Forget the sharing economy, we're in the uncaring economy

July 21, 2015 | Phil Fersht

The Sharing EconomyIf I have to read another article about Uber's disruptive business model, I think I am going to defect to a Trappist monastery and brew very strong beer for the rest of my life...

However, iet's be honest here - who really cares about these taxi drivers being forced to improve their services, clean their cabs,  clean themselves, start using credit card machines and even (on occasion) help you with your bags? The fact is, unless you are a legacy taxi driver, or related to one, you're most likely delighted they are being forced to get competitive and improve their services.

It's the same with Spotify / Google music - unless you are in the business of selling music, most people are ecstatic they can now get all the music they desire for $10 a month or less, without having to spend a fortune on CDs, with the hope that there's the odd good tune.  And there's Amazon versus Best Buy, there's Airbnb versus Marriott, there's Netflix versus Comcast, and so on. Moving to our industry, there's Onesource Virtual versus NGA, there's ZenPayroll versus ADP, Workday versus SAP, there's software versus people, there's offshore people versus onshore people, there are robotically automated solutions versus people, there are self-learning machines versus people, in fact, every advancement in services we look at today is all centered on less people... and delivered As-a-Service.

And like the happy world of taxi customers now getting a better and cheaper service for their money, there are many business leaders who are only too happy to get cheaper and better business operations, because they can reduce their reliance on people. If you're not an employee who is being replaced by a piece of software (although it's widely assumed we will be someday), the chances are you're happy your firm is becoming more profitable and doesn't need to rely on so many bodies to keep the lights on. Just revisit our Value Beyond Cost study we ran with KPMG earlier this year, where we asked 168 senior executives about the priorities of their C-Suites with their operations:

Click to Enlarge

Click to Enlarge

What is startlingly apparent here, beyond the fact that well over 90% of C-Suite directives are obsessed with cost and flexible services as operational priorities, is that less than half (48%) view improving their operational talent as important, 65% are exploring efforts to restrict the recruitment of labor where possible, and 62% are looking, with varying levels of interest, at automation and robotics with the specific purpose of reducing their reliance on labor. The bottom line here is very clear - C-Suites are caring less and less about their people, and more and more about their services.

The big question many are facing now isn't whether to invest heavily in their people - it's whether to invest in technology to replace staff, or use outsourcing partners to reduce the burden of inhouse staffing cost, while improving their access to flexible services.  Or use a combination of the two... or use an outsourcer which is using robotics on itself and is willing to pass on the benefits to its clients desperate to move from a legacy labor-centric operational infrastructure.

The Bottom-line:  In the The As-a-Service Economy, we only care about achieving our desired outcomes 

Here's the nub of the argument, while people like Hillary Clinton want to turn back the clock and protect the legacy job-for-life, the vast majority of people really do not care that labor forces are being disrupted, along with legacy business models and obsolete practices.  Today's world is all about faster, cheaper, more accessible services - and to hell with any obsolete process, system or person which gets in the way of convenient and affordable As-a-Service models.

People care most about enjoying the outcomes of what they pay for, not the efforts made to achieve those outcomes.  Expenditure on services is increasingly related directly to outcomes, not a fixed tax we have to pay for a standard service. Personally, I always pay a limo driver $10 over the norm to drive me to the airport. He picks me up in a Cadillac, hangs up my suit, gives me a bottle of water and a newspaper - and only makes conversation if I want to. My desired outcome is a relaxing journey and the extra cost is worth it - and he wins my business everytime and I refer him to all my friends and colleagues. Now that's one way to win over the Ubers of this world - people will pay when the outcome is what they want. Welcome to the uncaring economy where is all about the outcome...

Posted in: Buyers' Sourcing Best PracticesDesign ThinkingDigital Transformation

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1 Comments

12 Comments

  1. Phil Martie
    Posted Jul 21, 2015 02:43 PM | Permalink Reply

    I am excited to provide a more optimistic perspective here: outcome-based, as-a-service models are more human and caring than effort-based models.

