No major historical transformation has taken place in technology, or in the
economy, without an interrelated organizational transformation. The large factory,
dedicated to mass production, was as critical to the constitution of the industrial
age as the development and diffusion of new sources of energy. In the information
age, the critical organizational form is networking. A network is simply a set of
interconnected nodes. It may have a hierarchy, but it has no centre. Relationships
between nodes are asymmetrical, but they are all necessary for the functioning of
the networkófor the circulation of money, information, technology, images,
goods, services, or people throughout the network. The most critical distinction in
this organizational logic is to be or not to beóin the network. Be in the network,
and you can share and, over time, increase your chances. Be out of the network, or
become switched off, and your chances vanish since everything that counts is
organized around a worldwide web of interacting networks.
Networks are the appropriate organization for the relentless adaptation and the
extreme flexibility that is required by an interconnected, global economyóby
changing economic demand and constantly innovating technology, and by the
multiple strategies (individual, cultural, political) deployed by various actors,
which create an unstable social system at an increasing level of complexity. To be
sure, networks have always existed in human organization. But only now have they
become the most powerful form for organizing instrumentality, rather than
expressiveness. The reason is fundamentally technological. The strength of
networks is their flexibility, their decentralizing capacity, their variable geometry,
adapting to new tasks and demands without destroying their basic organizational
rules or changing their overarching goals. Nevertheless their fundamental
weakness, throughout history, has been the difficulty of co-ordination towards a
common objective, toward a focused purpose, that requires concentration of
resources in space and time within large organizations, like armies, bureaucracies,
large factories, vertically organized corporations.
With new information and communication technology, the network is, at the same
time, centralized and decentralized. It can be co-ordinated without a centre. Instead
of instructions, we have interactions. Much higher levels of complexity can be
handled without major disruption. It does not follow, however, that large
corporations are being replaced by small and medium businesses, or that
multinationals are obsolete. We observe, in fact, the opposite: there is merger
mania around the world. Bigger appears to be increasingly beautiful, as Citicorp
marries Travelers Insurance, Bank of America leaves its heart in San Francisco but
moves its money to North Carolina, Daimler Benz swallows Chrysler, Volkswagen
upgrades itself to Rolls Royce status, and American banks digest Asian banks and
financial corporations, in a historical revenge of the West against the high-growth
areas of the Pacific.
But the concentration of capital goes hand in hand with the decentralization of
organization. Large multinational corporations function internally as decentralized
networks, whose elements are given considerable autonomy. Each element of these
networks is usually a part of other networks, some of them formed by ancillary
small and medium businesses; other networks link up with other large
corporations, around specific projects and tasks, with specific time and spatial
frames.
Yes, ultimately all this complexity boils down to the need to assure a profit. But
how, and for whom? Once CEOs have served themselves, lavishly, there is still
most of the capital to be distributed among increasing numbers of shareholders.
Earnings do not remain in the firm (whether dedicated primarily to manufacturing,
finance, or services): they are invested in the global casino of inter-related
financial markets, whose fate is ultimately determined by a series of factors. Only
some of those factors have to do with economic fundamentals. Because of this
level of unpredictability and complexity, the networks in which all firms, large or
small, are anchored, move along, readapt, form and reform, in an endless variation.
Firms and organizations that do not follow the networking logic (be it in business,
in media, or in politics) are wiped out by competition, since they are not equipped
to handle the new model of management.
So, ultimately, networksóall networksócome out ahead by restructuring, even if
they change their composition, their membership, and even their tasks. The
problem is that people, and territories, whose livelihood and fate depend on their
positioning in these networks, cannot adapt so easily. Capital disinvests, software
engineers migrate, tourists find another fashionable spot, and global media close
down in a downgraded region. Networks readapt, bypass the area (or some
people), and reform elsewhere, or with someone else. But the human matter on
which the network was living cannot so easily mutate. It becomes trapped, or
downgraded, or wasted. And this leads to social underdevelopment, precisely at
the threshold of the potentially most promising era of human fulfilment.