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The current rapid development of high technology and the consequent need for

highly skilled "knowledge workers" call for innovative management of

human resources in organizations that must meet global competition.

The Third Industrial

Revolution: A Special
Challenge to Managers

Joseph Finkelstein
David Newman

have entered into a third industrial revolu- gineered materials, space exploration — the
tion that is reshaping our industrial processes list grows.
and is dramatically changing the bases of in- This third industrial revolution
dustrial and technological growth. It is not at brings with it the reality of engineered mate-
all certain that the United States is well posi- rials as well as engineered life and drugs. For
tioned to take advantage of what is happen- most of history we have been constrained by
ing. Other nations are touted as potential the materials produced by nature, modified
winners; the challenge is global. The shifts in by our intelligence and artifice. We are now
products and markets are already in evi- able to select the properties we desire in a
dence; microchips, computer-aided design material and have it engineered to order. The
and computer-aided manufacturing (CAD/ industrial world has never before known this
CAM), fibre optics, lasers, holography, bio- freedom; henceforth engineers and entrepre-
genetics, word processors, robotics, en- neurs will, perhaps, have the imaginative 53
range of expression that poets and artists
have traditionally had.
We know that we are living in "in-
teresting times." New technologies appear;
iong-established businesses fall on hard
times; the economic order is threatened; and
society itself experiences drastic challenges to
values and standards of behavior. This pace
of change and the condition of uncertainty
are facts in our lives. The 21st century has al-
ready begun, even though the technologies
of the 19th and the 20th centuries are still
very much with us. Accordingly, we live si-
multaneously in three centuries, in three
great historical movements.
The impact of the first industrial
revolution was spread over two centuries.
Joseph Finkelstein, educated at Utuon College.
The second industrial revolution featured a
Harvard University, and the London School of
Economics, is an economic historian who ap- much more rapid diffusion of technology
plies the viewpoint of business history and and techniques over two or more decades.
institutional economics to the strategic The impacts of the third industrial revolu-
decision-making process of domestic and mul- tion, however, are overwhelming. The time
tinational firms. He has written or contributed
available to us to adapt is being dramatically
to many books and publications in economic
history and economic development. His best- compressed. The pace of change threatens
known work is Economics and Society: The our capacities —individual and institutional
Development of Economic Thought from Ac- — to cope with change. The stresses we all
quinas to Keynes, coauthored with Professor feel is only one manifestation of what we are
Alfred Thimm, director of the School of Busi-
living through and attempting to "manage."
ness. University of Vermont (Harper & Row.
1973}. His professional teaching expertise lies in
the areas of development of U.S. enterprise
abroad, the social aspects of U.S. capitalism, THE SIX MAJOR HIGH-TECHNOLOGY CHANGE
and government in business— the interface of
corporate policy and public issues.

Professor Finkelstein has been a guest visiting

To give a flavor of some of the specific and
lecture*- to the International Management Pro-
gram of the Administrative Staff College, dramatic changes we are already experienc-
Henley-on-Thames. a founding director of a ing in new products, processes, and markets,
high-technology company, and a consultant in we will briefly explain six of them —the mi-
environmental and marketing areas. Since 1972, croprocessor, computer-aided design and
he has been an inspector of elections for the
manufacturing (CAD/CAM), fibre optics,
Ceneral Electric Company. At present he is
editing a volume on the Third Industrial biogenetics, lasers, and holography.
Revolution-f/iF knowledge-driven changes in
technology and communication that are affect-
ing ow world. Microprocessor

