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The Future of Work
How the New Order of Business
Will Shape Your Organization,
Your Management Style, and Your Life
Thomas W. Malone
Harvard Business School Press
Boston, Massachusetts
Copyright © 2004 Thomas W. Malone
All rights reserved
Printed in the United States of America
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Library of Congress Cataloging-in-Publication Data
Malone, Thomas W.
The future of work : how the new order of business will shape your organization,
your management style, and your life / Thomas W. Malone.
ISBN 1-59139-125-3 (alk. paper)
p. cm.
1. Industrial management. 2. Labor. I. Title.
HD31.M2867 2003
The paper used in this publication meets the requirements of the American National
Standard for Permanence of Paper for Publications and Documents in Libraries and
Archives Z39.48-1992.
For Robert, for Laura,
and especially for Joan
Preface vii
Acknowledgments xi
Part I: The Coming Revolution
1. A Time to Choose 3
2. An Amazing Pattern 15
3. The Amazing Pattern in Business 27
Part II: How Many People Can Fit at the Center of an Organization?
4. Loosening the Hierarchy 41
5. Harnessing Democracy 55
6. Unleashing Markets 73
7. Bringing Markets Inside 91
8. When Should You Decentralize? 111
Part III: From Command-and-Control to Coordinate-and-Cultivate
9. Coordinating Activities 129
10. Cultivating People 153
11. Putting Human Values at the Center of Business 169
Epilogue 183
Appendix: How Do Communication
Costs Affect Centralization? A Simple Model 187
Notes 193
Index 215
About the Author 227
The Coming Revolution
A Time to Choose
IMAGINE IT’S 1795, and you’re a shopkeeper somewhere in Spain.
You no longer believe, as the ancient Egyptians did, that your king is
literally a god living on earth. But you still believe that he has a divine
right to rule over you. You can’t imagine any country being governed
well without a king who is responsible for the protection and control
of his subjects.
You have heard of the strange rebellion in North America in which
the British colonists claimed that they could govern themselves with-
out any king at all. You’ve also heard about the recent bloodshed in
France that ended with a group of so-called revolutionaries killing their
king, replacing the government, and destroying, almost overnight, so
many good things. These events seem to you like profound mistakes,
foolhardy experiments that are bound to fail.
It just doesn’t make sense to say—as the democratic revolutionaries
do—that people can govern themselves. That’s a contradiction in
terms, like saying that children could raise themselves or farm animals
could run a farm. People can try it, you think, but it certainly couldn’t
work as well as having a wise and just king.
Well, of course, today we know the outcome of those strange demo-
cratic experiments. They worked. Really well. Over the past two hun-
dred years, democratic ideas have triumphed in Europe, America, and
many other parts of the world. While democratic governments have
not been established everywhere, their economic, political, and mili-
tary successes have far surpassed what almost anyone would have
predicted in the late 1700s. And, perhaps more important, our whole
way of thinking about society—the role of government, the rights of
people, the importance of public opinion—has profoundly changed,
even in countries that don’t themselves have democratic governments.
Now, we are in the early stages of another revolution—a revolution
in business—that may ultimately be as profound as the democratic
revolution in government. The new revolution promises to lead to a
further transformation in our thinking about control: Where does
power come from? Who should wield it? Who is responsible? Once
again, the result will be a world in which people have more freedom. A
world in which power and control in business are spread more widely
than our industrial-age ancestors would have ever thought possible. A
world in which more and more people are at the center of their own
New information technologies make this revolution possible. Dis-
persed physically but connected by technology, workers are now able,
on a scale never before even imaginable, to make their own decisions
using information gathered from many other people and places. The
real impetus for the transformation in business will not come from the
new technologies, however. It will come from our own innate desires—
for economic efficiency and flexibility, certainly, but also for noneco-
nomic goals like freedom, personal satisfaction, and fulfillment.
And that leads to one of the main messages of this book: For the
first time in history, technologies allow us to gain the economic bene-
fits of large organizations, like economies of scale and knowledge, with-
out giving up the human benefits of small ones, like freedom, creativ-
ity, motivation, and flexibility.
