Principles of Algorithmic Management

Our title harks back to Frederick W. Taylor’s influential book. But our identification of the principles of algorithmic management is certainly not advocacy. Our task in this essay is to develop a theory of algorithmic management in relation to fundamental changes in the shape and structure of organization in the 21st century that are reconfiguring boundaries, roles, and relations among managers, workers, engineers, professionals, consumers, and other user categories. In particular, such a theory must be attentive to transformations in the topology of organization. Today, many of the most valuable actors, assets, and activities are not located within the firm but involve a complex entanglement of information flows, practices, and users. This topology gives rise to a distinctive challenge: how to manage when the most valuable assets and activities are not in the firm. Whereas actors in hierarchies command, in markets they contract, and in networks collaborate, on platforms they are co-opted. The co-optation of actors, assets, and activities is undertaken by algorithmic management. To grasp the distinctive principles of algorithmic management, we compare and contrast the features of its ideology and practices with those of scientific management and the more recent collaborative management. Algorithmic management, we argue, operates within a different organizational form, articulates a different ideology, and addresses different managerial problems with different governance principles along different lines of accountability.