11. SUPERVISION IN THE VIRTUAL CORPORATION. As vast amounts of information travel at the speed of light, success in organizations of any kind depends on the survival of the swiftest, the most adaptive supervisors-leaders. Industrial age organizations and traditional management cannot always mobilize resources, supervisors, and employees quickly enough to meet the demands of the fleeting market. One solution is the establishment of the "Virtual Corporation." But what is a virtual corporation? Virtual corporations (VC) are strategic business alliances that let firms instantly and dramatically expand their capabilities by pooling talent, expertise, and financial backing to complete a specific project. According to Barnette (1993) "virtual corporations are blurring the traditional boundaries between companies, even creating situations where competitors work side-by-side as temporary partners. They are not only revolutionizing the business world, but also forming the management model of the 21st Century." Barnette (1993) cites a number of examples of how this takes place. Borland Software and WordPerfect Corporation's co-created a bundled word processor, spreadsheet, database program. Apple Computer joined forces in 1991 with the Sony Corp. to produce the line of PowerBook notebooks, marrying Apple's user-friendly software with Sony's manufacturing and miniaturization expertise. Apple, IBM, and Motorola linked resources to develop an operating system and microprocessor for a new generation of computers. When problems arise in the virtual corporation, the mobilization of "people power" will be simultaneously swift and unique. Laurie Coots, senior vice president and director of business administration and development at a leading advertising agency in Los Angeles, said, "It's going to be about asking, 'What needs to happen in this particular situation, who are the five best people on the face of the earth to make that happen, and how do we bring them together to do it?'" (Barnette, 1993, p. 36). John Stygles, a business development and research specialist in Natick, Massachusetts, worked for several virtual corporations that resembled the old "Mission:Impossible" television show. "When they had an assignment, they pulled together their best people to handle it. When it was over, they all went back to their personal lives. So too with us. We pulled together to achieve a certain goal. When it was accomplished, we all went back to our regular lives. The structure of the virtual corporation is similar to that of a 'regular' corporation while the assignment is on. Loyalty to the goal or objective is what binds us together, not necessarily loyalty to a company" (Barnette, 1993). Phillip Dyer, a project management professional in Atlanta, Georgia, founded Dyer Associates in 1990 as one employee outfit modeled along the lines of a virtual corporation. "The 'associates' part was to be a loosely connected network of pros who could offer more depth and breadth to clients than any one person. Maybe that's just old-fashioned networking, but now it's becoming recognized as a more 'legitimate' way of doing business" (Barnette, 1993). The major issue in a virtual corporation is trust. People are often in a hurry to start with responsibilities and ownership issues. In order to make the relationships work in a virtual corporation, trust must be established first and foremost. One of the concerns of VC members, since they do not work under one roof, rarely are in each others' presence except when an objective is being met, and lead regular lives away from the corporation, is who owns the property rights to information generated by the group? This again involves trust, and until there is agreement on who, what, and how, problems can arise among the participants in the virtual corporation. The VC concept is new and exciting. Since there is no truly formal organizational structure, the question of who supervises whom arises. Certainly, in such a loosely knit gathering of experts, this issue needs addressed. Even after trust is established, there will need to be some semblance of leadership. Given the previous discussion in this paper regarding the nature of supervision, the virtual corporation's supervision must assume a Y-Theory management protocol. Each partner in the enterprise working on achieving the immediate objective for which the virtual corporation was formed needs to accept that the others in the corporation are working diligently on their particular part of the project. Without this trust, without this acceptance of the Y-Theory, the virtual corporation is doomed to failure. Computer information is becoming more powerful as new technology is being developed. People are relying more and more on this type of information. In the pre-computer days, an employee would have to use their creativity, imagination, education, etc. to solve a problem. Now, it seems that computers are taking away much of that innovative thinking. Davidow and Malone (1991), in their seminal text, The Virtual Corporation, suggested that it is a meshing of the two (computer factor and human factor) that will make the VC successful. Will employees become lazy in their thinking and not be as creative and innovative knowing or believing that information gathered through computers will solve their organizational decisions and problems? I think not. In fact, computers will only enhance the speed and productivity at which employees can complete the mundane tasks related to their jobs. Even in the treatment setting, computers now are being used to assess client's needs, write comprehensive and monthly treatment plans, quarterly progress reports, aftercare plans, maintain sophisticated client information in databases, wed human resources and training information to compile a complete employee work record, and communicate via e-mail. There is no limit to the applications of computers in the VC and when the next round of CPU's get cheap and voice recognition gets more popular, the