Christina Hoff Sommers writes,
Women still predominate—sometimes overwhelmingly—in empathy-centered fields such as early-childhood education, social work, veterinary medicine, and psychology, while men prevail in the mechanical vocations such as car repair, oil drilling, and electrical engineering.
If she would read Tyler Cowen’s new book, she would understand that “empathy-centered fields” have been trending up in demand, because that is where humans have a comparative advantage in a world where computers and robots keep getting better. In addition, Cowen argues that complex businesses require teamwork, not the sort of oppositional, maverick attitude that comes more naturally to males. I read Average is Over as implying that we should not blame the deteriorating outcomes for average males on feminist prejudice in education.
Anyone who thinks that men are less capable of teamwork than women in the workplace is unfamiliar with team sports, the Queen Bee syndrome, and good old-fashioned cattiness. The social unpleasantness seen so vividly among high school girls isn’t limited to high school. Men are competitive, and combative, but team sports have long been used to teach men that they can set aside their personal differences to cooperate and succeed together. An attractive young woman entering the workplace often worries too much about the attentions of the men there, and not nearly enough about the hostility of the women.
I don’t think it’s a willingness to cooperate that differentiates men and women, but a tendency to prioritize different sorts of tasks.
In my experience women’s attention is more innately calibrated towards consistently completing a large variety of small tasks concurrently and men tend to be more like “hedgehogs” and focus on larger issues to the exclusion of maintenance type activity.
Of course either gender is capable of the other, but in the heat of the moment they’ll typically swing in their own direction.
Men still dominate high-compensation status oriented fields that require both smarts and networking — think trial law and hedge funds, but many if not most successful tech start-ups preserve the pattern. Male domination will be where the status is — even if it is wearing hipster glasses.
If I understand Roy Baumeister’s point in What’s Right about Men, the male of the species seems to be more adept at organizing hierarchies around a goal. I think that’s basically right. Men, on average, can create camaraderie around abstractions better than women. All that empathy is great for building relationships, but you also get a lot more emotion and Queen Bee behavior as discussed.
I suspect the divorce revolution has at least something to do with these outcomes. Where that empathy really gives women an advantage is building compensatory/alternative social capital in an age where marriage is optional and extended families are rare. Men just aren’t nearly as good at that.
I saw a study just yesterday in which researchers submitted resumes for job openings, with photos on the resumes. If the photo was of an attractive man, he was more likely to get called to interview compared to an average-looking man. But, if the photo was of an attractive woman, she was less likely to get an interview. The researchers hypothesized that the reason was that the screening process is conducted by HR staff – almost always women – that they were measuring a cattiness effect.
Most electrical engineering is not a “mechanical vocation.” The gender split is more about high-level math and science than anything mechanical.
I don’t think “complex businesses” is where people are going to work going forward. As I’ve alluded to previously on this blog, I see a sea of information workers, all working together on impromptu projects then dispersing. The ease of communicating online these days means that the old Coase-ian calculation has changed, favoring the small over the large.
Of course, whether working together for a large company or not, teamwork is important. But the important difference is that when some risk-taker has a maverick path he wants to go down, he won’t have a boss to get permission from and can go off and take the risk, betting his own time and money on his oppositional instinct. He may still have to convince others to some extent, to include or sell his work as part of their product, but that should be an easier sell once the work is done, if it was a good idea in the first place.
This small-organization, risk-taking environ will be so much better than what we have today, that the current corporates won’t be able to compete and will all be put out of business. You heard it here first! 😉
I think the key difference in the types of workplaces you describe is is a difference of small, new firms vs. big, existing firms.
Big existing firms (which are still big drivers of employment for non-techy/startup folks) are having their work tasks splintered in more and more directions which increases the importance of coordination and immediate communication.
New, small firms have no existing overhead to support and have their work done over a more diverse spectrum of space and time, and a greater portion of it happens in the cloud.
I agree that the majority of new non-service employment opportunities will be the information worker you describe, but I think many people overestimate how quickly the large oligopolies are going to tumble.
I think a lot of them will stick around forever, but in a less dynamic form.
Extending off something Jonathan said, consider that today new companies outsource a lot of support services that aren’t part of their comparative advantage. That plays into the decentralization story.
But to whom do they outsource them? To companies — companies whose ability to provide those services simply dwarfs that of an impromptu project. Yes, you can be part of a growing sea of information workers. But your paycheck will come from a company.
Jon, how long did it take the newspaper oligopolies to tumble? A more competitive market like the recorded music business? It is uncertain when the disruption will happen for most markets but when it happens, it goes down fast and hard. 🙂
MikeP, outsourcing may happen to companies, but it’s as likely to be some small outsourcing shop in India as it is to Google’s cloud services. As for “companies,” I’m sure many in the sea of information workers will incorporate themselves or a small team purely for tax and legal reasons, ie no real benefit other than avoiding regulatory predation. If you’re counting those corporate shells as the “companies” where you get your paycheck, sure, you’re trivially right.