54 "The microprocessor," one engineer writes, "is

as revolutionary an invention as the wheel,
the combustion engine, and the light bulb."
Fourteen years ago, INTEL built the entire
central processor unit (CPU) of a digital
computer onto a single silicon chip. By 1980,
VLSIs (very large-scale integrated circuits)
with 150,000 components on a single chip
were in use. People now conceive of one mil-
lion components on a chip — dimensions
measured in billionths of a meter are feasible.
The microprocessor has become a
low-cost item. A complete system, with its
essential peripherals, now costs much less
than a new car. We have entered an era of
"distributed intelligence," in which we cannot
even vaguely grasp the enormous possibili-
ties of the computer turned little (though our David A. H. Newman, assiatunt professor of
children can, and will). The microprocessor business policy at McMuater University, Hamil-
ton. Ontario, came to McMaster in }983 after
runs totally counter to the concept of ever
a 32-year husiness career as a liauds-oii techni-
more powerful centralized computer sys- cal specialist and a member of top manage-
tems—a concept prevalent and pervasive in inent. He received his degree in electrical
the industry just ten or fifteen years ago. As engineering from McGill University and is cur-
with others of the emerging technologies that rently completing his doctorate in business ad-
ministration from Concordia University in
we have mentioned, the microprocessor
poses fundamental challenges to convention-
Newman worked as a guided weapons
al wisdoms at the corporate and even the na- specialist with Canadair Ltd. in the 1950s, and
tion-state level. The powers of informal net- as a senior engineer, operations researcher,
works are being radically enhanced — by computer systems designer, and marketing
their access to the new technologies of infor- specialist with Computing Devices of Canada.
Ltd. from 1960 fo 1965. He then worked as an
mation processing, storage, and communica-
independent public policy consultant in urban,
tion, and by their control of much of the new rural, and regional development, resources
and rapidly evolving know-how. Formal >nanagement, and environmental quality. He
structure and style is being effectively re- joined 5NC Enterprises, Ltd. in 1969 as assis-
placed through an inexorable process of in- tant to the president, responsible for initiating
and leading strategic planning: he became a
ternal revolution.
vice-president in 1975.
As a self-employed management consultant,
he has worked with private-sector organiza-
Computer-Aided Design and tions in strategic planning, technology sourc-
Manufacturing (CAD/CAM) ing, market research, new ventures, geographic
expansions, and so forth. His main research
CAD/CAM is a further intrusion of the new areas are knowledge workers and high-
into the traditional; its main uses are in very technology customizing organizations, and
large and largely conventional organizations. their special roles in industrial organization,
Quite junior people sit in front of screens and innovation, and revitalization.
manipulate designs, using light pens and 55
menus. A single component, which is high- promises. Japanese automobile companies
lighted in soft green, can be fitted into an as- have already shown how to use these devices
sembly of great complexity and its impacts effectively. Joined to new concepts, systems,
foreseen. This is more than a new technol- and management philosophies, CAD/CAM
ogy. It is also artistry —a new art form. Its and robotics have created a massive differen-
practitioners are artists who, like most ar- tial of at least $1,500 in the cost of producing
tists, are beyond the understanding of many a car—to the disadvantage of Detroit. And
traditional managers. increasingly in situations where people re-
CAD/CAM also represents a great fuse to go, robots are taking over jobs that
step forward in economizing the time-design- pose risks to health and safety.
manufacturing cycle —a step with profound
significance. The computer can refer the de-
Fibre Optics and
sign directly to the shop floor, where compu-
ter-controlled machines carry out the in-
structions—cutting, shaping, marking, and Fibre optics has been around for some time,
inventorying. Such companies as Boeing as a scientific toy. But it now represents a
have moved far in CAD/CAM usage, and dramatic breakthrough in communications
John Welch, president of General Electric that is just a few years away. We can now
(GE), has promised that GE, a leader in this make logic chips that use photons of light in-
area, will play a leadership role in the retro- stead of electrons. This breakthrough vastly
