Summary and Review of The Future of Work by Thomas Malone

This book summary of The Future of Work was prepared by Alison Palmer, while a Business Administration/Supply Chain Management student in the College of Business at Southeastern Louisiana University.


Executive Summary

The Future of Work is a business book written by Thomas Malone. Through his experience as a Professor of Management at MIT Sloan School of Management and the founding director of numerous MIT organizations, Malone has come up with a way to revolutionize all organizations for a better, more decentralized workforce. In the business world today many organizations seem to believe that decisions should be made by top ranking CEO’s, managers, etc. However, Malone believes that if we start allowing all levels of people involved in the organization to have a say so that we can change the future of work.

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The book has one primary focus: decentralization. In this book, decentralization is defined as ‘the participation of people making the decisions that matter to them.’ In even simpler terms, it’s about giving the people more freedom. More freedom can be given through loose hierarchies, democracies and markets. The amount of freedom ranges within each structure.

In loose hierarchies, the right to make choices is given to employees who work at extremely low organizational levels. For example, employees at the ‘bottom of the chain’ and sometimes even people who are not employees, such as volunteers.

In democracies, power to make important decisions is not just granted to low-level employees. Instead, it is granted to all members of the organization. This is done by allowing all members to participate in group voting to achieve things they want within their organization. Malone firmly believes that through democracies, an undeniable amount of creativity and energy can be shown.

The most extreme business freedom takes place in markets. In a market organization, individualism is the main focus. What this means is that no one must participate in any event that he or she does not believe in or agree on. This is most common in organizations that deal mainly with the buying and selling of products.

Malone uses his expertise in the field to describe the three main focuses in which he thinks will contribute to a successful future of work. Through his charts, graphs and writings, we are taught the differences between the three and shown examples of how each have played an important role in numerous organizations.



The Ten Things Managers Need to Know from “The Future of Work”

1. Managers must understand the differences and similarities between what it means for a company to be centralized and decentralized.

2. Managers must know that decentralization is ‘the participation of people making the decisions that matter to them.’

3. Managers must know that “To be an effective manager in the world we’re entering, you can’t be stuck in a centralized mind-set.”

4. Managers must know that in the near future, centralization will be decreased. Decentralization will become more and more dominant in the near future of all work.

5. Managers must understand that most humans have a strong desire to have as much freedom as possible, especially within their organization.

6. Managers must know the importance or coordinating all individuals involved in the process or decision-making.

7. Managers must take into consideration that all people have human values and all people value different things, especially when pertaining to the workforce.

8. Managers must know the three major benefits that come as a result of decentralizing.

9. Managers must find an appropriate time to decentralize. Once they do, they must know the right steps to take to do so.

10. Managers must know that sometimes, in small instances, decentralization is not the answer their organizations problems.



Full Summary of The Future of Work

Decentralizing

Most humans have a strong desire to have as much freedom as possible, especially within their organization. To accommodate all human and organizational needs, decentralizing within organizations is becoming the way of the future. In essence, to decentralize basically means to allow all members to participate in making decisions that actually mean something to them. When an organization moves from being centralized to becoming decentralized, the organization will immediately see changes. There are three major benefits that come as a result of decentralizing:

-Decentralizing encourages motivation and creativity

-Decentralizing allows many minds to work on/contribute to problem solving

-Decentralizing accommodates flexibility and individualism

Since this will soon be the way of the future, Malone has gone in depth to teach organizations three basic ways to decentralize. These include loose hierarchies, democracies and market sources. While all of the three types have their own strengths and weakness, they all play different roles in decentralizing; based on what situations a company may be in.

Loosening the Hierarchy

What exactly is a hierarchy? In simple terms, a hierarchy is “the structure of an organization based on the chain of authority from top to bottom.” According to Malone, the first step to decentralizing an organizational structure should be for a company to be willing to ‘loosen their hierarchy.’ Malone explains how to achieve this by providing numerous examples.

The most well known example of a loose hierarchy is the computer operating system Linux. Linux came about when its creator, Linux Torvalds, allowed and readily encouraged other people to use his operating system and modify it, at no cost whatsoever. Not only did thousands of computer programmers participate in creating this operating system, but they worked together to make it better – fixing problem areas, adding new and improved features and writing documentation.

