Power Shift by Alvin
Subject: Futurist, flex
firms, power dynamics
We are all in a power shift era. Power
deals with knowledge and the role it plays in our lives. Without knowledge you
will not win a battle, in war or in market competition. Knowledge is the key to success. Alvin Toffler gives
many examples on how knowledge has changed lives in his incredible book
PowerShift. With knowledge you can gain power. But the
shifting of power has become more fluid; it can shift from
one person to another quickly.
once in control before our digital
age. One example Alvin talks about is the Gillette razor company and the power
it had. Gillette had all the control of its product in the beginning. Gillette
controlled how many razors went in each store. How many different
styles/brands of Gillette’s a store would display. The store owner had no
Manufacturers kept their competition running
because of the information they knew. They knew how to accumulate knowledge
about their consumers. From this knowledge power was born. The invention of
bar-codes shifted power from the manufacturer to the retailer. Bar-codes
reveal a lot of information about the consumer. A retailer now has information
about their consumer from these bar-codes. The invention of computers for
bar-codes has shifted the power from the manufacture to the retailer.
Today these same manufacturers beg for space in
stores. Store owners know what the customer wants from the information
it collects through its barcode system. A good example of how power can
shift because of technology. Deeper knowledge permits us to reach high speed
levels that produce items as a faster and better efficiency.
The invention of networks has opened the world
to anyone. LANs and WANs can connect companies across the globe. “Companies
daily grow more dependent on their electronic nets for billing, ordering,
tracking, and trading; for the exchange of design specifications, engineering
drawings and schedules; and for actually controlling production lines
remotely. Once regarded as purely administrative tools, networked information
systems are increasingly seen as strategic weapons, helping companies protect
established markets and attack new ones.” In today’s society
we have VANs (Value Added Networks) now. These networks can translate
information’s from one form to the other. “VANs merely scramble and rescramble
messages to adapt them to different media.” VANs can translate from one
language to another. It may not be perfect but it is understandable.
VAN networks are a revolution in today’s
business. A network's main function is to share information. Corporations are
leading towards electronic interaction network. This interaction allows the
buyer to place an order with the seller and have the transaction take place
immediately. This leads to intimacy with customers and suppliers. You can
become locked into a supplier though. Information sharing could lead to
blurring boundaries of information. The information can be used as a weapon
for the ‘go-betweens’ and intermediaries. Wholesalers and warehouses are
bypassed. There are dangers to new technology. Corporations have to watch out
for themselves and their customers. Information boundaries are critical.
Could extra intelligence produce a better way of
life? Technology is proving extra intelligence does lead to a better life. The
invention of the computer has proven this fact. “Before long the power of
computers will leap forward because of parallel processing, artificial
intelligence, and other stunning innovations. Speech recognition and automatic
translation will, no doubt, come into wide use, along with high definition
visual displays and concert-class sound. The same networks will routinely
carry voice, data, images, and information in other forms.” Upgrading
information leads to intelligence.
Microprocessor revolutionized the mainframe
computer. “The next step has come with the introduction of recently of
“hyper-media” data bases capable of storing not merely text but also graphics,
music, speech and other sounds. More important, hyper-media combine data bases
and programs to give the user far greater flexibility than earlier data base
systems.” This technology has changed how people in today’s corporate world
Information is freely transformed from one place
to the other. Everyone does not have to have the exact same computer and
software. “The goal of hyper-media is to “free-form” and “free-flow”
information.” Knowledge is power and power is knowledge.
Skills and knowledge are needed for jobs, not
quantitative but qualitative. In the near future job descriptions will be
based on what knowledge you have in the technological field. Your brain will
earn you money not your physical strength. UPS and FedEx drivers use
computers, load and unload trucks plus they drive trucks. They have to use
their brain to run the computer and their physical strength to load and unload
the trucks. Knowledge is inexhaustible. Wealth used to be measured by the
possession of goods you had now it is measured by the amount of intelligence
you have. The information wars struggle for control of knowledge. Knowledge is
a hot commodity.
Information & Knowledge: Effects On Management
In the past, middle management’s role in a
corporation was to collect information from below and then review, format it
and pass it on to top level(s). But the channels of information were often
clogged with bureaucracy and information overload. One solution to this
problems was bypassing the chain of command to get things done. This caused
many problems with regard to communication. Managers were often unaware of
certain information exchanges or activities that were going on. In contrast,
the Japanese had the same problem but they had a system called a doki-kai
system which deviated from formal bureaucracies. Employees who were hired
together maintained contact with each other and hung out after working hours.
I was during this time that there was an exchange of information about each of
their ‘Cubby holes’.
One of the first steps taken to free up the flow
of information was to design computer management information system to help
remove clogs. Big mainframes (like IBM’s SNA) were first used to store massive
amount of information. Users used dumb terminals to access applications and
information stored on the mainframe. The information was organized like that
of a company, in a hierarchical structure. To employees, a mainframe
represented the typical structure of concentration of power, at the top, that
would be used against them.
Ex: Payroll records used fields which were
defined in the database. Specific information were sent to departments only on
a need to know basis. The rest was not made (readily) available.
