Small Business Labs

The Global Shift to the Open Workforce

New Ways of Working ... Managing the Open Workforce is a fascinating study from London-based CGMA. 

Key quote on their definition of "the open workforce":

Organisations are increasingly finding themselves managing an “open workforce” – one in which talent and resources are spread across a complex mix of in-house teams, freelancers, contractors and external business partners.

One of the most interesting things about this study is the source. CGMA stands for Chartered Global Management Accountants and it's a global trade association for management accountants.  

I think the fact that CGMA has issued a report on contingent talent is a clear signal that independent workers and "the open workforce" have become of strategic importance to most businesses.

Also interesting are their findings on the growing global use of independent workers.  

As the study chart below shows, the use of external talent (independent workers, contractors, etc.) is already substantial and forecast to grow rapidly over the next 5 years in most parts of the world.

These findings are consistent with the Ardent Partners study we reported on yesterday and the research behind the MBO Partners State of Independence studies.  

Theses studies, and others like them, make it clear the shift to independent workers is not just a response to the Great Recession. This is a fundamental shift in employment and business practices.  

Why Companies Are Increasing Their Use of Contingent Labor

Ardent Partners is an analyst firm focused on corporate procurement and as part of this brief they research and analyze the use of contingent labor (temps, contractors, consultants, etc.) by corporations.

The article The Contingent Workforce Management Program of 2016 provides their view of how corporate contingent labor programs will evolve over the next couple of years.  

A major finding of their research shows the use of contingent labor by corporations has substantially increased over the past 5 years. Key quote from the article:

In 2009, the estimated percentage of contingent workforce utilization within the average enterprise hovered around 16% or 17% ... The contingent workforce of 2014 is a force to be reckoned with, as Ardent Partners estimates that upwards of a third (32%-33%) of the average total workforce is comprised of contract talent.

And according to their research report The State of Contingent Workforce Management 2014-2015 this growth is going to continue.  Key quote from the report:

Ardent predicts by the end of 2017, nearly 45% of the world's total workforce will be contingent ...

Even more interesting is why companies are expanding their use of contingent labor.  As the chart below (from the research report) shows, the key reasons are to tap into the skills and talents of contingent labor.  

This is a fundamental shift from past years, when most companies turned to contingent talent to reduce costs.

This shift - coupled with the growing recognition by hiring corporations that contingent labor is becoming a strategic HR issue - are key reasons we're forecasting the continued growth of the independent workforce.

Insight, Innovation and Finding Aha's

The Harvard Business Review article Where to Find Insight provides a good primer on how to spot trends and create business insight that can drive innovation.

The article defines insight as:

... an imaginative understanding of an internal or external opportunity that can be tapped to improve efficiency, generate revenue, or boost engagement. 

Insights can be about stakeholder needs, market dynamics, or even how your company works.

It describes 7 sources of insight:

1. Anomalies, or data that deviates from business as usual.

2. Confluence, when economic, demographic, and technological trends come together.

3. Frustrations or pain points, which lead to innovative work-arounds.

4. Orthodoxies, which can spark a search for alternatives.

5. Extremities, such as fringe members of stakeholder groups who push for solutions.

6. Voyages, whereby innovators leave their offices to visit colleagues or customers.

7. Analogies, useful ideas or systems in other teams, business units, companies, or industries.

We describe our work as finding aha's about small business and the future of work. Merriam-Webster defines aha as an interjection used when something is suddenly seen, found, or understood.

When we find something that has our clients saying "aha", we've done our job. 

We use all 7 of the insight sources listed above to do this. But we consider two to be of the greatest importance to us in our trend spotting and analysis work.

The study of emerging fringe groups or edge activities, called extremities by the authors, is one of our key research methods. For example, we started researching the coworing movement when it first started back in 2007.

Based on this research, we quickly realized coworking provided a window on the much broader topic of the future of work as well as the future of the independent workforce.  

The identification of converging trends, confluence in the language of the article, is another insight method we spend a lot of time on.  

We've long found converging and reinforcing trends drive major change. A good example is mobile computing, cloud computing and big data. Each is a powerful trend in their own right. But what's making them major drivers of change is they are converging and reinforcing one another.

