Small Business Labs

The Artisan Economy Continues to Expand

Several Artisan Economy articles caught my eye this week:

The Guardian's Toy Choice Gets Wider as Internet Inspires Playtime Revolution covers how the Internet and networked business models are enabling a growing number of artisan and boutique toy producers. Key quote:

"You may have noticed it, here and there: more smaller brands, more toys with an eco angle. More craft-oriented, or retro toys. Maybe more unusual toys, tech-enabled toys and toys that teach ... But why is this happening now? All roads lead to the Internt and its democratising ability: networked knowledge, networked contacts, networked marketing and even networked manufacturing."

PSFK's Artisanal Food Hall Brings Gourmet Food Vendors Under One Roof covers All Good Things, a restaurant and food hall in New York City.  The is yet another example of the growing influence artisan foods is having.

Artisans Spin Up a Good Time in Wren covers a fiber arts and spinning festival in Corvalis, Oregon.  Key quote:

Some came to sell their wool or finished products, but most came to share their joy of spinning with like-minded people.

Creative Conference Focuses on Southwest Virginia Assets covers an event focused on artisans in Virginia.  The state's Round The Mountain artisan network has over 400 members.  

We continue to be impressed and excited by the growth of the Artisan Economy.

Chili's Augmenting Waiters With Tablets

Restaurant chain Chili's is rolling out table top tablet computers to most of their 1200 locations after a successful test run earlier this year.

The goal, according to the company, isn't to replace their human wait staff. It's to get diners to spend more per visit.

According to a Business Week article:

"No, it’s not an effort to replace wait staff with machines and cut down on labor costs, insists Nicole Cochran, senior director of marketing at Chili’s. The table-top tablets give the dining experience a novel and modern flair, but that’s not why Chili’s is moving ahead with the effort. The real allure of the tablets, Chili’s has found, is that they reliably increase the size of the average check."

During the test period Chili's found the tablets, which display food ads in addition to being payment devices, increased appetizer and desert sales by 20%.  They also found that diners tend to tip better (the tablet recommends a 20% gratuity).  

Also, because diners can pay via the tablet they don't have to wait for their check.  This saves time, increases table turnover and leads to happier customers.

While the chain is playing down the labor implications of adding tablets, there's little doubt the use of tablets will improve productivity and lead to at least a small reduction in the use of human labor. 

The tablets will also be used as labormetrics devices, providing performance and productivity data on workers and the overall dining experience.  Yet another example of growing role data and analytics are playing in our economy.

I had the opportunity to dine at a tablet equipped Chili's recently. I liked the ability to pay using the tablet and yes, I ended up tipping the recommended 20% (it was easier than changing the tip). I didn't order more food, but from my perspective it improved the overall experience.

Expect to see more tablets in restaurants.

The Shift to Defined Contribution Health Care Plans

Like the defined benefit pension plan before it, the defined benefit health plan seems likely to be replaced by most employers with defined contribution plans.  

Years ago most large corporations (and many mid-sized and smaller firms) offered defined benefit pension plans. These plans promise an organization's employees a specified retirement benefit that's determined by a formula based on some combination of an employee's earnings, length of time with the firm and age.  

Defined benefit retirement plans have almost disappeared in the private sector due to their overall costs and the unpredictable nature of their costs. In their place, companies offer defined contribution plans like 401Ks. These plans reduce costs and limit company risk.  

A similar shift is happening with health care plans. Firms are increasingly dropping their traditional health insurance plans and replacing them with fixed payments to employees.  

Recent examples include Walgreens, Sears, Darden Restaurants and others.

These firms are providing their employees a health care stipend and access to private health care exchanges. These are similar to the public exchanges mandated under Obamacare, but are private and only available to member companies and their employees.  

Many companies are looking to shift their employees to private exchanges. According to a recent study by the consulting firm Booz and Company as many as 20 million Americans will get their health insurance from private exchanges by 2018. 

In addition to using private exchanges, firms are also planning to move employees - and especially part-time employees - to the public exchanges mandated by Obamacare.  Part-time employees are being moved because firms can drop traditional healthcare coverage for them without incurring Obamacare related penalties.  

A good example is Trader Joe's. They are moving their part-time employees from their health care plan to public exchanges. As part of this shift, they will provide their part-time employees $500 a year towards their health insurance costs.

Home Depot has also announced they will be moving their part-time workers to public exchanges.

Over the next year there will be a growing number of defined contribution health care programs, plans and exchanges available to small businesses.  

We encourage small businesses to explore and evaluate these health care options and exchanges. Not only can they reduce health care costs and risks, in many cases they will also provide better benefits for employees.  

The shift to defined contribution health care plans is not surprising - it's part of a broader, long term trend of risk being shifted from institutions to individuals. 