But the real distinction here is between big and small, between a sea of very small teams or individual information workers, whether incorporated for legal reasons or not, and the corporate behemoths that currently walk the earth. My point is the corporate dinosaurs are on their way out. 🙂
Ajay,
The examples you cited were media industries, a sector that’s particularly well suited to displacement by smaller entities since size doesn’t give you a comparative advantage.
The spread of information technology has been just as fast in finance, but it’s caused firms to get bigger, not smaller. I think we’ll see that gains in IT can lead to consolidation as well as disaggregation.
I agree with the general trend about information workers, but I think you overstate how far it will spread as far as jobs go. I used to be on the “we’ll all be in the labor cloud” camp until about 2-3 years ago.
Now I’m in the “lots of new jobs will be in the cloud but at the end of the day it’ll apply to about 20-25% of the populace and most everyone else will either be retired or scrounging for work” camp.
I completely agree that new firms are much smaller than they were before, and more work will be cloud based, but I don’t think things will be *quite* that dispersed.
Jon, yes, media businesses have been hit hardest, but that’s only because they were the easiest targets to pick off. Many other markets are next, as size isn’t a “comparative advantage” for information work and non-information markets are also heavily affected by the internet. As for financial or tech mega-corps that got even bigger, I claim that is merely the last crest of the previous wave, ie the corporate dinosaurs used their entrenched advantages and the new tech to temporarily get even bigger, right before they’re completely disrupted! 🙂 Consolidation is not in the cards; everything, all the trends and theory, says otherwise.
“I agree with the general trend about information workers, but I think you overstate how far it will spread as far as jobs go. I used to be on the ‘we’ll all be in the labor cloud’ camp until about 2-3 years ago.
Now I’m in the ‘lots of new jobs will be in the cloud but at the end of the day it’ll apply to about 20-25% of the populace and most everyone else will either be retired or scrounging for work’ camp.”
What changed your mind, the stasis of the last decade and the fact that it isn’t here yet? I think you’ll find that good ideas or even the obvious can be delayed for years, decades even, as people in the market muddle around trying to stumble on it. 🙂
As for the “lord of the flies” endgame you posit where most are unemployed, I can’t deny that as a possibility, as it’s superficially plausible, has some real reasons behind it, and I’m no oracle who can look into the future, but every time that has been mooted in the past, it has never come true. I suspect that we will merely divvy up the information work differently online, ie that there will be a lot of what we now call “part-time” work and that everybody will do well enough, better than today even, while obviously a few will do great, just as always in a real market.
“I completely agree that new firms are much smaller than they were before, and more work will be cloud based, but I don’t think things will be *quite* that dispersed.”
It appears we only differ on degree and timing, not on the fundamental prediction, time will tell who’s right on those smaller details. 🙂
Bringing it back to the ostensible topic, if we’re right that there will be a “labor cloud,” as you call it, and it will be a significant section of the market, that section would superficially seem to favor risk-taking males as opposed to team-building females. But there will be a great need for both: the risk-takers to blaze new paths and the team builders to knit the impromptu teams together to lay the track and keep the trains running on time. Both mindsets will get to fully express themselves and be appropriately rewarded, though high risk is always going to be compensated with greater reward and punished with more failure.
Ajay,
FWIW I spend my nights working on my own startup which is mostly cloud based (here if you’re interested), and my day job as an officer at a large bank where I spend most of my time helping people struggle with their adjustment to a life run by computers.
I think technophiles have a tendency to overestimate the degree of similarity between them and lay people when it comes to technology. Reddit is not a representative sample of the world at large.
I don’t think we’re heading towards an Orwellian dystopia where large hordes of people are Oliver Twists in the digital age. I just don’t think these dispersed information jobs are going to do much for the employment prospects for the right half of the bell curve.
Health superfood website, interesting concept, nice design. I’m well aware of the differences between technophiles like myself and “lay people” regarding tech, as we all help them with their tech problems, whether it’s our day job or not. 😉 But when they have to make money through computers, they can be trained for the limited software and processes they’ll need for the job, just as they were trained for industrial processes in the last century.
I don’t read Reddit, never have, so I’m not sure exactly what you mean, but I’m guessing you think they’re overly optimistic about tech? I’d guess that they’re not optimistic enough, as revolutionary changes are coming. 🙂
“I don’t think we’re heading towards an Orwellian dystopia where large hordes of people are Oliver Twists in the digital age. I just don’t think these dispersed information jobs are going to do much for the employment prospects for the right half of the bell curve.”
I disagree, guessing you mean the left half of the bell curve though. Not only will they be able to get out of the factory or the kitchen, but there will be plenty of information work for them online. Much of their work will be fairly clerical and boring, like looking at a picture of a cat and labeling it “cat,” but so was the physical work they were doing before. At least they’ll be at a desk rather than leaning over a blast furnace or a steaming hot stove, without the physical grind and all the injuries that come with that physical work.