next quantum leap (no relation to the TV show) in human and computer interaction will take place. Keyboards limit the number of people willing to get a computer and manipulate the information for themselves. In our agency, those who can type are not afraid of interacting with the new technology. Those who cannot use the keyboard may find that voice recognition will certainly make users out of avoiders. Imagine this for a moment. The counselor enters the office and says, "good morning Casper, what do we need to accomplish today?" The computer (Casper) responds, "the progress report on Fred Jones is due, and you have a treatment planning meeting at 10 am. You also need to finish the aftercare plan for Keith Hyatt. It's also your wife's birthday on Friday so get her a present." "Good", the human said. "give me the latest assessment summaries from the network." The computer then begins a narrated version of the assessment summaries. After listening to the summaries for a few moments, the human says, "print a copy of this summary for me." The computer says, "printing." Is there some fear that computers will replace humans? I believe quite the reverse is true. Computers work for humans, not the other way around. As computers do more and more of the hack work, we get freed up to do the innovative work. Look at the businessman who gets to understand spreadsheets and the use of accounting software. Suddenly he can explore the parameters of his business during the time he used to spend just adding up the numbers. The problem is we are not moving up the level of human education and development at the same pace as we are gearing up the performance and capabilities of computers. The VC is predicated upon the new technology and the computer is at the hub of this communication network. It's not that humans will be less creative as a whole; it's that a divide is opening up between the advanced 'know how workers' (who will thrive in this future world) and the people who traditionally have relied on blue collar jobs (of which there will be less and less, and where there will be greater and greater volatility). We need to put the effort now into human education and development that we used to put into fighting wars and building factories. And let's not sneer at being lazy. Laziness has been responsible for more good inventions than anything I know. Of course, not the kind of laziness that involves stupor but lying in bed creating things is not so lazy. Many extremely creative people get the most work done while lazily meditating. Napoleon and Einstein were two such individuals. Time and space are two parameters that are being shrunk significantly in the Information Age. Davidow & Malone (1991) explored the value of time and how important it is when meeting a customer's need. They discussed how the VC concept made Wal-Mart such a successful company and maintained that Walton operated in a virtual setting. He put together his team of people focusing them on the areas in which they had expertise. He felt that they would be successful and make him successful in the areas that they knew well. His number one priority was meeting his customer's needs with enough inventory to satisfy customers but not be overstocked. He had a real thing about timing - when to open a new store and where. He felt the timing and place was extremely important for the success of that store. Today, Wal-Mart is the leader in discount stores. In the years to come, incremental differences in an organization's ability to acquire, distribute, store, analyze, and invoke actions based on information will determine the winners and losers in the battle for customers regardless of what that organization is marketing, products or human services. The authors stated, "the success of a virtual corporation will depend on its ability to gather and integrate a massive flow of information throughout its organizational components and intelligently act upon that information" (p. 123). Information is the most valuable resource of the VC - even more than in a traditional corporation because it's really the only glue that binds the organization together. The old information flow mechanisms (eg. conversations at the water cooler, over the cubicle wall, formal meetings, informal hallway rendezvous, the tone of voice, the facial expression...) will no longer apply, so a fragment of information (possibly THE pivotal fragment) could easily fall through the cracks if it's not captured, analyzed, stored and distributed optimally. We carry a tremendous amount of information about people we know personally - not just appearance, but what they know, so we know who to go to for an answer. What is the VC equivalent? It's only the fragile web of what we can glean from messages and resumes. The real key is to weave the change into the fabric of the preexisting organization. That's where VC's enter the picture IF the participants have the HUMAN skills of rapidly creating and recreating temporary organizations. The ultimate goal of the VC is to create quality while limiting cost. Philip Crosby (1991), an early observer of VC, "estimated that the cost of poor quality could be as great as 20% and that, with processes that eliminate defects and wastes, most of that money could be saved." Crosby came up with four commandments of product quality: 1. Definition - Quality is the performance to requirements 2. System - The prevention of defects 3. Performance standard - Zero defects 4. Measurements - The price of nonconformance to perfect quality" The following TEN commandments of Quality Improvement govern the VC: 1. Never stop improving. There is no such thing as perfect quality. 2. Quality is everybody's business, from janitor to board chair. 3. Keep your eyes, ears and nose open ... the best quality ideas are only as good as the ability of your senses to detect them. 4. Develop a detailed implementation plan. Talking about quality is not quality. 5. Foster cooperation ... turf is the worst enemy of quality. 