, in cloud systems, in medical systems, or in routing algorithms at call centers. Companies specialized in this field are mostly hidden from public view but are worth billions of dollars. Take ServiceNow, a company that came from nothing in 2014 and is now valued at US$50 billion in 2019. Their business model is to provide companies with the capability to stay on top of their sprawling IT operations, no matter whether the workers are humans or machines. 

Technology will increasingly be running itself in the coming years. Indeed, it has already taken on a life of its own, and determining where sentience starts is an open-ended debate. Some think it starts with intelligent, self-organizing behavior that apparently works but that we are unable to fully understand. We will be using more and more algorithms and intelligent assistants over time. Kelly and others predict that the benefits we are able to give to our organizations will crucially depend upon our ability to collaborate with machines. A work design for the digital age must provide an environment where people can get acquainted with their new technological companions and quickly adapt to the fast pace of change.

Technology wants ubiquity and freedom

Technologies, even dangerous ones, spread no matter what we do. There is no way to control the very real problem of nuclear proliferation, for instance, but there are less dramatic examples. The so-called “washing nuts”—the fruits of the Sapindus saponaria—have been used by local communities in India for thousands of years, but they recently became popular in Western households seeking more sustainable ways of cleaning fabric. Demand for them caused prices to rise so much that Indian communities were forced to switch to “modern” washing powder. Any technology, old or new, spreads. 

Companies align themselves with technologies’ desire for ubiquity by making it easy for technologies to both enter and flow forth from the company: they pull in technology by making it easy for people or units to observe and adapt whatever technology other people, units, or companies are using, and they also let technologies travel from the inside to the outside. Why should a company share its technologies with the outside? The more technologies change, the less a single technology represents a competitive advantage for any prolonged period. Technologies become stale if they are cut off from contact with the outside world; if outside observers cannot scrutinize a technology, if insiders cannot freely discuss its merits and opportunities, its full potential benefits will fail to develop. There will still be a case for secrecy in areas where technological progress is not fast—such as preserving the recipe for a vintage drink like Coca Cola—but in most other cases, openness and the freedom for technology to spread in all directions is a better choice. More and more options become available to an organization that is open to the spread of technology. Freedom begets options begets progress. 

It takes an open organization to let technology proliferate. The primary mechanism for this is to make it easy for people at all levels to take a break from their close colleagues and explore other technologies “out there,” then come back and synthesize their findings at home.[13]

Technology wants mutualism and structure 

Technologies build (and rely) upon each other. A car’s navigation, parking, and voice control systems rely on its electrical systems, which in turn rely on the car’s mechanical systems. Technologies are mutually dependent, and the more advanced the technology, the more dependent it is. 

However, there are two traits that a successful technology—one that spreads—must show. First, it must be reliable. Those technologies prone to breakage are unlikely to spawn new technologies or combine with other technologies to form more complex solutions. Second, its structure must be easy for those interacting with it to understand. Today’s phone apps, for example, are only so ubiquitous because they are built on very stable operating systems (ioS, Android) and developers can access the published library of Application Programmable Interfaces (APIs) released by Apple or Google. Another, more low-tech example is the way that a light bulb interacts with the electrical grid. It can only do its job because it can rely on a stable grid with well-described properties and because its socket conforms to mechanical norms.

In the digital age, work designs need to be geared towards creating combinations of human and technological activity. Therefore, they must cater to experimentation, playfulness, and local variation while still providing a high level of reliability.

Technology wants evolvability and beauty

The result of all of the above is that technology will necessarily evolve. Becoming both ever more efficient and increasingly complex, it will create more opportunities, greater diversity, and more specialized uses. It will show more forms of sentient behavior, will increase freedom, and will rely on and be relied upon by other stable, structured technologies.

Kelly argues that technological evolution and biological evolution are very similar. The specialization of species, the striving of all life forms to become ubiquitous, and the ever-increasing complexity of biological systems is not unlike the process of technological evolution that we have been exploring. The biggest difference between these two types of evolution is that biological evolution is much, much slower. Biological evolution is bound by the realm of biochemistry and scarce resources. Technological evolution is not bound by any material constraints; it is only limited by the laws of physics and mathematics. Technological evolution happens in a realm of abundance; biological evolution happens in a realm of scarcity.

