In this week’s Economist, Tim Hindle has written a brilliant survey called Knowledge and the Company. I recommend getting a copy.

The way people work has changed dramatically, but the way their companies are organised lags far behind.

The first article, entitled The New Organization, compares the hierarchy loving 1950s suburban American “organization man” of companies like IBM with the “networked person” of today. While organization man protected knowledge as a key to power and avoided decisions as a survival strategy, networked person is the complete opposite.

Networked person, by contrast, takes decisions all the time, guided by the knowledge base she has access to, the corporate culture she has embraced, and the colleagues with whom she is constantly communicating. She interacts with a far greater number of people than her father did.

The Economist goes on to say that the old idea of 6 degrees of separation, which was based on a study done in the 1960s, has changed. Today, it’s no longer 6 degrees. It’s shrunk to 4.8.

The article goes on to reference a McKinsey Quarterly article.

Last year, Lowell Bryan and Claudia Joyce, two of the firm’s consultants, argued that “today’s big companies do very little to enhance the productivity of their professionals. In fact, their vertically oriented organisational structures, retrofitted with ad hoc and matrix overlays, nearly always make professional work more complex and inefficient.” In other words, 21st-century organisations are not fit for 21st-century workers.

This is echoed by Mercer Delta:

[Mercer Delta] recently observed that “the models and frameworks that shaped our leading organisations from the end of the second world war through the conclusion of the cold war are clearly obsolete in this new era of e-business, perpetual innovation and global competition.” The design of today’s complex enterprises, says Mercer Delta, requires an entirely new way of thinking about organisations.

Trust is the driving issue here, and one that you will find I come back to again and again as I talk about implementing new management techniques and new technology to empower innovation creators.

Networked person can add a tremendous amount of value to a large organization. However, to get the most out of her, senior management has to trust her. Senior management has to trust her with key information about the company’s strategies and challenges. Senior management has to trust her to make decisions. Finally, Senior Management has to trust her with all the tools she will need to communicate efficiently with the rest of the company.

That trust issue gets highlighted for me when I suggest to a company that they should give their employees access to enterprise blogs and wikis. I hear things like “What if they write the wrong thing?” If you trust your networked person to make decisions, then, you have to demonstrate that trust by giving her the power to communicate with the whole company, and potentially, with the whole world.

Beyond the use issues of trust and the use of tools like enterprise blogs and wikis, the Economist suggests that the whole approach to management needs to change. Centralized hierarchies do not work. Matrix management doesn’t work.

Instead, the Economist quotes Gerard Fairlough, former CEO of Shell and author of “The Three Ways of Getting Things Done: Hierarchy, Heterarchy and Responsible Autonomy in Organizations“.

Mr Fairtlough’s preferred alternative is something he calls “responsible autonomy”, a form of organisation in which groups of workers decide for themselves what to do, but are accountable for the outcome.

To me, that sounds an just like the Emergent Organizations I talk about in Turning Knowledge Workers into Innovation Creators.

Responsible autonomy is what makes Open Source work. It is the way to get the most out of the bright networked people in your organization.