New institutions for a new economic order

Jerry Davis13 June 2015

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What I am going to say

• Society is in the midst of a regime shift in the costs of organizing due to information technologies

• Information enables pervasive markets• Markets undermine institutions (like organizations)• Institutional collapse can be liberating or

immiserating (or both)• Organizational researchers are in the best position to

illuminate a more humane path forward

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A REGIME SHIFT IN THE COSTS OF ORGANIZING

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How to get 250,000 people to show up and protest, 1963

• Eight months• Six major sponsoring

organizations• 200 activists coordinating

transit by bus, train, plan, carpool

• 4000 volunteer marshals on site

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How to get 250,000 people to show up and protest, 2011

• Four weeks• Two online activists• A Facebook page (“We

are all Khaled Said”)• A challenge:

– “January 25 is Police Day and it’s a national holiday… If 100,000 take to the streets, no one can stop us… I wonder if we can??”

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OMT, 1995•5 paper copies of ~300 papers mailed in•Sorted, assigned reviewers, anonymized, mailed out (via USPS) by staff; reviews mailed in, entered into database, evaluated; decisioned, with decision letter and copies of reviews mailed; assigned to panels, scheduled by staff

OMT, 2005•429 papers and symposia uploaded electronically•Each assigned to 3 reviewers, decisioned, assigned to panels, scheduled by one person •[NB: This is why there are more free drinks at AOM these days…]

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How to organize a conference with 100s of papers

Blockbuster, 2005• 83,000 employees• 9000 stores in strip

malls across America

Netflix, 2015•2000 employees•Rents server space from Amazon

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Sony, 2010•10.1% market share for LCD televisions (Q4)•150,000 employees

Vizio, 2010• 27.6% market share for

LCD televisions (Q4)• 196 employees

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It’s a lot cheaper to coordinate the actions of many actors these days

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PS: These days everybody has their own journal

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INFORMATION ENABLES PERVASIVE MARKETS

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Does everything have a price?

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StudentLoan-ActivatedVolatileEmployment™

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Not all transactions require cash

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MARKETS UNDERMINE INSTITUTIONS (LIKE ORGANIZATIONS)

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The number of public corporations in the US has dropped by over half since 1997

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Source: World Bank World Development Indicators 2014

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The “going public” fad of the 1990s is long gone

Source: Jay Ritter, University of Florida

And the companies going public today ignore basic standards of corporate governance

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Some companies going public since 2010 with dual-class voting rights (the “Zuckerberg grip”)

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Ironwood Pharmaceuticals Inc Groupon Constellium NV

Crude Carriers Corp Manning & Napier RCS Capital Corp

MaxLinear Inc Zynga Coty Inc

First Interstate BancSystem In Renewable Energy Group Truett-Hurst Inc

DynaVox Inc Yelp Luxoft Holding Inc

PAA Natural Gas Storage LP Vantiv Silvercrest Asset Management

S&W Seed Co Digital Cinema Destinations Noodles & Co

Niska Gas Storage Partners LLC Edgen Group Inc NRG Yield Inc

Oxford Resource Partners LP The Carlyle Group LP UCP Inc

Ameresco Inc Tilly's Inc Jones Energy Inc

Green Dot Corp Facebook Inc Intrexon Corp

Chesapeake Midstream Ptrs LP KAYAK Software Corp Pattern Energy Group

Rhino Resource Partners LP Globus Medical Inc Premier Inc

Booz Allen Hamilton Holding Co Manchester United PLC RingCentral

FXCM Inc Workday Inc RE/MAX Holdings

Swift Transportation Co Seadrill Partners LLC LDR Holding

Adecoagro SA The WhiteWave Foods Co Veeva Systems

MagnaChip Semiconductor Restoration Hardware Hldg Inc JGWPT Holdings LLC

Apollo Global Management PBF Energy Inc Zulily

GNC Holdings Zoetis Inc AMC Entertainment Holdings

TMS International Health Ins Innovations Inc EP Energy Corp

Arcos Dorados Holdings Artisan Partners Asset Mgmt In Malibu Boats

Box Ships Inc Taylor Morrison Home Corp uniQure BV

Air Lease Corp Fairway Group Holdings Corp Ladder Capital

LinkedIn Corp Blackhawk Network Holdings Inc Lumenis Ltd

Yandex NV PennyMac Finl Svcs Inc Castlight Health Inc

KiOR William Lyon Homes Inc Phibro Animal Health Corp

Zillow Tableau Software Inc Moelis & Co LLC

Source: Jay Ritter, University of Florida

Nobody actually works at these new companies, and most will not last long

Company Employees (most recent)

Zynga 1974

LinkedIn 6897

Groupon 3525 (North America)

Zillow 1215

Yelp 2711

Facebook 9199

Kayak 205

Tableau 1947

Zulily 2907

Box 1158

TOTAL 31,738

23Circuit City employees fired in January 2009: 34,000

Source: 10-K statements via EDGAR

Meanwhile, corporations in every industry are de-composing back into a primordial soup

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Corporations have no clue what to do with their money

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How are corporations like elders giving their money away to their grandchildren?

Meanwhile, back in retail and food service…

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Organization design is now a sub-field of computer science

IF COASE IS RIGHT, WHAT WOULD HAPPEN TO ORGANIZATIONS IF THERE WERE READY PRICES FOR ALL THE INPUTS?

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The webpage enterprise

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Yep, The Matrix was a documentary

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How-to guide for an instant startup, ca. 2015

• Product: iPhone “remote drone assassin”

• Target market: neo-mercenary firms

1. Rent a desk in a shared office

2. Incorporate online in Liberia for $713.50

3. Crowdsource the funding at Kickstarter

4. Hire programmers for the app at oDesk

5. Find a drone manufacturer at Alibaba.com

6. Set up a payment system at Square

7. Get it shipped from the dock to our customers

BUT WHAT IF I NEED ACTUAL PEOPLE TO SHOW UP?

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After Nikefication: Uberfication

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As of Dec. 2014, Uber has 2000 employees and 162,000 “driver-partners” in the US

Source: Hall & Krueger, 2015

In contrast, GM has 120,000 North American workers left

Source: Moody’s, EDGAR, Compustat

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What we think corporations are: What corporations really are:

INSTITUTIONAL COLLAPSE CAN BE LIBERATING OR IMMISERATING

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When Royston was a lad…

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Goodbye, corporations; hello, precariat

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1950 1960 1970 1980 1990 2000 2010

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Employment Concentration Income Inequality

r = -.89

Some precedents

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1815(ish) 1915(ish) 2015(ish)

ORGANIZATIONAL RESEARCHERS ARE IN THE BEST POSITION TO ILLUMINATE A MORE HUMANE PATH FORWARD

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Possible paths going forward

• Dystopian cyber-Fordism: the global online assembly line (brought to you by Amazon’s Mturk™)

• Locavore wiki-everything (in which one is a genetic engineer in the morning, an urban fish farmer in the afternoon, and a mash-up DJ in the evening)

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Reasons for optimism

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OMT is an intellectual crossroads

Nodes=biggest divisions, size scaled to membership

Ties=500+ shared members

Strategy

Micro

Joint division memberships among the largest AOM divisions

OMT

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Organization theory is an estuary

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• The categories we use to apprehend the economic world (“corporation,” “employee”) no longer fit the world we live in

• Organization theory offers the best path for comprehending and acting on our emerging system

• But: we have work to do

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