Although, it will be interesting to see what happens when the third world comes online. Just as they took much of the low-end manufacturing jobs recently, they will take a fair amount of information work too. I was talking to the head of a technical publishing outsourcing company in a third-world country on the opposite side of the globe recently. He has a team that does all the layout, formatting, and various aspects of the editing workflow over there, for books and ebooks written and sold here. His company was expanding, despite the worldwide recession that persists most everywhere, including in his country. I asked him if they were any communication issues, dealing with publishing companies in completely different time zones and work cultures. He said that wasn’t a problem, their people occasionally took their laptops home and worked at night if necessary, presumably collaborating with their publishing counterparts here. The “labor cloud” is already here, it just isn’t widely distributed yet. 😉
I was talking to the head of a technical publishing outsourcing company…
Irony intended?
Not only was there none intended, 🙂 I don’t see any even now. You’ll have to point it out.
Your “labor cloud” is organized by a company and doesn’t present as an impromptu team.
Oh, that, 🙂 I thought you meant something in the quote you gave, as opposed to the bit at the end. Yeah, that’s why I added the wink at the end, as that’s still an employee of a company, as opposed to a true “labor cloud” example like elance, odesk, freelancer, vworker, guru, and so on.
The point I keep repeating to you is that the market is already moving from large companies to small companies, whether independent or outsourced, like the publishing outsourcing example I just gave. I’m extrapolating that trend to the endgame of a sea of information workers, which all those freelance marketplace websites I just listed enable. Most people at these companies can’t see the endgame, including you apparently, which is why they take such small steps towards smaller companies for the time being. I’m extrapolating that gradual trend to its obvious finish.
I’m stumped as to why all this is so difficult for you to understand, to the point where you make silly statements about how you see “no evidence” for the trends I’m talking about. I suspect you are simply invested in the status quo and want to keep your head in the sand. Oh well, you will be hit hardest by the changes that are coming then, I’m just trying to lift your head out so you see it coming.
As I’ve alluded to previously on this blog, I see a sea of information workers, all working together on impromptu projects then dispersing. The ease of communicating online these days means that the old Coase-ian calculation has changed, favoring the small over the large.
I have to disagree.
The institutional and organizational superiority of most functioning companies and company components simply dwarfs that of individuals on impromptu projects.
There is a reason that start ups incorporate and that consultants look for companies doing what they want to do. Companies do it so very much better! There is nothing that teh Internets can do to make an ephemeral and mutually remote team behave anywhere close to as well as a team that is together, that shares the same support systems, and that has the same shared history of past projects and shared commitment for future projects.
I could not disagree more. Does “institutional and organizational superiority” refer to this? Cuz I certainly don’t see it. While scale has historically had some advantages, it also has many costs, which now far outweigh the benefits. Yes, there is “a reason that start ups incorporate,” purely tax and legal reasons which add nothing to functionality.
As for “ephemeral and mutually remote teams,” you’ve already noted that companies are already outsourcing more to other companies, so they obviously believe it can be done. I’m merely taking the next step to a sea of information workers. “Together” is highly overrated in an age where email, chat, and video conferencing are widespread: it’s a cost with little benefit. You can share the “same support systems” online, which is what most companies do now anyway. As for “shared history” and commitment, the notion that companies enable that now is laughable, 🙂 but to the extent it’s worthwhile, it’s possible that small teams that know each other will tend to work with each other over many projects. They just won’t get big, as that’s not a useful quality in the information age.
Does “institutional and organizational superiority” refer to this?
It refers to “Apple, Google, and Facebook [that] whizzed by” Microsoft. Impromptu teams of information workers did not whiz by.
I don’t swear that all companies are supremely functional. But Microsoft has “fallen flat” only in comparison to the companies that have captured 21st century markets. In what they do, Microsoft is still the best and is incredibly profitable.
But I would claim that even barely nominally functional companies will outproduce even well-coordinated teams of information workers. The “tax and legal reasons” that start ups incorporate include both recognizing ownership shares and mutually committing to the future of the enterprise. Those are beyond important to making sure that it doesn’t fall flat on its face because someone loses interest. Impromptu teams would effectively need to invent that legal and ownership structure out of whole cloth in order to guarantee the same commitment. But then, they have effectively formed a company.
Apple, Google, and Facebook were all small companies when they whizzed by Microsoft. 🙂 Sure, they weren’t impromptu teams, I’m just pointing out the natural evolution of that trend: we aren’t there yet. Check out some of the links from my first link above for more info, for example, the bossless structure at Valve. I was just watching this talk by Gabe Newell today, another good exposition of what’s coming. There are a few others who see aspects of this devolution coming, I’m not the only one.
“In what they do, Microsoft is still the best and is incredibly profitable.”