    It is effort-based services that are inhumane. Humans aren’t meant to key invoice numbers forty hours per week. Executing a basic task correctly and repeating it infinitely is something robots are wired for. Humans enjoy problem solving; that’s what we are wired for. The type of job fulfilling to humans has meaning, and meaning can only be derived from an employee understanding the outcome their effort produces. The more the employee is a participant in making changes that improve outcomes, the more meaningful their work experience is.

    The key is for outsourcing providers to include the frontline employee in continuous improvement of their services. Be transparent about the strategy and inclusive in the execution. Employees must also rise to the occasion and add to their skillset. It’s quite doable, but it’s not easy. There is decisive change that needs to take place, but the result is best for all.

    This optimistic view is not the most apparent because outsourcing is in the era of churn (credit: HfS/KPMG). The market moved fast in its desire to buy outcomes, and it’s faster for a client to look for a new provider than to evolve an existing relationship. Same with RPA, same with as-a-service. Churn has people casualties in the short term because clients aren’t replacing like-for-like, so it appears that they favored people-slashing and robots over humans. But this is misleading because it is not a long term dynamic. The positive is that low-end jobs were replaced with high-paying, higher-skilled jobs. Keyers replaced with programmers. Churn just ensures that these exact keyers weren’t the ones who got the better roles in their own specific outsourcing deal.

    But it is happening and will continue to happen: outsourcing relationships will evolve to outcomes and as a service and the employees (humans) will evolve right along with the relationship. It’s the only way for this to work in the long run. If we were truly in an anti-human marketplace, the industry would collapse.

  2. Graham Wright
    Posted Jul 21, 2015 07:56 PM | Permalink Reply

    Phil,

    Superb blog posting. Agree with Phil Martie that the value of jobs will be forced to improve, but also share your view that there isn't a lot of "care" for those who fall by the wayside in this harsh environment. What do you think is the likely outcome of all these jobs that are simply going to go away in the future? Will there be employment for everyone, or is the future of labour really that bleak?

    Graham Wright

  3. Phil Fersht
    Posted Jul 21, 2015 10:32 PM | Permalink Reply

    @Phil M - I love the optimism, and I do share it. For the bright and ambitious (and even semi-bright and semi-ambitious) among us, As-a-Service provides a higher level of work type, and the ability to re-imagine process, get involved in Design Thinking initiatives is paving the way for the future - all about outcome definition, prioritization and realization. I run Design Thinking exercises on my own business and it's amazing how many great ideas and services you can come up with!

    At the same time, we do need to be honest about the harsher attitude so many of us are showing towards workers today. Essentially, if you are an "expensive" widget-turner and can be standardized / robotized / automated / offshored, noone cares anymore. Sadly there are a lot of mid-level workers who probably do not classify themselves as "widget turners" who now fall into that category (read this article on this topic btw), where extinction of that role is increasingly viable. There simply won't be as many higher-value roles to cater for these people, even if many can reorient / or at least want to try. The future of white collar work is less work for many - it's harsh and there will increasingly be shifts in the types of work people need to take on to survive.

    I hate to look back at previous decades when jobs went away, but the government focus was to create temporary infrastructure jobs when there were employment issues in recessions - as these were always assumed to be temporary cyclical occurrences. This difference with today's issues, is that these white collar jobs are being eliminated for good - just look at how entire HR departments have been slimmed down over the years to a small team of administrators and their service provider and SaaS relationships. As the survey data points out, the same is slowly happening across all business functions that are not directly tied to revenue growth - hence the white collar shift, for the smart minority, is going to be from the back and middle offices to the front office.