The implications are quite shocking. There is no way that technological evolution will not outpace biological evolution. That means that humans will need to cut loose from their biological origins and humanity will need to come to grips with artificial forms of intelligence that will become ever-more superior. Humans and technology are players on the same team, however. It’s likely that they will become closer and closer entwined.[14] In humanity’s fight to gain dominance over nature and biology, technology has always been our greatest ally. 

Of course, with the limits of our planet so clearly visible, the time has come for us to stop fighting with biology. After all, we are biological creatures, and continuing to fight against biology is likely to get us all killed. It is time to change our ways through a better understanding of holistic ecosystems.[15] Technology can be our ally if we stop using it to overpower biological systems.

Positioning companies on the trajectory of technology

How can a company align itself with a trajectory of technology that calls for continual evolution? The answer is simple: it needs to evolve, too. However, evolution is something totally different than the typical corporate transformation programs of today. A traditional change program follows a number of steps: (1) decide on a vision for the company; (2) assess the status quo; (3) determine the delta between vision and status quo; (4) create an implementation plan; and (5) execute this plan, which usually requires people to be trained, processes and systems to be established, and accountabilities restructured. Five years on, however, the company usually ends up with an outdated vision, implementation that has become bogged down, and a general sense of disillusionment. The classic change program, though rational and controllable, is a relic of the industrial age. It has four fundamental flaws that render it obsolete in the digital age:

1 Reliance on prediction. It assumes that the future can be predicted.

2 Assumption of no important unknowns. It assumes that this vision can be broken down through a rational process into an implementation plan.

3 Assumption of rational agents. It assumes that people at the top have the objective ability to sense what’s needed for both vision and implementation.

4 Assumption of relative stability. It assumes a period of stability after the change has been made so that all implementation costs can be recouped.

An evolutionary work design is quite different. It rests on the following four assumptions: [16]

Reliance on mental models: Multiple predictions are great for building mental models that prepare for the possibilities that the future holds. 

Assumption of fundamental learnings. There are very important things to learn that we are not even aware of. A high-level yet meaningful organizational mission is enough to give direction to the evolution of a company. Visions become more like forecasts, repeated along the way, and less like directions.

Assumption of collective intelligence. Individual actors are even better if they support themselves. A company’s work design must be open and transparent so everyone can sense technological, market, or customer needs.

Assumption of fluidity. The future consists both of stability and change of any magnitude. We don’t know how long stability will last, nor do we know how fundamental a change will be. But we do know that we need to be prepared. 

Biological evolution brings to life highly complex things that humans often call beautiful: zebras and giraffes on the savannah, a flock of geese in flight, meadows filled with flowers. In the same sense, technological evolution brings about beautiful things through its evolutionary drive: virtual worlds, beautiful tableware, sleek cars. The chances are that organizational evolution will bring about companies that we experience as beautiful, too. Places where people are free to invent, to heed their inner calling, to look after others, to contribute to the world with less fear of oppression.

As a very earth-bound North German, I need to add a caveat here. Evolution brings about many highly specialized things that we do not classify as beautiful: cockroaches, bed bugs, intestinal worms. There will also be ugly, exploitative organizations. However, organizational evolution will make sure that the safari will be much more colorful than ever before. 

*** That concludes this excerpt of “Liberated Companies”. If you enjoyed it, consider signing up to this blog to stay connected.


[1] (Nietzsche, 1974)

[2] Adapted from (Silver, 2012). Silver describes what a good forecast is built upon. I think that this list is applicable to the management of any complex system.

[3] (Kelly, 2011)

[4] (Kelly, 2011)

[5] (Birkinshaw, 2012)

[6] (Weber, 2019)

[7] (Kurzweil, 2006)

[8] (Kelly, 2011)

[9] (Harari, 2016)

[10] (Kelly, 2011)

[11] To get an impression, skim through the AI Services offered by Amazon Web Services today. All these world-class algorithms are available today, for everyone. https://aws.amazon.com/machine-learning/)

[12] (Spears, 2010).

[13] (Pentland, 2014)

[14] Historian Yuval Harari believes the emergence of “super humans” is likely—that is, humans augmented with technology in ways that make them significantly less human. (Harari, 2016)

[15] (Raworth, 2017)

[16] The list is inspired by (Sanford, 2017).

1 comment on “Book Announcement: Liberated Companies”

Book Announcement: Liberated Companies

Are you tired of hearing about Agile, New Work, Lean, and Design Thinking?