6. Dissect every job. Discarding the unnecessary is as relevant to quality as is measuring the necessary. 7. Control ALL processes, not only production processes. The organization must know all the factors that impact quality lest it repair the wrong ones when things go badly. 8. Make extraordinary efforts when things go wrong. Your attitude and level of effort during difficult times are the ultimate measures of quality. 9. Think beyond improving profits. The benefits of quality are too important to be reduced to mere fiscal measures. 10. Be patient. Do not look for the benefits of this quarter's quality improvements only in the next quarter (Davidow & Malone, 1991). I believe EVERYONE in a company is responsible for quality. Not just quality of the product, but quality of customer support, etc. Nothing frustrates me more than to be enjoying a new product (such as software) but need some additional information and get jerked around by the customer support people. On the flip side, nothing turns me off as a buyer faster than to call a marketing department to get additional information on something and getting jerked around there. I forget the product no matter how good it sounds. I'm also what Faith Popcorn has called an "attack consumer". If I get jerked around too bad, I start chewing my way up the chain of command until I'm satisfied. So most corporate quality programs (there are shining exceptions) are doomed from the beginning by a power hierarchy which cannot face its own quality nakedness. It is easier for an entrenched corporate management to allow an IBM to fail, than it is for them to admit their own culpability on the way to a recovery. This is not only an issue of quality, but may possibly be a law of nature, like entropy, which can be called the Law of Evolutionary Thickets. This means that the more an organization (or an organism) evolves by way of specialization, the more it becomes hemmed in by constraints which hamper both its ability to function AND its ability to change. The cheetah is a rather beautiful and tragic example of this happening in nature. However, in organizational life there is no excuse since organizations are human endeavors and people are endowed with the analytical and cognitive skills which obligate them as managers to manage and escape from, rather than drift into and succumb to the thicket of impenetrable lethargy. TQM applied to the virtual corporation is listening to the customer and implementing the desires of the customer into the design, manufacture and distribution of the product or service. What makes it "virtual" is the way technology is used to collect and analyze the voice of the consumers. Davidow & Malone (1991) discussed the future relationship between producers and customers and how it will affect the virtual concept. Here are some highlighted points: 1. The nature of new business relationships will result in stronger and more enduring ties based on mutual destiny shared by both suppliers and customers. 2. The VC may appear amorphous and in perpetual flux but will be nestled within a tight network of relationships. 3. Common future and mutual support will be highlights of the relationship between producers and customers 4. Customers will depend on producers having more invested in the relationship - they will share business secrets, train them to their needs, integrate them into their design process (p. 152). The question now is will this change of relationship happening now occur quickly enough for the organizations to more freely accept the concept of the VC and virtual teams? I believe Davidow & Malone are being very idealistic in their predictions. I hope they are right. The American business paradigm has been based on competition; the above characteristics assume a more cooperative model. That's a major shift in thinking for our economic environment (competition for capital) and our culture. I believe the competitive model business in which we currently operate deters the formation of the VC, especially when dealing with individuals because our society tends to value the individual and measures him/her competitively in relation to his/her peers. We learn that model from our very first days in school. The problems associated with forming VCs, reflect difficulties over managing individuals and their unique needs for money, security, recognition, power, and self-actualization. Can services be seen as virtual items? Does it get confusing when we begin talking about a virtual service? Products are easy to define because they are tangible. Services are not so. It seems that the service industry, like the alcohol and drug treatment field that I am in, may have a more difficult time adapting to the virtual concept and idea than the product industry. As the shift from the industrial age to the information age takes place, there will be a shift in the way capital and labor interact. In the Post Capitalist Society, Drucker (1993) posits that we are making a transition from a capitalist economy, where capital and labor are the commodities of trade, to an economy where the application of knowledge and ideas are paramount. Alvin Toffler (1992) makes a similar prediction in his book "Powershift." There is no question that rules governing supervisor/employee relationships are shifting rapidly in the face of human capital, which has spawned a new term... the "preferred employer." More and more we have to manage people as if they're volunteers...another Drucker idea. Davidow & Malone (1991) stated, "in the virtual corporation, where almost every employee is to one degree or another a leader, the requirements for belief and trust are greater than ever before" (p. 183). The authors further suggested that not only does the relationship of line staff and middle managements' roles change with the organization in a VC, but also the CEO. They stated the following characteristics that a CEO in a VC should have: 1. "The CEO must define the corporate vision and skillfully convey it to all employees