fitting of other companies — in the reindustri- improves signal strength and expands the
alization of the United States. bandwidth —the number of messages that
Data generated by designers and can be handled simultaneously. Some en-
engineers, as they fashion products on a gineers suggest that one optical chip can con-
CAD system's video screen, will provide tain 10,000 "gates"-those logical devices that
much of what is needed to computerize pro- permit unscrambling and encoding of sig-
duction. Such manufacturing systems as the nals. The age of stringing millions of miles of
manufacture of tooling, ordering of materi- wire and burying miles of cable is passing
als, scheduling of production runs, program- quickly.
ming of robots, inspection of finished prod- Satellite communication is already
ucts, and much more are today more than well established, and is gowing exponential-
ly. Many newspapers are printed in several
locations, using a master copy transmitted by
satellite. And satellite channel television (TV)
has become one of the hottest plays in town.
Telecommunications of all kinds —videotext,
teletext, and cellular telephones —are loom-
ing close on the horizon. AT&T is only one
of the giants entering these new areas.
Thompson C.S.F., the French electronics gi-
ant, has announced that it is launching a ma-
jor market thrust to secure the communica-
tions potential of our TV screens. The United
56 States telecommunications scene has not
been so vigorous and volatile since the days of growing without fertilizers, and can sub-
of Alexander Graham Bell —but now the stitute for oil.
actors are global. It is within our imaginative grasp to
"design and grow a single plant that has edi-
ble leaves like spinach, high-protein seeds
Biogenetics and Bioagriculture
like beans, a highly nutritive potatolike tu-
We are on the threshold of a biogenetic revo- ber, nitrogen-fixing roots, and a stalk that
lution; we are witnessing the emergence of a yields useful fibre" {The New York Times,
kind of scientific awareness that has broken October 25, 1981). Some of the cloning ex-
through before perhaps only once or twice in periments on plants are awesome in their
history —with Isaac Newton in the 17th cen- potential, and cloning has already been sup-
tury. The miracle of DNA deciphering is the planted by automated gene-splicing ma-
base for a vast new range of inventions rang- chines; CAD/CAM may have uses far be-
ing from new drugs to genetic engineering in yond the concept of the conventional factory.
plants, animals, and humans. The immensity
of this biological cosmos is challenging and
frightening. We are already artificially pro- Lasers-Holography
ducing strains of interferon that are purer Lasers are emerging as versatile and powerful
than that obtained naturally, and we're pro- tools; any device that can be used to both
ducing them in quantity. We have now cre- weld a detached retina and bore a tunnel
ated synthetic insulin for those several mil- through hard rock has an enormous future.
lions of people who need insulin for life sup- Second cousin to the laser is holography —
port and who have previously depended on three-dimensional photography. Holography
insulin extracted from the pancreas of has established claims in microscopy (espe-
slaughtered animals. Bacteria are being de- cially high-resolution volume images), inter-
signed-to eat' sludge, to transmutate ele- ferometry, optical memories for storing ex-
ments, to accelerate chemical and industrial tremely large amounts of binary data, three-
processes, and to replace mechanical and dimensional imagery-and advertising and
chemical techniques. The implications are medical holography is used as an alternative
unparalleled in human history. Hundreds of to X-rays. Industrial uses are proliferating
firms with emerging technologies are active wherever signal processing is used. Holog-
in biogenetics; some of them are looking for-
ward to becoming part of the new wave of
billion-dollar businesses.
The biogenetic impacts on agricul-
ture are perhaps the most startling. In 1982,
Secretary of Agriculture John R. Block an-
nounced that scientists at the University of
Wisconsin had "in a pure research break-
through, introduced a gene for protein pro-
duction from a french bean into a sunflower
. . ." The "sunbean" may be the forerunner of
a new geneology — of plants that are resistant
to disease, can survive drought, are capable 57
raphy has been used to "map" a salt dome as nique. The half-life of the technology-in-use
an aid to oil prospecting. Holography is add- was many years.
ing to the effectiveness of radar and sonar,
and acoustical holography has even been
Rate of Growth and Change
used to determine whether a desired Leonar-