Did you already experience how the marvelous values inherent to those approaches have been hijacked and corrupted into just another wave of corporate gimmickry?

Do you wonder how your company or team will ever be able to solve its problems more creatively and spirited?

Companies need an update. The way we run most companies today is detrimental on so many levels. It’s neither well-performing nor allowing technology and humans to flourish. Yet there are progressive organizations that show that through distributing power more evenly, we can make the workplace much better than ever before. This book shows how.

The Need

How to enable people to prosper alongside technology is all-important for any modern organization. The more technology inundates our lives, the more humans must be at the center of organizational design. They are the only ones that can make sense of its vast and ever-increasing possibilities. In current companies, people are rarely able to flourish. There is no sidestepping the issue that arbitrary power undermines people’s initiative, performance, and personal development. In the digital age, we need to find new mechanisms for sharing power to make everyone in an organization more powerful – without distributing power so much that companies become indecisive and unfocused.

This book offers a practical method for running companies ‒ using progressive work designs ‒ that is much better attuned to the digital age as well as to human needs. #liberatedcompanies

The Content

Liberated Companies is a business book for people at all levels who are looking for better ways of working yet find it hard to determine what precisely these better ways are. Much has been said and written about digitalization, the agile company, New Work, and the need for more self-management, yet almost everyone struggles to make sense of it all. So many good ideas, so much corporate gimmickry. Most people are uncertain about what’s really important and what really works.

Liberated Companies is a book about management in the age of digitalization. It provides orientation to master the ever-increasing complexity of the business world by showing that human collaboration is more actively malleable than we are accustomed to think or believe. By using and evolving work design configurations, ways of collaborating with one another, we can work ourselves and our organizations into new behaviors and mindsets. The book can be a travel companion on that journey. It provides a map and a compass for those seeking to navigate their company or their team to better human and economic outcomes for everyone in business and society.

The USP

This book helps readers to:

  • Design their organizations, companies, and teams much more actively than ever before.
  • Know what makes really matters for them and their organizations and what can be safely ignored.
  • Map and navigate their organizations’ journey through the digital age.
  • Lead their organizations with purpose, efficiency, and humanity
  • Appreciate, realize, and support everyone’s human potential much better. 
  • Manage in a way much more attuned to the needs of technology and of people. 

Because the book:

  • Makes the fallacies of hierarchical, empowered and self-managed models of working clear
  • Maps the complex territory of organizations in a unique representation of management practice, the “Liberated Company Map.”
  • Distinguishes, based on the situation of a company, those work designs that are most applicable for it out of a library of about 200 work designs
  • Provides a compass to the organizational journey, the “11 Principles of Liberated Companies.”
  • Delivers great examples by describing the configurations of work designs of one traditional and three leading progressive companies. 

The Author

Frank Thun has helped organizations around the globe to digitalize their operations as a Project manager, CIO, COO, and Coach. He studied Economics at the Universities of Kiel, Germany, and Glasgow, Scotland, and holds a Masters Degree in Economics. He worked for start-ups and companies like Daimler, Volkswagen, Capgemini Ernst & Young, General Electrics, Nokia Networks, Bayer, Philips, Schneider Electric and Invensys.  

___

I spend my lifetime looking for better ways to run teams and organizations. This is my attempt for a comprehensive answer. I hope you will find it useful.

Liberated Companies- How to Create Vibrant Organizations in the Digital Age“, 380 pages, will be available in hardcover and e-book worldwide in the second half of November.

Sign-up to www.liberated.company to stay in touch AND spread the word – every tweet and post helps.

0 comments on “Book Review: Principles. By Ray Dalio”

Book Review: Principles. By Ray Dalio

Ray Dalio has founded and leads one of the worlds largest and most successful hedge funds, Bridgewater, worth 150 Billion$. Last year, and with great media fanfare, he launched his book to explain to the world his management philosophy. It’s a best seller, which is not surprising, given Mr. Dalio’s stellar reputation in the dominant business sector of our time: The guys making huge piles of money out of money: Hedge funds. Does all this money make Hedge funds or investment banks the real rulers of the world? You bet. The US government, the Senate, the Fed, International Institutions, the European Central Bank, the World Bank  – all full of ex-Investment Banker in leading positions. Even the former FBI director James Comey was a Bridgewater employee. The Masters of the Universe – and Dalio is one of the Grand-Masters of the Universe.

