Networks and the Organization: An Historical Context

The ability of people and organizations to connect with each other and to form networks moved into hyper-drive with the rise of the über network of our time, the Internet. Peter Drucker, one of the leading management thinkers of the last fifty years, highlighted the importance of the Internet by putting it into historical context. 

He explained that during the first sixty years after the invention of the printing press in 1455, the technology was used to print titles that had been reproduced by hand for centuries, mostly religious tracts and writings from ancient Rome and Greece. The new technology didn’t change what was done, just how it was done. Then Luther translated the bible into German. Machiavelli wrote The Prince. All of a sudden, books were available in local languages. They made knowledge accessible to a much greater audience. The secular book (and later secular theater too) was born and changed society in so many ways, leading to new institutions such as the Jesuits, the first modern navy, and the nation state.

The industrial revolution followed a similar pattern. For the first forty or so years after the commercialization of the steam engine, it was used to perform tasks that had been done before by hand: spinning cotton, metalworking, papermaking and leather tanning, to name a few. The technology provided huge efficiencies and led to incredible growth. But, Drucker asserts, these changes were nothing when compared with the invention of the railroad locomotive. All of a sudden, the technology of the steam engine created a new world. It tied together nations. It facilitated an unprecedented level of commerce. The world grew instantly smaller and more connected. This was the breakthrough that opened the floodgates to a wave of innovations as diverse as telegraphs, photography, vaccinations, and sewers. New institutions arose such as postal services, daily newspapers, and commercial banking.

Drucker made the case that the information revolution is following this historical pattern. The first computers were invented in the middle of the 20th century and caused unprecedented developments. Work and information of all kinds were automated. But it was mainly work that had previously been done by hand like the creation of documents, financial accounting, the design of buildings. But the Internet was a revolutionary application of the computer. As with the railroad engine, the Internet instantly made the world smaller. It made connections and communication instant. And it will change our world as dramatically as the printing press and the railroad did in prior eras.

The floodgates are open. In the last few years, the Internet has disrupted the very publishing media launched in the 15th century. We have seen the rise of social media that is changing how people communicate on a personal and professional level. This new form of two-way communication is changing how organizations design products, market, sell, and manage their businesses. The innovation has just begun. And the driver is the rise of the networked world.

The Internet is essentially an open network accessible by anyone and everyone. In the space of a few years, it has connected the globe in a way that the railroads and cars and planes invented in the industrial era never could. Today, it is possible to fly anywhere in the world. But it still takes time and money. Moving things is still subject to physical limitations.

But moving information is essentially free for an individual with an Internet connection and still relatively cheap for organizations with larger amounts of data. There are still physical limitations: much of the Internet is still a physical thing—it is made up of millions of computers connected through physical cables to millions of routers. But it is a distributed model that is deliberately flexible.

The Internet was originally designed this way as a protection against attack of U.S. defenses. The idea was that if one section of the Internet were destroyed or disabled, the system could still function. It is the genius of it that despite the influence of corporations, governments and interest groups of all kinds, the Internet remains essentially an open system. There are obviously exceptions and threats to this but, up to now, the design has kept any one group from controlling the Internet. And it has created a whole new set of opportunities that are still being discovered and invented.

Understanding this context is important to understanding what is happening at an organizational level. More on networks and the organization tomorrow…

Adapted from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization by Mary Adams and Michael Oleksak.