Sure, but information markets move fast. Once Blackberry started faltering from their leading position in the smartphone market, they were still growing wildly for years! They were just lagging behind the market leaders in an explosive market. Once you falter in tech, you usually soon get eaten up: Blackberry is about to be carved up for the pieces. Microsoft is currently in the faltering stage, I see the lionesses circling. 😉
“But I would claim that even barely nominally functional companies will outproduce even well-coordinated teams of information workers.”
You keep saying this, but why? One big benefit for impromptu teams in the information age is that things move fast and change is constant. Large orgs can’t navigate that change, while impromptu teams can try different approaches and quickly fail and re-form. You impute great strength to companies, whereas I only see rigidity. In a fast-changing environ, quickness is much more valuable than strength.
Most information workers have little to no “ownership shares” in the companies where they work, so current incorporation is irrelevant for them. Yes, a new “legal and ownership structure out of whole cloth” will be necessary for impromptu teams, that is what we will do. 🙂 But these new ways will have little in common with current corporate structures, as information processes and output are fundamentally different than the previous industrial analogues. All the old organizational structures that you want to promote are unsuited for the information age; we are thinking about and will come up with new structures to replace them, which will be much more atomic and loosely knitted together.
This all comes out of Coase’s theory of the firm, a paper which he amazingly wrote 76 years ago. The transaction costs that lead to incorporation of a firm have all but disappeared today, so the firm goes away too. 😀
Too bad Coase just passed away and isn’t here to see the full transformation. An amazing man, he’ll be missed.
I hate to tell you, but Blackberry is another example of a company that got beat by other companies, not by impromptu teams of information workers.
One big benefit for impromptu teams in the information age is that things move fast and change is constant. Large orgs can’t navigate that change, while impromptu teams can try different approaches and quickly fail and re-form.
And I assure you that if this actually does become a threat to companies — which I see no evidence of ever happening — then the companies that incorporate this paradigm into their own business models will outcompete those that don’t. And they will trounce impromptu teams.
All the old organizational structures that you want to promote are unsuited for the information age; we are thinking about and will come up with new structures to replace them, which will be much more atomic and loosely knitted together.
Well, here’s a tip: Figure out the commitment problem. For the vast majority of firms, the sea of information workers that are sometimes called on are the least reliable and least productive of inputs, and it’s all because they do not have the same commitment to the firm or project as employees do. They really are a last resort and should never be on the critical path of a product release.
You missed the point of my Blackberry example: it’s that they were once “the best” and “incredibly profitable,” then they quickly weren’t. The same is happening to Microsoft as we speak, though they have tens of billions in the bank to burn through while they flail wildly trying to stop the inevitable. Nobody said that either were outdone by anything other than companies; as I said before, the notion of impromptu teams is my extrapolation of what’s coming next, given that in all cases the larger teams were beaten by the smaller, nimbler teams.
“And I assure you that if this actually does become a threat to companies — which I see no evidence of ever happening — then the companies that incorporate this paradigm into their own business models will outcompete those that don’t. And they will trounce impromptu teams.”
So I asked you why you think this and your answer is “I assure you they will?” 😉 You seem stuck on the notion of “companies,” with little reason given. You really see “no evidence of ever happening” to all this stuff I’m talking about? I suggest you at least watch that Gabe Newell video I just linked, because I suspect you haven’t been looking at any of my other links, if you see “no evidence.” 😉
“Well, here’s a tip: Figure out the commitment problem. For the vast majority of firms, the sea of information workers that are sometimes called on are the least reliable and least productive of inputs, and it’s all because they do not have the same commitment to the firm or project as employees do. They really are a last resort and should never be on the critical path of a product release.”
You do have a point here, which is that current impromptu teams don’t really have the reputation and incentive mechanisms that companies do. Do you really think there aren’t solutions for that? 🙂 Where do you think we’re going with work-related “social” networks such as linkedin, stackexchange, and the like? Having everyone work for the same company is an antiquated solution in the internet age, there are a lot better solutions coming, which is why the companies won’t survive.
BTW, Adam Smith distinguished two sets of virtues, the amiable virtues and the respectable virtues, and he gendered them a bit.
On the amiable/respectable distinction, see TMS 23, 306.
On the gendering (amiable with female, respectable with male) see TMS 190, 187, 209.
I’m extrapolating that gradual trend to its obvious finish.
The obvious finish is that companies shrink to include all their comparative advantages — long term strategic planning, repeatable episodes of focused tactical execution from determining market demand to generating requirements to developing product to delivering sales, and high stakeholder commitment — and exclude all their comparative disadvantages. And that point is far, far before a company of one.
I’m stumped as to why all this is so difficult for you to understand, to the point where you make silly statements about how you see “no evidence” for the trends I’m talking about.
It is almost tautological. For your claim to beat mine, you have to prove that there is no one in the sea of information workers who can recognize inefficiencies in these disparate individuals’ abilities to produce in impromptu teams and improve the output. All that person has to do is share a cut of the profit with his — to coin a word — “employees”, and he will lift them from the sea of information workers into committed and dedicated proponents of his strategic vision and tactical execution.
