Small Business Labs

Book Review: How Will You Measure Your Life

Clayton Christensen is a leading guru on innovation, a professor at Harvard Business School and the author of The Innovators Dilemma - one of the most influential business books ever written. 

But his new book, How Will You Measure Your Life, is a big departure from his past work.  

The book focuses on how to apply business tools to improve your life.  

The inspiration for the book came from Christensen's HBS reunions, where he noticed a surprising number of his classmates had gone through "personal dissatisfaction, family failures, professional struggles, and even criminal behavior".  

One of his classmates, for example, was Enron's Jeff Skilling, who he describes as "a good man" but that "something had clearly sent him off in the wrong direction."

The book contains Christensen's advice on how not to head off in the wrong direction, and consists of three sections:

• Finding Happiness in Your Career
• Finding Happiness in Your Relationships
• How to Stay Out of Jail

Each section discusses tools, cases and theory from business and business research.  It then covers how to apply these to life situations with the goal of teaching people how to lead successful and ethical lives.

The reviews of this book have been mixed.  Many feel it's too preachy or surgar coats today's ethical complexities.  Others question the value of applying business tools and research to life.  

My review is simpler. I wish this book was around when I started my carreer.  

And after reading it myself, I bought copies for my kids and other young adults I know. $16 is not a lot to spend to get them thinking about their future and how to live responsible, ethical and successful lives.    

Most Feel Classic Retirement No Longer Affordable

Transamerica released their 13th annual retirement survey.  They cover a lot of areas related to retirement and their full report does a nice job with the details.  

The quick summary is only 39% of respondents believe they are buiding a big enough nest egg to fund a traditional retirement.  

Because of this, most plan on working in retirement  As the chart (from the study) below shows, 54% of the respondents plan to work past age 65 and/or in retirement.  

Also, only 19% said they did not plan to work in retirement.  27% weren't sure.

This continues a pattern started a about a decade ago of more people saying they plan to work in retirement.  However, up until the Great Recession surveys consistently showed that the main reason people were planning to work in retirement was to stay active or involved.  

As the chart below (also from the study) shows, this is no longer the case. Income is now the primary driver for wanting/needing to work in retirement.

The good news from this data is people are figuring out they aren't financially prepared for a traditional retirement.

The bad news is people aren't financially prepared for a traditional retirement.

People not being prepared to retire is a popular theme these days with the press.  For more on this topic, see the Forbes article 6 Reasons You'll Never Retire or Classic Retirement Becoming Less Likely from Investment News.

Chinese Businesses Renting White Guys

Foreign Policy magazine has an article on the phenomenon of Chinese companies employing white Americans on a part-time basis.  

According to the article, they are looking for white American males "to sit near the front of an office or to join in on meetings because it apparently adds a level of sophistication."

This practice was also common in Japan during the boom years of the late 1980s.  Having a white guy around meant the company was hip and "kokusai" - meaning international.  Being kokusai was a big deal in Japan back then.

I lived in Japan during these years and had several friends who had "rent a white guy" gigs.  These dried up when Japan fell into recession in 1990s.

Before you hop on a plane to China, you need to understand the Chinese have high standards for their rental white guys. They are looking for fluency in Mandarin and prefer good looking and well educated white guys.  The article says the ideal candidate is a "tall, white, male, Jewish, Harvard-educated fluent Mandarin speaker."

Back in the 1980s the Japanese had much lower standards.  Pretty much any white guy with basic conversational Japanese language skills would do.  According to one of my Japanese collegues at the time, they weren't picky because "all white guys look and act the same." 

Gen Y Independents Non-Profit Oriented

We posted the article Gen Y Independents: Socially Oriented and Serving Non-Profits over at MBO Partners blog.

The article covers one of the more interesting statistics from MBO Partners State of Independence Study, which is 22% of Gen Y (born 1980 to 2000) independent workers (freelancers, temps, etc.) reported that the primary market they served is non-profits.

