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The virtual organization.

(business and technology)(includes related articles) Samuel E. Bleecker.

Brief Summary: The use of information technologies has resulted in the drastic reshaping of the corporate landscape. Through networking and virtual enterprising, individuals can easily find jobs while businesses can better serve their customers.

Full Text: COPYRIGHT World Future Society 1994

Look around. The corporations you see today on the business landscape are changing rapidly in structure and function and will be, within a few decades, almost entirely new entities.

What is evolving are virtual enterprises. Using integrated computer and communications technologies, corporations will increasingly be defined not by concrete walls or physical space, but by collaborative networks linking hundreds, thousands, even tens of thousands of people together.

For example, let's suppose you head a large company. It's Christmas time, and you need to add 100 customer representatives to the payroll. It doesn't make sense to keep 100 offices with 100 computers open all year long just to accommodate one month's rush of business. Instead, it makes sense to hire 100 people who work at home and have their own computers. These "virtual workers" can be in Hong Kong or Singapore or Cincinnati. It makes no difference. They dial into the company's database and become an extension of the company. When a customer calls in, all information about that person is flashed on the computer screen of the temporary worker, wherever located. The widely scattered workers can operate as if they were all at company headquarters.

A prelude to virtual enterprising appeared in one state's efforts to find jobs for the homeless. Colorado's dilemma was this: How do you locate a homeless person to tell him or her that a job interview has been scheduled or an opportunity for work has opened up? After all, the homeless have no addresses, no telephones. The state decided to establish individual voice mailboxes accessible by toll-free telephone numbers for each homeless person in the program. The individuals simply call their personalized numbers to get their messages. And it works: So far, more than 75% of the homeless people enrolled in this program have found jobs.

In the future, virtual enterprising will follow Colorado's example by operating without walls. These collaborative networks make it possible to draw upon vital resources as needed, regardless of where they are physically and regardless of who "owns" them--supplier or customer.

"Collaborative networks deliver better products, higher quality, improved time-to-market, and higher returns to the bottom line," says Gordon Bridge, president of AT&T's messaging company. "They leverage the strengths of each link in the value chain, improve efficiencies, reduce expenses, and focus on the inter-operability of processes and supporting systems."

"Virtual" Trends In the Marketplace

Several factors are driving businesses toward virtual enterprising.

* Pace. As Alvin Toffler predicted more than two decades ago, businesses now run at warp speeds, demanding immediate responses--anywhere, anytime. Today, "it's survival of the fastest, not the fittest," he notes.

* Cost. The cost of market entry is often smaller than previously, especially in the information services and other technology-driven industries, where even undercapitalized start-ups can have an enormous impact on innovation.

* Personalization. Computerized manufacturing has made it economical to produce assembly-line product runs of a few dozen items instead of a few thousand. This has meant that corporations are now driven more by customer demands than by internal needs. Today, customers get what they want or go elsewhere.

* Globalization. Businesses no longer compete only with their nearest rivals, but internationally.

As a result, large corporations are under pressure to drastically cut the time it takes to deliver a product from the engineer's workbench to the showroom floor. If they can't, they'll lose millions of dollars in investment to a faster competitor.

What has insulated many corporations from this reality, particularly in the United States, has partially been the high cost of entry into well-entrenched distribution networks. For years, U.S. car manufacturers could ignore consumer demands because it was too costly for a foreign competitor with a better idea or a better-made vehicle to enter the U.S. market.

All that changed when new technologies and political realities blurred national borders. GM, Ford, and Chrysler sprang to their feet when well-financed Japanese and German auto manufacturers started penetrating American barriers and delivering cheaper and better-designed cars.

Other industries besides car manufacturers are also getting the message. Giants like AT&T and IBM are reengineering themselves to be more agile. They are using their cash, extensive marketing machinery, and manufacturing might to form relationships with faster, less-encumbered companies--even startups. Recently, the business news pages are bloated with reports of joint ventures between IBM and Apple, US West and Time Warner (to deliver new home entertainment services via fiber-optic cables), and AT&T and startups such as the Go Corporation, which develops pen-based operating software, and EO, which manufactures pen-based palmtop computers.