Malone focuses on the story of Linux because of its ‘highly decentralized way of organizing knowledge work.’ From this story, Malone shares the three main characteristics of loose hierarchies.

First, all loose hierarchies have dense communication. What this means is that no matter what situation an organization may be faced with, all of its members must stay in close contact with each other. Linux was provided this dense communication simply by the Internet.

Second, all loose hierarchies must have a relative lack of centralized control. In simple terms, important decisions are left to be decided on by members who are preferably at a lower level in the organization.

Third, all loose hierarchies must promote that all members have the freedom to participate or to not participate. The role of freedom in Linux’s case has shown to be quite promising. For example, the members who participated in the modifying of Linux chose to participate on their own. The members who were extremely interested made this operating system what it is today. According to Malone, “By delegating decision making and engaging people’s values, loose hierarchies can take advantage of a much greater amount of creativity and energy from a much larger pool of people than would ever be possible in most traditional companies.”

The next and more relatable example of an extremely loose hierarchy is the web-developed encyclopedia, Wikipedia. Wikipedia is a loose hierarchy because it has no centralized quality control, no reviewing for validity and no approvals necessary to update the information. Anyone can edit an encyclopedia article on Wikipedia, regardless of the credentials one may or may not have.

Harnessing the Democracy

Besides loosening the hierarchy, businesses and companies have another method that can be used to place members in the center of their organization. The second way to do this is through a process known as “Harnessing the Democracy.” This concept consists of letting all members in the group vote on a particular subject as a whole.

Democracies are quite common. For example, we have all witnessed them in the United States when voting for our Presidents or electing other political leaders. The concept is quite simple. We allow legal citizens to place their vote and the majority usually wins. According to Malone, this should be a concept that organizations use.
The example used in “The Future of Work” is very simplified, but still manages to show how democracies can be used to further an organization. Before hiring an employee at Whole Foods, all applicants who are being considered for the position must complete a mandatory thirty-day trial period. During this period, the applicants learn the specific trades of the department that have applied to. Team members observe the applicants to see who is ‘the best of the best.’ After the thirty days is over, team members come together as a group and vote on which applicants to hire. While this may seem like a ‘popular vote’ issue, other factors apply that team members take into close consideration. Of course, there is one strong motive that does sway their votes. Money. Every month, team members are given a bonus based on how efficiently their department has been running. By choosing the most qualified applicants, they not only choose the best workers for their department, they choose the best workers for Whole Foods as a whole.

Markets

Many organizations today are using external market sources to become more organized within their own company. Using these outside market sources opens up an organization to a more diverse range of goods, services and expertise. One of the most common examples of contracting an external source is when an organization will hire graphic artists to develop a website or a specific kind of advertising to promote their company.

After becoming fascinated with how beneficial outside market sources could be, Malone and a colleague came up with the idea of an “E-Lance” community. This idea of this community focuses itself around individualism and allows independent contractors to come together as a functioning unit to sell and buy goods and services. To an extent, freelancers participating in an “E-Lance” community come together to create their own temporary organization. Once the job is fully accomplished, the organization dissolves and its members look for another community to join.

To visualize the idea of an “E-Lance” community, Malone uses Hollywood as an example. To create a movie you must have several key individuals. You have your directors, producers and actors who all come together to produce a product: the movie. Once the movie is done being filmed, the key individuals go on to other projects. Contracting outside market sources is also common in the construction industry too. While one company may build a house, they will outsource an electric company to run electricity.

A company by the name of Topsy Tail has relied heavily on outside market sources to run their successful business. Topsy Tail began as a local company that made plastic hairstyling tools. By hiring all outside market sources, the company has not had to build its own warehouses or distribution centers. This company allows contractors to perform all tasks, except for developing new products and markets strategies. Without the use of the outside sources, Topsy Tail would never have made a profit of $80 million in just one year!

In Malone’s opinion, decentralizing organizations by using outside market sources promotes individualism and can be used to efficiently hire the right people for the right jobs. Market sources are shown to be extremely useful when the organizations situation is lacking creativity and motivation among employees. For a market to run efficiently, it is important that all members involved are aware of and agree on the ‘rules.’

When to Decentralize?