do da Vinci fresco might be nestled under a The company's growth and change was evo-
more recent one. lutionary, and the pace was appropriate to
the firm's financial capacities and manage-
ment system life-spans. Product innovation
was carefully controlled to maintain this
gradual pace of change.
Until recently our experience has meant
something in anticipating the future. Despite
change, for much of the 1960s and the early Marketing
1970s, things seemed predictable. Long-range
strategic planning was often useful, applying Demand for the company's product was tied
rational premises to a logical and sequential directly to demography —the need expressed
planning methodology. Today there is even in the marketplace was fundamental and not
greater need for coherent strategic planning, likely to change much. Demand was not the
but managers must now adopt a very differ- driving force; that came from technology
ent attitude and methodology. (and was largely under the firm's control).
What we are living with is a discon-
tinuity. The entire structure of business expe- Management's "Grasp"
rience and management thought is being
transformed. What has already happened to The company's managers had grown up with
more than a few organizations will eventual- the technology and with the business. They
ly happen to many organizations and insti- had lived with it; they understood it; and the
tutions. status quo was taken as 'given." Business-as-
usual was the declared corporate mission.
Management expected a continuation of the
A TYPICAL TRADITIONAL HIGH-TECH COMPANY surprise-free business climate that had char-
acterized the previous decades.
The following account describes a large and
typical technology-based business that had
Availabilit}/ of Key People
lived through the 1960s in its traditional and
surprise-free way. While people with special skills and know-
how were important to the business, there
was no real dependency:
Technology in the Product
• There were many more skilled people
The company's technology was totally famil- available because the technologies and trades
iar, long-established, and well-known in the were common to many other organizations
technical literature, in the education system, and were based on a long-standing education
and among customers. Accordingly, there and experience stream.
58 was a commonality of knowledge and tech- • Like many organizations of its era, this
business contained a lot of redundant capa- • There are not many such specialists
bilities. It was not lean because it had never around.
faced pressures to make it lean. • We do not understand their sciences,
• The business was not going anywhere in and we do not begin to appreciate their ex-
a hurry, and there was nothing like a critical pectations and motivations.
path to compel a squeeze on resources. The • When we bring in "managers" who can
key resources in a know-how intensive busi- work with these new kinds of people, we be-
ness are people and money, and there was come dependent upon these "managers" as
enough of both. In fact the firm lacked new well. Our dependency is as strong as the par-
challenges to allocate them to. There was only ticular person is effective.
'more of the same," and the rate of change of • In some fields we are not even sure what
the "more" was known. to call the new know-how. It is still emerg-
• There was little need for aggressive mar- ing. Some of these areas are not yet codified
keting. Accordingly, there was no felt need to or taught by the universities; these capabili-
develop the extensive product know-how ties must be learned on the job.
and championing that would have been nec- For many firms, for the first time,
essary to support a dynamic and entrepre- resources allocation has become a strategic
neurial effort. issue. Both cash flow and availability of the
"right" people have become limiting factors.
This pressure has been intensified because
THE MAGNITUDE OF PRESENT CHANGES the product life cycle has become a tight time
frame. Having committed to certain product
What has been familiar to us—technology, families, businesses must move from concept
education, management principles —are all to development to production and on to the
being overtaken by an as-yet unpredictable market on a tight "fast track."
new culture. Because we do not clearly and Accordingly, the onus is on a com-
fully comprehend these changes and their plex assemblage of people in a variety of po-
importance to us either as threats or oppor- sitions and roles to somehow work together
tunities, we have to rely on people who do. cutting across all the corporate functions and
Accordingly, our uncertainties set up crucial compartments.
dependencies: The marketplace has become a new

