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On The Flip Side
by Michael Munger




Serious Lessons To Learn From The New Economy
July 5th, 2000

I will deviate from my usual Macintosh and Internet scope of topics to talk about a lesson that "new economy" businesses could teach to the corporate world... if the latter knew how to listen.

Everybody talks about the new economy. Wall Street has invested millions (if not billions) in it with incredible enthusiasm, before it woke up not long ago and crashed the NASDAQ market.

Side note: I still find it funny that a dot com domain or company name was so darn hot earlier this year and how investors suddenly changed their minds, telling us that it will be soon outdated and useless. See an article at Wired for more details.

Financial experts and all kinds of technology pundits (including some lunatics) exalt the information age's supremacy and praise it as much as they possibly could. After all, it created jobs and an optimistic wave of the future, which could only have helped the incredible economic growth experienced in North America during the second half of the 1990's.

Governments, trying to cash in for popularity along with the good intention of allowing society to keep up with progress, throws tax dollars at academic institutions and even families* to digitize everything and wire everybody. The revolution has to spread, as they say.

* In Quebec, the provincial government announced a project earlier this year to wire families to the Internet via a special program that sponsors Internet providers and families to make access more affordable. I was quite surprised to see it happening.

The business world... wires itself to stimulate its own productivity and make sure that it does not miss the bus with all the changes.

Wait. The above statement is a problem in itself because this should not be the limit of modernization. Everybody claims to be modern, and yet, enterprises are anything but innovative in the way their bosses establish and organize their daily operations.

Companies that constitute the new economy currently give a serious example to follow. Here is how.

In the last few decades, university researchers studied the work environment to find out what type of conditions were the best to get the most out of a company's employees. They found out that the old theories about strong authority and rigid policies were harmful while democratic ways to manage a business usually produced better results. They found out that the old school's vision of business is more than outdated. Such a vision emphasizes the importance of authority and loyalty to the entity you work for. These people think that strong leaders are the key to success and that submission to them is the only way to go. They are keen on telling you that you have to sacrifice individual needs and opinions to serve the interests of the company more suitably.

Balls.

When you give more freedom to your employees to use their skills (read less restrictive rules) you make them feel responsible. When you allow them to participate in the decision-making process and have a tangible impact on choices made, you make them feel more important.

When you trust an employee, when you treat him as an equal and when you know how to harmonize the company's interests with his interests, you boost his productivity level and spur enthusiasm to work for you.

In short, they are adults just like you, and treating them as such will only get them to act like adults. Doing the opposite frequently produces blind obedient subordinates who cannot think for themselves or unhappy workers who know that they deserve better.

Many of the new technology leaders and their founders understand the principle and apply it to the fullest.

The best example I can lay on you is from Montreal, where I live. This city saw several new high-end multimedia and technology oriented companies establishing themselves in its territory.

The usual portrait of their leaders:

  • In their twenties or early thirties.
  • They work in the same spaces than everybody else in the company, no cozy office.
  • They hate hierarchical organization diagrams and their rigid formal boss-to-employee relationships.
  • They do not feel that they have to write a 200-page code on how to conduct yourself in the workplace.
  • They treat their employees as equals.
  • Their companies enjoy quick success and tremendous growth within a few years after their foundation.
  • They distinguish themselves with their dynamism and sense of adaptation to modernity.
  • Etc.

Certainly not all 100% of the above-mentioned enterprises adopt such policies, but it is a proven fact that bigger proportions of them believe in modern business management instead of the old archaic ideologies from the traditional corporate environment.

What is the result? Their staff is more enthusiastic at work, the productivity level higher than anywhere else; the burnout syndrome hits them less than others, etc. This is how they teach a lesson to the other types of administrators out there. It just works better!

On the other hand, you can also see why men and women who grew up in a conservative environment would not have it in any other way.

They had to wait several years for their turn to grasp power in a business. They waited so long to have their large office with its locked door and a secretary who says "please take an appointment if you wanna talk to me." For many of these people, there is just no way to convince them to change any of it. Now that they call the shots and can impose their way, why would they want to harmonize company policies with their employees individual needs?

Why would they give up any of their decisional power and prestige to adopt an employee's brilliant ideas? "Hey Joe, do as you wish when you get to make the decisions. For now, it's MY turn!" is what they mean when they say "I considered it, but it wouldn't work out." Even if it is a fact that a happy worker is a productive worker, administrators prefer to resist for their own sake and because they prefer their good old habits.

The democratic kind of business management is the smartest since it gets staff members to tie their evolution to the company's development. It produces amazing results. Who said that tight control and formal work relationships were better for an organization anyway?

I had the occasion to speak to consultants in work relations and industrial relations. They all told me that they push for this kind of vision because when they successfully implement it, corporations that follow such sound advice always profit from it.

When you think about the benefits, you can always bang your head against the wall thinking about why most administrators resist to it. Hey, that would be too logical. It would also ruin their turn to have their way...

We always talk about the new economy, Internet CEO's and companies, but most of the time, we forget the most important element of it. The new economy is not just about technology, but also about the business model of the future. I hope that everybody will get the point soon.

Your comments are welcomed.

Michael Munger is a French Canadian living in Montreal. He discovered the Mac in 1994 while studying journalism, the profession he loves and practices. He also studied history and communications. In addition to his work at The Mac Observer, he authors the iBasics tutorial column at Low End Mac, and cofounded MacSoldiers in 1998.

You can find more about him at his personal Web site.

You are welcome to send me your comments or you can post them below.

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