Bradford C. Johnson, James M. Manyika, and Lareina A. Yee, “The next revolution in interactions” (MP3 audio), McKinsey Quarterly, 2005/11

The nature of work in the 21st century — beyond automation to knowledge-based work — may benefit from the development of some new models.

Organization, Strategic Organization article, corporate interactions

Today’s most valuable workers undertake business activities that economists call “interactions”: in the broadest sense, the searching, coordinating, and monitoring required to exchange goods or services. Recent studies—including landmark research McKinsey conducted in 1997—show that specialization, globalization, and technology are making interactions far more pervasive in developed economies. As Adam Smith predicted, specialization tends to atomize work and to increase the need to interact. Outsourcing, like the boom in global operations and marketing, has dramatically increased the need to interact with vendors and partners. And communications technologies such as e-mail and instant messaging have made interaction easier and far less expensive.

The growth of interactions represents a broad shift in the nature of economic activity. At the turn of the last century, most nonagricultural labor in business involved extracting raw materials or converting them into finished goods. We call these activities transformational because they involve more than just jobs in production. By the turn of the 21st century, however, only 15 percent of US employees undertook transformational work such as mining coal, running heavy machinery, or operating production lines—in part because in a globalizing economy many such jobs are shifting from developed to developing nations. The rest of the workforce now consists of people who largely or wholly spend their time interacting.

Within the realm of interactions, another shift is in full swing as well, and it has dramatic implications for the way companies organize and compete. Eight years after McKinsey’s 1997 study, the firm’s new research on job trends in a number of sectors finds that companies are hiring more workers for complex than for less complex interactions. Recording a shipment of parts to a warehouse, for example, is a routine interaction; managing a supply chain is a complex one.

Complex interactions typically require people to deal with ambiguity—there are no rule books to follow—and to exercise high levels of judgment. These men and women (such as managers, salespeople, nurses, lawyers, judges, and mediators) must often draw on deep experience, which economists call “tacit knowledge.” For the sake of clarity, we will therefore refer to the more complex interactions as tacit and to the more routine ones as transactional. Transactional interactions include not just clerical and accounting work, which companies have long been automating or eliminating, but also most of what IT specialists, auditors, biochemists, and many others do [….]

Employee interactions: creating competitive advantages – McKinsey Quarterly – Organization – Strategic Organization

MP3 audio

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