'[T]he onus is on a complex assemblage of

people in a variety of positions and roles
to somehow work together cutting across all
the corporate functions and compartments. n
"front end" in not only supporting an existing precedent in dealing with the unprecedented
product but in specifying what comes next in and from accumulated know-how of a special
the "need," and in the technology. The "front kind. Know-how is usually thought of as
end" is also internal to the firm —in the pre- resident in people and in policies, facilities,
dilections and attitudes of key people —at and even in organizational structure. The
the "boundaries" with marketing and sales, know-how that underpins earlier capital in-
and in the hearts and minds of other kinds of vestment and organizational design decisions
boundary-spanners. The "front end" is defi- continues into the future for a time. Thus,
nitely not located at the front end of a know-how in people and in equipment is the
sequential process of concept, design, pro- basis of value-added. Know-how has addi-
duction, and so forth. The contemporary or- tional dimensions of great significance for
ganization has become highly dependent on organizations confronting the third industri-
those few people who can bring it all to- al revolution:
gether; they should include, but not be re- • Know-how is also a characteristic of a
stricted to, top management. collectivity-of group, team, or an entire
How then can organizations be de- organization.
signed to facilitiate this "front end" activity? • Know-how is the basis of the feasibility
How can a complicated collection of individ- of extending experience to new possibilities
uals anticipate and respond with appropri- (and this is close to Joseph A. Schumpeter's
ateness to unprecedented demands? How do classical definition of entrepreneurship).
organizations operate within boundaries of • Know-how, as the basis for innovating
urgent real needs, rather than through evolu- and for adding value, represents an opera-
tionary and long-term processes? Whatever tional definition of productivity —because
meets these requirements must be innovative. productivity is itself a measure of value-
creating activity.
Productivity accordingly derives
TOWARD A NEW DEFINITION OF PRODUCTIVITY from the ways in which special people can
work together effectively. Productivity, in
Competitive advantage in new and uncertain the emerging 21st century, is equivalent to
situations derive from innovation based on the know-how of finding, keeping, and
building know-how, and of combining
know-hows in flexibly effective ways.
The following three sections of this
article (based on actual cases involving sev-
eral or more business organizations) outline
three aspects of organizing for productivity
in its more innovative modes:
1. Productivity improvement in produc-
tion through self-optimization.
2. Productivity as effective product "de-
velopment"—where development spans from
concept to marketplace as a highly interac-
60 tive process.
3. Productivity as a corporate strategic It is then in the interest of each
process. member of the team to ensure that the en-
semble contains the minimum number and
choice of persons to provide the capacity and
the mix needed to perform compatibly and
Given the dilemma of managing the un- effectively. The team membership, leader-
manageable—of bringing a variety of spe- ship, size, and structure may vary experi-
cializations together toward an open-ended mentally over the course of several contracts,
result— one answer is not to attempt to until an optimum is reached. The real limita-
"manage" the situation at all. Rather, the ap- tion in the use of self-optimization is the
proach is to so set the terms of reference that inability of many managers to acknowledge
the group is self-optimizing and self-manag- the full set of enabling conditions. Strongly
ing. held assumptions about the nature of indi-
This concept is not new. In the mid- viduals and of organizations usually go
19th century, similar schemes were common- counter to concepts of decentralization and
place in American arms factories. Foremen self-management.
were in fact "contractors" who negotiated
with the owners and were assigned machin-
A "Right" Set of Policies
ery within the factory, but were left to their
for Management of "Development"
own devices to both hire and get the work
done as he or she wanted. Because most con- Some of the leading high-technology organi-
tracts were firm price, there was a premium zations have evolved climates and cultures
on innovating—to improve productivity of that include most of the following policies:
machinery and of labor. The benefits, at 1. There are declared corporate fields of
least in the short term, flowed to the con- interest, and development leaders negotiate
tractor (and to labor that worked under sub- their own objectives within this context.
contract in much the same way). 2. Development engineers are sought from
The most complete contemporary among the outstanding students at the lead-
examples are those in which a special task is ing universities. The qualities that companies
contracted out under constraints of cost, look for are these:
quality, and time.
The basic conditions for self-opti-
mization are these:
1. A performance vs. payment tradeoff is
negotiated in advance with the team.
2. The payment goes to the team as a
whole. Individual sharing in the payment is
based on peer evaluation —where the peers
are the other members of the team.
3. The team leader is perceived by the
team members (and by those doing the con-
tracting out) to have credentials that are
special and indispensable to success. 61
• Applied experience in the firm's core Nearly all communication is face-to-face.
technology - so the recruit can make an The working environment is enriched with
immediate contribution and feel a sense of the best tools available — computers, test
worth. equipment, books, access to data, and so
• Strong theoretical underpinnings — as forth.
in physics and chemistry- so that as the core 8. The team has clear and total responsi-
know-how shifts with discovery and innova- bility, cutting across all functions from con-
tion, the individual can make the adjust- cept to marketplace and beyond. The feed-
ment. back from the market is the ultimate and the
3. Much of the work is hands-on, and this most real evaluation of performance, and the
characteristic provides a sense of tangible main basis of recognition and reward. Ac-
achievement. [A number of these policies cordingly, an assignment that spans from
closely fit D. C. McGelland's "need to achieve" concept to market usually takes less than
model, described in "The Achieving Society" two years (anything longer would weaken'
(D. Van Nostrand, 1961).] the sense of mission and the feeling of
4. A person is hired by the person he or accomplishment).
she will work for. Managers do their own 9. The team "leader" is outstanding tech-
recruiting; recruiting is.not left to a staff nically and, in addition, has considerable
group. maturity gained within that corporate cul-
5. A new recruit is assigned immediately to ture. Leadership is exemplary in the sense of
a small team and within that team's task is reinforcing the corporate culture and atti-
given a precise subtask with its own cost- tudes.
quality-time criteria. Individual performance 10. The boundary between manager and
and team performance become closely com- peer is blurred. It is fairly easy for an in-
plementary. dividual to move back and forth — from
6. There is frequent-and-prompt feedback being a manager to being a specialist among
on performance from the people perceived to peers. This design is reflected in a relatively
be important — peers, immediate superior, flat organizational structure and few but
and senior management. very broad salary grades.
7. The members of the team are colocated. Not everyone is content in this kind