Self-Employment and the Future of Work Webinar

We're participating in the webinar The Future of Work: Self-Employed Workers are America's Hidden Growth Engine this Thursday, September 26th from 1:00pm to 1:45pm ET.

The webinar is being produced by MBO Partners, who we work with on the annual MBO Partners State of Independence study and report.  

We'll be covering the key data from this year's study including demographics of the self-employed and their population growth, as well as new statistics measuring their impact on the economy and employment - which is substantial.

We found that about 1/4 of independent workers (freelancers, self-employed consultants, etc.) hired other independent workers via contracting and this added up to the full-time equivalent of 2.3 millon workers last year.  

We'll discussing this and other data on self-employment in more detail.  

The webinar is free.  Click here to register.

The Personal Revolution

Legendary venture capitalist Michael Moritz gave an interesting presentation at a recent tech show titled The Personal Revolution.  His slide show in embedded below.

The theme of the presentation is the economy is moving to "data factories" that create tools and products that make it easier to start a small business.  Key quote from a Tech Crunch article on the talk:

The tools and platforms listed above have given way to a “personal revolution” that’s delivered unprecedented productivity and reach to small businesses and entrepreneurs. You don’t need nearly as much money to start a business anymore. Moritz gave a slew of examples of people who made small fortunes selling sleds on Amazon, becoming makeup spokeswomen on YouTube, becoming best-selling authors via Kindle, or earning huge real estate commissions through Trulia.

Moritz also covered the downsides of this shift.  Another quote on the outlook for people who aren't highly educated and/or highly skilled in ways attractive to data factory companies like Google and Facebook:

“It means that life is very tough for most everyone in America” says Moritz. That’s not just some ambiguous sense of hardship. The median American household has stagnated. The absolute minimum wage value has decreased significantly. “It’s tough if you’re poor, it’s tough if you’re middle class. It means you have to have the right education to work at [the tech giants]. If you’re not like us, it’s tough” said the highly successful venture capitalist.

Regular readers of this blog are familiar with these themes, but Moritz presents them with flair.

Rage Against the Machines

There's been a regular stream of articles about robots and automation taking jobs from humans of late. Techcrunch's Jobs, Robots, Capitalism, Inequality and You nicely sums up many of the negatives associated with the technology replacing jobs.  

This article focuses on growing income equality.  Key quote:

The strange present, we may conclude, is one in which the middle class is slowly being squeezed out of an economy that is gradually dividing into two camps, the few rich and the many poor. Furthermore, “rich” increasingly means “those working in technology.” 

A more balanced view of this issue is taken in Fast Company's Are Robots Going to Kill Your Next Job or Create It? It covers both sides of the argument and points out there will be "winners and losers" and doesn't come to a firm conclusion on the overall impact of automation on jobs.

A new study out of England (so new it's not yet available online) suggests that close to half of all current U.S. jobs will be automated over the next 20 years.

This is similar finding to a study that we covered last year in our article The Polarization of Jobs. The authors of that study also felt 40%-50% of U.S. will at risk of being replaced by automation.

A good example of the type of robots entering the market is Throwbot, a small robot being used for survelliance by SWAT teams.  Yahoo's Whoa: That Police Officer is a ... Robot does a nice job of describing how Throwbot is used.  

It has a good paragraph on the size of the robotics industry:

According to the International Federation of Robotics, 2012 was a banner year for sales. About 160,000 units were sold for $12 billion, the second highest number ever recorded. "All expectations are that the industrial robots market will continue to expand at around 9 percent to 14 percent per year for the rest of this decade," said Frank Tobe, owner and publisher of The Robot Report, which tracks the industry.

We're more optimistic than most about the ability of humans to compete with automation and robots. We were recently encouraged by what's going on in the accounting industry. When we did a series of forecast workshops 3 years with accountants they were very worried about automation hurting their business.

But as we learned in a recent workshop on the future of accounting, the industry now sees automation as an opportunity in addition to being a threat. They see automation as a way to increase productivity, creating more opportunities for the industry to add value through services.  

We also continue to believe the the New Artisan Economy will also lead to jobs for humans.

I think the Fast Company article closes with a good quote on this topic:

As we enter the Age of Robotics, the question for you may not be: “Will robots kill more jobs than they create?” But: “Am I the 2013 version of a buggy whip manufacturer?"

Autonomy, Control and Self-Employment Satisfaction

Fast Company's Why Everybody's Going Freelance explores a key issue why the self-employed tend to be more satisfied with their work than traditional employees - autonomy.  Key quote from the article:

Organizational psychologists are finding that self-expression has deep links to productivity ... It follows, then, that the autonomy of independence allows people to be more maximally self-expressive, and thus more maximally, sustainably engaged, and thus more successful over the long run.

