The Convergence of a Gig Economy & Talent-Management Platforms
*Written in January, 2018 (let's see how wrong I was)
*Written in January, 2018 (let's see how wrong I was)
Every single one of you will be a product on Amazon.
You'll have a rating. A review. Chances are you'll even be two-day shipped.
Now I know what your thinking....wasn't that on Black Mirror? It was. It also is China's Social Credit System (scheduled to be nationwide implemented in 2020).
While China states it explicitly, well over 2 million Americans live it implicitly with their "score" determining their paycheck. Who would agree to this you may be asking? For one, the people that drove you to work.
But the sharing economy is just the beginning. While historically humans have implicitly evaluated one another, the convergence of the internet, cloud computing, and availability of relevant data will bring each and every one of us on a digital platform that makes these evaluations explicit. Chances are your already participating. Does your job have a feedback score? When I was in public accounting we were scored after each project from 1-5. While it was for "feedback", what's the difference between your manager's score for you and your rating of the Uber driver? Both are on a cloud-based platform. Both are involved in determining your opportunity. Both are isolated to that company. For now...
In the next ten years, the convergence of the "Gig-Economy" and talent management platforms will transition our view of labor from employer-backed 9-5's to products on Amazon. We'll all be "Gigsters" - freelancers quantified, ranked amongst our global peers, and delivered on-demand.
Are we ready for this?
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In order to be prepared, three questions must be answered:
What is the Future of Work?
What is the Work of the Future?
How can we position ourselves in the age of automation?
These questions are more than a tongue twist. They represent three fundamental pillars that will shape the world of tomorrow.
Through a 3 Part series, we'll take you through each pillar one step at a time. Pillar 1 will build the foundation. It will cover the transition from corporations to a Gig-Economy run on talent management platforms. This will provide a foundation we will build Part 2 & 3 on top of.
In Part 2 we'll uncover what this work will look like, and in Part 3 we'll show we can position ourselves in this age of automation.
Settle in, stretch out, grab some popcorn and brace yourself for a bumpy ride.
Once you're tucked in... Let's begin!
What is the Future of Work?
20 years ago being a product was a cozy job. You had a loving manager that had nothing but praise (sales associate), a glamorous office (the store), and a pretty good social life (the shelves) while your personal life remained fairly private.
But something happened fifteen years ago. It started when rumors swirled about products who traveled the world after signing up for a social network account. Feeling the FOMO, you tried it out yourself. You had great pictures, an even better bio, it was a matter of time until you were a frequent flyer.
At first it went great. You saw the world. You received numerous compliments. You even started to feel independent as you didn't need a manager or office anymore. But after a year something happened....
Instead of hopping on a plane, you were stuck in a dusty warehouse. No more compliments. No more travel. Just an existence of isolation colder than the server rooms that replaced what was once your vibrant storefront.
What happened?
You left the small city "main street" for the shiny lights of Amazon. The "compliments" were ratings and reviews, the travel was Prime's 2-day shipping, and the independence was the result of disintermediation - removing inefficiencies of "middlemen", or brick & mortar stores, from transactions. Unfortunately, as fast as you rose to "top rated" you fell to obsolescence as product life-cycles exponentially accelerated.
With the rise of the Gig-Economy, the transition of labor from corporations to talent management platforms have mirrored the transition from products selling brick & mortar to selling on Amazon. Except instead of Amazon, it's talent-management platforms - better thought of as social networks that handle talent matching, talent monitoring, talent evaluation, and necessary administrative tasks once necessary to start a business.
Next we'll dissect what this Gig Economy is, and what these "platforms" that house "gigsters" are.
Talent Management Platforms are the Amazon of Labor
What is the Gig Economy?
The concept of a Gig/Freelance economy - freelance/contract-work in place of or along with full-time employment - is nothing new. Prior to 1800 the idea of one company with one job was the taboo. Then came Industrialization and the age of the Corporation which favorized size in the name of vertical integration. Few companies gained massive market share, and the need for middle management created the structure for a middle class that favored the idea of being a "lifer". But in the developed world labor diverged during the '08 financial crisis.
While official reports focus on unemployment as a whole - we all know not all employment is created equal, and as we see in the above graph, post-recession the majority of jobs created were in the form of part-time work. This has created a slew of controversy from Wal-Mart costing taxpayers $6.2 billion in public assistance, to companies keeping employees right below the full-time benefits threshold while forcing employees to be "on-call" - inhibiting them from having other jobs.
But while for you and me this is a shocker, for Andrew McAfee and Erik Brynjolfsson, leaders in the Future of Work, this partition is of no surprise. Instead, it is a visible signal for a problem plaguing America since the early '80's.
Post World War II the American economy experienced phenomenal growth. Companies grew, wages grew, the economy grew, and entire generations gained access to the "American Dream". Driving this was the correlation of wages & productivity. As companies grew, quality jobs grew, and employees within companies felt the boom of a rising middle class.