This is what markets do. Companies are simply the natural state of productive organization. You can make them smaller and leaner than they are today, but the comparative advantage of even the smallest company is maximized at well over a dozen employees.
Things that are outsourceable to individuals — i.e., that have crisp requirements and are fungible down to one worker — will go outside the company to the cloud of workers. But the core competencies of the company are neither and won’t.
“The obvious finish is that companies shrink to include all their comparative advantages… that point is far, far before a company of one.”
Perhaps, but my main point is that you’ll see much smaller teams than we see today, certainly not thousands of information workers getting paychecks from giant companies like GE or Microsoft, as we see today. Also, I think you far overrate what companies accomplish today, like “long term strategic planning” or “focused tactical execution.” 🙂 Most companies fail because the politics that come with scale don’t allow for precisely those attributes.
“It is almost tautological. For your claim to beat mine, you have to prove that there is no one in the sea of information workers who can recognize inefficiencies in these disparate individuals’ abilities to produce in impromptu teams and improve the output. All that person has to do is share a cut of the profit with his — to coin a word — ’employees’, and he will lift them from the sea of information workers into committed and dedicated proponents of his strategic vision and tactical execution.”
Except that I never claimed that there wouldn’t be exceptions to the rule. There will always be empire-builders who are competent enough to build medium-sized orgs that are functional despite their scale. But their size will always be a drag on their performance and the market will soon destroy them.
We already see this happening today. In 1958, the average large company in the S&P 500 index could expect to stay in the index more than 60 years, today the number is closer to 15 years, a 75% drop over the last half-century.
Your problem is that you can only imagine things as they are today, where the founder hires “employees” to work for him. In the future, he’ll put together an impromptu team, using the same skills you claim he has that enable him to hire the right people for a company, then collaborate with them to get the work done, without having the roles of CEO or employee that they have today. They will have similar responsibilities in some cases, but the notion of a company or corporate officers will be foreign to them. These future structures will have strategic and functional advantages that aren’t available to current corporate structures, such as being able to fail quicker or gather information and make decisions in a more decentralized manner.
“This is what markets do. Companies are simply the natural state of productive organization. You can make them smaller and leaner than they are today, but the comparative advantage of even the smallest company is maximized at well over a dozen employees.”
I’d say you are wrong about the “company” aspect for the vast majority of information work, once there are proper tools in place to enable impromptu teams. For example, all work you do for a particular team would need to be checked into version control, where every contribution you put in is tracked. Then, your contributions need to be available to team-sorting marketplaces, so that others can look at the quality of your work and your price and decide if they want to work with you. There is an entire software and cultural infrastructure that needs to be built up to enable impromptu teams of information workers and that will take time to accumulate. But that’s not a huge challenge, certainly much easier than reinventing the wheel at every company, as many of them do now. 😉
“Things that are outsourceable to individuals — i.e., that have crisp requirements and are fungible down to one worker — will go outside the company to the cloud of workers. But the core competencies of the company are neither and won’t.”
So we agree that there are significant areas that the labor cloud will take over. Where we disagree is that I don’t think there are “core competencies of the company” in information work. Information-oriented companies, whether newspapers, TV, movie, software, universities, medicine, etc., will all be smashed to bits by continually re-forming teams from the sea of information workers in the coming decades. Even companies that aren’t information-based will be heavily fragmented by the internet and these trends. Let’s see if I’m proven right. 🙂
These future structures will have strategic and functional advantages that aren’t available to current corporate structures, such as being able to fail quicker or gather information and make decisions in a more decentralized manner.
These structures already exist. They are called “venture capital firms”. And the mechanism they use to prove out an idea is a company, not an impromptu team of workers.
I’d say you are wrong about the “company” aspect for the vast majority of information work, once there are proper tools in place to enable impromptu teams. For example, all work you do for a particular team would need to be checked into version control, where every contribution you put in is tracked.
It is notable that your example would be around development. But while developers may be the highest skilled of the workers, the limiting factors on, say, software are not in development per se: They are in product management and sales. Coders can code. But it is what they code and how they sell it where the company has its comparative advantage. And when people bring money to an enterprise to build a product and market it a certain way, they will prefer the commitment and dedication to the enterprise that an employee brings but a freelancer does not.
“These structures already exist. They are called ‘venture capital firms’. And the mechanism they use to prove out an idea is a company, not an impromptu team of workers.”
They do exist to some extent, ie impromptu teams that produce open source, but they’re certainly not VC firms. In fact, VC firms exhibit how clueless they are that they’re still creating companies, which is perhaps why they’ve been losing money and getting beat by the S&P 500 index for the last decade and a half.
“It is notable that your example would be around development.”
