The shift to the learning organization goes hand-in-hand with the current transition to a technology-driven workplace. The physical world that Frederick Taylor and other propo- nents of scientific management measured determines less and less of what is valued in or- ganizations and society. Our lives and organizations have been engulfed by information technology. Ideas, information, and relationships are becoming more important than pro- duction machinery, physical products, and structured jobs.
Many employees perform much of their work on computers and may be a part of virtual teams, connected electronically to colleagues around the world. Even in factories that produce physical goods, machines have taken over much of the routine and uniform work, freeing workers to use more of their minds and abilities. Managers and employees in today’s companies focus on opportunities rather than efficiencies, which requires that they be flexible, creative, and unconstrained by rigid rules and structured tasks.
1. THE SHIFTING WORLD OF E-BUSINESS
Today, much business takes place by digital processes over a computer network rather than in physical space. E-business refers to the work an organization does by using electronic linkages (including the Internet) with customers, partners, suppliers, employ- ees, or other key constituents. Organizations that use the Internet or other electronic linkages to communicate with employees or customers are engaged in e-business.
E-commerce is a narrower term. It refers specifically to business exchanges or transactions that occur electronically. E-commerce replaces or enhances the exchange of money and prod- ucts with the exchange of data and information from one computer to another. Three types of e-commerce are business-to-consumer, business-to-business, and consumer-to-consumer.
Companies such as Amazon.com, 800-Flowers, Expedia.com, and Progressive are engaged in what is referred to as business-to-consumer e-commerce (B2C), because they sell products and services to consumers over the Internet. Although this type of exchange is probably the most visible expression of e-commerce to the public, the fastest growing area of e-commerce is business-to-business e-commerce (B2B), which refers to electronic transactions between organizations. Today, much B2B e-commerce takes place over the Internet.59
Large organizations such as Wal-Mart, General Electric, Carrier Corp., General Motors, and Ford Motor Company buy and sell billions of dollars worth of goods and services a year via either public or private Internet linkages.60 For example, General Motors sells about 300,000 previously owned vehicles a year online through SmartAuction. Ford purchases a large portion of the steel it uses to build cars through e-Steel.61
Some companies take e-commerce to high levels to achieve amazing performance through supply chain management. Supply chain management refers to managing the sequence of suppliers and purchasers, covering all stages of processing from obtaining raw materials to distributing finished goods to consumers.62 Dell Computer was a pioneer in the use of end-to-end digital supply-chain networks to keep in touch with customers, take orders, buy components from suppliers, coordinate with manufacturing partners, and ship customized products directly to consumers. This trend is affecting every industry, prompt- ing a group of consultants at a Harvard University conference to conclude that businesses today must either “Dell or be Delled.”63
The third area of e-commerce, consumer-to-consumer (C2C), is made possible
when an Internet-based business acts as an intermediary between and among consumers. One of the best-known examples of C2C e-commerce is the web-based auction such as auctions made possible by eBay. Internet auctions create a large electronic market- place where consumers can buy and sell directly with one another, usually handling nearly the entire transaction via the web. Members of eBay in the United States alone sold approximately $10.6 billion in merchandise during the first 6 months of 2005. Merchandise sales worldwide in the previous year were approximately $36 billion.64
Another growing area of C2C commerce is peer-to-peer (P2P) file-sharing net-
works. Companies such as Kazaa and Grokster provide the technology for swapping music, movies, software, and other files. Online music sharing, in particular, has zoomed in popularity, and although music companies and record retailers currently are engaged in a heated battle with file-sharing services, these companies are likely here to stay.
2. INNOVATIVE TECHNOLOGY IN THE WORKPLACE
New electronic technologies also shape the organization and how it is managed. A century ago, Frederick Taylor described the kind of worker needed in the iron industry: “Now one of the first requirements for a man who is fit to handle pig iron as a regular occupation is that he shall be so stupid and so phlegmatic that he more nearly resembles in his mental makeup the ox than any other type.”66 The philosophy of scientific management was that managers structured and controlled jobs so carefully that thinking on the part of employees wasn’t required—indeed, it usually was discouraged.
How different things are today! Many organizations depend on employees’ minds more than their physical bodies. In companies where the power of an idea determines success, managers’ primary goal is to tap into the creativity and knowledge of every employee.
Technology provides the architecture that supports and reinforces this new workplace. One approach to information management is enterprise resource planning (ERP), systems that weave together all of a company’s major business functions, such as order pro- cessing, product design, purchasing, inventory, manufacturing, distribution, human re- sources, receipt of payments, and forecasting of future demand.
ERP supports a companywide management system in which everyone, from the CEO down to a machine operator on the factory floor, has instant access to critical information. People can see the big picture and act quickly, based on up-to-the-minute information. Thus, ERP also supports management attempts to harness and leverage organizational knowledge.
Peter Drucker coined the term knowledge work more than 40 years ago,68 but only in re- cent years did managers begin to genuinely recognize knowledge as an important organiza- tional resource that should be managed just as they manage cash flow or raw materials. Knowledge management refers to efforts to systematically find, organize, and make available a company’s intellectual capital and to foster a culture of continuous learning and knowledge sharing so that a company’s activities build on what is already known.69
A growing segment of knowledge management is the use of sophisticated cus- tomer relationship management (CRM), systems that collect and manage large amounts of data about customers and make them available to employees, enabling bet- ter decision making and superior customer service. The use of CRM has virtually exploded over the past several years. In Bain and Company’s 2005 management tool survey, for example, three out of four companies reported using CRM, up from only 35 percent of companies in 2000, one of the largest and fastest usage increases ever re- vealed by the survey.
Information technology also is contributing to the rapid growth of outsourcing— contracting out selected functions or activities to other organizations that can do the work more cost-efficiently. Today’s companies are outsourcing like crazy to free up cash for investment in long-term research and innovation. Outsourcing—along with other trends such as supply chain management, customer relationship management, telecommuting, and virtual teamwork—requires that managers be technologically savvy and also that they learn to manage a complex web of relationships. These relationships might reach far be- yond the boundaries of the physical organization; they often are built through flexible e-links between a company and its employees.
Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.