5 Interesting Thought Pieces on the Future of Work

Really interesting set of thought pieces - they call them frameworks - from Society and Data on the future of work.  The 5 papers are:

• Understanding Intelligent Systems unpacks the science fiction stories of robots to look at the various ways in which intelligent systems are being integrated into the workforce in both protective and problematic ways. Much of what’s at stake in this domain stems from people’s conflicting values regarding robots, drones, and other intelligent systems.
• Technologically Mediated Artisanal Production considers the disruptions introduced by 3D printing and “maker culture,” as the very act of physical production begins to shift from large-scale manufacturing to localized creation. The implications for the workforce are profound, but there are other huge potential shifts here, ranging from positive possibilities like democratizing design to more disconcerting concerns like increased environmental costs.
• Networked Employment Discrimination examines the automation of hiring and the implications this has on those seeking jobs. The issues addressed here range from the ways in which algorithms automatically exclude applicants based on keywords to the ways in which people are dismissed for not having the right networks.
• Workplace Surveillance traces the history of efforts to using tracking technologies to increase efficiency and measure productivity while decreasing risks for employers. As new technologies come into the workplace to enable new forms of surveillance, a whole host of ethical and economic questions emerge.
• Understanding Fair Labor Practices in a Networked Age dives into the question of what collective bargaining and labor protections look like when work is no longer cleanly delineated, bounded, or structured within an organization, such as those engaged in peer economy work. Far from being an easy issue, we seek to show the complexity of trying to get at fair labor in today’s economy.

All the papers are full of insights and information and well worth reading. 

Wage Versus Education Gap

Their are two really interesting male/female gaps in the U.S.  The wage gap, where men make more money on average than women, gets a lot of attention.

The education gap, where women and girls out perform men and boys at all levels of education, gets less attention.

Also getting little attention is the fact that these two gaps are linked.

Over time those that are better educated will be paid better. And as we've written about before, women currently comprise about 57% of all college students and it is expected this will grow to about 60% by 2019.

Women also out number men in most grad school programs and 2013 was the 5th year in a row that women earned more Ph.Ds than men. As the chart below shows, there are about 1.4 women in graduate school for every man and women have clear majorities in most fields.

 

Yes, men still dominate in math, computer science, physical science and business, but even in those fields the gap has been closing over the last decade.

Also, trends suggest the number of women studying business in grad school will pass the number of men over the next 5-7 years.  

So what about the wage gap?

It still exists with men continuing to earn more, on average, than women. The Washington Post's The Wage Gap - A Primer provides a detailed look at the current state of the wage gap.  

But the wage gap is closing, especially for Millennial women. There are multiple reasons for this, but the big one is women's growing education advantage.

Because of this, we continue to forecast wage parity between men and women in the 2020 time frame. 

We also continue to worry about the state of men and boys. We suspect today's wage gap will be reversed within the next decade or so.  

Half of Americans Single

For the first time since the government started keeping these stats, more than half of adult Americans are single.  There are about 125 million single Americans, which is just a bit over half of all Americans aged 16 and older.  

Bloomberg's Is Everyone Single? nicely covers this shift, including providing the chart below. It shows the steady climb from 37% of adult Americans being single in 1976 to 50.2% today.  

The percentage of "never marrieds" has also risen from 22% to 30% over this time frame. 

Pew's research memo Record Share of Americans Have Never Married goes deep into this shift, with a focus on those aged 25 and older. Key quote:

This trend cuts across all major racial and ethnic groups but has been more pronounced among blacks. Fully 36% of blacks ages 25 and older had never been married in 2012, up from 9% in 1960. For whites and Hispanics, the share of never-married adults has roughly doubled over that same period. In 2012, 16% of whites and 26% of Hispanics had never been married.

New York Magazine also weighs in on this topic with an article covering a study looking how college students currently think about marriage. The quick summary is: "Americans may have more conflicting, complicated views on marriage than ever before.

This shift is even more pronouned in Europe, as the Guardian's Marriage falls out of favor for young Europeans as austerity and apathy bite points out.

Key quote:

Marriage rates have fallen dramatically in most major European countries over the past decade, as austerity, generational crisis and apathy towards the institution deter record numbers of young people from tying the knot.

The rise of singles and the decline of marriage has broad implications for the economy and society.  

Singles, particularly younger ones, are more likely to rent apartments than own houses. They are less likely to have children, buy cars or spend as much on household furnishing. They're also less likely to live in rural or outer suburban areas, preferring instead urban or closer in neighborhoods.

