Paul Michelman is editor in chief of MIT Sloan Management Review. He tweets @pmichelman.
Editor’s Note: This article is an expanded version of the article that appears in the Winter 2018 print edition.
Sometimes things move so fast in our digitized world that it can feel as if there is no safe place to position yourself — or your organization. How do you anticipate where to go next — whether considering your company’s strategy or your own career — when the winds of change sweep from every direction? You simply can’t know the right move for certain. And even when you do make a good call, the clock is ticking; you’ll soon face a new threat of obsolescence. As I’ve written in the past, we all need to accept that change is continual; we must learn to embrace change rather than fight it. Similarly, we need to accept that there are no safe havens — for us or our companies. We simply must be prepared to stay on the move.
But whatever you do next, wherever you go, don’t head for the middle. Not the middle of a relationship, not the middle of an organization. It’s a bad time to be an intermediary — at least in the traditional sense of the word.
As the makers of products seek to close the distance to those who buy and use those products, and as layers of traditional management hierarchy fall away, the real worth is increasingly found at the extremes of value chains and organizations, rather than at the center.
There was once a time when the “middleman” was an indispensable resource. Intermediaries facilitated transactions between producers and consumers; they interpreted high-level corporate strategy and connected it to frontline execution; they monitored and herded; and they closed the gaps between disconnected entities that required one another for survival.
But one by one, they are being replaced — if not rendered obsolete — by technology.
- Digital platforms are convening direct connections between traditionally intermediated sides of markets by the thousands — in retailing, dating, personal transportation, entertainment, product development, and so on.
- Within organizations, advanced communication technologies — from corporate messaging apps today to facial recognition and emotion-sensing technologies tomorrow — combined with distributed leadership models are slowly but surely threatening traditional middle-management functions.
- New industrial technologies like additive manufacturing will eliminate links throughout legacy supply chains. For example, a company that can make a needed replacement part through 3-D printing doesn’t need to purchase that part from a distributor.
- We are only now just scratching the surface of the internet of things (IoT). IoT promises to deepen connections between manufacturers and end users of their products — and that threatens many traditional intermediaries.
- And if I were in a field such as financial services, I would already be looking at blockchain with a great deal of trepidation. Who needs the “trusted intermediary” when trust has already been confirmed through blockchain technology?
For most of the industrial age, we took the value of intermediaries as a given. Organizational models were built on the assumption of their value. But the more we encounter example after example of their redundancy, the more we will see middlemen as usurpers of value rather than creators.
Most intermediaries will not disappear overnight. For instance, there are few organizational models that can withstand the wholesale removal of entire management layers in one fell swoop. But over the long term, genus go-betweenus may well find itself on the endangered list.
The intermediaries that persevere will be those that adapt. They will produce unique value, adding something to a transaction or relationship that is — at least for a time — irreplaceable. They will provide a bridge or translation between two parties who would otherwise be unable to fully appreciate each other. Intermediaries will increasingly become specialists offering customized services that are too expensive or rare for the parties they serve to justify building on their own.
But for the rest, for those middle players who exist by tradition rather than by irreplaceability, the future will not be kind.