No, it has nothing to do with development, which is why I didn’t mention source code. Version control can be used for all kinds of information output, it just isn’t so far and will need to be eventually.
“But while developers may be the highest skilled of the workers, the limiting factors on, say, software are not in development per se: They are in product management and sales.”
Not really, I’d say the bottleneck is high-level strategic and functional decisions, which aren’t made by product managers or salespeople. In fact, sales is in the process of being obsoleted, with how easy it is to distribute information work online these days.
“Coders can code. But it is what they code and how they sell it where the company has its comparative advantage. And when people bring money to an enterprise to build a product and market it a certain way, they will prefer the commitment and dedication to the enterprise that an employee brings but a freelancer does not.”
Perhaps those who “bring money to an enterprise” will prefer employees, that’s precisely why they’ll all be bankrupted by impromptu teams. 🙂 Impromptu teams will be better incented by more competition and no guarantees of even a salary, ie much more performance-oriented. Also, since impromptu teams will keep forming up around projects and leaving, there won’t be time for the kinds of politics that builds up in companies and slow down the entire process of actual work getting done.
You look at companies through remarkably rose-tinted glasses. There are new modes of operation coming online that will destroy them. 🙂
You look at companies through remarkably rose-tinted glasses.
I look at companies as someone who has spent 20 years in several of them ranging from 180,000 employees to 2. The means for them to actually make money is always the same, and it requires multi-year efforts that are only improved by shared history, common infrastructure, and future commitment.
Perhaps corporate ownership and revenue sharing structures may change in the future; perhaps that is your main point. But such teams are not impromptu. And whatever they are called, they will look like companies.
“I look at companies as someone who has spent 20 years in several of them ranging from 180,000 employees to 2.”
That’s a lot more corporate experience than me. 🙂 Certainly you’ve experienced the politics, particularly the bureaucratic infighting described in that Microsoft piece I linked earlier, and lethargy that any large org tends to inculcate? I wonder why you don’t think that’s a significant problem for their survival, if a new model comes along.
“The means for them to actually make money is always the same, and it requires multi-year efforts that are only improved by shared history, common infrastructure, and future commitment.”
It has “always” been the same, that is no guarantee for the future. With current software tools that are being developed, it is relatively straightforward for teams of people scattered all over the world to collaborate on open source projects or the type of third-world outsourcing I described earlier. None of those efforts have the “shared history, common infrastructure, and future commitment” of everybody working for the same company in a local office that you trumpet (though they may have different non-company ways of accomplishing similar ends), yet they’ve already accomplished big things, because their computers and software are much more advanced than what was available in the past.
I’m merely extrapolating what happens when those new collaborative tools really get used to the extent they can be in the future, to reach my prediction of impromptu teams of information workers. Perhaps there will merely be a transition from big companies to small ones, but you don’t provide any worthwhile reason the trend won’t proceed further to impromptu teams.
“Perhaps corporate ownership and revenue sharing structures may change in the future; perhaps that is your main point.”
That’s part of it, how the profits and revenue are split up when there are no companies, but my “main point” has always been about how people actually work together, ie impromptu teams that aren’t all part of a company.
“But such teams are not impromptu. And whatever they are called, they will look like companies.”
No, they will look fairly different, more like currently decentralized open source projects, where anybody in the world can pitch in in a fairly impromptu fashion and there is usually no company driving the efforts. Why are you so insistent that “they will look like companies?” I keep asking you this question, but you don’t really answer it, other than a few points that are easily debunked. It seems like you have some emotional attachment to the idea of a company, when you keep insisting they’ll be around, but can’t provide solid reasons for such a conviction and don’t address my reasons why they can’t survive, ie politics, decentralization, etc.
Certainly you’ve experienced the politics, particularly the bureaucratic infighting described in that Microsoft piece I linked earlier, and lethargy that any large org tends to inculcate? I wonder why you don’t think that’s a significant problem for their survival, if a new model comes along.
It is a significant problem for a particular company’s survival. But the company will be beat in the market by another company, and the liquidated employees will be acquired by another company, and the metamodel will live on. Creative destruction and all that. The company is dead. Long live the company.
You’re hopeless, Mike. 🙂 Creative destruction is about to destroy the entire “metamodel” we call a “company,” that is my whole point. It is similar to how the decentralized model of open source is changing the way software is developed, with open source Android the most popular OS these days, dominating the mobile OS market with 80% quarterly share. These are giant, unstoppable trends working against companies, these aren’t forces they can survive.
I suppose I am hopeless. I simply cannot look at a collection of individuals and think, “You know, there is nothing whatsoever that someone cannot provide a more defined and long-lived team of these individuals that improves their productivity and affords them a higher wage.” In fact there are many things that can be provided to employees that are difficult to supply to an impromptu team: salaries before revenue, strategic vision, project management, sales channels, and explicit commitment.
Your argument seems to be that trends are going a certain way. But trends do not necessarily continue unabated to their metaphysical limits. Airplanes descend, but they are not crushed by the heat and pressure of the core of the earth. They land on runways.