This revolution has already begun. We saw its harbingers in the
final decades of the twentieth century in talk about empowering work-
ers, outsourcing almost everything, and creating networked, or virtual,
corporations. We saw it in the premature—but not entirely unwar-
ranted—enthusiasm for new ways of doing business in the dot-com
bubble and in the slogan “The Internet changes everything.” We see it
all around us today in the increasing choices people have in how and
where they work.
But, like the loyal subjects of Spain’s King Carlos IV in 1795, most
of us don’t yet understand how far-reaching these changes may even-
tually be. We still assume, without even really thinking about it, that
someone needs to be responsible and accountable in business. We
assume that the managers of well-run companies should always be in
The Coming Revolution
control of what’s happening. We assume that power should always
come from the top of an organization and be delegated down.
This book is about the underlying technological and economic
forces that are making such beliefs less useful and less valid. It’s about
the new ways of organizing work that are becoming possible: what
they will look like, where they will happen, where they won’t. It’s
about broadening your view of management, stretching the limits of
what you think is possible. And it’s about the choices these changes
give you—and all of us—to shape a new world.
What Will These New Ways of Organizing Work Look Like?
There are many buzzwords for describing the kinds of organizations
this revolution will make more common. Self-organizing, self-managed,
empowered, emergent, democratic, participative, people-centered, swarm-
ing, and peer-to-peer are just a few of them.1The word I’ll use most
often in this book to encapsulate all these different terms is a simple
and timeless one: decentralized.
If you are like many people in business today, when you hear the
word decentralized, you assume that it just means delegating more
power to lower-level managers inside traditional organizations—letting,
for instance, divisional vice presidents make product strategy deci-
sions that used to be made by the CEO. But this limited kind of de-
centralization barely scratches the surface of what’s possible. Let’s
define decentralization as the participation of people in making the deci-
sions that matter to them. In this sense, decentralization means roughly
the same thing as freedom. From this point of view, decentralization
offers a much wider range of possibilities (figure 1-1).
At the far left of the continuum are highly centralized organiza-
tions—those in which all important decisions are made by a few high-
level decision makers (e.g., traditional military organizations). As you
progress along the continuum, from loose hierarchies to democracies
to markets, the amount of freedom people have in decision making
As we’ll see in chapter 4, some companies today already have loose
hierarchies, in which considerable decision-making authority is dele-
gated to very low organizational levels. Many management consulting
ATime to Choose
The Coming Revolution
firms, for instance, let the individual partners and consultants assigned
to a project make almost all its operational decisions. The AES Corpo-
ration, one of the world’s largest electric power producers, allows its
low-level workers to make critical multimillion-dollar decisions about
things like acquiring new subsidiaries. In an even more extreme exam-
ple, one of the most important computer operating systems in the
world today—Linux—was written by a loosely coordinated hierarchy
of thousands of volunteer programmers all over the world.
When most people think about decentralization, they stop at loose
hierarchies. That is, they think of decentralization as the delegation of
many decisions to lower levels in hierarchies. But what if power were
not delegated to lower levels? What if, instead, it originated there?
How much energy and creativity might be unlocked if all the members
of an organization felt in control?
The right half of the continuum shows what this more extreme kind
of freedom looks like in business. As we’ll see in chapter 5, some busi-
nesses already act like miniature democracies, in which the decisions
are made by voting. Many good managers today, for instance, infor-
mally poll their employees about key decisions, and some companies
have made the formal polling of workers a routine part of their man-
agement. In a few cases, such as the Mondragon Cooperative Corpora-
The Decentralization Continuum
hierarchies Democracies Markets
Centralized Decentralized
Consulting firms,
Free markets,
the Internet,
internal markets
inside firms
Type of
Organizations can be placed on a continuum based on how much people participate
in making decisions that matter to them.
tion in Spain, the workers own the company and, therefore, can elect
the equivalent of a board of directors and vote on other key issues.
What if companies began to take this notion of democratic decision
making even further? What if professional partnerships and other
worker-owned businesses allow workers to elect (and fire) their own
managers at every level, not just at the top? And what if these employee-
owners could vote on any other important question on which they
wanted to express their opinion?
