Sunday, March 07, 2010

Reading :: Powershift

Powershift: Knowledge, Wealth, and Violence at the Edge of the 21st Century
By Alvin Toffler

Powershift is the 1990 followup to 1970's Future Shock and 1980's The Third Wave. As Toffler tells us in the preface, whereas Future Shock looked at the process of change and The Third Wave took up the directions of change, "Powershift deals with the control of changes still to come" (p.xix). The three books form a trilogy that attempts to outline what was then the future: the impending 21st century.

And like the other parts of this trilogy, Powershift sometimes seems quite prescient about this future. For instance, Toffler argues that "closely held specialists' knowledge is slipping out of control and reaching ordinary citizens. Similarly, inside major corporations, employees are winning access to knowledge once monopolized by management. And as knowledge is redistributed, so, too, is the power based on it" (p.8). We might think of several 21st century examples here: Rathergate comes to mind, but so does WebMD; the Iranian protests coordinated in part via Twitter and Facebook; and Climategate. If some of these examples make you want to object that specialists' knowledge is sometimes twisted and misconstrued, yes, you're beginning to see a problem with what Toffler is describing: when knowledge escapes its customary boundaries, it's not simply a wayward package, it's interpreted. Multiply the number of interpreters and the number of backgrounds from which they draw, and you don't just get redistributed power, you also get ambiguities and distrust. In any case, it's certainly a "powershift."

In The Third Wave, Toffler argued that the world had undergone three major waves of change based on three objects of human work: agriculture, industry, and knowledge. Here, he argues that each of these waves is associated with a type of power: violence (force), wealth (cash), and knowledge (culture) (p.12). These are additive: the first-wave source of power, violence, has never gone out of style, but it's now layered under the other two sources (p.16). Toffler specifies the definition of power for purposes of future discussion: "purposeful power over people. ... the use of violence, wealth, and knowledge (in the broadest sense) to make people perform in a given way" (p.14). Unlike the other two sources, though, knowledge is more flexible, not finite, and simultaneously usable by many; therefore, knowledge is the most "democratic" source of power (p.19). It's also the highest quality source of power, he argues, compared to violence (low-quality) and wealth (medium-quality) (p.41). Indeed, wealth in particular is undergoing a transformation due to knowledge: the investor (capitalist) is alienated from the source of her wealth (p.59; cf. Drucker in Post-Capitalist Society). And the finite character of capital, he says, is over: something that explodes classical and Marxist assumptions about capital (p.59; cf. Zuboff & Maxmin in The Support Economy).

Toffler also makes the now-familiar argument that "skills are now so varied and fast-changing that workers can't be interchanged as easily or cheaply as in the past" (p.71). All work now has knowledge work and service work components (p.73).

Later, Toffler notes that once, the manufacturer stood between the retailer and consumer, controlling information to both (p.93). But the UPC shifted information control to the retailer by allowing them to examine the many dynamics of retail (from shelf space to placement) at great speed and scale (p.95). More recently, customers have begun paying partially in data (think loyalty cards), data that further accrues to the retailers (p.97). As Toffler says a little later in the book - sounding exactly like Drucker in Post-Capitalist Society - "it is knowledge about knowledge that counts the most" (p.124).

Let's skip ahead a little. Toffler [was "Drucker", fixed 2010.03.10] argues that superior organization is a strategic weapon, the most important weapon in a Third Wave world (p.161). And this "is what today's attack on bureaucracy is all about" (p.161). He characterizes bureaucracies as having two key features, two routine controls: cubbyholes (held by specialists) and channels (held by managers) (p.162). Cubbyholes are places where "specialized information and personal experience are stored"; and with demassification, organizations have become more complex, meaning that more information is trapped in cubbyholes (p.163). Channels are places where information is interpreted and shared: "in every bureaucracy, information is broken apart horizontally and put back together vertically" (p.168). But a faster pace, with more information, means that these channels are choked (p.168). These two features of the bureaucracy are bottlenecks, and in Toffler's view, they are leading to a crash.

So how might an organization develop if it develops away from a bureaucratic organization? One way is the "flex-firm" of small family businesses based at home (p.176). Toffler argues that "huge firms will become more dependent than in the past on a vast substructure of tiny but high-powered and flexible suppliers" such as flex-firms (p.178). Toffler associates flex-firms with "networks" (p.182) but cautions that many other forms are available.

This brings us to those other organizational forms. Toffler identifies several.
  • "The pulsating organization": organizations such as the US Census Bureau, which "expands and contracts in a regular rhythm" (p.187). He sees ad-hocracies (such as taskforces or project teams) as one-pulse organizations (p.187).
  • "The two-faced organization": a unit that can shift from hierarchical to nonhierarchical command to meet demand (p.188).
  • "The checkerboard organization": Alternating categories of people at each level of a hierarchy, as when a Japanese bank in California "alternates Japanese and Americans at each level of the hierarchy" (p.190).
  • "The commissar organization": Ensuring that each level of a hierarchy has two or more information channels. Toffler likens these to Soviet Army units with political officers, and suggests that they represent CEOs' desparate bids to keep control in a bureaucracy (pp.190-191).
  • "The buro-baronial organization": Feudal organization in large hierarchies (e.g., universities, and to some extent accounting houses and the military). The "barons" feud with each other and form alliances (p.191).
  • "The skunkworks organization": "Here a team is handed a loosely specified problem or goal, given resources, and allowed to operate outside the normal company rules" (p.192). "The skunkwork format is inherently and militantly antibureaucratic" (p.193).
  • "The self-start team": These emerge without formal sanction or organization and "can function only in an atmosphere that gives individuals considerable autonomy" (p.194). Toffler links these to electronic media.
Toffler argues that this high level of diversity requires new styles of leadership (p.194).

Toffler also cautions that the term "networks" has been overused, becoming a panacea (p.195). He sees flex-form as a broader concept that includes networks. And he foresees the atomization of the company into a consortium of independent contractors and free entrepreneurs (p.198).

This new form of work, he argues, involves new organizations and new discipline (p.205). A heavier load of information requires that the knowledge load be distributed through the managerial ranks. Workers have to continually learn, unlearn, and relearn (p.206). And, as Toffler intimated earlier, it becomes harder to replace the individual: training takes longer, and individuals work in teams that must reach some measure of trust and cohesion (p.208). Along these lines, he predicts that the trend of offshoring labor will reverse because speed will become more important than the low expense (p.392) - a prediction that does not seem to have panned out widely.

Given all that, Toffler makes various policy suggestions, most notably an aggressive buildout of national digital infrastructure (p.400).

My thoughts? It's fascinating to read Toffler's books to see how we've developed differently. As in his other books, he's gotten several things right in Powershift. I'm particularly interested in how he's attempted to build a taxonomy of emerging organizational types, although I'm not sure how useful this taxonomy is. I'm also interested in how closely this text sometimes parallels Drucker's Post-Capitalist Society, which was published a few years later. On the other hand, I think Drucker actually underestimates some of the complications of more pervasive digital information, particularly in undermining (in some cases, further undermining) public trust in political, scientific, corporate, and academic institutions. Nevertheless, a fascinating read.

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