Why Coase’s Penguin didn’t fly

Not at first sight an obvious entry for inclusion here, but indirectly very relevant to thinking about the impact of change on large organisations. The size and complexity of organisations, it is argued, is a function of the relative costs of internal control and market transactions – whether it’s cheaper to make or to buy. That is in turn in part a function of the cost and availability of information. And so the conclusion is reached that digitally-based organisations will be smaller and fleeter of foot than their predecessors and that large ungainly organisations of the pre-internet era are doomed to extinction, with government in their current form being among those whose demise is inevitable.

In some circles, that conclusion is seen as an obvious one. Farrell’s argument is that something critical is missing from the analysis, the self-interest of individuals, and that when that is factored in, the picture looks very different. That matters not to justify slow change in large organisations, but to explain that power relations are a critical part of understanding the overall situation. And as long as they remain unequal, the pop up employer is likely to remain intriguing at the margins, rather than central to how stuff gets done.

Henry Farrell – Crooked Timber

Future of work

The Pop-Up Employer: Build a Team, Do the Job, Say Goodbye

Organisations exist to get things done. They are necessary because they solve problems ranging from communication and co-ordination to moral hazard. But in principle, if we could find other ways of solving those problems, we wouldn’t need organisations any more – at least of the traditional kind. This article gives some examples of where that is starting to happen, by assembling not just project teams, but project organisations, created to meet a specific need and disbanded as soon as that need is met.

The examples given show that it can work, but they don’t and can’t show that it can scale, and there may be good reasons to think that it can’t. But that doesn’t stop the idea being a good challenge, particularly to those in organisations which don’t tend to think about organisational change in quite those terms.

Noam Scheiber – New York Times