Power Shift: Microprocessor
The microprocessor placed the intelligent power
of mainframes onto the desktop computer. The power of microprocessor didn’t
threaten the existing power models since most of the data was still specific
fields which were not flexible. But, the advent of new relational databases,
which are inherently non-hierarchical, which allowed the free form and flow
across other software packages. Add hyper media (e.g., video compression,
CD-ROM), the individual now had the power to manipulate information
and present the information in a form that would create perceptions.
Free forms of storage and manipulation strike a blow against specialization;
new forms of communications end run hierarchies and break them up. For
example, employee can access and assist on projects being done at the top. The
top can call up information on what the lower level employee is working on.
This is the cause of reduction in middle management.
Knowledge & Power: Relationship
The relationship between Knowledge & Power is
how people organize their concepts and how they organize their institutions.
For example, the way we organize knowledge frequently determines how
we organize people. When knowledge was conceived of as specialized
and hierarchical, business were built like in accordance to this. Cubby holes
would freeze the information into these places. Power struggles made action
slow and crushed creativity. Competition requires innovation but Bureaucracies
crushed innovation. Institutions are replaced with mechanical idiot proof
rules. Bureaucracies can no longer perform the function they once did.
Flex Firms are new firms created by having
access to money information. Franchises are now popular; small business units
who have access to a large corporation. Another example is family enterprises
who specialize and are able to react to the market quicker. We see a shift
from the power or large bureaucratic management distilled down to small units.
These anti-hierarchical cluster or business units find each other using the
power of the computer. A computer to them gives them access to information for
solving problems in the market place.
In the industrial revolutions, skill of the work
was mechanized so that anyone else could step in and do the same job without
missing a beat. Today's jobs requires skill with more content than just the
time-motion routines of the past. Jobs in essence are less interchangeable
where knowledge workers are less and less replaceable. Today it is difficult
to have to replace a knowledge worker. It is costly. Knowledge workers today,
depending on the field, can essentially name their own price. It is said that
it takes 6 months to train new person and even then you cannot guarantee that
that person will fit in.
One noticeable result of this new independence
of the knowledge worker is that Unions have become less powerful because
people are not interchangeable. For example, for strike to occur, you no
longer need workers to be organized. A few key knowledge workers today have
the power to bring a project to its knees. Other weapons of the knowledge
based employee include:
distorted information in database
leak information secrets to competitors
The only ounce of prevention is based on peer
pressure and treating employees well.
In the past, Economic Power would be controlled
by hierarchical, economical monoliths during the era of acquisition and
mergers. One of the fundamental mistakes made was to think that these megacorp
will stay together. History has shown that as markets mature or evaporate
these megacorps begin to realign themselves again. Beyond the market
reasoning, internal workings work against the usurpation:
Plans differ and don’t work
One must look at relationships between these
companies, not just the structures: Some are growing others are breaking up
into small business units and creating the new power mosaic” The profit center
is now companies broken up and operate as Small Business Units (SBUs).
Monoliths were encouraged to break up into SBU forming mosaics that were more
profitable. One of the problems was that a hierarchical system used a system
of computing that was hierarchical. This made it hard for top-level managers
to control or view the SBUs.
It wasn’t until the PC gained acceptance that
the boardrooms were willing to look at SBUs. These changes where setup by the
implication of the computer and its distributive power. PCs had to be
networked to mainframes; microcomputers shifted power downward as different
departments were able to gain autonomy. They allowed top management to keep
track of SBUs. It became easy for top management to let them be autonomous
while still holding them accountable for their SBUs by monitoring the
information with their computers.
With these new SBUs, the gap between finance and
operations widen. Making financial concentration go hand in hand with
operational deconcentration. A move from doing all things in house (vertical
integration) to outsourcing. Companies moved to take advantage of not having
to train or buy technology by outsourcing some of their work. One impetus for
this was that in-house production produces rigidity. In-house production
becomes an internal monopoly forcing internal departments to pay higher
prices. For example, GM & Ford announce to increase outsourcing to 55%.
Explains explosion of small business. The point is that now
centralized corporations are into the central to production in capitalistic
system. Now SBUs; decentralized way of doing business. We are not going to see
the giant companies ruling, but a symbolic economy made up of SBU and Profit
Centers in and out of corporations. Boutiques, not behemoths.
1) Mass Media product Mass Democracy
2) Mom & Pops were pushed out by big companies
during the smoke stack era and coming around to technology available to allow
Mom & Pop to compete - full circle.
3) Restructuring of Society: Back in the
Roosevelt Days you had at most 10 groups who could influence policy making;
today there are hundreds. In this new mosaic society, we need to rethink the
fundamental democratic laws.
4) bureaucratism: most prevalent form of power
in a system. Not capitalism or socialism. The flow of information and the flow
of money; both are important. Power will flow to those sectors which regulate
information in a super symbolic corporation. Bureaucratic Powershifts will
5) Privatization has become a buzz word:
downsize bureaucracy; outsource... Privatization is the government equivalent
of corporate divestiture. We overlook that as we break up business into SBUs,
a government that doesn’t follow suit will be a gross mismatch with how we are
to do business (Internet is a good example). This is one way government is
trying to cope with the new realities.
Victor Antonio G. is
an author and motivational speaker. Please share this with a colleague or friend who
may need some words of inspiration.
Success Happens for a Reason.
Copyright © 2004 by Victor
Antonio G. All rights reserved. This article MAY be reproduced in any
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