Finance and Economy

Working in the Digital Age: the Future of Companies and Regulation

The rapid and widespread adoption of digital technologies in work processes has significantly altered the spatial, temporal, and organisational context of work and its regulation. The regulation of work refers to all the processes by which stakeholders (the employees of a company and, more generally, workers) constantly adjust their activities through cooperation, interaction, collaborative problem solving, dialogue, conflict, and so on.

In the context of a company, therefore, the regulation of work is based around three processes of dialogue: professional dialogue (adjustments as a result of cooperation between peers and colleagues), social dialogue (exchange of information, consultation, and negotiation between management and employee representatives), and managerial dialogue (instructions and information that are passed up or down the managerial chain).

The profound disruption that the advent and spread of digital technology has brought about in companies can be explained by the fact that these three dialogues, which once provided structure, have been simultaneously challenged. This challenge goes so far as to question the very existence of companies as we know them today. It does so by disrupting three historical structures in the organisation of work: cooperation, the company, and management. What do the major trends we see today mean for tomorrow’s world of work? We will not see the ‘end of the company’. Rather, it will be reorganised along new lines towards becoming the ‘contributive company’.

Cooperation in all its forms

Cooperation, working together, is at the very heart of work. Arguably, there is no work without deliberate or willing cooperation. Yet, the cooperation that distinguishes work from the simple performance of a task has been shaken to its foundations by digital technology.

The first destabilising factor is the increasingly important role of social networks and collaboration tools in organising cooperation. More and more companies are using social networks and platforms to connect and deploy people in a project-by-project approach to work that blurs internal and external organisational boundaries. Work collectives, which comprise not only employees but sub-contractors, partners, contract workers, service providers, and other freelancers, are continually forming and re-forming based on the know-how recognised and trust gained in each member.

Co-workers (whom we can no longer call ‘employees’ as their legal ties to companies are ever more tenuous) are highly aware of the quality and extent of their professional network. It can determine their ‘rating’, ‘network value’, and ‘online reputation’. In other words, how much they are worth in this labour market. It constantly regulates the matching of labour supply and demand (as already the case on professional social networks like LinkedIn or Viadeo), especially in the market places in people they collaborate (see Guru.com or Freelance.com for the French market). Companies also have to maintain their online reputation and have had to adapt to a new reality in which they are assessed by third parties, not only through social ratings, but also rankings such as Best Workplaces and review sites like Vault and Glassdoor, which do for the workplace what TripAdvisor does for leisure.

the cooperation that distinguishes work from the simple performance of a task has been shaken to its foundations by digital technology

In this reputation economy, co-workers with good ratings choose the projects they want to work on, based not only on the merits of the project, but also the other co-involved and the opportunities for learning it presents. The same goes for factory workers. To adapt to shorter production runs resulting from greater market segmentation, managers prioritise versatility and only the most skilled workers can avoid being replaced by algorithms or robots. Other co-workers are reduced to taking on unattractive and poorly paid projects and tasks. Workplaces are diversifying: we work ‘at our desk’, but this can now be at home, at a client, or in a co-working space or café.

The network therefore structures business and regulates the distribution of workflows. What is more, the network becomes a major strategic asset for companies, part of their capital. Within companies, value is no longer created through the optimisation of internal processes (using just-in-time methodology managed by software and standardised instructions) but at contact points between stakeholders, clients, suppliers, and partners, which are currently far from optimal. Networks can continuously re-configure value chains, helping to match labour supply and demand within companies and between them.

Companies need a new purpose

The disruption caused by ‘consumer to consumer’ models threatens the very existence of companies by allowing direct contact between individuals, to the great benefit of the companies controlling the networks (Airbnb, Twitter, and Amazo, to name a few) and capturing all the value. So, will we inevitably see the traditional company model crumble? Will places of production move closer towards places of consumption, potentially reducing carbon emissions? The network, which does away with the unities of work place and time, is gradually taking over the management of workflows thorough the connection of small, agile entities.

The economist Ronald Coase showed that the main justification for companies’ existence is the reduction of transaction costs. It is cheaper to internalise an activity than to buy the product of it on the market. But this assumption is no longer certain in an economy being re-shaped by digital technology. The transaction costs of sharing knowledge and innovation are much greater within a company due to the organisational silos and bureaucratic barriers that technology has yet to break down. In contrast, external sharing is facilitated by the growing fluidity of transactions and the flexibility of commercial relationships. This evolution is also leading towards the atomisation of work organisations.

The pyramidal structures of large companies are weakening too. In the integrated company model born out of Taylorism and Fordism, customers’ requests and managers’ instructions move down the hierarchy and are processed at the end of the chain by subordinates. In the contributive company, customers short-circuit this structure to speak directly to the person they believe is most relevant. It’s then up to co-workers themselves, working closely with customers, to decide what their priorities and work schedules are. Managers are still there, but their role is radically changed.

Unions are struggling to unite these digital workers, who have nonetheless understood that there is strength in numbers in a world where individualism reigns supreme

To resist the trend towards disintermediation, companies will be forced to offer far more autonomy and opportunities for self-fulfilment to their employees, while continuing to provide them with a degree of job security and a relatively stable working environment. Tomorrow’s successful human resources managers will be those who manage to achieve this alchemy, the contributive company will work very closely with its co-workers, towards building together an evolving psychological contract that gradually moves away from subordination.

