I spoke recently with Rod Collins about his fascinating new book about reinventing management: Leadership in a Wiki World: Leveraging Collective Knowledge To Make the Leap To Extraordinary Performance (Dog Ear Publishing, 2010). It is one of a number of books discussing the revolution that is brewing that will end the world of work as we know it in the Fortune 500 companies. Rod’s book adds important new insights.
Steve: The title of your book indicates that this is a book about leadership. Is it also about management? Is there a distinction between the two?
Rod: The book is actually about both leadership and management. I used leadership rather than management in the title because there seems to be more interest these days in leadership over management. Perhaps this is a result of the popular notions that leadership is "in" and "management is "out" and that leaders "lead people" while managers merely "manage things." However, I believe that this is a false dichotomy. Leadership and management are two sides of the same coin. In the best of organizations, great leaders are usually great managers. Leadership is about the role of the catalysts in organizations who influence and shape both strategy and execution, while management is the discipline that guides how large numbers of people efficiently accomplish complex work. Organizations need both catalysts and discipline.
What is happening today is not the replacement of management by leadership, but rather the reinvention of both leadership and management. For the last 150 years, the work of large organizations has been about mass production and making centralization effective. In this context, leaders have been bosses and their defining characteristic has been the authority to issues orders and to expect compliance. When leaders are bosses, organizations naturally adopt the disciplines of top-down hierarchies to assure that the individual intelligence of the leaders is properly leveraged across the work of large numbers of people.
However, with the rapid emergence of the new and very different Digital Age and its revolutionary technologies, the work of large organizations is now about mass collaboration and making decentralization efficient. In this new context, leaders are facilitators and their defining characteristic is their ability to enable connections that drive effective collaboration among large numbers of people. When leaders are facilitators, organizations adopt the disciplines of self-organized networks that are designed to leverage collective intelligence. As the rapid developments in digital technologies continue to demonstrate that networks are far smarter and faster than hierarchies, the biggest challenge for traditional organizations will be whether or not they can reinvent both leadership and management and transform themselves from top-down hierarchies to peer-to-peer networks. This is the essential message of the book.
Steve: The title of the book says we live "in a wiki world." What do you mean by that?
Rod: A wiki world is the new world we suddenly find ourselves in today where networks are far smarter and faster than hierarchies. "Wiki" is the Hawaiian word for "fast" or "quick." We now live and work in a permanently fast forward world where the capacity to keep pace with the speed of accelerating change separates the winners from the losers. What's different about today and what's bringing on this new wiki world is the digital revolution, which has created the unprecedented capacity for large numbers of people to work directly and effectively with each other without the need to go through a central organization. This is the remarkable power behind open source platforms. These innovative ways of orchestrating the work of large numbers of people now make self-organized peer-to-peer networks much more efficient than top-down hierarchies. This explains why the leadership and management revolution is inevitable. In a wiki world where forming networks is easy, cheap, and available, hierarchical bureaucracies like the Encyclopedia Britannica can't keep pace with collaborative communities like Wikipedia.
Steve: The subtitle says that the book is about "leveraging collective knowledge"? Could you elaborate on what you mean by that? Is that what the book is about?
Rod: Inside every organization is an incredibly rich resource. In fact, for many companies, it may well be their richest resource. Unfortunately, this powerful asset also happens to be the most untapped resource in traditional organizations. What is amazing is that this untapped rich resource requires no financial investment because it's already fully paid for. What it does require is a radical shift in management and leadership practices. This rich abundant resource is the collective knowledge of an organization's own workers.
Top-down hierarchies are designed on the premise that an organization's intelligence resides in a select number of star performers who leverage their expertise through the power to direct and control the work of others. Self-organized peer-to-peer networks, on the other hand, are built upon the principle that an organization's intelligence resides in the diversity of its members who leverage their collective knowledge through the power to connect and collaborate with each other. The sudden and rapid emergence of peer-to-peer networks as a more efficient management alternative is accelerating a major shift in the way organizational power works. Increasingly, the power to connect trumps the power to be in charge. That's why organizations that want to manage at the pace of accelerating change need to learn how to leverage their collective knowledge.
Steve: Your book indicates that the boss is no longer the boss: the customer is now the boss. What are the implications of this in the workplace?
Rod: For most of the 20th century, bosses dominated market economies. Mass production equaled market power, and the greater their capacity, the more the bosses had the sense that they were in control. Thus, bosses didn't concern themselves with customers; rather they worried about the other bosses in their industry who might deprive them of their coveted market share.
With the digital revolution and the dramatic increase in the flow of information, customers are no longer passive recipients of corporate offerings. They are now educated, knowledgeable, and discriminating consumers who have lots of options and choices. It's not uncommon to see a customer in an aisle at Wal-Mart, using her iPhone to find a better price on Amazon and completing her online purchase before leaving the store!
