Talents make capital dance

Jonas Ridderstrale and Kjell Nordstrom’s book seeks to explore world’s nowadays business condition and how business organisation or anyone wishes to involved in business should perform. Using the term ‘Talent makes capital dance’, they draw a kind of brain-based world business environment.

The whole book draws how business world have changed. It describes some of economic theories, from the machine age which is renowned with its Fordism assembly line untill the way internet has led information technology age and has changed most of management style in business organisations.

The world business condition appears to be shaped by lot of contribution from development of technology, especially information technology. Information technology, which is led by internet, has made almost anything available to anyone, anywhere and anytime. Ridderstrale and Nordstrom state that information technology decreases time and space. It causes to “shrink the world” and makes a global market phenomenon. Moreover, information technology enables total transparency, as a result, this seems causes people with access to relevant information are beginning to callenge any type of authority and appears it changes styles of nowadays business organisations. Both them also claim that it will shape markets to its perfect and very traditional shape, Bazaar. In traditional bazaar, as in nowadays markets situation, informations about the products are available at consumer’s fingertips. Markets believed to become more efficient and thus affect everything involved in business processes. Business best practice move faster than ever before. Therefore, funky business can also mean ‘more competition for everything in everywhere.’

There are two other forces of funk besides information technology which argued by Ridderstrale and Nordstrom have most contribution to shape the funky time. The change of institutions in society believed to be one of them. Institutions considered as contractual arrangerments that bind people. It may be states, political parties, eternal enterprise and even family. The last force of funk is values. Value system, which become base for every institution, organisation and society, argued to be has changed slowly. It affects people’s thoughts, deeds, artefacts and actions. Value system believed to has been geographically liberated. Values in working places and spiritual emptiness become one of the biggest aspects that shape the funky world.

The most important reason for those situations and become central point of the book seems to be an importance of knowledge. A brain, as a based tool of knowledge believed to be a critical means of production. The book also draws how knowledge spreads globally and instantly and unstopable. It is becoming more and more important than ever. The book describes the knowledge as “The new battlefield for countries, corporations and individuals”. Futurist Alvin Toffler once said that the “brute force economy” is being superseded by a “brain force economy.”(Crainer, 1996) Brain has become the central and the most important aspect of production. Brain replaced the most important aspect of production in machine age, which once appeared in Henry Ford’s lamenting expression; “How come when I want a pair of hands I get a human being as well.” It also appeared in what Charles Handy has said in his book, the Age of Unreason, (Handy, 1992): “Comparative advantage means that there is something for which others will pay a price, be it minerals, cheap labour, golden sun or brains. For Britain and the rest of the industrialized world it has, increasingly, to be brains. Brains are becoming the core or organisations-other activities can be contracted out.”

On the other hand, Handy’s phrase about Britain and industrialized world should be given more consideration from Ridderstale and Nordstrom. How extend the internet and information technology have an effect on business in particular country is seems not in the same speed and depend on many aspects. One of significance aspect has drawn by Hofstede, (Morden, 2004) which is known by ‘National Culture.’ National culture is defined as the ‘collective mental programming’ of society. Fukuyama defines national culture in terms of ‘inherited ethical habit.’ (Morden, 2004) Hofstede believes that people from any particular nationality are culturally conditioned by particular patterns of socialisation, education, and life experience. (Morden, 2004) Furthermore, he argues that cultural conditioning is stable and resistant to change. His reason is because national culture resides : (i) collectively in the mental make-up of the people in the society; (ii) in their institution (family, education, religion, forms of government, associations and institutions, law, work organisations, literature, settlement patterns, towns and cities, buildings, etc.) and (iii) in their ideologies, technology, and scientific theories.

Following that, there should be more specific and clearer arguments about how extend the influences of internet and information technology development in a worldwide, especially in non-industrialized countries. For comparing, in Indonesia, one of South East Asia developing country, only about 14 million from about 238 million of people who recognised as active internet user. (www.komfindo.or.id, 2004) Compare it with a fact from a research in 2002 about relation between internet usage and industrial behaviour in Spain, one of industrialized country members of European Union, which about 8,5 million from about 40 million population is known as internet user. (www.nielsen-netratings.com, 2004) The conclusion of the research is there is not as yet possible to find any proof of a cause-effect relationship between internet usage and improvements, percetible to the client, that are liable to change the dynamics of competition within pharmaceutical industry in Spain. The research in pharmaceutical industry had choosen because the sector was one of the pioneers in the introduction of robotics, telecommunications and computer technology in the organization, achieving a high degree of technological development from the early 1970s in Spain. (Ana Rosa, et al, 2002)

On the other part of this book Ridderstrale and Nordstrom establish some opinions about companies and leadership. Companies, as a backbone of business world are claimed to stay dominant. Corporations are the dominant social institutions of our age. It said in the book that 300 largest multinational companies control 25 percent of all the productive assets on earth. These global firms are considered as the new empires roaming and running the world.

