Spent yesterday’s treadmill time watching Clay Shirky’s talk at TedTalks 2005 yesterday.  I believe the implications of his talk energized me as much as the “exercise” (ok, so I just walk for 30 minutes – it’s a start).  His central thesis was that the low transaction costs of communication meant that new forms of organization may be preferable to derive maximum value based upon the natural laws underlying communities and human assemblies.  

Hah?  He was much more elegant, let me try again.  If you have an employee who comes to work, “drinks your Coke and plays your foosball, and after three years has only one good idea,” how would you receive this individual in your firm?  For most companies, of course, the employee would have been fired ages before the good idea.  But what if that single idea sparked an innovation, or salvaged a product line, or in some other way had a non-linear effect on everyone else’s work?

If we focus on employee productivity instead of finding a way to value ideas, we will never realize the benefit of this one good idea.  The connectivity we enjoy today means that new organizational structures may allow us to manage for good ideas, instead of busy bee workers.  In any community, whether emergent or designed, roughly 20% of the participants will provide 80% of the value.  Most companies will then try to encourage more people to “be like” the top 20%, and will trim away the “bottom 10%.” Sounds great, but what ideas are you throwing away?  What is wrong with managing people as they naturally organize, rather than try to force human beings into a bell curve?

I thought the days of brutal HR were over, at least for professional services firms, but I was very wrong and very close to home wrong.  The Jack Welch dictum, which forced a ranking of employees and sought to remove the “bottom 10%,” is alive and well.  And still remarkably dangerous.  While Shirky’s model is backed up by complexity principles (disequilibrium is a natural state) and network science (power law distribution rather than normal law curves) – some firms still to manage their workforce because “GE did it this way.”  Even the basis of Jack’s marvelous scheme is flawed – employees are actually not motivated by monetary rewards and incentives (see Washington Post article on this topic).  Instead, they need to feel a sense of autonomy and purpose.  Being told to strive to be the “top 20%” in your company means you are hoping people will engage in mimicry and adapt your ideas regarding their performance metrics.  Goodbye innovation.  The effort to trim the bottom 10% will instead alienate the top 15%, who realize the implications of treating human beings like bacteria.  (Which isn’t fair to bacteria, actually, who display remarkable emergent social behavior for mutual benefit.)

This is a failure of ideas, of course.  We have failed to make our case to CEOs, so they are left with just mimicking observed behaviors – which never reveal the entire story.  As with misguided “best practice” efforts, CEO aping behaviors ensure that a certain pack will follow what they believe makes the Silverbacksuccessful, and therefore never overtake him or repeat his luck.

Shirky predicts 50 years of chaos until this all shakes out.  I plan to retire within 20, so I’ll need to step carefully in applying what I know to what I face.  Not that I’ve ever been adept at stepping carefully.