Mobile Knowledge Workers

Increasingly, the "office" is where the worker is--not the other way around. Today, 45 million U.S. workers now spend more of their time on the road than at their desks. This new mobile work force demands new tools that both untether them from the workplace and, at the same time, allow them to stay in touch anytime, anyplace, and (very importantly) in any way--via phone, computer, fax, pager, videoconference, and so on.

As Intel's Andy Grove says, we are in the midst of a major paradigm shift in both the computer industry and the workplace itself. The new mobile work force doesn't so much need computer devices that communicate as they need communications devices that compute. We are at the brink of untethered communications. It is the dawn of a new era--the era of universal devices--when your pen-based palmtop PC becomes your personal communicator, serves as your mailbox, your fax machine, your notebook, and even your electronic secretary. This single device will manage and store your electronic communications, becoming, in essence, your "briefcase office."

Yet, for this revolution in work and workplace to materialize, an invisible worldwide infrastructure of new hardware tools, wireless links, and land-based communications superhighways are needed for high-speed and broadband data transfer of high-definition documents, such as medical X-rays or multimedia presentations.

Increasingly, we will see a host of personal digital assistants (PDAs), also known as "pocket pals" or "personal communicators." These handy devices feature built-in wireless telephones and modems, voice-recognition and voice-synthesis capabilities, and have photographic-quality, touch-sensitive screens. Increasingly, companies will build their telecommunications operations around virtual networks, such as AT&T's Software Defined Network, which allows a company to piggyback on a private virtual network that has the intelligence and reach of AT&T's global public telephone network.

Personal communicators will also allow vital information to be wirelessly downloaded to the field. For example, that same claims adjuster might need a diagram of an older-model car to be sent directly to his or her personal communicator for the accident report to be completed. Salespeople, too, can get immediate answers to customers' questions or price quotes downloaded wirelessly from headquarters and thus close a sale on the spot rather than having to postpone the sale until information is available.

With electronic messaging and wireless communications, the road warrior can now also have a universal mailbox. Colleagues need not follow his or her movements because they can deliver their communications--memos, faxes, spreadsheets, presentations--directly to the mobile worker anywhere by addressing his or her universal mailbox. And, wherever the worker is--on the road, on a plane, in a hotel, or at a client's office--those messages are waiting. And if there's no fax machine handy, the mobile worker can read messages on the computer through electronic messaging.

Unwiring Society

In the 1980s we noted proudly that we were a wired society. Soon we can proudly say we are an unwired society. It's the age of emancipation. Time and space will collapse, and the barriers to communications will fall away. It won't matter if you're in America and your trading partner is in Bulgaria. You will be truly connected--linked to one another by an invisible web of communications networks and intelligent, integrated appliances: the electronic virtual office. Traditional offices, on the other hand, will shrink to mere landing sites, where mobile workers dock for an hour or so at a communal electronic desk. Here, you will plug in your personal communicator, or personal digital assistant, and download all the data you've collected into a single unit--an integrated intelligent document-processing and management appliance combining fax, copier, printer, and scanner all in a machine no larger than your current laser printer. In the future, this intelligent peripheral will not only receive, store, and transmit data, but also manage your work flow. Truly an intelligent personal assistant, such a device will even turn your notes into desktop-published reports, including graphs, facts, and figures. It will sort through your files for the references you include and insert them where instructed.

It will also store and index information so that you can retrieve it instantly without intervention of a secretary. When you're on the road, it will receive your correspondence and, if the information is urgent enough, track you down and e-mail or fax your messages to you. Right now, several e-mail software developers are working on such intelligent assistants, including Lotus's Notes and Beyond's Mail.

Winning the Business War

Business is war. We battle our competition. We call our work force an army. We call our mobile work force road warriors. We invade markets. And, during crises, we call the conference room the war room. So what will make the virtual enterprise of tomorrow the most productive--that is, competitive--is warware. Computers without it will be little more than expensive paperweights. Warware is strategic simulation software that allows executives to manage complexity, to create virtual realities (or virtual enterprises) on the computer screen, and to watch the results of their scenarios as they replay the parameters. It's not new. The Pentagon has been doing it for years. Even civilian PC users have been doing it. With SimCity, they play town manager; with Gettysburg, they fight again and again the famous American battle.