If a Grand-Master speaks out, you better listen. So I did. I read the book already a couple of months ago and did write a post about Bridgewater’s practices:  The World’s Leading Hedgefund is Relying on Key Principles of Self-Managed Organizations. But I delayed writing a full review: I was befuddled by what I read.

Outlandish, Orwellian Management Practices

Mr. Dalio is spelling out over 200 principles of “Work and Life,” principle by principles. Like the great Roman Emperor Marcus Aurelius did in his “Meditations.” How fitting.

Irony aside, I actually like the clarity and to read about the accumulated wisdom of thoughtful people. And Mr. Dalio is very thoughtful. He is driven by his worldviews, especially on management, and he share’s it with us. I think that’s grand, mainly because the management practices he employs are often so extreme and apparently over the top:

  • Video Taping all Meetings. All.
  • Giving performance feedback in real time during a meeting of every participant to let the person know how she is doing
  • The “Pain Button” app where people can describe their emotional stress and share it with others
  • The “Dispute Collector” app where people can mediate their interpersonal conflicts guided by a machine

Orwellian speech is rampant in “Principles.” Mr. Dalio talks of “tough love,” or “shoot your friend,” – all for the service of the collective.

The Rule of the Fittest

My favorite example of all those management practices is to let people vote on decisions while weighing these decisions with the “believability” of the person: An “Idea Meritocracy” where every person is eligible to vote, but only the most knowledgeable votes carry decisive weight. The believability is determined by their track records, test results, and other data. In other words: The reign of competence, instead of a reign of populists. Wow!

If only the standards that determine believability can be kept “objective” and free of corruption. Mr. Dalio doesn’t explain how to do that, but my hunch is Discipline. Adherence to formal systems, to the principles underlying the believability algorithm. Adherence to the formal system is prominent in Mr. Dalio’s business empire. Comply with the system or be fired. The attrition rate of new and very carefully selected employees is about 30% within the first year. And Bridgewater is very Elitist in selecting candidates in the first place.

Psychological safety, i.e., a safe place to speak up without the fear of retaliation, is a key feature of learning organizations or any organizations aiming at achieving innovations. Dissenters need to be encouraged. And yes, Bridgewater is a safe place to speak up, with even brutal honesty, as Mr. Dalio writes. People may even raise dissent with the system, and principles might evolve in consequence, if its ruling hierarchs choose to adopt them. But chances are that fear is rampant. Not the fear to speak up, but the fear of acting in a dissenting way, which is not in compliance with the ruling system, the principles. If everything is taped and visible to everyone, political correctness rules, and human fallibilities are suppressed. But control is maximized, too.

The central metaphor for the business which Dalio uses right at the start of the book is the machine. And as cogs in a machine people got to be kept inline, disciplined. Add to that that Mr. Dalio is very close to central figures of China’s ruling party, a country where a  lot of experimentation in social control is ongoing, and the pictures become genuinely, outlandish dystopian.

And whats more: His practices are actually embraced by Robert Kegan, a Harvard Professor of Psychology and one of the worlds leading proponent of the “learning organizations”. Money, Power, and Academia united to create a Dystopia. A possible future where the Rationale, Analytic, Performing runs Amok creating a new super-collective of connected super-minds, where the apparently “dumb” are ignored by the (believability) algorithm. This is can be labeled and sold as “Intelligent Democracy”: The rule of the one with the most merits. Not far from Darwins “The rule of the fittest”.

A Great Experiment

Let’s look at the bright side. It’s is a great experiment based on many of the principles of movements like Agile, Lean, the Learning Organization, Leading Management thinkers and Behavioral Organizational Psychologists propose:

  • Build more reflection into daily work routines in order to enable learning
  • Trust more in the power of the collective than in individual decisions makers through structured exchanges that drive out biases, to come up with better decisions
  • Give everyone a voice and a place and time to speak out
  • Use data gained from objective and subjective sources extensively
  • Address all level of the Organization simultaneously:  Mind-Sets, Principles, and Practices
  • Seek organizational growth in the inert, personal growth of individuals

Looking at Mr. Dalio’s work this way, there is a lot to learn about Bridgewater. Therefore reading “Principles” is absolutely recommended.

Long live Hierarchy & Control!

