Jeffrey Pfeffer, a Professor at the Stanford School of Business, distributed an interesting article by Gerald F. Davis of the University of Michigan about the changes facing corporations and corporate structures titled, “What Might Replace the Modern Corporation? Uberization and the Web Page Enterprise.”
Although this is a very academic article and assumes substantive understanding of various theories of organization, its core thesis is quite interesting. Davis argues that two factors–“Nikefication” and “Uberization”–are fundamentally changing organizations.
What Davis is calling “Nikefication” is the outsourcing of production and distribution. In Nikefication, traditional control of production and distribution is contracted out to other organizations – think Apple producing computers in China through a Chinese company.
On the other hand, “Uberization” is the outsourcing of labor. In Uberization, the role of the worker doing a job for the corporation is changed to a contract worker doing a specific task for the organization.
This is a very interesting thesis to consider. It seems virtually everything can be contracted out. As business leaders, we contract out our financials, many elements of marketing, many elements of software development, customer service, and several other operational needs. It seems as though virtually anything can be converted to a contract.
There is certainly much discussion in the media about these changes and their impact on things like productivity, healthcare, and social security. My particular interest is the impact these changes will have on leadership.
What is leadership if almost everything is converted to outsourced contracts?
I suspect what remains for leaders in an organization is to focus on defining strategy, generating innovation, managing financials, and knowing how to manage contractual relations.
What does a leader need to be able to do?
I believe one of the most important capabilities for leaders in this new outsourced world that Davis describes is being able to sense the direction of markets and create innovations that quickly turn market opportunities into real business. As such, it is very much like the first phase in most transformational leadership programs, which should be about sensing and defining opportunities. But beyond that, it would seem leadership would be very different in this new business world.
The second step should be about building a consensus around an opportunity. However, the number of people required for the consensus shrinks significantly when everything is outsourced. The leader no longer has to convince a production arm or a labor force that it is worth doing, but rather only those colleagues who need to align with the strategy. Similarly, planning for implementation changes from how to do the detailed work needed to produce a new product or service to who to select to do the planning and the work.
In an outsourced world of business, traditional notions of control also change from a focus on creating motivation and monitoring performance to an assumption that motivation, and to a lesser degree, monitoring, are less relevant because behaviors are governed by the contracts. The monitoring would be more focused on checking on contractually defined performance, presumably with various contingencies.
As a result, establishing an excellent contractual relationship and writing a solid contract become more important than traditional notions of “leadership” such as influencing, motivating, and engaging. Organizations are likely to be smaller, and “led” by a small cadre of closely knit colleagues with very different attitudes and skills than traditional notions of a CEO as being at the top of the corporate org chart. It seems likely that traditional organizational charts will become less prevalent as more nimble team-based organizational structures take the forefront in the years ahead.
What are your thoughts about the changing face of leadership in the outsourced world?
For more leadership strategies in today’s evolving workplace, see An Easy Recipe For Healthy Leadership.
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