November 14, 2016

Robots disrupting organizations – bye bye middle management, hello people!

Taneli Tikka

Head of Innovation Incubation, Data Driven Businesses, Tieto

Advanced technology – robotics and artificial intelligence – is enabling multi-levelled expert organizations to transform into organizations containing only frontline employees, experts and senior managers. This leads to flatter organizations as middle managers are no longer needed. In the future, most present organizational and management models may be thrown on the scrapheap as a result of robotics.

As the tools get increasingly powerful, middle managers will find their administrative services less and less needed. Employees can take care of the same tasks better without a management layer in between.

The Belgian free researcher and writer Frederic Laloux describes the organization of the future as family-like (green) and similar to a living organism (teal). They strive for maximum flexibility and adaptability so that they can make the most of advanced technology.

Family-like organizations that are similar to living organisms will be free to try things out more quickly and to leap straight into action without detailed preparation. The change may be enormous for working life as a whole, because an estimated 80 per cent of the world's organizations currently structure their operations in rigid matrices or functional silos.

There are already signs of family-like organizations that are similar to living organisms, as described by Laloux. The models have arisen with start-ups but they can be expected to become more widespread among companies that have been around for longer and are larger in scale.

The family-like organization and management model is used by companies such as Wunderkraut Finland, an online service business. Wunderkraut declares that "for us, our employees are a family that we take care of". The company's motto is "Hug and be hugged", which is also demonstrated by the bonus system: "we hug each other and also get paid for it".

Unity Technologies, a game engine company originally from Denmark, is a good example of an organism-like organization. It aims to "democratize game development" so as many people as possible can develop interactive 2D and 3D content. It pursues this mission with a wide array of relatively independent cells fullfilling the same purpose from different angles.

In family-like organizations, directors do all they can to empower others. In a self-guiding organization that resembles a living organism, the director focuses on ensuring that everyone is able to aim for the target in the best possible way, and the target is more important than any single member of the organization. Traditional management doesn't exist in these organizations.

In the world of advanced technology, the work done by a single employee may have a massive effect on the entire organization's productivity and ability to deliver results.

Already now there are extremely productive employees in information work, such as planning and programming, who are easily 100–200 times more productive than passable level performers. In the era of robots, the productivity of super-productive employees could be up to 1,000 times higher than that of their colleagues if they are able to harness robots and artificial intelligence systems for their work while less productive employees rely solely on traditional methods.

Therefore, it is likely that the differences between employees in terms of productivity and efficiency will only increase, so senior managers must be able to create an atmosphere of super productivity. In the management of new organizations, the concept of guiding employees with incentives, sanctions and precise planning and reporting has been discarded. Management focuses on people and on the culture and atmosphere of the entire organization, as well as the overall system in which the organization operates.

Read also my other blogs about robotics; "Three steps to superproductivity", "When a machine takes control" and "Robots on duty. Assistant or orchestrator – you decide". 

The blog is part of a report published by Finnish Business and Policy Forum EVA ”Robots to work – what happens in the workplace”. Taneli Tikka wrote chapter "When a machine takes control" for the report, pages 63–86. The report can be downloaded in Finnish on EVA's website.

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