The most remarkable thing is, Mr. Dalio has added all these routines on top of the traditional management hierarchy.

tvb.png

(For more on Management Practices and Maturity Level check out some of the previous blog posts 76 Agile Workouts & A Fish and Let a Thousand Nerds Blossom!)

In all of the 539 pages, he does not write a single line about self-managed teams. But the other times he uses the prefix “self” is revealing: Self-accountability, self-discipline, self-reflection, self-accountability. It is the individual how needs to better herself. By sticking to the collective rules set by, well Mr. Dalio. Or the Chinese communist party…

Mr. Dalio trusts the individual to get better under guidance, he trusts collective, believable weighted votings, as long as

  • Superiors may veto any decision and
  • Mr. Dalio (or a governing elite) sets the rules

At the heart, Mr. Dalio’s vision is not about liberation. It is about performance. About making money. If what it takes to make money is to develop individuals, so be it.

But Control is central. Full stop.

Bridgewater might be a great Place for Fawning Alphas

I like organizational designs more that give space for autonomy (a word not found anywhere in the book) and non-mainstream people – call them beta if you want.

Whats more, true innovativeness will not come from an environment that is purely ratio driven and relegates fun to an emotion that is to be reflected on and analyzed – all in the service of big performance equation that is to be solved.

The featured sentence on the promotional page of “Principles” is “Principles are ways of successfully dealing with reality to get what you want out of life“.

A bigger car, I guess. This Hedgefond even wants to exploit life itself. Putting such a line in front of the whole work shows what Frederick Laloux would call intensely “orange” beliefs, beliefs bred in the industrial revolution: It’s about getting things, about scarcity, about accumulating, and finally about consuming life itself.

I am a bit harsh, though. It’s is worthwhile reading:

 It shows how the application of Agile/Lean/ Behavioral Sciences while being stuck in a Mindset of scarcity and control – instead of abundance and exploration- may quickly lead to dystopia.

___

This is what I think. What do you think?

 

Sources

 

 

 

 

1 comment on “The Startup Way by Eric Ries – Book review”

The Startup Way by Eric Ries – Book review

Want to know how to scale the “Startup Way” of doing business to conventional organizations? Want to know how to keep on perpetually innovating new products and processes? Then “The Startup Way- How Modern Companies Use Entrepreneurial Management to Transform Culture and Drive Long-Term Growth” should be for you. According to Eric Ries, it outlines nothing less than a “unified theory of management.”

Wow. What a claim. I was excited, as I admire Eric Ries last book, the “Lean-Startup” and many of its sister publications like “The Lean Enterprise.” And finding better ways to manage in the digital age is all that my work is about.

Spoiler Alert: I was bitterly disappointed.

How to transform a company to work like a start-up?

The recipe according to Eric Ries is to:

  1. Fully understand the Lean Start-up Model with its Minimal Viable Products, Experimentation, Pivots, Leap of Faith Assumptions, Iterations & Learning, etc.
  2. Gain top Management buy-in, so that they commit themselves fully to a big change management program that focusses on training more and more people in “Entrepreneurship.”
  3. Institutionalizing Entrepreneurship in a separate line function.  So Entrepreneurship become a department, such as HR, Finance, IT, Sales and Purchasing are. In contrast to the other departments, the “Entrepreneurship” unit has some matrix functions in the other line functions, such as training and coaching entrepreneurs and maintaining start-ups like funding and governance structures. Thereby the “Entrepreneurship Department” is mimicking external start-up functions internally inside a company.
  4. Continually change the processes of a company by experimentation and iteration to come up with just the right ones for your company. Do it scientifically, never stop experimenting and adapting and you will be fine for all time to come.

Eric’s “Unified Theory of Managment”

The new organization will be a combination of “general management practices” (see the left side of the graphic below) and “experimental management practices” (on the right side). Traditional management practices based on hierarchy and experimental, team-based, lean start-up practices are meant to coexist in every company:

Experimental Management is like a bolt on general management practices. IMG_6527.PNG

Nothing much changes in General Management practices. Eric describes experimental management – in a less than humble manner – as the “missing part of the lean manufacturing system,” known as Toyota Production System (TPS), the mother of all Lean and Agile movements. Lean Manufacturing (and its off spins like Six Sigma) have been all about efficiency (doing the things right). But they couldn’t help at all in effectiveness, i.e. determining what things are the right things to do. These “right things”  can only be identified by customer-centric experimentation. This is exactly what the lean startup method is there for.