'[A way to bring] complexity under 'control

is goal factoring, the process of fragmenting
a complex mission into 'packets'—each
designed to match the capacity and know-how
62 of a segment of the formal structure."
of environment. Some people prefer to a "best" solution. In this frame of reference,
work in more traditional functioris and incrementalism means a narrowing in of
organizations. But for those who choose to scope, and a "one best way" of organizing.
stay, and who are able to gain peer accep- There is another kind of incrementalism in
tance, the work generally proves highly chal- an open-system context. There is no conver-
lenging and rewarding. gence, only an expanding range of oppor-
Such an organizational scheme, tunities. Reality is not only not divisible into
however, has its dangers. Some managers independent chunks; reality is something
have expressed concern that the turnover is that will only emerge with time. Goals are
too low to provide an adequate level of not so much declared as evolved. Goal fac-
renewal and infusion of new ideas. There toring can be used, but very powerful inte-
are, moreover, dangers in perpetuating a task grative mechanisms balance the forces of
team with a set membership for too many compartmentalization. One of the key mech-
years. Maintenance of the group may be- anisms binding efforts to a common purpose
come the mission, overshadowing the inno- is vision, held by the leadership and shared
vative intention. In other words, there is in by the other key players. The corporate
nothing automatic in the way this, or any culture and mind-set represents this sharing.
other, system of organization works that will Thus the legitimacy of the organization in
ensure the permanence of its desirable the emerging future takes on new meaning
features. and derives from the integrity of the vision.
That integrity, in turn, must come from in-
sight into the underlying systemic reality of
Management of Complexity — Closed-
both the external and internal "universes" that
and Open-System Attitudes
management must deal with. What counts is
Those responsible for providing direction to not so much form or structure as the pattern
an organization must deal with complexities or networks of relationships. In satisfying
arising from both external and internal this need, many successful high-technology
forces. One of the more common ways of organizations create very different and idio-
bringing complexity under "control" is goal syncratic organization designs.
factoring, the process of fragmenting a com- Because the reality the organization
plex mission into "packets"—each designed to seeks to confront is dynamic and shifting,
match the capacity and know-how of a seg- the process by which that patterning is
ment of the formal structure. Eventually, the evolved and adapted becomes crucial for the
parts must reassemble into something useful. organization. This patterning calls for excep-
The connection between the factoring and tional innovative powers. The act of innovat-
the assembly comes through trial and feed- ing, then, is that of seeing new possibilities
back—into and from the "marketplace." Each and new patterns in what to others is the
unit of the organization attempts to meet its same familiar background. The open-system
assigned target; performance is measured attitude perceives that the nature of human
and used as feedback to the policy level. Tar- beings is to search for new insights—to
gets are revised, based on performance, and innovate —and that this can be usefully done
the next phase of effort is launched. This by people in groups as well as by individuals
strategy takes an iterative closed-loop mode, in isolation. An added implication is that
using stepwise trial and error to converge on collective innovation must operate side by 63
side with individual thought and action. "knowledge worker" and the need for new
Progress, then, is not something to be mea- patterns of interaction and involvement, new
sured, but the inevitable by-product of forms of recognition and reward, and new
human interaction in an awareness-building types of leadership to respect. And this is
frame of reference. Progress is what happens, only a beginning.
and progress is "good." Progress is in the pro- Managers, whether in sunset in-
cess and not in the status; the only limiting dustries or in the latest and highest "tech,"
factors are the capacities of the shared vision will have to be creative as never before. (The
and the willingness to pursue that vision. most demanding situations may well be
those confronting managers who must simul-
taneously handle the obsolete and the very
CONCLUSION new.) Product cycles will, in many instances,
be dramatically telescoped because the new
We are in a period of overlap of eras. Long- technologies will, for years to come, be sub-
established enterprises coexist with radically ject to continuing alteration and elaboration.
new technologies. Business as usual must "New" products will be born before "old"
continue, in parallel with unprecedented in- ones reach adolescence. The "life cycle" may
novating. There are many unknowns. We combine the most difficult features of fast-
have entered a zone of uncontrollability, of track development and simultaneous large-
inherent unmanageability. New rules will scale production. The notion of having a
apply, though we do not yet know what clear generic strategy may blur, and little will
those rules might be, and "management" be neat or follow tried-and-true formulas.
takes on new meanings. We have to ap- Most of all, managers will relate
proach this future experimentally, boldly, with people in ways we do not know and
and incrementally. We can be guided by our cannot teach. Much will have to be created
vision of what limitless possibilities may lead and learned on the job, as we "develop"
to, but we have to realize that vision by play- managers who can work with these new
ing upon opportunities as they arise in an "knowledge" people and within self-reliant
open-ended, divergent strategic mode. The teams. The distributed intelligence of micro-
vision will be reshaped as we do so, and that processor technology, for example, may find
reshaping will be an enlargement of oppor- its organization design equivalent —arising
tunity at each stage. from the informal networks and modes that
Earlier schools of management individuals bring into being through open-
thought and conventional widsom have ended self-optimization. The formal organi-
viewed individuals in various ways: as raw zation chart of past and present, with its
units of production, as recalcitrant and in- careful array of boxes representing line-and-
corrigible specimens to be driven and tightly staff hierarchies and linkages, represents nos-
controlled, as necessary components of task talgia. The organization of the future is not
forces to be harnessed and motivated by likely to look as neat again —ever. It is not
skilled leaders and as such to be manipu- long since Keuffel and Esser gave their last
lated, and as higher beings with an innate slide-rule to the Smithsonian. In like fashion,
capacity for self-control, self-development, we will "museum" other dinosaur artifacts
and self-motivation — given suitable guid- and ideas. There is an enormous amount of
64 ance and delegation. We now recognize the experimentation in organization design
going on as managers and "owners" search be impermanence. The concept of open-
for enhanced productivity and effectiveness ended innovation in all aspects — product,
as well as survival. One of the things we production, organization —suggests evident
know from the higher "tech" firms is that dangers in seizing on panaceas and millen-
there is no "one best way" of organizing. nian solutions; in particular, to seek quick
They do not all look alike. Even the same salvation in the formulas that worked for a
firm does not look the same as it did; a char- time in other cultures and societies seems at
acteristic of high-tech organizations seems to best misguided.