We cover the changing American family, including the rise of singles and the decline of marriage, in more detail in our Demographics section.

Fast Food Declining; Food Trucks Increasing

The Forbes article Survey Says Americans are Losing Their Appetite for McDonald's, Taco Bell and Burger King covers a study showing that consumers - and especially Millennials - are choosing fast casual restaurants over fast food places. Key quote:

Most Millennials surveyed (89%) seek out fast, casual food they deem healthier, tastier and “more customized” than fast food, and they’re willing to pay more for it, the survey revealed.

At the same time, the nation's appetite for food trucks continues to grow. Cities across the country are liberalizing food truck laws in response to growing demand and people from all walks of life are starting food trucks. 

We're not surprised by either development and see them as linked.  

As we pointed out in our 2012 study Food Trucks Motor Into the Mainstream, patrons see food trucks as a higher quality but fast alternative to traditional fast food.  We also pointed out a cultural shift towards healthy, fresh and locally grown food would allow food trucks to charge more than traditional fast food.

Add in the ability of food trucks to give their customers a unique, novel and fun experience to report on in social media, and it's easy to see why more people are choosing food trucks.

    

The Rise of Experience Retail

I was shopping recently in Walnut Creek, an affluent east bay suburb of San Francisco. An upscale shopping destination, Walnut Creek has the usual array of high end stores and boutiques.

But what caught my eye were two stores that don't actually sell things. Instead, they are meant to be places where potential customers can learn about and experience products and services.

Tesla, the high end electric car company, has one of their showrooms in Walnut Creek.  The showroom gives you a chance to see, touch and feel a Tesla as well as arrange for a test drive. But if you want to buy one, you do so online.

The other experience store is owned by Inspirato, a private vacation club that provides their members access to luxurious villas, apartments and homes in major cities and resorts across the globe.  

The nice folks from Inspirato told me the goal of the store was to provide potential members with a place to experience what it's like to be a member. While you can sign up for their service in the store, most sales are finalized via their direct sales force.  

Both of these are part of the broader trend of providing experiences via retail stores. Many of the companies doing this are brands that used to be online only. Examples include:

Warby Parker - a trendy online seller of glasses that has opened 9 stores and/or showrooms.

Bonobos - an online clothing company somewhat famous for saying they would never have brick and mortar stores. They now have 10 brick and mortar "guideshops" where customers can try on clothes across the country with more planned.

BeGood Clothing - an online sustainable clothing company that also has a retail store in San Francisco and is planning a series of "pop-up" showrooms across the country starting this fall.

With the rise of ecommerce, traditional retail has needed to reinvent itself.  Providing experiences is one way this is happening.  

The Booming Field of Public Relations

Interesting data from Pew Research's The Growing Pay Gap Between Journalism and Public Relations shows that the PR field is booming even while the total number of reporters in declining.

As the Pew chart below shows, over the 10 year period from 2004 to 2013 the number of reporters fell by 17%.  Over the same time period, the number of PR professionals increased by 22%.

           
Public relations is booming because PR is proving to very effective in an online world.  This is leading to more firms investing in PR and related activities.  

The industry calls PR "earned media", which the marketing firm Hubspot explains in more detail in their blog post What is Earned Media.

We expect public relations to continue to grow, but often do so under other names. Content marketing is one of these names, and expect to hear this term much more in the future.  

Betting on Fusion Energy

Tech Crunch's Y Combinator and Mithril Invest in Helion, A Nuclear Fusion Startup covers a $1.5 million investment in Helion, a nuclear fusion startup.

What makes this really intriguing is Helion's claim that it can produce, in 3 years, a fusion generator that's:

"1,000 times smaller, over 500 times cheaper, and realizable 10 time faster than other projects."

They go on to say they will be able to generate electricity for less than 4 cents per kilowatt hour.  

What makes these claims so bold is most observers believe fusion energy is several decades and many hundreds of billions of dollars of investment away from becoming commercialized.

The infographic below is from Helion's website and explains their approach.  

All I can say is "wow".  If this happens, we would have a non-polluting, low cost energy source with an unlimited amount of fuel. This would fundamentally change the world.  

While this seems fanciful at best, Nature's article Plasma Physics: The Fusion Upstarts seems to imply firms like Helion may be able to do this over the next decade or so.