Philip Condit: All change as the network age begins

The information revolution will require huge and difficult changes in companies’ organizational, hierarchical and decision-making structures if they are to survive, says Philip Condit

We are in a period of unprecedented change. The information revolution will produce social impacts and disruptive transformations, just as the industrial revolution did when it changed civilization from a rural, agrarian, small economy into an urban, industrial economy. The information revolution will change us into a more global, collaborative, integrated economy.

The impact on industry and institutions will be huge because, in a networkcentric world, information will flow where it is required. This will transform decision-making, hierarchy and bureaucracy as we know them.

If you look for the roots of the way we are organized, the way every large company in the world is organized today, you will find the lessons of the ancient Greeks, Romans and Mongols being applied. In those days, if you were going to march tens of thousands of soldiers across Persia, Europe or China, you had to build communications and logistics structures. You had to have a hierarchical structure because 20,000 people would not fit into your tent every morning to be given their orders.

But you could get your top 10 people into the tent. And those top 10 people, in turn, could get their top 10 people together to communicate the plan and give out orders. This pyramid provided the structure for logistics and communications.

This same logistics and communications structure exists today in industry and institutions. Alfred P Sloan studied military hierarchy and applied it to his company, General Motors, in the 1920s and 1930s. This is why businesses continue to have divisions and general managers even today.

But we are moving into a networkcentric world, a world in which organizational structures will look radically different and direct communications will permit better decision-making. Today email, a graphics-rich environment, video-teleconferencing and networks are part of a world that allows us to share data and connect with one another to improve efficiency and effectiveness.

In the future, we will get information directly to the person who needs it in order to do a job or to make decisions on the spot. We will routinely communicate messages directly to large masses of people without going through a hierarchical structure.

But this is only the beginning. A networkcentric world offers a great opportunity to change and improve decision-making radically. This world will be able to collect data, process it into information and structure it to allow people at all levels to make decisions quickly. It will allow leaders to move information to the people who need it – people who can turn it into knowledge and use that knowledge to make the best decisions efficiently. Just think: “What will it look like in 50 years’ time?”

Part of a manager’s responsibility today consists of talking to other managers, going to meetings, fixing mistakes, making joint decisions and resolving misunderstandings. Take the first-line manager, for example.

Almost everything in a first-line manager’s life is driven by recent and current events. Most manage in a chaotic environment. They juggle parts and daily schedules and make judgments on the best use of everyone’s time to get the job done for the day. They rebalance the workload when their team is short by one person because someone called in sick that morning.

Other management levels have different responsibilities. They may audit the company’s operational plan and report on progress. They ensure that the plan is adhered to, just as in the ancient empires.

Changing the chain of command

In a network-centric world, that process will change fundamentally. The status of the operational plan will be automatically available online. We will see a shift in roles and responsibilities as more teams work on projects around the clock globally to use time effectively and wisely.

When I was an engineer, for example, we used to create drawings on a polyester fabric called Mylar that had to be moved physically. Today we have the ability to work digitally and interactively. So now our employees can work with customers and colleagues across the world with a collaborative environment systems tool.

The 78,000 people who work in our new Integrated Defence Systems unit operate in 33 states of the US, with many of them collaborating in a virtual environment on the same programmes. All this is improving our efficiency and ability to compete.

Not long ago we had an opportunity to bid for a government contract but had only three weeks to write a proposal. We were able to compete and win because we could work 24 hours a day with a virtual team in the US and Australia. Interactive network tools allowed our people to make it happen.

Historically we have trained people to follow directions, to let others make decisions. Now, when data and information can be made available to all, we must teach and encourage local decision-making.

In the military we trained people to take orders and follow directions because awareness of the overall situation existed only at the highest levels of the pyramid. Now, as the ability to process data and distribute information spreads widely to the lowest level, we will have the ability to allow people on the front line to make decisions about what to do next in the battle. In this way, information will be the ultimate “high ground”.

The same applies to the business world. We have trained people to follow orders, obey rules and take directions. But when data and information are directly available to them, what will that mean?

What happens in a network-centric world when people are able to make their own decisions because they have the information to get the job done, to fix problems or to smooth out the disruption caused by a team member who is missing for the day?

The hurdles will be tremendous as we move towards this network-centric world. We have thousands of years invested in a hierarchical structure, so this is not going to change overnight. We must consider the implications for our industries and universities, for our government and military, for our managers, students and employees.

In business, we will need leaders who understand their roles, who see how they can move their companies forward, and who are willing to think about the future, so that their companies will exist 20 or 30 years from now.

My bet is that many firms will not survive because they will fail to make the transition. It will mean working against cultural and institutional prejudices that have existed for thousands of years. But it is a journey that promises huge rewards, and thus one worth making.

Philip Condit
Philip Condit is chairman and chief executive officer of The Boeing Company.