Chapter 1: Inventing the Organizations of the 21st Century

Overview

Now and then in human history, there come periods of dramatic change. After an era of relative stability, many things are suddenly transformed, seemingly all at once, in profound ways. Looking back on such times, we realize that the choices made during the transition laid the foundations for a new era—for better or for worse. The Industrial Revolution was one such period, and to a lesser degree, so were the years just after World War II and after the fall of communism in the Soviet Union.

We believe we have now entered such a period of momentous change in the ways businesses are organized. Buzzwords from the 1980s and 1990s like "downsizing" and "reengineering" gave us a hint of what was to come, and the dot-com bubble of the late 1990s gave us a premature—but partly correct—sense of the scope of the changes still in store for us.

Buffeted today by powerful forces like deregulation and globalization, rapid advances in computer and communications technologies, and the increasing education and affluence of people around the world, we now face profound choices about how we organize work. These choices are not a simple matter of selecting from a few well-understood alternatives. Instead, some of the most important choices involve possibilities we haven't even imagined yet. In fact, the factors transforming the business world today are making it possible to organize work in ways that have never before been possible in history.

To take full advantage of these new ways of organizing, we first have to invent them. Successful invention requires more than just knowledge and creativity. It also requires a sense of values. If you are only trying to predict what is going to happen, what you want doesn't matter very much. But if you are trying to invent new things, your own values and desires are very important indeed.

To achieve the full potential of the opportunities that face us, therefore, we need to think deeply about what we really want—as individuals, as organizations, and as societies—and to imagine creatively how new technologies and new ways of organizing work can help us achieve those things. In other words, we need to invent the organizations that we, and our children, will inhabit for the rest of the twenty-first century.

It was in this spirit that we undertook a five-year research initiative at the MIT Sloan School of Management called "Inventing the Organizations of the 21st Century". It is in the same spirit that we offer in this book some of the major results of that initiative's work. The Initiative included more than 20 MIT faculty members and researchers from many different academic disciplines. It was sponsored by a dozen leading international corporations from many different industries and countries. Together, our mission was "not only to understand emerging ways of working, but also to invent entirely new and more effective approaches and put them into practice".

Before proceeding to the Initiative's results, it is useful to reflect on how we got to where we are today. To do that, we need to look at the hierarchical corporations that dominated the global economy throughout most of the twentieth century and at the forces that are now leading them to change.