The historical development of work

The first industrial revolution (1760-1830)

• Key technological developments: steam power, iron making, manufacturing machinery
• Work transitions from hand production methods to industrial production work supported by machines
• Social and organizational changes:
  • Emergence of the factory system, industrial centers, and urbanization
  • Shift from task-based work to time-based work following the industrial rhythm

The second industrial revolution (1870-1914)

• Key technological developments: scientific discoveries (patents), standardization, mass production
• Work is shaped by Taylorist principles, later referred to as scientific management.
• Social and organizational changes:
  • Early labor laws and growth of labor unions (collective bargaining, measures against child labor)
  • Movement toward standardized workdays (8-hour days*)

• Note: The 5-day workweek was promoted in 1926 by Ford to improve productivity and give workers the opportunity to consume goods.

Scientific management

Scientific management, or the Taylorist principles, are named after Frederick Taylor (1865-1915)

1. Separate the work of workers (efficient task completion) and managers (analysis, planning, training).
2. Use of the scientific method to study work and determine the most efficient way to perform specific tasks (instead of working based on common sense or rules of thumb).
3. Match workers to their jobs based on capability and train them to work at maximum efficiency (instead of hiring generalists with broad skill sets).
4. Monitor worker performance, and provide instructions to ensure that workers work in the most efficient way possible.

These principles continue to influence the organization of work today.

From mass production to competitive strategies

• Mass production achieves high output and operational efficiency
  (e.g., through Kanban*).

• Several markets are saturated by mass production in the 20th century. Demand for innovative, high quality products and services grows.

• Organizations adopt new competitive strategies (Porter 1985):

  • Cost leadership strategy (e.g., involving automation technology, and efficiency measures like Lean or Sig Sigma)
  • Differentiation strategy (e.g., focus on quality or customer experience)
  • Focus strategy (e.g., focusing on customers with unique needs)

• Rising demand for highly skilled workers across industries

• Note: Kanban boards can be found in modern software development tools and methods, including Scrum and Agile.

Organizations

Organizations are a key innovation: As a legal entity, organizations acquire capital, organize work, and satisfy customer demands.

Different types of organizations often have different working cultures:

• Large industrial corporations
• Public companies (stocks owned by shareholders)
• Small-and-medium-sized enterprises (Germany)
• Startups
• Digital-native enterprises
• Freelancers

Transaction cost theory

• Assumption: organizations can either organize work in institutional hierarchies or source it from the market.
• Organizational size is then influenced by the balance of internal and external transaction costs.
• Transaction costs include search and information costs, bargaining and decision costs, and pricing and enforcement costs.
• Transaction costs vary across industries and value chains. Information and communication technology (ICT) often decrease transaction costs.

The digital revolution

• A shift towards differentiation and services (third sector)
• Ground-braking technology innovations, such as the Internet, e-commerce, and digital platforms
• Growing bargaining power of highly skilled workers (war for talent)
• Disruptive changes in a highly connected world: dot-com boom, the 2007/8 financial crisis, COVID-19
• New challenges, such as algorithmic management, and marginalization

How the digital revolution changes the nature of work (examples):

• Shorter cycles for updating skills
• Shift towards remote work
• Artificial Intelligence (AI) augments or replaces jobs

Knowledge work

• Many professions increasingly involve knowledge work, and innovation is becoming a key driver of progress across industries
• Examples of knowledge workers: consultants, programmers, researchers, lawyers, pilots, and doctors
• Many of these professions aim to implement research innovations, adopt evidence-based practices, document compliance, and improve continuously
• The term "knowledge economy" is coined to illustrate the the production of goods and services is dominated by knowledge-intensive activities

The future of work: A philosopher's view

Key question: How should we work in the future, especially when automation will (partially) replace jobs?

The new work paradigm (Frithjof Bergmann, 1984) envisions new ways of working in the digital age. It is based on the values of autonomy, freedom, and participation.

Three pillars of new work

• Gainful employment
• Smart consumption (self sufficiency)
• Calling (doing what you really, really want)

The future of work: An economist's view

Raj Chetty (Harvard University) presents results from large-scale econometric analyses, using census data and data provided by Facebook (big data).

Findings:

• Upward mobility is declining: "90% of children born in 1940 grew up to earn more than their parents. Today, only half of all children earn more than their parents did." (Opportunity Insight)
• Implications for policy makers: Implement effective measures to reduce disparities (e.g., integrating disadvantaged people in small groups to interact with successful people).
• Suggestion: It is not a zero-sum game (all competing for a limited number of jobs), but a cake that can grow through entrepreneurship, and innovation.

Insights presented at the Harvard Big Data Conference (see recording).

The future of work: A realist's view

Cal Newport (Professor, Georgetown University)

So Good They Can't Ignore You: Why Skills Trump Passion in the Quest for Work You Love (popular science book):

• Rule 1: Don't follow your passion.
• Rule 2: Be so good they can't ignore you.
• Rule 3: Turn down a promotion to take control.
• Rule 4: Think small, act big.

A recording of the talk is available here.

Learning objective:

Understand and explain the historical and contextual influences shaping digital work.

We covered:

• The industrial revolutions and scientific management
• The influence of more challenging competitive strategies
• Facets of the digital revolution
• Differences in organizational settings
• Three approaches to thinking about the future of work