However, there still some business organisations come and go. Some organisations change shape constantly, thus, survive and even succeed. They even reorganize, realign and refocus. There is no organisation stays the same. In that case, there are some related characteristics of which believed will keep the organisation survive and have a chance to survive according to this book. Funky Inc., a phrase that Ridderstrale and Nordstrom use to label those organisations is defined as an organisation that actually thrives on the changing circumstances and unpredictability of our times.

The characteristic of these organisations can be seen from how these organisations looked and operated. The first character for companies is to be focused. The organisation argued to be focused to secure their existence in business world. Furthermore, it should be narrow on one or just a handful of core business. They take the basic idea from Adam Smith who has pointed out that “the size of a market increase so should the degree of specialisation.”

The second aspect of Funky Inc. is that leveraged. Once organisation has identified its basic business, the core capabilities and the target tribe, it has to leverage its key resources. Leveraging is a three-stage process. The first is internal, then industrial and international leverage. Internal leverage is a process that happens inside the organisation and it is influence the style of management in the organisation. Internal leverage is about building a learning organisation, increasing the rate of knowledge transfer and transformation and this starts with leveraging knowledge throughout the firm. It is argued that learning must be a key task for any leader in the firm to ensure the continuous transfer of knowledge across organisational boundaries. Therefore, Funky Inc. is built around forums, virtual and real, where people can meet, rather than boxes and arrows that isolate them in unbreakable silos. Industrial leverage is happen when organisations use their core competences and competents to enter new industries, just like not what Ford did, they do so without trying to control all process internally. International leverage means business organisations should keep to be global, administratively, structurely and systematically.

To remain unique, it said that organisations must constantly sharpen their competitive edge. Furthermore, innovation argued to be not only a matter of technology. Innovation concerns every little aspect of how organisations operate their administrative, marketing, financial, design, human resource and even service concept innovation. To be innovative, the style of management should be different. The reason appears that people need resources and time to sit down and reflect to be creative. People need time to be alone and play around and so give them a chance to make experiments and to have casual conversation with other. Ridderstrale and Nordstrom claims the fundamental starting point as the consequences of developing a brain based firm, is to allow people to be themselves and to look as they want appears. Sharing a number of things considered will be helpful to manage this style of organisation. Ownership share, rewards, identity, culture, language, knowledge and attitudes are the examples.

Funky firm also argued to be not hierarchycal in its structure. Alternatively, it should be heterarchical. The reason can be seen from the nature of hierarchy. Hierarchy word literally means: ‘to rule through the scared’. Moreover, hierarchy said to be built on three key assumptions: the environment is stable, the processes of organisation are predictable, and the output is given. They believed in a surplus society, an economy moving forward at high speed, and in companies heavily reliant on brainpower, traditional hierarchis will get constant nervous breakdown. Organisations need structures that support experimentation and the creation of innovation. On the other hand, most of new organisation will be heterarchical, containing many hierarchies of different kinds.

Spaghetti organisation is a term that Ridderstrale and Nordstrom use to express the style of that kind of heterarchical organisation. Every person in this kind of firm belongs to a group of resources. Any individual is tied to a project, an area of expertise profession, and to people dimension. Projects comprise the operation style in this kind of organisation.

Management style from such kind organisation appears to be accordance with the theory of “Management by objective” or MBO which was put forward by Peter Drucker (Morden, 2004). MBO is a management style that may be applied where employees are in a position to exercise at least some degree of discretion within their jobs. This kind of management requires an open two-way communication relationship between the superordinate and the subordinate. They need to identify, clarify, agree together what are the basic performance parameters, measurement values, and required outcomes of the subordinate’s work. The result of the agreement should content the objective of subordinate and how these objective or targets should be achieved. It also accordance to the theory attribute to this concept which was developed by Ouchi (Morden, 2004) and known as concept ‘Management by Wandering Around.’ It is a close managerial participation in events, rather than the distant giving of orders. Managers who practice this kind of management style become highly visible and accessible. It reduced the status difference between superordinate and subordinate staff. They also attempt to maximise the degree which issues are resolved by direct, face to face, verbal communication and negotiation with peers and subordinates. Therefore, it associated with speedy, consultative, and informal decision-making. In the face of an increasingly complex knowledge landscape, organisations have to strengthen the power of the professional and process structure. There still a critical role for management to play. But they are considered no longer the only actors or stars in organisations.