at every level" 2. "The CEO must symbolize the company" 3. "The CEO must be the company's premier generalist" 4. "The CEO must trust the employees of his firm" It appears that CEO's will have to change a lot in their management style. The CEO will need to become more involved in every aspect of their company, as well as, more involved with their employees. As organizations change their way of doing business to the virtual corporation concept, what happens to business management courses? Will a whole new curriculum have to be developed to include this new way of thinking and doing business? Davidow & Malone stated, "middle management's function has been to serve as an information channel through which top managers can view events and to relay orders down to the individuals doing the work. These functions have become unnecessary because computer networks can carry much of the information about the status of operations more efficiently and effectively than can people" (p. 183). Eventually, I believe the whole concept of layered management, i.e. upper, middle, and then the "peons" will disappear. In many ways it's a featherbedding-based system used to award cronies and good ol' boys rather than competence. Business will get more like sports, where the individual either contributes to the team or he or she does not wear the uniform. Information conduit is only one of the roles that a supervisor plays. If one accepts the notion that the majority of people perform to less than their capacity, then it makes sense that another role of a supervisor is to facilitate high-performance on the part of the subordinates. Motivating individual employees will become the primary responsibility of supervisors. Middle management has made itself an endangered species because it has not adequately played the coach role. It has failed to obtain high performance from those it supervises? One of the major criticisms of middle managers under the traditional organizational structure is that they "manage upward" and spend most of their energies being corporate politicians rather than carrying out their duty to develop those they supervise. This is a major waste of creative energy and needs to change if there is hope for the present industrial-style managed organizations to successfully evolve into an information-age system. There will always be "human factor" problems. At the working level, supervisors and "lower" managers deal with people directly in groups of 7-20 or so depending on the complexities of the work place be it physical or virtual. These team leaders facilitate brainstorming and coordinate the immediate problems of the work space like scheduling, resolving conflicts of personality, and performance issues. But there are problems between work groups that need resolution and the task of generating information still requires humans. Granted, the computer can relay directives and report meeting results between senior management and work groups and workers and computers can do some pretty remarkable things with raw (reliable) data, but there is still the question of determining what data should be collected, which process to apply to distill it to an informative level, and how to insure its validity. These tasks can be delegated to "middle managers." These challenges lend themselves to "ad-hoc" assignments of "specialists" or "expediters" who apply the human touch to those situations that need them and solve the one-time problems like how to distill collected data into usable information. These "staff" functions required lots of people in the absence of mechanical information processors, but some of the tasks will never be replaced (automated). In the near future, organizations will become more effective by moving toward small groups of autonomous workers. Large companies are fragmenting and there is less and less need for large sets of workers doing similar jobs. The function of middle managers primarily carrying through the initiatives and policies laid down by senior executives is certainly doomed. What is needed now is initiative and policy making 'on the hoof' by ALL managers - indeed in many companies, by all employees. Read Tom Peters on 'empowerment'. If middle managers do not behave like executives - make important decisions all the time - their role will eventually become obsolete. Management and supervision will change in the virtual corporation concept. "The most fundamental transition will be the shift that management will have to make from directing action to ensuring the smooth functioning of processes. A second change will occur in the very structure of management itself. It will become less hierarchical and in the process much of middle management will vanish" (Davidow & Malone, 1991, p. 194). I agree with this statement. There will be a difference in management today vs management in the virtual concept. The mind set of managers will change. Supervisors will need to be very flexible. They will need to expand their thinking, do more brainstorming, and basically become more communicative. Nagler & Hibino (1992) suggested some unique approaches to solving problems, and generating ideas that may provide those organizations contemplating the transition to a VC to consider. The main points described by the authors are: The Purposes Principle: Focusing on purposes helps strip away nonessential aspects to avoid working on the wrong problem. The Solution-After-Next Principle: Innovation can be stimulated and solutions made more effective by working backward from an ideal solution. The Systems Principle: Every problem is part of a larger system. Understanding the elements and dimensions of a system matrix lets you determine in advance the complexities you must incorporate in the implementation of the solution. The Limited Information Principle: Knowing too much about a problem initially can prevent you from seeing some excellent alternative solutions. The People Design Principle: The people who will carry out and use a solution must