Android is an excellent example of my case. Open source or not, it was created by a company — a company that could not afford to miss its targets and therefore directly employed well over 90% of the development effort and certainly near 100% of the critical path. Ephemeral subsets of the sea of information workers simply cannot compete with that.
“I suppose I am hopeless. I simply cannot look at a collection of individuals and think, ‘You know, there is nothing whatsoever that someone cannot provide a more defined and long-lived team of these individuals that improves their productivity and affords them a higher wage.’”
The problem is the particular type of “defined” you prefer, the standard corporate structure, which is positively antiquated in this day and age. As for “long-lived,” there’s nothing about impromptu teams that will disallow them from collaborating together for longer periods if they choose, as I already said above.
“In fact there are many things that can be provided to employees that are difficult to supply to an impromptu team: salaries before revenue, strategic vision, project management, sales channels, and explicit commitment.”
Even kickstarter provides money before revenue today. I don’t see much “strategic vision” out there, at companies or not, just a lot of random experimentation. There’s nothing exclusive to companies providing “project management” or “explicit commitment,” both will be done better by impromptu teams. As for “sales channels,” as I said before, there won’t be any in a decade or two, at least any that require any sales people. 🙂
“Your argument seems to be that trends are going a certain way. But trends do not necessarily continue unabated to their metaphysical limits. Airplanes descend, but they are not crushed by the heat and pressure of the core of the earth. They land on runways.”
Nobody’s talking about “metaphysical limits.” Just as the physical limit for an airplane is the runway, the physical limit for teams is the individual information worker. 🙂 The trend might not go that far, but you certainly haven’t been able to articulate why it won’t.
“Android is an excellent example of my case. Open source or not, it was created by a company — a company that could not afford to miss its targets and therefore directly employed well over 90% of the development effort and certainly near 100% of the critical path. Ephemeral subsets of the sea of information workers simply cannot compete with that.”
Android is actually a mixed bag, but one enabled by open source and its decentralized model. The linux kernel at its core is developed by a host of companies and individuals, the most widely collaborated on kernel out there. The Android stack on top is initially mostly Google, before being customized by OEMs for the hardware, ie binary drivers, and software, ie skins, features, and apps. Your 90/100 numbers are way off. So this is the first step in the trend I’m talking about, where Android is developed by a host of companies and individuals, as opposed to the competition, iOS/OS X and Windows, which are each developed completely by one company.
I agree that Android isn’t developed by “ephemeral subsets of the sea of information workers” yet, but considering how many ephemeral sets of large and small companies and individuals contribute to it today, the endgame I see is OS development and other information work done by impromptu teams.
I have given you a host of reasons why this will happen, while you usually simply keep repeating that it won’t. That’s getting boring, so I’ll leave it here.
I have given you a host of reasons why this will happen, while you usually simply keep repeating that it won’t. That’s getting boring, so I’ll leave it here.
Fair enough. But you should realize it is you who are making the extraordinary claim.
Companies have been around for three centuries. They are far and away more efficient at production than any other form of organization, be it central planning, co-ops, nonprofits, cottage industries, etc. This fact went unchanged by the industrial revolution, the transportation revolution, or the communications revolution.
But now the internet revolution will magically wash out all inefficiencies in how people produce together as individuals and eliminate all comparative advantages of all companies? That’s a tough case to make.
You seem pretty invested in this, so let me give you my perception of your argument.
You sound like a someone who, a century ago, would have suggested that capital and management are nothing but leeches and therefore the greatest efficiency happens when the workers own the means of production.
I respond by assuming the premise and then arguing that someone might have a better idea how to manage the workers or the supply chain or a better idea on what to produce. They could then sell more product at higher price and cut the workers in for some of the increased profit, making everyone better off. If so, that would become the dominant form of organization.
You respond , “I have given you a host of reasons why this will happen, while you usually simply keep repeating that it won’t.”
Please don’t think I am suggesting that you are a Marxist. But I am suggesting that you seem unwilling to believe that there is any inefficiency whatsoever that anyone can profit from by actually employing the workers. That is an extraordinary claim.
Sigh, I shouldn’t respond again, but briefly, there’s nothing “extraordinary” about noting that the latest revolution, the internet, that already disrupts the way people collaborate, will also one day destroy the dominant model of collaboration, the company. It’s just the fairly obvious extrapolation of the trend, though one that most can’t see.
I am somewhat invested in this, because what’s coming will be so much better than what we have today. 🙂 Your Marxism example is silly because I never made a simplistic assertion that management were just leeches, and even Marx didn’t leave it there. Even the Marxists give a lot more reasons, but for you all their reasons, however good or bad they may be, boil down to your crude generalization about leeches.
Someone may have better ideas about the supply chain or what to produce, but there’s nothing stopping them from introducing the same with impromptu teams. You assume your conclusion that the company is a better model, without giving much of a reason for why, then ignore all the reasons I’m giving for why the corporate model has been broken for a long time.