But large integrated companies have not drawn their last breath. They can resist the rise of small creative organisations thanks to two assets. First, the internet’s network effect, well known to economists, which gives them monopolistic power [read more on the network effect]. Second, their ability to dominate ecosystems, to set rules and prices through market power, to stifle innovation using patents and control of intellectual property, and to accumulate core competencies.

The future of the company as a human collective, the basic unit of the economy, is in doubt. Its core function, the organisation of workflows and processes, has been taken over by networks, relegating the company to a simple link in the chain.

Management in transition

In 2007, renowned American business consultant Gary Hamel wrote a much discussed book: The Future of Management. The following year, the French translation hit the shelves with the title La fin du management (The End of Management). The contrast speaks volumes about the esteem in which management is held in France. Whichever is more apt, in the internet age, management must reinvent itself. It would be a huge mistake to view the internet as simply an external tool. Now part of everyday work, it has shattered traditional management structures through its rejection of hierarchical power, its philosophy of immediacy, and its facilitation of interaction and collaboration. The internet model is here to stay, with its lack of a centre, low barriers to entry, and facilitation of spontaneous actions, driven by people’s desire to share and do things together.

Co-workers have eagerly seized these opportunities, exerting concerted pressure to pull down the rigid hierarchical structures which, by generating discontent, have become obstacles to efficiency. They reject Taylorism’s legacy of regimentation and subordination in favour of their own plans, codes, and tools. They bring their own smartphone, tablet or laptop to the company (a trend known as BYOD: bring your own device) together with their networks of professional connections and personal affinities, which intertwine. They refuse to be trapped or constrained by ‘enterprise social networks’ internal to a company or organisation (which they consider to be closed) or hierarchical relationships (which they consider to be rigid and inappropriate). They want to be treated (and evaluated) as unique people, whose individuality is an asset. If this does not happen, they leave the company.

The managerial shift currently underway in companies involves adapting to this change, often painfully, by moving away from management through control to management through leadership; from giving orders to providing professional support. Co-workers want to make the most of their autonomy and be judged on their results, fairly. For them, a good manager is one that ‘places’ them on the right projects.

The manager becomes a coach, a grower of potential, a connector, an intermediary who brings customer projects and needs together with the human and technological resources required to satisfy them

The contributive company gives substance to the old promise of ‘lifelong learning’ by offering workers wide access to competencies. We no longer learn as we did in the past in a set time, place, and format. Increasingly, skills are acquired continuously through contact with work processes, interactions with colleagues and customers, and the help of innovative technology (onlines courses and MOOCs, gaming, virtual reality, and so on). The contributive company lets co-workers develop their know-how and soft skills, as well as enjoying the opportunities and resources for reflecting on their successes, problems, and aspirations. It is an organisation that listens, supports, and cares, enabling continuous progress. The manager becomes a coach, a grower of potential, a connector, an intermediary who brings customer projects and needs together with the human and technological resources required to satisfy them.

The new networked unions

These changes in work are transforming social regulation in general and trade unionism in particular. Unions are struggling to unite these digital workers, who have nonetheless understood that there is strength in numbers in a world where individualism reigns supreme. As a result, we are witnessing a shift towards a hybrid of the organising and servicing models of trade unionism.

In the United States, the Freelancers Union, founded in 2003 by New York lawyer Sarah Horowitz, defends independent workers by offering them health insurance and other benefits. Thanks to lobbying by the union, in October 2016 the city of New York passed the first legislation in the US aimed at protecting independent digital workers. Called the Freelance Isn’t Free Act, it obliges any organisation using a freelancer to enter into a written contract if the value of services provided exceeds 800 dollars over a four-month period. The contract must also provide details of payment deadlines and procedures. The Freelancers Union has 350 000 members, a critical mass which gives it clout, but still a drop in the ocean when you consider there are 54 million freelancers in the US. Also in the US, TurkerNation, the collective that defends the rights of ‘Turkers’ (freelancers working in Amazon’s Mechanical Turk marketplace), has developed a militant culture and even invented a reverse rating system in which Turkers score requesters, thus tilting the balance of power towards them little by little [read more on online ‘microwork’]. Freelancers and independent workers also organise collectively on dedicated crowdsourcing platforms like Malt with its 40 000 members, or business and employment cooperatives (such as Coopaname and Kanopé).

The contributive company gives substance to the old promise of ‘lifelong learning’ by offering workers wide access to competencies.

Social dialogue will have to find the right approach for uniting hypermobile workers. It will be essential to reach compromises on new issues: collaboration conditions, work rating and evaluation, the balance between contribution and remuneration, work-life balance, occupational health in a hyperconnected environment, intellectual property, and so on. But the rise of individualism and reforms of trade union laws show that unions are not exempt from disintermediation either.

The existence of checks, balances, and levers able to influence a negotiated future are essential. The work of the future, which is currently taking shape through the destabilisation of social regulation, has upsides in greater autonomy and opportunities for everyone, downsides with risks of increased inequality and insecurity, and an open question regarding social protection. But the future is not written: it is up to us, as free agents, to choose the work that we want for tomorrow.

Newsletter

Sign up to the newsletter for handpicked highlights of articles, interviews and translations published each month.

Select the language(s) for which you would like to receive notification :

Select the theme(s) for which you would like to receive notification :

Working in the Digital Age: the Future of Companies and Regulation

Cookies on our website allow us to deliver better content by enhancing our understanding of what pages are visited. Data from cookies is stored anonymously and only shared with analytics partners in an anonymised form.

Find out more about our use of cookies in our privacy policy.