The Future Calls for Letting Go
By George Anderson
As Dan Quayle the famous philosopher, orator and spelling bee contender once said, “The future will be better tomorrow.”
While others may not match the eloquence of the former Vice President of the United States in speaking about the possibilities of the years ahead, many share his vision that the future holds great promise.
Thomas Malone, professor of information systems at MIT’s Sloan School of Management and author of The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style and Your Life, is among those.
According to a report on the Xtreme Retail 23 (XR23) Web site, Prof. Malone believes improvements in technology,
specifically in communications, can have a profound impact on how business is done in the future if companies are willing to let go of present day thinking on organizational structure.
“People have enough information to make sensible decisions for themselves, and not just take orders in a hierarchy,” he said.
“Think about eBay as if it were a retailer, not an auction company. From this point of view, eBay has hundreds of thousands of ’employees’ — the sellers on eBay. But these sellers aren’t really employees; they are effectively independent store owners. As such, they decide for themselves what to sell, when to sell it, how to advertise it, and how to price it. In other words, eBay has ‘outsourced’ most of the traditional functions of retailing to a bunch of independent sellers who eBay doesn’t even pay. Instead, they pay eBay! This model may not work for all kinds of retailing, and sometimes you may have to almost start over to get there, but eBay shows how really different approaches can sometimes work amazingly well.”
“The next logical step” in the evolution of retailing, said Prof. Malone is “decentralized, empowered, networked and outsourced organizations” run by people who “are more creative, more motivated, and just like going to work better” than those typically employed in the business today.
For those who think the eBay reference goes too far, Prof. Malone offered another present day example of on organization change. “A less radical example comes from Whole Foods supermarkets. When managers hire people to work in Whole Foods Markets stores, they are really only making a recommendation. Before a job candidate becomes a permanent employee, the candidate has to work for a 30-day trial period. Then everyone in the department gets to vote on whether to keep them. This isn’t just a popularity contest either. Team members know that their monthly bonuses are based on their department’s labor efficiency, so the people they vote to hire will directly affect their own pay.”
Moderator’s Comment: How will technology affect how retail and related businesses are run in the future? –
George Anderson – Moderator
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7 Comments on "The Future Calls for Letting Go"
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“Don’t pave the goat path” is a way of saying that adding modern capabilities to a system built for a different set of circumstances doesn’t get you the most benefit. So yes, new tech should prompt rethinking. But I think the professor is naive to think that all employees can be that self-directed, and eBay is a flea market operator, not a new kind of business.
The ultimate result of improved communication will be continued consolidation of support functions as centralized management of disparate retail operations becomes possible through the investment in exception based management tools. Retail consulting organizations that actually manage the operations through sophisticated forecasting algorithms will offer assortment planning, gross margin management, and promotion planning to all “subscribers.” “Software as a Service” will allow these new consultants to hire the best merchandisers in various categories and demographic backgrounds, so that the individual store operator will have the same resources as the “big chain” stores. The difference will be that the individual operator will have his heart and soul in the business and be more motivated to make it work. This will lead to the return of the independent retailer as the ultimate manifestation of “free enterprise.”
Once again it all comes down to “people”…technologies can make the retail experience (and just about everything else) faster and more detailed – but it’s how the use and benefits are communicated that makes all the difference between success and failure. The key to effective technology is effective empowerment!
Good companies benefit exponentially from improved technology, but the old rules hold and automated poor companies use technology to suboptimize faster. Want to understand the limits of information? Contrast the amount of scan data available and the use of that data.