A Digital Renaissance Has Sparked A New World of Possibilities
By Mousa Ackall, Director of Brand Marketing, WorkMarket
tl;dr: As a number of technological, societal, and economic mega-trends converge, companies both large and small have already been massively impacted. Smart businesses are equipping their most important asset — their people — with the tools and information they need to be productive and maximize their value.
Since the invention of the wheel made merchant carts possible, technology has enabled businesses.
By itself, however, technology is not the full story. The impact of every recent advancement, from personal computers to the internet, and mobile devices, has been affected by its convergence with both societal and economic trends.
When those trends align, the results can be explosive. That’s exactly what’s happening today.
The Perfect Storm
Over the past few years, a number of factors have created the “perfect storm” for business transformation. These factors typically include:
- A surging societal trend towards redefining how we get things done.
- Intensifying economic pressures.
- New technologies that enable transformation to happen.
Take Uber for example. Their matching algorithm technology, combined with a societal expectation that hailing a cab shouldn’t be so hard, paved the way for them to balloon into a $60B company in 7 years. Uber was made possible because all the pieces were finally in place for the company to come to life.
As to Uber’s economic pressures, the ever increasing necessity to keep business costs down led them to develop something new, which became their independent drivers model.
Exploring and experimenting with new business models is typically the result when a perfect storm occurs. This is especially true in the case of workforce utilization.
New Operating Models
Imagine an economy without friction — a new world in which labor, information, and money move easily, cheaply, and almost instantly. Psst — it’s here.
That’s how this Fortune cover story started. “Every Aspect of Your Business Is About To Change” is a fascinating read that explores the new rules governing today’s “new economy.” The article distinguishes between businesses evolving as “21st century corporations” and those that aren’t (yet at least).
Studying Tesla and GM helps us better understand this dynamic:
General Motors creates about $1.85 of market value per dollar of physical assets, while Tesla creates about $11.
While Tesla is in the same business as GM, the company is “creating high value with scant physical hard assets” as do the following companies in their respective industries:
This comparison carries over to the workforce of the two companies as well:
GM creates $240,000 of market value per employee, while Tesla creates $2.9 million.
Tesla does this by employing less full time workers than GM while still raking in the earnings. How? By leveraging a flexible operating model and forming new, fluid relationships with customers, workers and owners.
It’s the Cost of Labor, Stupid
The workforce is the largest line item for most companies. Employees cost a lot, both in terms of salary and benefits, a fact that’s led many companies (including Sprint, P&G, Intel, HP, Microsoft, and Cisco) to announce layoffs over the last two years.
Those layoffs are directly related to the use of old-school cost/labor structures. Those models aren’t suited to compete in a world where you need to be lean and nimble to overcome market turbulence.
Some companies recognize that change is needed. For example, Sprint’s new CFO Tarek Robbiati recently called his company’s cost structure “bloated” and announced plans to cut 10% of operating costs for a $2 billion savings.”
Meanwhile, HPE’s CEO Meg Whitman said that her company’s latest job cuts will “enable a more competitive, sustainable cost structure.”
A Perfect Storm for the On-Demand Workforce
Like other transformations, the call for an on-demand workforce is driven by trends converging with technology. In this case, these include:
- A surging societal trend towards redefining work driven by the desire to work remotely as an independent professional with many clients.
- The intensifying economic pressures to keep business costs down.
- New technologies that enable workers to be more productive than ever, greatly increasing the return on human capital investments.
Change is in the air and variable workforce models that are adaptable to an unpredictable world are providing real business advantages.
Real World Examples of Variable Workforce Benefits
Three companies stand out in the way they’re using flexible workforce models to compete. These businesses are reaping the benefits of:
- Lower cost structures,
- Faster response times, and
- Better work quality (since you’re using specialists).
Nintendo, the world’s largest video game company is regularly listed among the top companies hiring freelancers. In a recent Wall Street Journal article, Nintendo spokesman Charlie Scibetta says the company treats “all people with the same respect, regardless of their employment status.” The game maker uses “a hybrid approach of full-time and contractor positions so we can staff up quickly when needed,” he adds.
Procter & Gamble (P&G), the consumer packaged goods juggernaut, has recognized the value of a contingent workforce in perhaps the most important part of its business: bringing new product innovations to the market.
According to a recent report by Deloitte, P&G collaborates with outside innovators on more than half of its product initiatives. The company even launched a dedicated Connect and Develop program encouraging external individuals to submit new product ideas and become innovation partners.
The company’s Swiffer Duster — now a billion dollar brand — was the most high-profile success of this effort. P&G now has more than 1,000 such agreements in place, highlighting the value of its independent workforce.
General Electric (GE) found that employing an on-demand workforce could give it greater flexibility in addressing key talent shortages. This is particularly true with its field services operations, where it predicts that its field services operating model will evolve into a “crowd-sourced on-demand pay-per-use service model that will tap into a global, mobile and flexible workforce.”
CEO, Jeff Immelt, was recently on CNN chatting with Fareed Zakaria talking about the future of work, robots, and even on-demand service delivery (he even used an industry term “First Time Resolution”) to talk about how new technologies are empowering field service professionals with unprecedented connectivity.
How are these companies achieving these results?
Here’s Where The Magic Comes In
The rise of labor automation software, such as WorkMarket, is enabling businesses around the country with the tools, technology and insights they need to scale and automate a truly flexible workforce. Savvy enterprises understand that digital transformation starts with their most critical asset: their people.
And not just their W-2 employees or their 1099 freelancers, but every cog of their talent supply chain including vendors, contractors, third-party service providers, alumni and much more.
While shifting to a flexible workforce model sounds intimidating, and potentially expensive, the reality is quite the opposite. Not only does WorkMarket seamlessly integrate into leading cloud-based business apps (like Workday, ServiceNow, Salesforce and more) the software is simple to use, easy to scale and affordable to adopt.
Imagine a world in which you could always have the right person, at the right place, at the right time.
Guess what? It’s here.