However, such kind of idea of organisation style that Funky Business proposes has appeared parallel with other ideas from previous management thinkers. Compare it by Shamrock organisation which proposed by Charles Handy in his book, The Age of Unreason. (Handy, 1992) The organisation called by Shamrock, the Irish national emblem, symbol of three aspects of God (Trinity). It used to make point that the organisation is made up of three very different groups of people. The first group is the core workers (the core), or professional core. These are the people who are essential to the organisation. The second group is the group of people who contracted (the contractual fringe) by the organisation to do non-essential works in organisation. The third group in the shamrock is the flexible labour force, all those part-time workers and temporary workers who are the fastest growing part of the employment scene.

Handy establishes F International in Britain as an example such kind of organisation. (Handy, 1992) It seems can be identified some similarity with organisation style that Ridderstale and Nordstrom argued. FI’s Charter’s statement that the organisation designed to develop, through modern telecommunications, the unutilized intellectual energy of individuals and groups unable to work in a conventional environment seems to indicate an innovative aspect of the organisation. The focus and heterarchical aspect of Shamrock seem reflected from its behaviour to contract the special worker in second group. The organisation subcontracts particular works to whom considered to be capable to do it better than if they do by themselves. The first group- the core workers- therefore can be focus to their speciality. Meanwhile, the organisation stucture will be flatter and smaller.

Furthermore, Ridderstrale and Nordstrom establish seven features of the funky firm. The first, it said that funky firm is smaller, because the people creative in small teams.The second is it flatter. The flatter the firm, the faster the time to detect the problem appears and the faster solution implementation.The next is that organisation style working in projects and groups and temporary. Organisations have to be able to recombine their key assets and turn the firm into a team park.The fourth is Funky firms should work horizontally in process. Hierarchy is not accordance to the brain based world because vertical hierarchical logic builds upon the simple assumption that the smart ones are located at the top and the stupid ones at the bottom.The fifth, funky firms is circular. Circularity is about organisational democracy. This principle is perhaps more difficult to grasp. It built on the fact that people has a tremendous ability to self-organise once they get 360-degree feedback.The sixth features is organisation should be open. Given that the firm is narrower and hollower, organisations also need to develop abilities to become increasingly networked. The last feature is that everything in organisation will be measured as a substitue for the loss of hierarchical control resulting from the introduction of new structures. Information system will be used to increase control by measuring more things, new things, at multiple levels, and at a greater frequency than before. The fact that Xerox’s Anne Mulcahy and Pepsi’s Steven Reinemund regarded as one of the best managers of 2004 by Business Week magazine seems appear as evidence. Anne Mulcahy’s key accomplishment is to push for faster decision making and instituted lean Six Sigma to improve efficiency in her organisation, as Reinemund’s greatest achievement is in developing people more than products. He personally takes a major role in mentoring and teaching staff-both formally and informally. He also demands that everyone in the senior ranks do the same. (Business Week, 2005)

However, it should be considered that there are significance differences between organisations from its network point of view. Charles Snow and Raymond Miles (1992) describe the different form of organisations based on the forms of network organisation. Some organisations compete in stable network, therefore less affected by rapid technological change, such as manufacturing and food retailing. Some other operates in Dynamic network, such as computer manufacturing and fashion retailing which are affected by a high degree of environtment change. As Internal networks are similar to stable networks in that they operate in an environment that is less prone to change. The differece, however, is that there is a high need for knowledge transfer between the various elements of the network to leverage and fully exploit the internal resources. (Jackson, Ed., 1999)

In conclusion, Funky Business gives a new perspective link between economic world and humanity even though is not much original idea from this book. It gives a wholistic view for either people or organisation how to survive and to compete in nowadays speedy changing brain-based business environment. However, there seems appears some over-generalisation to see the speed of changing in business worldwide, especially which related to information technology, even though it is not reduce the contribution for business and management development.










Reference:
Ana Rosa Del Aguila Obra, et.al.(2002). “Internet usage and competitive advantage: the impact of the Internet on an old economy industry in Spain” Emerald Journal, Volume 12 Number 5 2002, [internet] Availablefrom: http://juno.emeraldinsight.com/vl=651591/cl=12/nw=1/fm=html/rpsv/cw/mcb/10662243/v12n5/s3/p391

Business Week’s Special Report: The Best and The Worst Managers of The Year. Business Weeks magazine. European Edition/ January 10-17, 2005 edition. Page. 34-41.

Crainer, Stuart., (1996) Key Management Ideas, Thinkers that changed the Management World. Pitman Publishing. London.

Handy, Charles (1992) The Age of Unreason. 2nd edition. Century Business imprint. London.

Jackson, Paul. Ed. (1999) Virtual Working, Social and organisational dynamics. Routledge. London.

Morden, Tony., (2004) Principles of Management. Ashgate Publishing Ltd. Hants, England.

Ridderstrale, Jonas and Nordstrom, Kjell,. (2002) Funky Business, Talent Makes Capital Dance. Pearson Education Ltd. Great Britain.

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