We have previously touched on the idea of rethinking innovation as it relates to processes, organizational structures and staffing models, including the “Hollywood Model.” The latter part of that list received some interesting feedback, and I thought I’d revisit and continue that conversation.
Our Direct Insights
What we’re hearing from our conversations with customers is that one of the lessons they learned from the financial crisis of 2008 is that it is important to have labor costs aligned with the demand for products and services. They want to shift their labor costs from fixed to variable to make it flexible with economic conditions.
We’ve talked with several CIOs and CFOs who have all agreed that when we put this into technology terms, what they are really looking for is a “people cloud.” In other words, just like cloud computing is a utility, business leaders want to be able to turn human resources on when they’re needed and turn them off when they’re not. They also want them to be immediately available, infinitely scalable and accurately metered.
They want to be able to dynamically reallocate human resources as part of the digital ecosystem that they are building – moving beyond traditional contractor relationships and more toward outcome-based engagements.
Hierarchy of Innovation Model Emerging
Most people are familiar with the idea of the “freelance economy.” That is, businesses that don’t have any employees performing a wide-range of jobs, from freelance IT analysts to taxi drivers. This segment of the U.S. economy keeps growing. According to the United States Census Bureau’s annual report on non-employer businesses and the current freelance economy, in 2011 around 75 percent of total U.S. businesses had no employees on payroll. That’s about 22.5 million businesses representing nearly $1 trillion in total revenue.
I’m wondering, as the freelance economy grows within the IT sector, if we’ll see this natural “pyramid of expertise” that forms with a wide base of freelance workers that perform more of the modular and micro tasks that companies need, with fewer specialized experts rising to the top. In the middle of the model would be full-time employees that support and drive innovation for the business – the “producers” in the Hollywood Model that we’ve discussed.
A good example of an organization at the base of the pyramid is Samasource. The non-profit organization delivers enterprise digital services through a unique Microwork™ model that harnesses the untapped potential of the world’s poor. Samasource continues to develop innovative technologies to perform data and content services for clients. The type of work they tackle could be a small, computer-based task taken from a larger data project. On the other end is Topcoder, a community of more than 480,000 software developers, algorithmists and digital designers that work to accelerate the development of new digital products and services for Fortune 1000 enterprises, small and mid-sized businesses, and government agencies on-demand. The Topcoder community is a collection of highly-specialized technologists that can bring instant expertise to IT projects.
The emergence of such networks of people who can be so easily engaged is one of the amazing ways the Internet has profoundly changed business. Now that the Internet has evolved to be more social and mobile than ever, it’s become about how people work, not where people work, and allows people to specialize and participate in ways that they can best provide value. It’s also about the ability of organizations to fluidly bring people on and off a project no matter where in the world they happen to be. As long as they have a decent connection, they can plug in and bring value.
Questions to Consider
- Do you have any examples of your organization increasingly tapping into the people cloud?
- What are your thoughts about breaking work down into discrete modules and engaging various resources to execute them?