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Notes & commentary from FMI’s Marketechnics

WASINGTON, D.C. – The essential question being asked by MIT’s Thomas Malone in his keynote address to the Food Marketing Institute (FMI) Marketechnics conference here yesterday was whether food retailers can create a work environment that caters to a “knowledge-based, information-driven society” in which companies with loose hierarchies push decision-making down into organizations, empowering people rather than dictating to them.

In many ways, this approach would seem to be antithetical to traditional industry management, which is more what Malone referred to as a “command and control” model, with centralization of decision-making – all in the name of efficiency – very much the rage.

But retailers simply may have no choice – especially if they want to remain relevant. Malone, who is a professor of information systems at MIT’s Sloan School of Management, said that because of the ease and inexpensive nature of mass communications, “people have enough information to make sensible decisions for themselves, and not just take orders in a hierarchy.” Not only do they have this ability, he said, but it is becoming a central part of people’s lives, as “people use freedom to get more of what they really want.”

The “paradox of power,” Malone said, is that “sometimes the best way to gain power is to give it away” – a hard lesson for some senior executives to learn. But he cited case after case – ranging from Wegmans to eBay to electrical power companies – of organizations where pushing down the decision-making actually served the company’s best interests. “People at the top (should) realize that their companies will be better off if they voluntarily give away power.”

Unfortunately, Malone noted, this kind of business model is more easily achieved by relatively new start-up companies that long-existing firms, which is why, for example, Whole Foods is better at achieving this sort of an organization than dozens of other food chains that one could name. “these new companies will be organized in a more decentralized way, and they will grow and inevitably they will take market share away” from older, bigger companies unable to adjust.

What seemed particularly interesting about Malone’s comments is that the industry he was addressing is the one, you would think, where pushing decision-making down the line would be most fruitful. The retailing environment is dependent, to a great extent, on the store environment…and the people who are working in the stores and talking to the customers and dealing with everyday realities far from headquarters are the ones who know far better than any executive how things are working and how they could work better. But often, nobody asks…or if they do, it is perfunctory at best. And the people making decisions worry more about Wall Street than Main Street, and the company loses its way.

(This is, by the way, the same point made in another speech by Ted Leonsis, vice chairman of AOL, who said his Internet/media company lost its way when it paid too much attention to analysts and not enough to customers. Enduring con summer relevance and trust are now job one at the company…but it has been a bumpy road.)

Here’s the thing. If retailers want to compete effectively with the biggest, most disciplined company in the world, they have to find new approaches. Empowering people (really doing it…not just posting the slogan on the wall) would seem to be a way to move the needle in some significant ways.

If Malone is right, this will be a smart thing to do because it will cater to what people will want out of their work lives – not to be drones, but to be responsible and effective. They want to matter.

If Malone is right, and retailers don’t take this approach, then the people who work for them will make one of two choices. They will consider their work “just a job,” and apply to it all the passion and commitment that “just a job” requires. Which is to say, none.

Or they will leave, and go elsewhere, where they will matter.

“Attention must be paid,” the late Arthur Miller wrote memorably in “Death of a Salesman.” Before, we might add, it is too late.

“IT has never mattered,” Malone said. “What matters is what you do with it. Some of the most important innovations in coming decades will not be new technologies, but rather new ways of organizing work that are made possible by new technologies.”

By the way, Malone’s approach to the changing culture of work can be seen in his book, The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style and Your Life, available at bookstores and on
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