Examples of publications addressing the third Technology, U.S. House of Representatives,

industrial revolution are Serge Leontiev's 'The Ninety-Seventh Congress, second session, June 2,
New Automation" (The New York Times, Feb- 23, 1982; and Robotics: Future Factories, Future
ruary 8, 1983); John Naisbeth's Megatrends: Ten Workers, Robert J. Miller (ed.), "The Annals of the
New Directions Transforming Our Lives (Warner American Heading of Political and Social Sci-
Books, 1982); and Daniel Bell's The Coming of ences," Volume 470, November 1983. For telecom-
Post-Industrial Society {Basic Books, 1973). munications information see, for example Martin
Those who have questioned the ade- Mayer's "Coming Fast: Services Through the TV
quacy of the United States' ability to take advan- Set" {Fortune, November 14, 1983). For a quick
tage of the third industrial revolution include summary of the biotech domain, see "Biotech
Alfred D. Chandler's The Visible Hand (Belknap Comes of Age" [Business Week, January 23, 1984).
Press, 1977) and Strategy and Structure (M.I.T. Warren Bennis discussed the notion that
Press, 1962); and Joseph A. Schumpeter's Capital- strongly held assumptions about people and
ism, Socialism and Democracy. Third Edition organizations typically run counter to concepts of
{Harper & Row, 1950); and a book. Business and decentralization and self-management in "Conver-
Its Environment: Essays for Thomas C. Cochran, sation with Warren Bennis" (Organizational
Harold I. Sharlin (ed.) {Greenwood Press, 1983). Dynamics, Winter 1974).
For more information on the new and Strategy and incrementalism is covered
dramatic products, see H. Kahn, W. Brown, and by James Brian Quinn in Strategies for Change:
L. Martei's The Next 200 Years (William Morrow Logical Incrementalism (Richard D. Irwin, Inc,
and Company, 1976), and Robert B. Reich's The 1980).
Next American Frontier (Times Books, 1983).
For more on microprocessing and the
microchip, see Dirk Hanson's The New Alchem-
ists: Silicon Valley and The Microelectronics Re- If you wish to make photocopies or obtain reprints
volution (Little, Brown, 1982). of this or other articles iv ORGANIZATIONAL DYNAMICS,
For information on Robotics, see Hear- please refer to the special reprint service
instructions on page 81.
ings Before the Subcommittee on Investigations
and Oversight of the Committee on Science and 65