work together in developing the solution with Breakthrough Thinking. The proposed solution should include only the minimal, critical details, so that the users of the solution can have some flexibility in applying it. The Betterment Timeline Principle: A sequence of purpose-directed solutions is a bridge to a better future. A philosophy professors once asked his students to think about the differences in efficiency between Democracy and Totalitarianism or Dictatorship. His point was that our society's way of conducting government business is woefully inefficient compared to the ability of other systems to decide and take action. Yet over the long run, it is our society that has produced better results for itself both in terms of standard of living and educated people. Why is it that in spite of our inefficiencies, or because of them, we have been successful? Our planned inefficiencies give us an opportunity to think, to hear and explore alternatives, to be open to ideas that are quantum levels better than our old ways. I believe the same is true with organizations. The old-style hierarchical structure parallels totalitarianism. Frankly, it can be awesomely efficient. Eventually, it stifles creativity and lateral thinking (deBono, 1970). But the new-style structure is a matrix. Supervisors cannot rely on automatic obedience to implement their will, but must influence and discuss and be open to compromise and new ideas. As with a free and open society, I believe that the price of a little inefficiency will be more than compensated by the great things that can be achieved by free and empowered work force. The main benefit of democracy is that it allows rich variety and the opportunity to make plenty of 'mistakes' (that's how we learn) and plenty of novelty (that's how we progress). The rigid organization (nationally or in a company) stifles initiative and assumes that the "central office" is right. But in a world of chaos, how can it be right more than (at best) 50% of the time? I believe the most difficult issue for senior managers and supervisors will be learning to influence without having to control. Most people think that this is impossible to do. A great deal of time will be spent with trainers, facilitators, and counselors helping supervisors with this issue. The biggest issue for senior supervisors will be in making some key shifts: 1. From management to leadership; 2. From delegating to empowering; 3. From criticizing to coaching; 4. From making excuses to being accountable. In order for the VC to work, everyone in the virtual corporation must clearly understand, on a very personal level, what the vision of the organization is. All the goal setting and objective discussion in the world does not substitute for people really internalizing the organization's vision. When people get it - there is magic. When they don't, there is confusion at best and destruction at worst. Some companies that have or are using work teams as internal VC components have produced some interesting results. Here are a few examples: 1. So successful have teamwork programs been at the Defense System and Electronics Group at Texas Instruments that management announced the goal of having every employee in a self-directed work team by the end of 1992. 2. A Federal Express work team identified a billing problem that was costing the company $2.1 million per year. 3. Aetna Life & Casualty reduced the ratio of middle managers at its home office from 1:7 to 1:20 while still improving customer service. 4. Work teams at Johnsonville Foods in Wisconsin convinced their CEO to make a major plant expansion, and the result has been a 50% improvement in productivity." Johnston and Packer (1987) suggested that the baby boomers group will be the last group in our lifetime that will include the stereotype of the average American worker which is, "white and male". They stated, "among the twenty-five million new workers in this decade, only 15% will fit this profile. Forty two percent will be women, a group that historically has not migrated to technical careers; 20% will be native (nonimmigrant American) nonwhite men and women; and 22% will immigrants, many of whom will have to learn English" (p. 123). As a marketing tactic, it is the ultimate "have it your way" campaign. In our business we have won new customers by responding to their needs. When the issue of how to treat "drug sellers" arose, our agency created a special "drug sellers" program that employed a relatively unknown concept called Criminal Personality Theory pioneered by Yochelson and Samenow (1970). Responding to a probation request for an innovative program to treat juvenile delinquents who were not drug sellers or chemically abusive or dependent, a Youth Leadership Program was researched and approved for inception. Combining the best of the military, boot camp model, education, and the Outward Bound Wilderness Experience, this program will serve a growing niche of delinquents in the juvenile justice system. Strategic marketing will not be part of the virtual corporation. In its place will become, "marketing of value". More emphasis will be placed on the relationship to the customer - basically - keeping them happy. Davidow and Malone (1991) suggested that reliability, creditability and trust are key factors in customer relationships. They stated, "the task of the virtual corporation is to develop relationships with customers to enable them to obtain the maximum value from the product they have purchased" (p. 189). In order to evolve into a VC, organizations will need to transform their already established management and supervision practices into a continuing support system. The management of these companies will need to change their way of thinking, managing, and training their leadership. Change will not happen overnight, but I believe, if organizations are serious about developing into a virtual corporation, they will need to start now to change. The information age arrived five years ago in 1987.