The most extreme kind of business freedom occurs in markets be-
cause, in this kind of organization, no one is bound by a decision to
which he or she doesn’t agree. In a pure market, for instance, no one
“on top” delegates to the different players the decisions about what to
buy and sell. Instead, all the individual buyers and sellers make their
own mutual agreements, subject only to their own financial con-
straints, their abilities, and the overall rules of the market.
As we’ll see in chapter 6, many companies already use this form of
organization by outsourcing activities they used to perform inside—
from manufacturing to sales to human resource management. Taken to
its limit, outsourcing can render large companies obsolete. Flexible
webs of small companies or even temporary combinations of electron-
ically connected freelancers—e-lancers, as I call them—can sometimes
do the same things big companies do, but more effectively. Such webs
are already common in the film industry, for example, where a pro-
ducer, a director, actors, cinematographers, and others come together
for the purpose of making one movie and then disband and regroup in
different combinations to make others.
In other cases, as we’ll see in chapter 7, you can enjoy many of the
benefits of markets inside the boundaries of large companies. For ex-
ample, some companies are experimenting with internal markets in
which employees “buy” and “sell” products and services among them-
selves; their internal trading becomes another way of allocating re-
sources for the company as a whole. One semiconductor company is
considering letting individual salespeople and plant managers trade
products with one another in an internal electronic market. This free-
dom gives the plants immediate and dynamic feedback about which
products to make each day, and it helps the salespeople continually
fine-tune the prices they offer their customers. Hewlett-Packard is
ATime to Choose
The Coming Revolution
looking at creating an internal labor market to determine which ex-
perts on its staff will work on which projects.
To understand why such decentralized approaches to management
are likely to happen more often in the future, you need to understand
what leads to centralization and decentralization in the first place.
Why Is This Happening?
Many factors affect how and where decisions are made in a business
or, for that matter, in any organization. Here are just a few of the most
common: Who already has the information needed to make good de-
cisions? Who already has the power to make the decisions, and whom
do these people trust to make decisions on their behalf? Who are the
potential decision makers, and what are their capabilities and motiva-
tions? Within the company and the country, what are the cultural
assumptions about what kinds of people should make decisions? The
answers to these questions vary widely from situation to situation, and
they change for many different reasons. Overall, though, they aren’t
changing dramatically in any one direction.
There is, however, another crucial factor that affects where decisions
are made in businesses, and this factor is changing dramatically almost
everywhere. In fact, this same factor has historically been implicated,
time after time, in some of the most important changes in where deci-
sions are made—not just in businesses, but in entire societies.
What is this factor?
It’s the cost of communication.
Back when the only form of communication was face-to-face
conversation, our distant hunting-and-gathering ancestors organized
themselves in small, egalitarian, decentralized groups called bands.
Over many millennia, as hunting and gathering gave way to agri-
culture, and as our ancestors learned to communicate over long dis-
tances more efficiently—by writing—they were able to form larger and
larger societies ruled by kings, emperors, and other central rulers.
These new societies had many economic and military advantages over
the hunting-and-gathering bands, but their members had to give up
some of their freedom—sometimes a great deal of it—to obtain those
Then, only a few hundred years ago, our ancestors invented a new
communication technology, the printing press, which reduced even fur-
ther the costs of communicating to large numbers of people. This break-
through allowed people to reverse their millennia-long march toward
greater centralization. Soon after the printing press came into wide use,
the democratic revolution began. Ordinary people—now much better
informed about political matters—came to have more say in their own
government than they had had since the hunting-and-gathering days.
Was the declining cost of communication the only factor that caused
all these societal changes? Of course not. Each change arose from com-
plex combinations of forces. For instance, our human desires for in-
dividual freedom—and for the motivation and flexibility that often
accompany individual freedom—were critical. But, as we’ll see in chap-
ter 2, the declining costs of communication allowed by new infor-
mation technologies like writing and printing played a key role in en-
abling each of these changes. Remarkably, the same underlying factor
is implicated in both the rise of kingdoms and the rise of democracies.
