The changing workplace in the Internet age

WORK HAS CHANGED SO MUCH over the past few decades, we can't help but speculate that working 30 years from now might be like an episode from The Jetsons. In reality, though, it's highly unlikely we'll be commuting to the office in oxygen-equipped power suits (thank heaven). Romantic predictions that everyone will be working from the comfort of their own living room or deck may not even come true by then. Still, there's no doubt that there will be unfathomable changes enabled by advances in telecommunications, multimedia technology, ubiquitous computing and the information economy. There will be companies providing virtual experiences (a midnight visit to Sri Lanka from a computer screen on your bedroom wall), while others will make money manipulating and selling huge directories of data. Future organizations will create new services we can't even begin to imagine now (10 years ago, who would have thought we'd go back to having our milk delivered, by something called an Internet grocer?).

CIO recently invited several prominent IT leaders to discuss the workplace of the future. Along with Senior Writer Polly Schneider, the participants were: >Anita Borg, researcher at Xerox PARC in Palo Alto, Calif., and president and founding director of the Institute for Women in Technology; Paul Horn, senior vice president and director of IBM Research in Yorktown Heights, N.Y.; Haim Mendelson, the Theodore J. Kreps Professor of Information Systems and Management in the Graduate School of Business at Stanford University in Palo Alto; and Jim Sutter, senior partner at The Peer Consulting Group in Newport Beach, Calif., and former CIO of Xerox Corp. and Rockwell International.

In this future world, the participants foresee the disappearance of multinational conglomerates, the emergence of a global job-bartering community on the Internet, and a leadership style that will require expertise in corporate culture and employee motivation. And contrary to popular belief, they say, people will choose not to do all their work at home.

CIO: How will corporations evolve over the next few decades?

Paul Horn: The changes we'll undergo are going to be quite phenomenal and startling. The companies of 2025 will, in my opinion, not look at all like the "The whole concept of the virtual enterprise is going to explode.-Paul Horn"companies of today. Twenty to 30 years from now you're going to be able to buy a terabyte of data storage for a dollar. When we invented the first disk drive in 1954, a gigabyte of storage cost $10 million. So the whole concept of the virtuall enterprise is going to explode. We'll have companies with little or no physical assets, with business models that are completely intellectual-property-centric, with essentially the entire technological infrastructure outsourced. Business models are going to be all based on rapidly turning data that's stored digitally on these "yada-bytes" of storage into useful corporate knowledge.

Haim Mendelson: We're going to see companies that are looser coalitions than the companies of today. If we talk about the corporation of the past, the prototypical successful company was a large, vertically integrated company that controlled an entire value chain. Today, these companies essentially are breaking down into components, where each does a piece of that value chain, and ultimately these pieces are integrated to create a final product. I think we're going to see this process continue on a very large scale.

One type of company will specialize in development, where the focus is knowledge work. It will be managed much the way Internet startups are managed. The second type of company will focus on physical production, where economies of scale and managing physical assets are important. We'll see even tighter control in these types of companies. A third type of company [will be] in the distribution business, where you see some integration of physical movement and of components. The closest to that is something like Ingram today, but it's difficult to predict what exactly it will look like because this structure is just evolving. The fourth type will be the ultimate aggregators: people who specialize in customer relationship management. Their key competence is going to be managing information about customers and providing high quality service. These are very different types of companies that require different skills, which is one of the reasons they need to be separated.

Anita Borg: I hope and think that one of the major changes in corporations will be that we will get to the point where women have significant roles in nearly equal numbers to men. That, in and of itself, will have a lot of interesting impacts on what corporations look like, because it will no longer be the case that women are exceptions or very much outnumbered. There will be a much more relaxed sense of inclusiveness.

CIO: But will people care so much about belonging to an organization? There's a lot of talk about the temporary company -- a specialized group of people that come together only for the length of a project.

Jim Sutter: Years ago, you'd go off and do research, contribute ideas and create a new product. Today, to minimize the risk, in part, and also to provide rewards for those who take the risk, a new entity is often created -- to develop an Iridium or whatever it might be. So I think corporations of the future will be much more built out of pieces that kind of come and go, if you will, as alliances are created and equity is generated. There will still be very large companies, but I think they'll be federations of smaller businesses that can be easily reconfigured or spun out or sold.