We've found in our work researching the self-employed and independent workers (freelancers, contractors, etc.) that control and flexibility are key reasons people become self-employed and enjoy being self-employed.  

Our research as part of the 2013 MBO Partners State of Independence study found:

"... those who create, manage and control their own work assignments, work place and schedules - "Job Makers" - reported very high levels of satisfaction (86% satisfied or highly satisfied)  ... few (less than 5%) would prefer having a traditional and almost all plan to continue as independent workers."

In other words, independent workers with autonomy and control are highly satisfied and like their work.

In interviews people like this consistently tell us they are happy to trade off the benefits of a traditional job (predictable income, benefits, higher pay, etc.) to experience the autonomy and control independence provides

Those who feel they don't have control over their careers, work assignments, work place, or work schedules see independent work very differently:

"They are much less satisfied with independent work and almost half (49%) report being dissatisfied. Most (54%) would prefer having a traditional job and only about one third (35%) plan on continuing as an independent worker."

In interviews with this group - often temps, on-call workers and others with little job control or autonomy - we found they didn't get the major benefits of being self-employed and they were impacted in major ways by the disadvantages.  

We've posted in the past about the two sides of independent work.  A major factor in whether you are on the good side or bad side is whether or not you have autonomy and control.  

The Rise of Smart Objects

Good article from JWT Intelligence on smart objects. These are objects that have been enhanced by the addition of computers of some kind. A good example from the article is the smart beer bottle from Heineken.  

The bottle has a set of music detecting sensors and LED lights. The bottle flashes to the beat of music.

The reason I like this example is if beer bottles are becoming embedded with computer chips and sensors then it means pretty much everything will.

Another technology that will drive the rise of smart objects is Bluetooth Low Energy (Bluetooth LE). This is a low power version of Bluetooth that is being quickly adopted as way to allow smartphones and other computer devices to communicate with smart objects.

Apple is including Bluetooth LE (they call it iBeacon) in iOS7 and Google has already adopted it for Android.  Paypal has already announced a hands free payment system based on Bluetooth LE and expect to see many new location-based services using this communications protocol.

Cisco is forecasting that by 2020 there will be 50 billion "things" attached to the Internet. They are also forecasting there will be 1.7 trillion things in existence by then.  

Since there will likely be a lot of smart objects not attached to the Interent (like Heineken's beer bottles), I think it's safe to say there may be as many 100 billion or more smart objects in world by 2020.

Academic Researchers Go Freelance

Harvard University's Some Ph.D's Choose to Work Off the Grid covers the growing trend towards independent, freelance scholars.

These are people who do academic research and publish papers and books, but do so without a formal affiliation with a university or college.

Key quote on why these people choose freelance scholarship:

They may have been jilted by the academic job market, or are uninterested in either being on the tenure track or in cobbling together full-time work as adjuncts ... the work life of an independent scholar—with its freedom from the performance requirements of the tenure track—can be attractive to those with young children and those who can't or don't want to relocate for a faculty job.

But the article also points out the downsides, which include loneliness, low income and a lack of respect by scholars who have jobs at universities.

There are enough freelance scholars that organizations are being formed to help them. The Ronin Institute for Independent Scholarship, for example, is "devoted to facilitating and promoting scholarly research outside the confines of traditional academic research institutions.”

We've posted in the past about how more academic teaching jobs are becoming contingent (or as they call it in academia, adjunct). It's clear it's not just teaching going contingent, but also research.

Life as a Freelancer

Two articles on what it's like being a freelancer caught my eye this week.

The Wall Street Journal's Before You Go Freelance, Read This provides a set of advice from an experienced freelancer on what life is like as an independent worker.  Key quote:

"Going it alone is liberating – and tough."

The author covers a number of challenges associated with being a freelancer including unpredictable income streams, how hard the work can be and periods of lonliness.

But according to this 15 year freelancing veteran, it's all worth it.  Key quote:

"The irregular cash flow and diminished income is more than made up by the freedom to choose my work.  I love being wholly responsible for the success or failure of my output ..."

I was a bit surprised to see an article on freelancing in Cosmopolitan, but What it's Really Like to Work from Home is both clever and funny.  It does say you may get laid less as a freelancer, but despite this the author's bottom line is quite positive:

"Sure, freelancing isn't totally what I thought it would be, but I wouldn't trade my (sometimes stinky) existence for any other."

The other advantage to reading this story is the page has a link to I Went to a Sex Dungeon for a Kink Lesson, an article one doesn't normally come across while reading about freelancing.

For more on life as a freelancer, see the just released MBO Partners 2013 State of Independence report. It covers in detail the attitudes and views of freelancers, the self-employed and others with non-traditional work situations.