Even more remarkably, this same pattern of change appears to be
repeating itself now—at a much faster rate—in the history of business
organizations. Chapter 3 explains that throughout most of history, up
until the 1800s, most businesses were organized as small, local, often
family affairs, similar in many ways to the early bands of hunters and
gatherers. But by the 1900s, new communication technologies like the
telegraph, the telephone, the typewriter, and carbon paper finally pro-
vided enough communication capacity to allow businesses to grow
and centralize on a large scale, as governments had begun to do many
millennia earlier.2By taking advantage of economies of scale and knowl-
edge, these large business “kingdoms” achieved an unprecedented level
of material prosperity.
As a result of this massive—and successful—move toward central-
ized business organizations in the twentieth century, many of us still
unconsciously associate success in business with bigness and central-
ization. But to achieve the economic benefits of bigness, many of the
individual workers in large companies had to give up some of the
freedom and flexibility they had enjoyed in the farms and small busi-
nesses of the previous era.
New information technologies can be used to further the trend of the
last century—the creation of ever larger and more centralized business
ATime to Choose
The Coming Revolution
kingdoms. And some important business changes in the future will no
doubt take that path, as ever larger groups of people are integrated to
take advantage of economies of scale or knowledge.
But there is a strong counterforce. Just as new technologies helped
spur the rise of democracies, reversing the long trend toward central-
ization in societies, today’s technological advances are beginning to
spur a similar reversal in business. With new communication tech-
nologies like e-mail, instant messaging, and the Internet, it is now be-
coming economically feasible—for the first time in history—to give
huge numbers of workers the information they need to make more
choices for themselves. Today, many more people in business can have
the kinds of freedom that used to be common only in small organiza-
tions. And that can be very good news for both productivity and qual-
ity of life. When people are making their own decisions, for instance,
rather than just following orders, they often work harder and show
more dedication and more creativity.
Even as they encourage greater freedom, however, these new decen-
tralized businesses can escape the limitations that hampered small,
isolated businesses in the past. Because the new organizations have
access to the best information available anywhere in the world, they
retain many of the advantages of large organizations. If there are econ-
omies of scale in parts of their business, for instance, they can find the
best suppliers in the world to fulfill their needs for those raw materials
and components. They can also find customers all over the world,
using electronic reputation systems to establish credibility with them.
And if someone on the other side of the globe has figured out how to
do a particular activity or process in a better way, the businesses can
tap into that person’s expertise, too.
This kind of decentralization doesn’t work well everywhere. Chap-
ter 8 will discuss some factors that can help you decide whether a spe-
cific situation is ripe for decentralization. If, for example, you have
a strong need for economies of scale or rapid decision making, you
might not want to abandon your centralized structure. But in all the
places where qualities like motivation, flexibility, and creativity are im-
portant to a business—and that’s lots of places—decentralization will
become increasingly desirable in the coming decades. Centralized
management isn’t going away, but its market share is likely to decrease.
Even where decentralization is desirable, however, the changes won’t
all happen overnight. Just as the democratic transformation of soci-
eties evolved in fits and starts over many decades, the changes in busi-
ness will take many years to play out. And every time there is a setback
in one place, or a failure to move forward somewhere else, some peo-
ple will say that things aren’t going to change after all. When managers
overinvested in e-business, and the speculative new-economy bubble
burst, many assumed that the old economy had won and that we were
going back to business as usual.
But the relentless declines in the cost of communication mean that
there will be ever more opportunities for decentralization. The funda-
mental changes in the economics of communication and decision mak-
ing will continue working their way through the economy, company
after company, industry after industry, for many, many years to come.
What Does This Mean for You?
If decentralization becomes increasingly desirable in business, then we
will need to manage in new ways. But most of us still have—deep in
our minds—models of management based on the classic, centralized
philosophy of command and control. To be successful in the world
we’re entering, we will need a new set of mental models. While these
new models should not exclude the possibility of commanding and
controlling, they need to encompass a much wider range of possibili-
ties—both centralized and decentralized.