But we haven't gone far enough. When computers get smart enough, business executives will be charting reorganizations on computers, not on paper. They will make fewer mistakes and grow greater profits. They will assign project management to computers, not to line personnel. With warware, executives will open new markets, anticipate economic shifts, and play currency markets. They will have a strategic edge because they will be able to simulate business scenarios free of risk and will come away less bloodied when actions are taken later in the real world.

In addition to corporate warware, however, there will also be personal software that increases an executive's capabilities. It's this sort of software that will cause executives to embrace hardware as never before. Contrary to popular myth, CEOs do use computers, but they're called vice presidents. The next generation of software will replace the VP as the CEO's intelligent assistant by mimicking the VP's activities. It will anticipate an executive's needs, learn from experience, conduct self-directed searches, synthesize data, provide analysis, and tailor-make reports.

Right now, the software isn't smart enough, and computers aren't powerful enough, so human vice presidents are still needed. But two developments will help change all that: parallel processing and fuzzy logic.

Parallel processing will allow software designers and systems experts to consider the workplace as a large number of independent processors acting in a coordinated fashion. By assigning rule-based operations to each processor and orchestrated actions to the whole, parallel processing will help more accurately simulate the corporation and anticipate the consequences of any corporate actions or policy changes.

To "think" like a person, however, computers must not only think faster, but differently. In many cases, the answer to a question or solution to a problem is not yes or no, but maybe; not good or bad, but okay; not hot or cold, but temperate. Fuzzy sets and fuzzy logic reject the binary notion that the world is entirely discrete and accepts a continuum of values. As a result, fuzzy logic will enable computers to think more like people do and to create real-world simulations.

Once we've accepted the pre-eminence of communication rather than location for winning enterprises, we will have come a long way toward reshaping corporations. Virtual enterprises will develop not in the image of the factory floor of 100 years ago, but as a new business ecosystem characterized by flexible relationships formed electronically at a moment's notice.

Agile Manufacturing

Only 40% of U.S. manufacturers are electronically linked to shared data with their suppliers, according to the National Center for Manufacturing Sciences.

Yet, data sharing is increasingly viewed as critical to the future of manufacturing and other enterprises. The goal of data sharing, says David Greenstein of General Motors, is to increase the agility of manufacturing enterprises.

"Manufacturing information systems are undergoing significant changes," says Greenstein, who is GM's manager of the Agile Manufacturing Information System (AMIS) project, a consortium of 23 U.S. manufacturers, including users of information technology, vendors who will provide the technology, and systems integrators who will build the system. "We view the largest improvement to manufacturing in the future will be contributed by information systems."

A goal of the AMIS project is to coordinate the use of distributed data throughout the manufacturing network, says Greenstein. "The entire philosophy of manufacturing has changed, and information-system architecture has evolved as a result. Hierarchical, vertical systems cannot fulfill the long-term needs of the market and served the market correctly," he concludes.

Source: Focus (October 1993), National Center for Manufacturing Sciences, 3025 Boardwalk, Ann Arbor, Michigan 48108. Telephone 313/995-0330.

Virtual Products

The virtual enterprise is emerging largely because a new kind of product is seeing increased demand: the virtual product.

Overnight package delivery, prescription eyeglasses and high-quality photograph developing in less than an hour, instant movies from tiny camcorders, and custom-made tacos in 20 seconds are just a few of the dazzling array of virtual products leading the way.

Products and services that were once never thought capable of meeting such enormous demands are being "virtualized." The automobile, for instance, is being virtualized by Japanese manufacturers who aim to meet a domestic order within 72 hours.

"Not only will virtual products have great value for the customer, but the ability to make them will determine the successful corporations of the next century," the authors conclude.

Source: The Virtual Corporation: Structuring and Revitalizing the Corporation for the 21st Century by William H. Davidow and Michael S. Malone. Harper-Business. 1992. 294 pages. Available from the Futurist Bookstore for $23 ($21.50 for Society members), cat. no. B-1741. To order, use the coupon on page 45.

Samuel E. Bleecker is a technology consultant specializing in the office of the future. His last article for THE FUTURIST, "The Information Age Office," appeared in the January-February 1991 issue. His address is 712 Northeast 71st Street, Boca Raton, Florida 33487. Telephone 407/997-9912.