This is a synopsis of a presentation given at the International Virtual Company Conference (IVCC '99), Charleston, WV, May 1999.
Access to global markets and resources and improvements in information and communications technologies are making virtualization a reality for many individuals, teams and organizations. However,
working effectively in these new arrangements requires new strategies and management styles. This presentation examines the principles and practice of virtual organizations, and offers a set of
guidelines based on the presenter’s experience of working in this mode for over a decade.
Why Go Virtual?
Virtualization needs to be considered in the wider environmental context of globalization, knowledge-based economies and technology. In order to remain competitive, particularly in global markets,
collaboration is a necessity. Yet geographic separation means that unless work can be highly pre-specified, then extensive communication is necessary. Virtualization allows you do this through
technology rather than travel. The Internet, in particular, is revolutionizing the way we trade and work.
Dimensions of Virtuality
There are three dimensions that offer tremendous scope for innovation in reaching markets and in working methods. These are space, time and structure. Within each dimension there are many ways to
reconfigure operations (see table).
Many are opposites. For example, in the space dimension, you may decide to disperse your operations to be closer to your customers, or you may decide to centralize customer services into a single
call centre. The number of variations and permutations gives tremendous scope for innovation.
25 Principles of Proven Practice
These principles were first developed in the late 1980s when I was part of a self-managed team in Digital Equipment Corporation (DEC) that was investigating the impact of technology on markets and
ways of working. Our own team was dispersed in three buildings in the Thames Valley area (England’s high tech corridor) and we worked on joint projects with other teams in Boston and Geneva, as
well as universities. We exploited our own technology - we had electronic mail from 1981 and computer conferencing from about 1983! But, we found that to be successful we needed new styles of working
and management. In short, human factors were key. Thus two key people on my core team were a human resources specialist and a skilled facilitator. I jointly reported to the Director of Strategy and
the Director of Human Resources.
The principles have evolved over time to take account of increasing virtuality and the growing importance of knowledge (previously knowledge was covered by one principle in the process group).
Although predominantly focusing on teams, they apply equally to virtual corporations. After all, a virtual team is simply a microcosm of a virtual corporation; furthermore, handling politics within
an organization is often even harder than that across organizations!
The full description of one of the earlier versions of these principles is in Lloyd and Boyle (1998), while the principles presented here are more fully explained in chapter 6
of Skyrme (1999).
I pick European Telework Development (ETD) as an example since the focus of this three year project is telework (telecommuting) in its wider context of
electronic commerce and organizational collaboration, including virtual organizations. It runs itself as a virtual organization, with partners from six countries and now has contributors and
subcontractors from over 30 countries around the world.
Challenges and Success Factors
The major challenge of virtualization is that you miss the face-to-face interaction, which accounts for so much knowledge exchange. On the other hand you can have more communications with a much
wider network of experts. Essentially you have to manage a balancing act of physical vs. virtual so as to get the best of both worlds.
Lloyd, Peter and Boyle, Paula eds. (1998), Web-Weaving, Butterworth-Heinemann.
Skyrme, David J. (1999), Knowledge Networking: Creating the Collaborative Enterprise, Butterworth-Heinemann.
An overview of the principles is in I3 UPDATE No. 11.
David Skyrme Associates provides consultancy services and workshops that address the
topics covered in this presentation.