This is substantially higher than any other age group.  On average a bit less than 5% of older respondents reported that non-profits were their primary market.

A number of studies have shown that Gen Yers are more socially oriented than older generations, so we weren't completely surprised by this finding.  But we were surprised just how the strong the difference is between Gen Y and the other age cohorts.  Head over to MBO's site for more on the social orientation of Gen Y.  

Speaking of the State of Independence Study, we've just kicked off year 2 and one of our focus areas is Gen Y.  So in a few months we'll have a lot more to say about this entrepreneurial and socially oriented generation.

Vertical Coworking News Roundup

We've long followed the growing number of coworking facilities that cater to vertical markets, specific industry groups and/or professions.  It's even on our list of the Top 10 Signs Coworking is Growing Up.  

This week a series of articles highlight this trend:

 - Co.Exit's Forage Kitchen: A Coworking Space for Food covers a new effort to create a food-oriented coworking space.  The article mistakenly says it "may end up being the first full-fledged co-working space for food".  In reality there are at least several hundred shared kitchen facilities in the U.S., but it's good see more entering.

 - The Hollywood Reporter's Hollywood, Digital Media Players Unite to Launch L.A. Incubator looks at the new space io/LA which is targeted at "the convergence of tech and entertainment and aligning storytellers with technologists."  It sounds very cool and very LA.  

 - Mashable's Green Spaces is a Coworking Hub for Social Startups talks about a new coworking and incubator space for social ventures in New York.  

The growing numbers of vertical coworking spaces is another example of the shift to Coworking 2.0.

We're working on a research memot on this topic that we hope to have out soon.  But the quick summary is we expect the number of vertical spaces to continue to grow and serve an increasing number of vertical market niches.

Academic Freelancer Woes

The PhD Now Comes with Food Stamps is an interesting article on the struggles of adjunct university faculty.

Adjuncts are freelance faculty who are paid per course taught.  According to the article, the average adjunct is paid $2500 per course taught, but it can be as low as $600.  As freelancers they don't have job security or, in most cases, benefits.   

This is very different deal than what tenured professors get.  Tenure is granted after a 5-7 year process at most universities, and once tenured professors are almost impossible to fire.  They're also well paid and, generally speaking, have excellent benefit packages.  

Not surprisingly, given the labor rigidity and costs associated with adding tenured professors universities are choosing to hire more adjunct and non-tenure track staff.  And since there is a glut of Ph.Ds in many fields, schools don't have to pay well to attract temp professors.

All of this adds up to situation like the one described in article - a women with a Ph.D in medieval history is teaching as an adjunct and makes so little she's on food stamps.

This article clearly overstates the problem.  The vast majority of adjuncts aren't on food stamps.  But just as fields like journalism have been hit with oversupply and the shift to freelancers, so is academia. 

We think the shift away from tenure is just beginning.  Many colleges and universities are in financial trouble, which means more temp faculty members.  And the Internet is just starting to impact higher education.  As Internet based learning expands, it's very likely the demand for college professors will fall.

All of this means expect big changes in how colleges are run in the coming years.

Secret Freelancer Knowledge

Best selling author Neil Gaiman gave this year's commencement address at University of the Arts in Philadelphia.

His theme was "Make Good Art" and in it he shared his "secret freelancer knowledge":

You get work however you get work, but people get to keep working in a freelance world - and more and more of today’s world is freelance - because their work is good, because they are easy to get along with and because they deliver the work on time.

And you don’t even need all three! Two out of three is fine. People will tolerate how unpleasant you are if your work is good and you deliver it on time. People will forgive the lateness of your work if it is good and they like you. And you don’t have to be as good as everyone else if you’re on time and it’s always a pleasure to hear from you.

I'm not familar with Gaiman or his work.  Nor do I often sit through 20 minute online videos.  But I was intrigued by a post on Media Bistro on the speech so I decided to watch.  

20 captivating minutes later I decided it was one of the best commencement speech I've seen.

