If used unwisely, digital forces could transform businesses in ways that will have negative long-term implications for both companies and workers.
Editor’s Note: This article is one of a special series of 14 commissioned essays MIT Sloan Management Review is publishing to celebrate the launch of our new Frontiers initiative. Each essay gives the author’s response to this question:
“Within the next five years, how will technology change the practice of management in a way we have not yet witnessed?”
Three technology-driven forces are transforming the nature of management. Automation is making it more and more possible for companies to do work without humans involved. Data-driven management supplements intuition and experience with data and experimentation. Resource fluidity matches tasks to the people who can best perform them, whether inside or outside the organization.
Taken together, these three forces are helping leaders rethink the way work is organized and managed. Tasks that were previously considered the sole domain of humans — like handling customer requests, driving vehicles, or writing newspaper articles — can now be done by machines. Employees at all levels have the information they need to make decisions and adjust their practices. Computers can diagnose situations and identify challenges that humans don’t see. Real-time information makes it possible to run experiments rather than guessing what might work. Employees can self-organize, obtain help from experts inside and outside the organization to get a job done. And companies can manage fluctuations in their resource needs through outsourcing, whether through long-term relationships, hourly hiring, or gigs and piecework.
On the whole, these forces are a good thing. They will help managers to increase productivity, innovation, and customer satisfaction in the coming years. However, if you lead a traditional company, be careful not to let these forces push your management approach to extremes. Taken to their logical conclusion, the three digital forces could transform management for the worse. Accelerating resource fluidity could make all workers contractors, paid only when the company needs them and earning a living only by cobbling together many different gigs. Data-driven management could become Big Brother, evaluating employees’ every action, and hiring or firing people rapidly based only on the numbers. Automation could replace workers and constantly ratchet up the pressure on those that remain. If left unchecked, the three digital forces could transform the employment relationship into an emotionless market transaction — a logically interesting approach that could have negative long-term implications for both workers and companies.