And if these two pillars of the house of management are built on solid foundations, i.e., vision, purpose, a focus on people and long-term thinking, the house will stand. It will deliver excellence and continuous improvement if only the shared values of all people in the company embrace truth and discipline.

That’s it. That’s all there is. How stupid have we been not to see this future of management! Just bolt on experimental management and get the senior management team to sponsor vision, truth and discipline et voila: The Organization of the future.

Naivete galore!

It is so naive. So torpedos away.

Eric’s 4 step recipe for transforming a company is EXACTLY what a conventional change management program is all about since time immemorial. Get Management Buy-in, teach and motivate people, lead by example, devote time and attention, train-the-trainers, etc. This is business as usual in modern companies. It is just another top-down driven Change Program. There is nothing to assume that this program will be more efficient than any other change program is.

Oh, wait! Maybe there is: Entrepreneurship is an institution now. We are adding a new department to the company. Surely this will help! It will help exactly like installing a “Chief Digital” or a “Chief Innovation Officer” helps to promote those themes on the board. The name is different, but there is nothing that indicates why a “Chief Entrepreneur” should be more effective. Those Organisations will always be the “weak line”:  Organizations are dominated by those “strong lines” of the departments doing the real work, closer to the business. Hell, they ARE the business. Entrepreneurship is just another matrix function.

But wait again! The strong lines, the realm of General Management, will be all aligned with experimental management now, as they all share a vision and embrace truth and discipline now – as in the neat graphic above.

This degree of naivete leaves me speechless. There is nothing in this book and in the world that will indicate any more success with this as with all other Change management initiatives before.

Looking deeper into “Deep Processes.”

Eric Ries describes the deep processes, such as career and promotion, salary management or purchasing, as “Deep Processes.” Those are the final frontier to conquer once all the successful experiments produced such a momentum to do this in a company’s drive to everlasting change and improvement.

This is very shallow. These are not the deep processes of an organization. These processes are just the result of the management hierarchy coming up with rules and regulations, that minimize variation, seek security in control and assign people to jobs like cogs in a machine.

To really change the “deep processes” you need to change the “metaprocess” under which decisions about processes are made. These are things like giving people a voice, letting the people who are doing the work decide what is best, utilizing all their local knowledge and sensors to come up what is best, giving them leverage to experiment and learn by their own initiative and not by the initiative of an autocrat of the management hierarchy.

It requires flatter hierarchies. It needs more self-management. It requires more local autonomy, less fear, and less separation. But there is no reference to that in the Startup Way. None at all.

A House divided against itself can not stand: The insecurities brought about by experimental management and its rule-breaking nature collide fundamentally with the stability and predictability seeking hierarchy. 

Eric asserts that companies need to act more based on rigorous “scientific experiments,” for which Lean Start-up is the vehicle. In doing that, he is basically giving the same advice that Frederick Winslow Taylor gave in 1911 in his book “The Principles of Scientific Management.” While no one can argue with this benefits of putting more science in management by doing more experiments, the “Startup Way” adds nothing new. The problem is still: How to get the hierarchy to embrace uncertainty and unpredictability? There are no answers to this in his book.

Damm it, he even gets the reference to Taylor’s all-time classic book wrong. This book, one of the most important books ever in the realms of organization and management, has been published in 1911, not 1915 as Eric Rees claims on page 355. A small, insignificant error? I think this is a symptomatic error. Just skim through the list of sources, and you will find secondary sources taken for example from such “authoritative” sites like Quora.

What happened to Eric Ries?

I feel kind of personally injured by “The Startup Way.” Lean Start-up was a great book. So many fabulous ideas that inspired such a great movement and community.

But it appears that all the well earned success within the Corporate world, for example in his long commercial engagement with General Electric, all those speeches to deliver, left him with only minimal time for deep thinking and research.

It feels like Eric Ries is out of his (Start-up) waters in the corporate world. His intentions are good, but there are much more thoughtful and ultimately helpful books available on the future of management such as Fredericks Laloux’s “Reinventing Organizations,” Jurgen Appelo’s “Management 3.0” or even General Stanley McChrystal’s “Team of Teams.” Or this Blog 😉

The “Startup way” is a shallow book.

___

This is what I think. What do you think?