It isn’t that there isn’t “any inefficiency” that somebody could form a company to exploit, it’s just that they would never use such an antiquated model as the company in the future. It’s like suggesting today that if they have a great idea for some new software that they go out to some rural area and convince all the local farmers to help them build it, like a local barn-raising. One would never use such outdated collaborative methods today, the same will be true someday for companies. 🙂
Even the Marxists give a lot more reasons, but for you all their reasons, however good or bad they may be, boil down to your crude generalization about leeches.
Perhaps I am not being clear. My reason does not boil down to a generalization about leeches. My reason boils down to the fact that there is exactly one way that they can be right that there are exactly zero inefficiencies a company can exploit and an almost uncountable number of unknowable ways I can be right that there are inefficiencies a company can exploit.
It’s like suggesting today that if they have a great idea for some new software that they go out to some rural area and convince all the local farmers to help them build it, like a local barn-raising.
Actually, this is exactly how new software is built today. Except it’s not some rural area: it’s Silicon Valley. And it’s not a barn-raising: it’s a start up company.
“Perhaps I am not being clear. My reason does not boil down to a generalization about leeches. My reason boils down to the fact that there is exactly one way that they can be right that there are exactly zero inefficiencies a company can exploit and an almost uncountable number of unknowable ways I can be right that there are inefficiencies a company can exploit.”
Perhaps it’s because you aren’t saying anything new and keep repeating the same point over and over again, no matter how many times I debunk it. Presumably you’re referring to efficiencies that don’t come from the company model itself, ie some inventor thinks of a great way to spit out moving pictures from a tube, in which case I’ve said repeatedly that such an invention will simply be commercialized in much better ways in the future, without forming a traditional “company.” If you’re now saying that there are “uncountable” efficiencies that come from the company model itself, which has never been the obvious reading of what you’ve written so far, my point has always been that you’re wrong, that the company model intrinsically has much more inefficiency in the information age, and I’ve listed a bunch of reasons why. I suggest you go back and read what we already wrote on this topic, because there’s nothing in your paragraph that hasn’t been covered before.
“Actually, this is exactly how new software is built today. Except it’s not some rural area: it’s Silicon Valley. And it’s not a barn-raising: it’s a start up company.”
Right, cuz we all know that Silly Valley engineers just show up at your startup one day and start working for nothing, all out of their neighborliness and frontier spirit. 🙂 You’re really getting goofy at this point, so I really will leave it here.
Right, cuz we all know that Silly Valley engineers just show up at your startup one day and start working for nothing, all out of their neighborliness and frontier spirit.
No, that’s called a hackathon. Like a barn raising, it lasts only a day or two but, unlike a barn raising, the product is far less useful than a barn. Silicon Valley engineers will, however, show up at your startup one day and start working for nothing except equity in your company. But there will be a mutual expectation that this commitment will last multiple years.
In between these two models is the sea of information workers working largely for free, largely without a deadline, and, consequently, largely on free software because no one will commit their critical project or their limited capital to a sea of information workers.
…no matter how many times I debunk it.
I’ll have to take your word for it.
Hmm, I wrote a reply to this comment, but Arnold seems to have pulled it, wonder what’s going on.
Given that this is a reply to this comment, and Arnold has not pulled it, you may be caught in a Gödel incompleteness trap.
Except that his deleting my earlier comment implies nothing for whether he’d do it again. 🙂
Oh well, I have one firm rule when it comes to blogs: I don’t read blogs that delete comments, as it exhibits a closed-mindedness that means it can’t be a blog worth reading. I stopped reading Econlog, where Arnold used to blog and which I mainly read for his posts, years ago when they deleted one of my comments and banned me from commenting. I only started reading Arnold again because he left Econlog. If he’s started using the same illiberal comment policy here, I’ll just stop reading this blog too.
Hmm, still no sign of my comment, days after I posted it. Looks like this is one of those blogs that deletes comments arbitrarily, oh well, going to have to stop reading it.
It’s more likely it was misplaced or failed to go all the way through. I haven’t seen a comment touched without comment.
I’ve been commenting on blogs for a long time now, I know it went through. It showed up on this blog for me for a couple days afterward, along with a note that the comment was queued for moderation. It no longer shows up for me at all, which likely means it was deleted (Arnold, care to comment?). Admittedly, it was a quick comment I dashed off in response to yours, so it wasn’t anything that said a lot, but it certainly wasn’t offensive or outright spam. But if even that can be deleted on this blog, what else is being removed?
I’ve had comments deleted on a fair amount of blogs, amazingly often because I simply disagreed with the author. I suspect that someday new tech will come along that takes such power away from the blog author, commenters will one day host their comments themselves. Until then, I don’t frequent blogs that arbitrarily delete comments like this, so this blog goes off my list.