But in the '80's this paradigm hit a ripple. Productivity increased to record highs, but wages stayed constant - a problem McAfee and Brynjolfsson call the "decoupling of wages and productivity". What happened? A multitude of forces. Technology. Globalization. One could argue trickle-down economics led by the "greed is good" mantra that crashed a global economy in '08. No matter the cause, the results hold constant - employees were left out, and while corporate profits hit record highs, middle-class wages have remained stagnant since 1985. And to add insult to injury, millennial children are worse off than their parents, a fact USA Today exposed when reporting Federal Reserve data that showed millennials earn 20% less than their baby boomer parents at the same stage of life. Thus not only have millennials inherited a stagnant economy, but they've been gifted a broken model. Go to school, work hard, take on a bunch of debt and hope you find a job that pays less than your parents....that's if you're lucky enough to find one.
The transition to a part-time labor force was fueled by the decoupling of productivity & wages
Amidst this decoupling, a force was shaping that promised to protect the worker. This force, the convergence of the internet & cloud computing, crystallized in 2012 to transition part-time work from a cost-cutting decision to a smarter alternative.
What resulted was the now prevalent Gig-Economy.
The convergence of the internet & cloud computing fueled the emergence of the Gig Economy from a cost-cutting decision to a smarter alternative
The magnitude of this force is grossly understated. What this did was not only add an option for supplementary income, it fundamentally transformed the paradigm of labor.
On one hand, it unlocked access to a severely underutilized asset - talent. Prior talent was restricted by geography and overhead. Unless you had a "business" with administrative support to handle accounting/legal, freelancing was grossly inefficient. Further, unless you already had a steady stream of clients, the process of prospecting was severely inhibiting. Yet with the rise of Gig Platforms, finding good talent and finding Gigs could be as simple as buying a product on Amazon.
On the other hand, it created a new model of labor Accenture calls a Liquid Workforce. Also called an "ownership over access model", or an "on-demand model", it's similar to calling an Uber rather than owning a car in that companies can tap into project-based talent rather than having full-time employee's on their books. Implications for companies are enormous. They can deploy resources associated with deep pockets while enabling the speed & flexibility of startups. One area in particular relevant is software development. The massive shortage in STEM talent has created an oligopoly of talent between a few tech giants. With talent-management platforms like Gigster, Toptal, and Upwork, companies can tap into this talent while developers can work on projects their passionate about with the flexibility to work wherever and whenever they want.
But arguably the greatest implications lie in the implications for individual workers:
First it's strength in numbers. Currently 15.3% of our workforce currently participates in the Gig Economy, but by 2020 Intuit CEO Brad Smith predicts it will represent 43% our workforce.
Second in shape. Current organizational management is different shades of Frederick Winslow Taylors "The Principles of Scientific Management". While a winning strategy for a factory in an industry of incremental change, in an economy of disruption, it lights the path to being the next Blockbuster, Circuit City, etc (Refer: Saving the World With an Exponential Mindset). Similar to how Amazon took over the brick & mortar, talent-management platforms will take Taylor's view of traditional management. For employees, this means breaking free from the shackles of utilization and undifferentiation (currently only 5% of the jobs we pay people to do require creativity).
But what does this look like? According to Harvard's Lawrence Katz, this means the return of an artisan economy. In Daniel Pink's book To Sell is Human, Katz goes as far as predicting middle-class employment of the future won't be through large companies, but rather self-sufficient "artisans".
I call this the rise of the Expert Entrepreneur, but before we can understand what this work will look or how to be positioned for it, we need to understand the platform.
While the Gig-Economy & Talent-Management Platforms will replace traditional management, middle class employment of the future will be in the form of self-sufficient artisans
What are Platforms?
Think of your local farmers market. Vendors stand at booths. Families with Golden Retrievers walk around the booths, ready to buy a $15 lead of lettuce.
Platforms are the digital equivalent. They are digital people factories, with production being the matching of producers & consumers.
In 2018 we are in wave 2 of 3 for talent management platforms. In the diagram below, the left stick figure is a consumer, while on the right are producers.
Wave 1 enabled the ability to match producer with consumer. For example, this past week I hired a designer from Nashville, Tennessee. Fifteen years ago this required a recruiting service & a plane ride. Today it requires posting a job description and letting the recommendation algorithms feed you with your best options based off their ratings/reviews.
Wave 2 is the management of these freelancers. While wave 1 unlocks access, it lacks the infrastructure to manage projects similar to a typical internal management structure. In the diagram, this is symbolized through the levels of hierarchy. If tasks are low skill and routine, or if you have the in-house capabilities both technically and in capacity, management isn't essential. But in high skill work such as software development, leveled oversight is crucial and thus wave 2 fills this value by having management capabilities along with a freelance workforce.
Wave 2 is the outsourcing of a freelance department
Wave 3 is the augmentation of work, which as you'll learn in Part 2 is the result of algorithmic automation replacing "grunt work" and freeing our mental capacity for creative work.
The Future of Work will be in the form of platforms - digital people markets
Summary
The future of the Gig Economy & Talent-Management Platforms is here.
Last week I posted a job on Upwork, and within seconds had a list of over 20 highly qualified candidates with portfolios, ratings, reviews, and transparent pricing. It took me a total of two minutes and thirty-seven seconds to hire, start the project and send the payment for our first milestone.
Just as my designer differentiated himself from the rest of the products on Amazon, so too will every one of us. We'll have ratings. Reviews. Insert cheesy two-day shipped joke.
But are we ready?