Mendelson: On the demand side, there's the need for temporary, virtual companies because the capabilities needed are changing so fast. You can't really form a group of people that will satisfy next year's demand. There will be a people's directory on the Internet, so that if you want to put together a company with a set of given skills, you go to this global employment agency that has information about millions of people. The agency will go and talk to candidates and try to convince enough of them to join the new operation. They do their job, they may continue intoo a couple of other generations of the product, and then they move on to another activity. The problem is, if we have a product that's created by a large number of components, what do you do if a component fails, for example? When the people have moved on to something else, it's very difficult to figure out which component is at fault. So the complexity of managing this type of operation is an order of magnitude higher than the complexity of managing today's operations.

CIO: How will managers lead in these increasingly chaotic and loose structures?

Horn: I think the biggest management challenge will be creating a unified corporate culture: pulling together something with a corporate value quickly -- a group of people, very disparate, perhaps around the world, and then instilling some level of value system. Business models will come and go more rapidly, so the whole thing strikes me as being far more ephemeral.

Mendelson: Leadership skills [may] become less important in the future because more of the decisions will be based on the rational analysis of information that gets presented. The information makes the decision as opposed to the personality. But the second perspective says, well, everybody's going to have more information, so the source of competitive advantage is actually going to be those intangibles -- the ability to get people to follow through a vision, the ability to create a vision that cannot be supported by data, the ability to create a market that doesn't yet exist -- and we need to do that through our personality. So there are two perspectives, and I don't know which is the right one.

CIO: What kinds of tools do you think we'll be using in the workplace?

Horn: First of all, the core underlying technologies, which are mostly optical and semiconductor technology and displays, are going to get better exponentially than they are today -- following something that's close to the existing Moore's Law [stipulating that the data storage capacity of microchips doubles every 18 months]. Also, object-oriented programming and Java are going to allow people to build applications fundamentally faster than they used to build them. In 2025, you'll be able to pull together components that'll interoperate and build a complex solution like well- defined little pieces. Just the way we can do it in silicon technology with circuits, you'll be able to do it with software programs. More and more, the technology is going to be invisible. It's going to be easier to use, and it'll be all around you. We're already starting to see today what we call the dawn of the post-PC era. It's really more correct to think of your digital phone as a client on the Internet than a phone, for example.

Mendelson: The first wave of technology will be to replicate daily activities in a virtual environment. Say we want two people to be able to speak to each other over the network. We'll have low-cost storage so we can bring back a discussion that we had two weeks ago and pop it up on the screen as we're talking. Then the question is, To what extent can we replicate the different senses on the Internet -- as far as smell and touch? In 20 years we'll have these technologies actually working in a way that surpasses the quality of face-to-face communication today, and we won't pay a penalty for assembling a company with people who are physically located in different places.

CIO: So will most people work out of their homes?

Borg: The Internet is in a baby stage right now, and the kind of communication that will be enabled will certainly change the way things are structured, although I don't believe it will eliminate offices or face-to-face work. I think that there's something inherently rich about that, that we're not going to be willing to give up. But it may move corporrations to an even flatter structure, with smaller pods of people spread around. I don't think people are going to be all that happy spending all their time working at home. If the pendulum swings toward a time when lots of people are flocking to work at home, they're suddenly going to find out that work is 24 hours a day. I talk to senior executives who say there's this expectation that you enter your e-mail 24 hours a day, which is bonkers.

Sutter: Virtual companies and offices will grow -- I just don't think the result will be that will stay at home. We offered that to our people at Rockwell, and it was surprising to me how few people were interested. People will want to go to an office that's convenient, however. One of the things companies will have to face is [the fact that] it's going to be increasingly difficult to define the workday. From your workstation, you can do your financial planning, take a course, do shopping and so on. For me, it might be that I work through the evening. But I do think people will be just as productive, and in many cases, more productive.

CIO: What changes might we see in the global economy?

Borg: The whole notion of a knowledge economy is one that has quite different dynamics than an economy based on physical stuff. Stuff is finite, but knowledge is infinite. There's no limitation to its volume or its tradability. Potentially, there's room for a lot more people to be supported by it. I think there's going to be an enormous growth in this knowledge layer, and if we're really lucky, it could have an incredibly positive impact on the world economy. The problem with the imbalance in the world economy is not a lack of resources but a lack of distribution, because the folks on the other end don't have anything to trade. Well, in a knowledge economy, maybe they do.

This story, "The changing workplace in the Internet age" was originally published by CIO.

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