Bosses now longer control the flow of information. The customer’s power of choice has supplanted the bosses' power of capacity, which is why, everyone inside an organization better understand that, in the wiki world, we work for the customers, not the bosses. This has significant implications for how we arrange the workplace. It means organizations need to eliminate the sovereignty of the supervisor by putting in place practices that hold people accountable to their customers and their peers, as well as their supervisors. Customer satisfaction data should be part of everyone's performance evaluation. Companies need to recognize that the fundamental relationship in their organizations is no longer supervisor-to-subordinate; it's now peer-to-peer. That's important because, in peer-to-peer networks, everyone is a customer of everyone else. This means not only do the supervisors evaluate the workers, but also the workers evaluate the supervisors and each other. If you want to create a customer-focused company, it starts by defining managers and workers alike as customers.
Steve: You say that there's a revolution brewing that is about to end the world of work as we know it. Could you tell us about the nature of this revolution?
Rod: Three sudden developments have come together to create what we know as the digital revolution, which is rapidly propelling us from the Industrial Age into the new and very different Digital Age. The first development is the incredible accelerating pace of change that has overtaken every industry over the last two decades. Today the increment of time for market change is now faster than the increment of time for moving information up and down a chain of command. This means that command-and-control organizations are unsustainable because they cannot keep pace with the speed of change in today's faster moving markets. If they could, the recording industry would have recognized that digital downloading is the new distribution system for music and, perhaps, they would have bought Napster, instead of putting it out of business.
The second development is that the Internet has created the unprecedented capacity for mass collaboration. We now have the capability for large numbers of geographically dispersed individuals to effectively and directly work together in real time - and they can do it smarter, faster, and cheaper. Who would have believed just 20 years ago that you could build a successful computer operating system using only volunteers, working without a plan or assigned tasks to produce a quality product that garners a 25 percent market share? Yet that is the incredible story behind Linux.
The final development is that knowledge networks are supplanting facilities and equipment as critical economic assets. This third development is a game-changer in two ways. In our new wiki world, the primary means for creating economic value has morphed from the means of production to the means of collaboration. In the Industrial Age, because the corporate bosses owned the means of production, they had the wherewithal to command and control. In the Digital Age, however, the workers now own the primary means for creating economic value because it is the workers, and not the corporations, who own the knowledge in the networks. The second game-changer is, for the first time in history, the prime economic asset is an abundant rather than a scarce resource. Knowledge can't be managed in the same way as plant, property, or equipment. Knowledge doesn't depreciate with use. Quite the contrary, using knowledge appreciates its value, especially when it is commingled with other knowledge. This is why open source platforms are so successful and why there is a significant "free" component on the Internet. The only way that knowledge grows is by giving it away. By making large portions of their platforms free, Google, Linux, and Wikipedia create sustainable business models.
The most significant consequence of these three developments is that, because command-and-control is unsustainable in our new wiki world, the biggest challenge facing traditional organizations is whether or not they can transform themselves from top-down hierarchies to peer-to-peer networks before someone else comes along, creates a competing peer-to-peer network, and puts them out of business.
Steve: To what extent are established organizations aware of the revolution you describe? How rapidly do you see this revolution happening?
Rod: Unfortunately, I think that many, if not most, organizations are almost completely unaware of the significant revolution that's reshaping the business landscape. Despite the many signs of the rapid ascendance of new business, operating, and management models created by leading innovators such as Google, Facebook, Linux, Best Buy or Whole Foods, most business leaders choose to ignore or explain away what's in plain sight: The companies who are most successful at managing at the pace of change are not top-down hierarchies - they're peer-to-peer networks. However, traditional leaders are challenged to make this transition because it means they have to accept that power comes more from being connected rather than being in charge. It means that leadership is no longer defined by the authority to issue order and to expect compliance. It also means they would have to learn to lead by consensus rather than by command, and many executives are simply lacking in the necessary collaboration skills.
Nevertheless, traditional leaders don't have a choice. The digital revolution is well underway, and I believe that, given our rapid pace of change, the transformation of the typical business organization from top-down hierarchy to peer-to-peer network will happen in less than a decade. In fact, I would suggest that the last large company designed as a top-down hierarchy has already been born - and there will be no more. Every new large business organization that is created from here will be a peer-to-peer network. In other words, it will more likely look like Google than like General Motors. The digital revolution really is ending the world of work as we have known it.
Leadership in a Wiki World: Leveraging Collective Knowledge To Make the Leap To Extraordinary Performance by Rod Collins (Dog Ear Publishing, 2010).