We live in a knowledge economy. The core assets of the modern business enterprise aren't its buildings, machinery, and real estate, but the intelligence, understanding, skills, and experience of its employees. Harnessing the capabilities and commitment of knowledge workers is arguably the central managerial challenge of our time. Unfortunately, it is a challenge that has not yet been met. Corporate ownership structures, governance systems, and incentive programs--despite the enlightened rhetoric of business leaders--remain firmly planted in the industrial age. In this article, the authors draw on history to lay out a model for a democratic business organization suited to the knowledge economy. The Athenian model of organizational democracy offers a window into how sizable groups of people can, in an atmosphere of dignity and trust, successfully govern themselves without resorting to a stifling bureaucracy. Such a system provides the synthesis of individual initiative and common cause that today's companies need to achieve if they're to realize the full power of their people and thrive in the knowledge economy.

This is an MIT Sloan Management Review article. Today's workforce is increasingly made up of volunteers--at least in spirit if not in fact. How will the traditional management tasks of motivating and directing employees change in the face of that new reality? The authors answer this question by examining an example of an economic enterprise that acts in many ways like a voluntary organization: the open-source software movement. The authors pose the following essential questions: What motivates people to participate in open-source projects? How is participation governed in the absence of employment or fee-for-service contracts? The answers revealed some important lessons for traditional organizations about the challenges of keeping and motivating knowledge workers and the process of managing in the new arena of networked or virtual organizations. First, traditional organizations should plan for a broader array of employee motivations than they often do today. Money is only one. Professional contributors are also motivated by the personal benefit of using an improved software product and by a number of social values such as altruism, reputation, and ideology. Second, traditional organizations should consider ways to shift from the management of knowledge workers to the self-governance of knowledge work. Despite their clear potential for chaos, open-source projects are often surprisingly disciplined and successful by means of multiple, interacting governance mechanisms. Membership management, rules and institutions, monitoring and sanctions, and reputation build on the precondition of a shared culture to self-regulate open-source projects.