  

 

Why Small Businesses Aren't Hiring - VUCA

VUCA is an acronym developed by the U.S. Army War College in the late 1990's to describe their view of the future strategic environment.  

It stands for volatility, uncertainty, complexity and ambiguity and we think this group of words does a pretty good job of describing today's business environment.

We also think this operating environment explains why a lot of small businesses are not hiring additional employees.  Things are simply too uncertain and too volatile to take on additional risk.

Accounting Today's Private Companies Too Nervous to Hire covers a survey on private company hiring conducted by SageWorks.  The chart below shows their results.  

What's interesting is the two biggest responses both relate to VUCA.  31.7% of the respondents are worried about the economy in general and 21.7% are more risk adverse due to the Great Recession. Also interesting is the 3rd largest response, increased efficiency.  

Combined, these are what I think of when I hear the term "the new normal". The business environment has become so uncertain and volatile that companies are going to be very hesitant about adding traditional employees.  Instead, they are increasing efficiency and automation and using outsourcing and temporary workers.

Unfortunately, we don't see this changing anytime soon.  

Super Temps to the Rescue

Excellent article in the Harvard Business Review on The Rise of the SuperTemp. According to the article:

"Supertemps are top managers and professionals—from lawyers to CFOs to consultants—who’ve been trained at top schools and companies and choose to pursue project-based careers independent of any major firm."

The article goes to say:

Most supertemps are refugees from big corporations and law and consulting firms who value the autonomy and flexibility of temporary or project-based work and find that the compensation is comparable to what they earned in full-time jobs—sometimes even better.

CNBC's The Rise of the SuperTemp in the C Suite is another version of the HBR article focused on the increasing use of executive temps.  

The demand for executive temps is growing and companies are responding.  For example, the large head hunting firm Heidrick and Struggles has created The Chief Advisor Network, a service to provide clients:

"proven leaders from a select group of vetted executives who prefer a 'portfolio life' over permanent full-time positions or retirement but are still eager to have an impact using their previous accomplishments."

Few independent workers are SuperTemps.  Based on the results of the MBO State of Independence Study, we think about 200,000 U.S. independent workers could be considered SuperTemps.  This is a little over 1% of all independent workers.  

I think I like the term "portfolio executive" over "SuperTemp".  

When I first started Emergent Research I spent most of my time as an executive temp.  I temped as CEO or CMO for about a dozen early to mid-stage tech companies.  The work was exciting, challenging, rewarding and very intense.  

But when I told people I was a temp they weren't impressed.  I think if I told them I was a SuperTemp they'd have been even less impressed.  But portfolio executive - that's impressive.

Grim Job Market Continues for Young Americans

Although the overall labor market continues to improve, there isn't a lot of good job news for young Americans.  The Economic Policy Institute's The Class of 2012 lays out how the job situation is for those 25 and younger.

The key data is the current unemployment rate for workers under the age of 25 is 16.4%.  A couple of other data points of interest are:

• For high school grads under 25 the unemployment rate is 31%
• For college grads under 25 the unemployment rate is 9.4%

Useful data for parents trying to show the value of a college education to their kids.  But even for college grads, the numbers aren't pretty.

The chart below shows the unemployment rate and the underemployment rate for college grads. The underemployment rates includes unemployed workers plus those who are working part time but want full-time work (“involuntary” part-timers), and those who want a job but have given up looking.  

    

This chart actually understates the problem because it doesn't include data on college grads that are working in jobs they are over qualified for.  Data on this is hard to come by, but the report cites a study saying close to 40% of young college grads are in jobs that don't require a college degree.

Wages for high school and college grads have also taken hit.  Between 2000 and 2011 real wages for high school workers under age 25 fell by 11.1%.  For college grads the decline was 5.4%.

The grim job market is a key reason more young Americans are pursuing work as independents (temps, freelancers, etc.).  

In our work on the MBO Partners State of Independence study we found about 2 million Gen Yers (born 1980 to 2000) work at least 15 hours per week as independent workers.  We expect to see these numbers to continue to grow.