Now that you know about the benefits and different ways to decentralize, the organization must know the right time to do it. Each of the three forms of decentralization, loose hierarchies, democracies and markets, must be used at specific times to get the most advantage for your organization. Before implementing the decentralization process, an organization must answer three important questions:

-Are the potential benefits brought upon by decentralization important?

-Can the organization compensate for the financial costs of decentralizing?

-Do the benefits of decentralizing an organization outweigh costs that may occur?

Problems and Solutions

with Decision Making while Decentralizing an Organization

When organizations choose to loosen their hierarchy, managers may sometimes to be forced to make decisions that not all members will agree on. However, this should only happen when the decision making process is taking too much time or when members become overwhelmed in the process. A loose hierarchy is the best option when your organization is having trouble dealing with conflicts of interest.

In democracies, sometimes voting on an issue may be more complicated then it seems. When an issue arises among members and a decision cannot be voted on properly, Malone has come up with two ways in which an efficient decision can be made. If an agreement on a situation can not be voted on, members can allow for managers to just make the overall decision or members can use opinion polls to allow the public to have a say so in the organization.

A market situation incurs the least problems because it only involves two parties to make a decision. When a problem arises, the two parties do not need to involve anyone other themselves.



Personal Insights

Thomas Malone is a Professor of Management at the MIT Sloan School of Management. While this is an accomplishment within itself, this is just one of his credentials. While working at MIT, Malone has been the founder and director of many different MIT organizations. Besides being the author of “The Future of Work,” he has published many book and magazine articles, research papers and is even an inventor of 11 patents. I believe that all of the experience that Malone has in different aspects of management are what make him a reputable author.

With business conditions today, what the author wrote is true because we all want to be part of something big. For many of us, this applies more within our careers. To feel incorporated into business making decisions is quite an accomplished feeling. Malone goes into great depth to explain that to his readers.

If I were the author of the book, I would have done these three things differently:

1. The Future of Work was written in terms that all business members would recognize. The book is so informative that I believe all people would learn from it. If I were the author, I would create an introduction chapter that goes over the basic terms so that non-business members would have an easier time understanding.

2. Thomas Malone uses great, simplified charts and graphs to visually show his points. However, there is not that many in the book. If I were him I would have added more visuals.

3. Even though the examples used were informative, I would have liked to see Malone use more examples in which he actually participated in.

Reading this book made me think differently about the topic in these ways:

1. It is without a doubt extremely important to incorporate all levels within an organization while in the decision making process.

2. Decentralizing organizations really is the future of work. In the future, important decisions will not only be made by CEO’s and managers, but by all members associated.

3. Reading this book made think differently about why company’s would choose to be centralized or decentralized.



I’ll apply what I’ve learned in this book in my career by:

1. Since I am going into the management field, I now know how important it is to include all members in the decision making process.

2. In my career, I will apply more decentralized approaches when in decision making situations.

3. In my career, I would like to use Malone’s charts and graphs to explain to lower level employees the concept of decentralization. Since learning that all humans wants to be incorporated in the process of making strong decisions, I think this will be a good way to start off the decentralization process.

Here is a sampling of what others have said about the book and its author:



“The book is about the new order of work that is to come. With its powerful insights, it is bound to shake all serious CEOs into taking stock of where their organization.”

-Vilasini Kumar

“”The Future of Work” began changing my thinking and attitudes about work from its very first pages. It clarified and extended my understanding of myself as a worker, as well as of friends and colleagues, many of whom are either, like me, self-employed, or have entrepreneurial-type positions within organizations. I’ve already begun using Malone’s ideas in consulting with individual clients and organizations, and found them relevant, productive and fun.”

-Jay Einhorn



Bibliography

Malone, Thomas. (2004). The Future of Work. Watertown, MA: Harvard Business Press.

Thomas W. Malone. (2010, February 17). Retrieved March 10, 2010, from MIT Sloan Management website.
website: http://cci.mit.edu/malone/index.html



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To contact the author of this review, please email Alison Palmer (Alison.Palmer@selu.edu).

David C. Wyld (dwyld@selu.edu) is the Robert Maurin Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. He is a management consultant, researcher/writer, and executive educator. His blog, Wyld About Business, can be viewed at http://wyld-business.blogspot.com/.

Originally published Summary and Review of The Future of Work by Thomas Malone

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