Data is a hot topic – it promises to offer a comprehensive, timely, and objective representation of the world. Yet, despite the hype and significant advances in technology, most companies are struggling to make use of data.
The Data Imperative - How Digitalization is Reshaping Management, Organizing, and Work, published on 29 October 2020 by Oxford University Press, skips the technology-centric or business-model approaches typically used in other books on the subject.
"What I think is really the most important and interesting aspect of digital transformation is the changing nature of management mindsets inside the companies," says Professor Henri Schildt, the author of the book.
According to Schildt, managers in data-centric companies have sought to systematically replace the human-centric routines with automatic processes and algorithmic control. In the book he describes this new mindset in terms of two ideals: digital omniscience and digital omnipotence.
"Digital omniscience is the attempt of companies to capture the world through digital data flows and Artificial Intelligence (AI). Take Facebook, for example. They gather all this data on how you use the service, and they also acquire data streams from their partners. The purpose is to understand what your interests are, and how you would engage with different kinds of content and advertisements," Schildt explains.
"Companies also pursue digital omnipotence, which is the ability to control the world, employees, and user experience through software. In the case of Facebook, they can change in real time the content you see, the advertising you see, all based on how you behave."
The future of work is polarised
The book focuses on management and strategy, organizations, and work.
"In terms of strategy, the old sources of advantage are eroding because of digital capabilities, but new ones are emerging. Uber, for instance, has all the data about the demand for cars and the availability of drivers. They leverage these insights to constantly change the pricing of their service and the compensation they offer to drivers. This creates a more efficient match that benefits both parties. This is an example of how companies can optimise their operations in real time to create an advantage."
The book connects this new data-centric mindset to organizing. Team-based structures are becoming increasingly popular, because they allow companies to develop new processes more flexibly and faster. In terms of culture, companies are becoming much more transparent and open.
"If you look at established, pre-digital companies, they have a prevalent culture of secrecy, whereas almost all digital companies are much more transparent. Just to take one example, it is now a standard in technology companies to make the performance indicators of all employees and managers visible to everyone inside the company."
The book also examines the future of work and how AI is changing the work roles in companies. Here Henri Schildt recognizes clear polarization. While AI-enabled tools improve the productivity of experts, algorithmic management — a new phenomenon — means that human supervisors are being replaced by software systems and mobile apps that control the workers.
"One food delivery company had a system to estimate how long it should take for their employee to deliver the food. If employees consistently exceed the expected delivery time by more than four minutes, the system sends them a message telling, essentially, that they have to drive faster or they will be fired."
Henri Schildt teaches in several Aalto EE and Aalto PRO programs, including Diploma in Artificial Intelligence, Driving Business Growth with Artificial Intelligence, Aalto Financial Executive, and in the Global Strategy module, which is included in the Global Leader program. Link to Professor Henri Schildt’s book ‘The Data Imperative - How Digitalization is Reshaping Management, Organizing, and Work’ on Oxford University Press website.
This article was originally published on Aalto.fi.