Here is one way of summarizing this new perspective: We need
to shift our thinking from command-and-control to coordinate-and-
cultivate. As chapter 9 explains, when you coordinate, you organize work
so that good things happen, whether you are in control or not. Some
kinds of coordination are centralized; others are decentralized. But either
way, coordination focuses on the activities that need to be accomplished
and the relationships among them. We’ll see, for instance, how looking
at the “deep structure” of business activities can help you think of inno-
vative new ways to coordinate them. We’ll also see how rigid standards
in one part of a business system can sometimes—paradoxically—allow
much more flexibility and freedom in other parts of the same system.
ATime to Choose
... For example, administrators, who form the largest such group, are given the ability to prevent articles from being edited, delete articles, or block editors from editing-but the limits of their power are set in accordance with the policy designed and modifiable by the community. Overall, it appears that the Wikipedia model of governance is highly decentralized, and sucesfully prevents creation of oligarchies (Malone 2004:45, Konieczny 2009). ...
... In the most recent study of Wikipedia's editors motivations, Schroer and Hertel (2009) found that significant factors positively influencing editors' activity included identification with the project goal-providing free access to information-as well as identification with the Wikipedia community. It is interesting to note that the motivations roughly related to helping others are always ranked above the values of pure self interest, such as career motivations (Malone 2004:45, Nov 2007, Schroer and Hertel 2009. ...
In recent years a new realm for study of political and sociological phenomena has appeared, the Internet, contributing to major changes in our societies during its relatively brief existence. Within cyberspace, organizations whose existence is increasingly tied to this virtual world are of interest to social scientists. This study will analyze the community of one of the largest online organizations, Wikipedia, the free encyclopedia with millions of volunteer members. Wikipedia was never meant to be a community, yet it most certainly has become one. This study asks whether it is something even more –whether it is an expression of online activism, and whether it can be seen as a social movement organization, related to one or more of the Internet-centered social movements industries (in particular, the free and open-source software movement industry).
... Sie ermöglichen sowohl den Unternehmen als auch den Beschäftigten ein höheres Maß an Flexibilität. Es wurde oft angenommen, dass Plattformen den Beschäftigten die Kontrolle darüber geben, ob sie jede Stunde und jede Minute des Tages arbeiten oder nicht (Malone 2005; Sundararajan 2016). Tatsächlich sind die Beschäftigungsverhältnisse in Plattformunternehmen jedoch häufig prekär. ...
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Die vorliegende Studie untersucht den Charakter von Dienstleistungsplattformen aus wirtschafts- und organisationssoziologischer Sicht. Sie basiert auf einer ethnografischen Untersuchung und halbstrukturierten Interviews bei einer Dienstleistungsplattform in Deutschland. Der Artikel argumentiert, dass Dienstleistungsplattformen als dualistische Meta-Organisationen aufgefasst werden können. Im Zentrum des Unternehmens steht eine vollständige Organisation mit Mitgliedschaftsrechten und -pflichten. Jenseits des Zentrums der Organisation existiert eine periphere oder partielle Organisation, die eine Mischform zwischen Organisation und Markt darstellt. Diese partielle Organisation bietet ihren Mitgliedern nur begrenzte Rechte und Pflichten. Daraus entsteht eine neue Form digitaler Kontingenzarbeit. Innerhalb dieser Struktur erleben die Beschäftigten also neue Formen der Unsicherheit, entwickeln aber auch eine eigene Organisationskultur, die sich stark von derjenigen des Managements unterscheidet.
... Within economic systems, information technology decreases losses that are incurred by ˝friction˝. According to Malone (2004), the introduction of information technology decreases both fixed and variable costs. While research related to transaction cost theory is above all oriented to analysing processes governing exchange and adjustment in the economy, we can also use this theoretical framework to explain ˝correct˝ work distribution and specialization (Picot et al., 1999: 73;Kieser & Walgendach, 2010: 50). ...
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... It should be noted here that this distinction has become less clear-cut in recent years, since many transactions inside of companies are nowadays managed very similarly than market transactions, e.g. in the case of individual profit centres which together make up a larger, often multi-national corporation (see Malone 2004). Moreover, inter-organisational transactions are often coordinated inside of quasi-fixed networks or cooperation structures, which means that they are not well described as taking place on the "open market" (Picot et al. 2003). ...
