Right now, most people are too busy working to notice just how profoundly the world around them is changing. Those who do realise what’s going on have a window of opportunity to gain a competitive edge. But that window is closing fast. The massive changes will soon be apparent enough for every business to adopt a radically different approach to their workforce and value creation process.
Let’s take a closer look at some of the concepts at play. To provide you with key insights, this article won’t simply tell you what is happening, but also why it’s happening and what it all means. With these insights, you won’t need a crystal ball or constant news updates to anticipate what’s next in the world of work.
We’ll start by setting the scene with the what. The following facts and figures should give you the big picture pretty quickly.
What’s happening
External workforces now account for over 40% of global labour costs. Morgan Stanley confirmed that freelancers represented 35% of the US working population already back in 2018 and projected that this figure could increase to more than 50% by 2027. Around 80% of large U.S. corporations plan to change their recruitment practices in favour of a flexible workforce. Generation Z (born 1997-2000) is more inclined toward freelancing than any previous generation. In Sweden, many companies have grown their contingent workforce from a few percent to nearly a third of their total human capital. And, what’s more, consultants are increasingly being placed in roles that are key to the companies’ value creation.
Bottom line: the world of work is undergoing a revolution. (If you’re still not convinced, there’s plenty more where that came from – you can start by reading this piece in Forbes.)
The life-long career ending in a gold watch is out. Employee mobility and a flexible, rapidly changing contingent workforce are in (and, for reasons outlined below, there probably will be no going back to the way things were). However, if you only relate to this as a new fact of life, you’re missing some powerful insights. Because what’s happening goes right back to the fundamental driving forces of human behaviour and societal development. These forces are of such magnitude that they will either make or break your human capital management. You cannot fight them. You can only surf them. So, you’d do well to understand them.
Here’s why the workplace revolution is the natural next step in the following (very) brief history of humankind.
We’ll start by going right back to where things began.
Why is it happening?
Anyone who has read Harari’s Sapiens knows that written language kicked off civilisation. Texts enabled us to literally put everyone on the same page. Suddenly, people across large geographical areas could be made to believe in the same ideas (Gods/kings/laws, etc.) and pull in the same direction. National identities could be created, taxes collected, libraries built and armies raised.
But why did it work so well? Because storytelling meets two of the most basic human needs: to connect with others and to make sense of the world.
Hold that thought.
Now, let’s fast-forward to modern history. Until the 18th century, people were generally either farmers or artisans, such as shoemakers or blacksmiths. The First (steam) and Second (electricity) Industrial Revolutions changed this by offering employment in factories. But many aspects of business and society still remained the same:
- Work was largely repetitive and stable over the long term – you kept producing the same product year after year.
- Technological progress was relatively slow and incremental. For instance, you might develop a slightly more efficient steam engine – and the time from idea to execution was considerable.
- Value was created by protecting and extracting value from existing knowledge, say, how to operate a textile mill.
- Notably, workplaces and churches were central in meeting people’s needs to connect with others and making sense of the world.
Then came the Third (computers) and Fourth (cloud computing) Industrial Revolutions: aka the Digital Revolutions. Whilst their early stages kept people and knowledge siloed in physical locations, the Internet and cloud-based computing have completely upended the world of work. Today, in the Fourth Industrial Revolution – Industry 4.0 – things look radically different:
- Business operations are characterised by projects where handpicked teams of specialists work in relatively short sprints.
- Technological progress is incredibly fast and often disruptive.
- Value is generated through creation of new knowledge – we deliver value by doing things differently, not just better, than our competitors.
- Notably, people no longer have to go anywhere to connect with others and make sense of the world. There’s Google, Facebook and Insta for that.
What does it all mean?
In an age where CAD and a 3D printer can take you from idea to finished product in minutes, creative thinking is worth its weight in gold (or cryptocurrency, to name another disruptive technology). Logical and rational thinking as well as the knowledge and skills needed to execute on plans are still needed to keep you afloat. But to forge ahead, you need intuitive, creative thinking.
Fortunately, companies’ needs for fresh thinking is converging with professionals’ wishes to enjoy an untethered lifestyle.
John Hagel, The Future of Work thought leader and former co-chair of Deloitte’s Centre For The Edge, writes, “As knowledge stocks depreciate in value at an accelerating pace, the focus of economic value creation shifts to effective and privileged participation in knowledge flows. Finding ways to connect with people and institutions possessing new knowledge becomes increasingly important. Since there are far more smart people outside any one organization than inside, gaining access to the most useful knowledge flows requires reaching beyond the four walls of any enterprise.”
The contingent workforce is in other words key to economic value creation. And for constructive, visionary collaboration with many different parties, you need an environment where trust and mutual understanding brings out the best in people. But you need only look at one of the main societal shifts – digitalisation – to see that a lot of companies are missing this point. Whilst everyone agrees that digitalisation is “so, so important!”, too many procurement departments still know more about who supplies them with office equipment and coffee beans than they know about their IT consultants.
What to do?
Knowing your contingent workforce – and letting your suppliers get to know you – are matters that shouldn’t be left with individual managers or farmed out to any third party. If you want to remain competitive, it’s of vital importance that your leadership, HR and department heads are informed and engaged.
The way to make it all happen? Adopt a digital workflow that plugs into your existing ecosystem of business applications, giving you access to all suppliers, streamlining all management tasks and providing all data that you need to make strategic decisions.
There really is no alternative to taking action. That good old adage – “human capital is your company’s greatest asset” – has never been more valid.
In fact, it’s quickly turning into a massive understatement.