Winning by Sharing

Fractional work emerges

I've been writing about the emergence of fractional work for some time now.  The UK's Peopleperhour is a platform for sourcing people on a literally per hour/per day basis.  My contention is that the only area in which we've not seen serious innovation by large companies is with their labour models.  When big companies start to adopt a fractional approach to at least some areas of their workforce......

Winning by Sharing is a collection of true stories combined with market research and analysis about the future of work, how profoundly it will affect people in the next decade, and how this will take most people by surprise.

"Imagine organizations in which most workers aren’t employees at all, but electronically connected freelancers living wherever they want  to. And imagine that all this freedom in business lets people get more of whatever they really want in life – money, interesting work, the chance to help others, or time with their families.” Thomas Malone, The future of work

Ki work: A platform for fractional work

Michael Wolff has been explaining what ki work is for many years.  This is perhaps one of the best explanations because he's set it in context so well. In a recent email thread written in response to a query from an interim management firm Michael says;

people4business.com is a neatly structured freelance marketplace, primarily serving buyers and professionals in the UK. it is one of about a hundred “me-too” businesses that have followed the original models developed by elance and guru. apart from UK focus, it has very little to differentiate itself from the other 100 service providers in this market.

The underlying assumption of all elance look-alikes is that the fundamental organisational principle in all business is that demonstrated by the “firm”* or modern corporation. buyers are some kind of corporation, however small, and sellers are employed contractors to these corporations. the underlying reason is that hitherto it has been more sustainable and cost effective for businesses to be organised in this way, rather than a situation where the economy consisting exclusively of a multitude of independent, self-employed people who contract with one another. this model of business was classically explained by ronald coase in 1937 in his famous article: the nature of the firm.

However ki work is truly part of the online work revolution. we see the emergence of a new organisational model that is structured in such a way that “a multitude of independent, self-employed people who contract with one another” are able to complete transactions as reliably, but more cost-effectively, than the conventional firm. this organisational model has been pioneered within the open source development environment (http://sourceforce.org) and described in Yochai Benkler’s seminal work: coase’s penguin, or linux and the nature of the firm.

ki work takes the organisational concepts of sourceforge (where open source projects are organised on a free basis) and translates them into a model where multiple online work projects can be executed with remuneration for the suppliers. just as sourceforge is a utility enabling virtual open projects, so is ki work the utility for paid virtual projects.

Hence ki work’s main differentiator from the elance model: an organisational structure comprised of category marketplaces, which are  co-ordinated by category leaders and experts. this forms the basis for the creation of virtually outsourced projects, executed by “a multitude of independent, self-employed people who contract with one another”.

What relevance does this have in the interim management market? until you surfaced we did not include “interim management” as a category. our perception is that interim managers focus primarily on getting work in conventional businesses as a form of temporary employment (rather like elance), and as such, are not generally attuned to becoming leading players in the emergent virtual outsourcing market. however, I suspect that a small percentage (maybe 20%) of interim managers would be interested in the emergent opportunities, and I see our “interim management” category as being an alternative to “project management”.

So regarding people4business.com and all the other ones like them, I do not see these as a threat but as a valuable channel for creating awareness in the marketplace. the elance model, now 10 years old, is due to be superseded by the virtual organisational model. ki work is leading the way.

These models are starting to emerge in the creative industries.  Andy Law of St Luke's has created a worldwide network of partners at The LAW Firm, Citizen Agency started as a network of advertising, marketing and web 2,0 professionals, and John Caswell's GroupPartners' expert network delivers most of the value to its clients.  So when will we see Agency.com, AKQA, BBH and others adopt these fractional models of work and start leveraging these platforms to make their biggest cost (people) variable rather than fixed?

The business impact of social networks

I wrote the first version of this diagram in 2005.  It describes the role of a new function that should be created by HR.  I've been talking recently to Jonathan Winter of Career Innovation.  He's been conducting ground breaking research on behalf of large corporates in the field of talent acquisition, social networks  and their impact on a wide range of strategic issues.  It's just as relevant to small companies (or networks?) as it to large ones.  It needs some explanatory text which I've not had a chance to write, but when CEOs and their boards ask questions about the value of social networks;  What's the point, where does all of this take us, what's the business value? 

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Some of the answers to these questions can be found in this diagram.  There are two key outcomes;

Creating and measuring the value of intangible assets, so called good will - a significant proportion of a company's market capitalisation is based on good will, except no one knows how to measure it (at least accurately).

Creating a capability to source and manage people on demand.  A CEO I worked with at BT a few years ago said "I could manage this company with 5,000 people (rather than the 90,000 on the payroll), if I could derive resources on demand in the same way as I can supply bandwidth on demand".  BT will see 25% of its intellectual capital retire in the next five years.  This talent is irreplaceable - apparently.  But why not create a platform for these people to continue to work for BT except on their own terms, in a fractional way?

The key message in this diagram is a call for a 'function' that is responsible for delivering these two outcomes on a continuous basis.  It doesn't matter what you call the role of the leader of that function - Communities Director, Network Leader, Chief Social Officer, if HR doesn't take responsibility for it, they will become irrelevant.

And just to remind you what some of the benefits are, here's a table we devised at Ecademy in 2003 for various companies curious about the impact of social networks to their "bottom line".

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