As a new general-purpose technology, robots have the potential to radically transform employment and organizations. In contrast to prior studies that predict dramatic employment declines, we find that investments in robotics are associated with increases in total firm employment but decreases in the total number of managers. Similarly, we find that robots are associated with an increase in the span of control for supervisors remaining within the organization. We also provide evidence that robot adoption is not motivated by the desire to reduce labor costs but is instead related to improving product and service quality. Our findings are consistent with the notion that robots reduce variance in production processes, diminishing the need for managers to monitor worker activities to ensure production quality. As additional evidence, we also find that robot investments predict improved performance measurement and increased adoption of incentive pay based on individual employee performance. With respect to changes in skill composition within the organization, robots predict decreases in employment for middle-skilled workers but increases in employment for low- and high-skilled workers. We also find that robots predict not only changes in employment but also corresponding adaptations in organizational structure. Robot investments are associated with both centralization and decentralization of decision-making authority depending on the task, but decision rights in either case are reassigned away from the managerial level of the hierarchy. Overall, our results suggest that robots have distinct and profound effects on employment and organizations that require fundamental changes in firm practices and organizational design. This paper was accepted by Lamar Pierce, organizations.
Through an analysis of three case studies, this chapter proposes a new kind of democratic risk communication that can be realized through environmental sensing by citizens with smartphones, and considers the challenges involved. The three case studies, which the authors have implemented in the society, are as follows: (1) The Pocket Geiger (Pokéga) is a radiation sensor for citizens developed immediately after the Fukushima nuclear accident. More than 100,000 Pokéga units have been produced under an open source license. (2) The Unreal iSOTOPE is a mobile simulator developed for training Japanese law enforcement agencies during radiation disasters. (3) The Pocket PM2.5 Sensor visualizes the distribution of invisible air pollutants indoors and outdoors. It is particularly useful for fieldwork in developing countries where environmental assessments are inadequate.
This chapter provides an overview of space planning from a business-driven perspective. The focus will be on how to plan for and manage facilities change resulting from office reconfiguration and office moves by regarding functional spaces within buildings as a business resource that must be optimised — hence ‘the business of space’ (McGregor and Then, 2001). The provision of functional workspace is no longer simply determined by financial considerations. Demand assessment at a corporate level is multi-dimensional: it therefore needs to take into consideration location preferences and transportation convenience, technological developments that support flexibility and mobility, corporate image and culture, and individual tasks and preferences. Clearly, facilities change management is inextricably linked to the provision and management of business facilities in which the workplace and workspace environment is the embodiment of the corporate culture and branding.
This paper addresses the importance of process in enterprise systems engineering. It relates process to the balance between complexity and order in a complex adaptive system, and it extends the rationale for process from efficiency to both efficiency and effectiveness in enterprise adaptation. It develops several enterprise principles based on the works of Ashby, Ackoff, Axelrod and Cohen, Barabasi, Gharajedaghi, and others. It makes no attempt to be mathematical or rigorous, but rather postulates several heuristics. It discusses the deep structure of engineering process.
Download Free Sample Increasingly, teams are working together when they are not in the same location, even though there are many challenges to doing so successfully. Here we review the latest insights into these matters, guided by a framework that we have developed during two decades of research on this topic. This framework organizes a series of factors that we have found to differentiate between successful and unsuccessful distributed collaborations. We then review the kinds of technology options that are available today, focusing more on types of technologies rather than specific instances. We describe a database of geographically distributed projects we have studied and introduce the Collaboration Success Wizard, an online tool for assessing past, present, or planned distributed collaborations. We close with a set of recommendations for individuals, managers, and those higher in the organizations who wish to support distance work. Table of Contents: The Changing Landscape / Types of Distributed Collaborations / What It Means to Be Successful / Overview of Factors that Lead to Success / The Nature of the Work / Common Ground / Collaboration Readiness / Organization and Management / Collaboration Technologies and Their Use / The Science of Collaboratories Database / The Collaboration Success Wizard / Summary and Recommendations / References / Author Biography
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