    I'll address some more of these issues with what the future of work will look like a little later - back to the day job for now =)

    PF

  4. Sharing Economy 12 | Pearltrees
    Posted Jul 22, 2015 12:14 AM | Permalink Reply

    […] Writing the Laws of The Sharing Economy. Federabitazione, 'sharing economy' a misura di condominio - Adn-kronos. Inventory Software for a Sharing Economy - IntelliTrack Software. GoGoBus, Dopo l’Auto anche il Bus è Sharing. Anti-Airbnb ad accuses company of making the rich richer. WeWork in Boxes. Let’s face it: Uber IS the sharing economy. PersonalHeroes Wants To Bring A Kindness Score To The Sharing Economy. The "Sharing Economy" is the Problem. Could Creating A New Class Of Worker Solve The Sharing Economy's Labor Problems? La grande trasformazione del lavoro - ilSole24ORE. 5 Sharing Economy Services You Might Have Missed. The "Sharing Economy" is the Problem. The rise of the 'peer-to-business-to-peer' marketplace. Forget the sharing economy, we’re in the uncaring economy. […]

  5. Oliver Marks
    Posted Jul 22, 2015 03:34 AM | Permalink Reply
    • For Uber and Lyft the human element are an inconvenience...you can argue they ae loaded for bear financially to take advantage of a future fully automated driverless vehicle economy. who will be left with a salary to buy a ride is another matter. (Driving jobs are the biggest employer in the Western US States).

    I think there is a strong whiff of dot com crash about all that but there is no question the realities you touch on above are coming, and human processes are being planned out of existence in tangible ways now. I did a consulting gig recently that was all about replacing human labor intensive mainframe workflows with a modern digital stack. The human aspects are scary...

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  7. Beware the Internet of Things - it's early, security sucks and the C-Suite doesn't care - diginomica
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  8. Weekly Data Protection & Compliance Links
    Posted Jul 31, 2015 12:48 AM | Permalink Reply

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  9. Sharing Economy 13 | Pearltrees
    Posted Aug 01, 2015 02:29 AM | Permalink Reply

    […] che viene però ceduto – e Marx avrebbe disapprovato – dietro remunerazione dello stesso. Forget the sharing economy, we’re in the uncaring economy. If I have to read another article about Uber’s disruptive business model, I think I am going to […]

  10. Manish Mehta
    Posted Aug 03, 2015 12:38 AM | Permalink Reply

    Talking about the economy one can sometimes very rightly be influenced by the very here and now issues that we are familiar with in our IT industry. Worth reflecting also on the evolving picture, the past, present job situation and then how it may change ahead?

    Even if historical experience does not necessarily foretell the future, it is perhaps true that the decline in traditional industries and jobs/work models of the industrialization age were almost in parallel accompanied by the growth of the services economy. Creativity spawned new job avenues, the Services economy went from strength to strength, many work spaces, roles emerged. Automation via software tools and robots may replace some of the jobs that can be done away with - low end jobs or repetitive tasks as people call them; but we must consider also that new trends will emerge ahead and that new opportunities will be created.

    Jobs that are linked to outcomes/impact cannot be handed over to an algorithm yet - even in the middle and back office there will perhaps be work for the smart sourcing professional who can uniquely source for a prototype design, the creative HR manager who challenges the norm to structure a new evaluation system and an analytical financial specialist who can recommend biz. perf. improvements based on algorithms + his/her insight? Can software truly replace a good project manager? And ofcourse, in the front office, in customer services/sales/marketing, the pmnichannel digital personalization world ahead we will need both human and technology components. Yes, the nature of the jobs and the work arrangements (full time vs contractual) will evolve and there may also be no job for the very average middling professional, who is just a part of the regular process step. Just another bean counting role, a transactional HR role, just an average sales person...well you are not going to find many such jobs, some maybe...

  11. Phil Fersht
    Posted Aug 03, 2015 03:34 AM | Permalink Reply

    @Manish - business models are more often defined by recessions, where there is a burning platform to drive out any unnecessary costs and survive, as opposed to growth periods, where there simply isn't a huge onus to make painful changes to the business operating structure.

    The next recession will be very defining for us all - the middling process job go away and simply not be replaced. Companies will look to technology to scale down their reliance on manual tasks. There will be a lot of the "I told you so" once China (or somewhere else) causes the next downturn...

    PF

  12. Manish Mehta
    Posted Aug 03, 2015 01:40 PM | Permalink Reply

    Good point about the trigger event -Yes, it may well be the next recession that which may be the final step to accelerates this shift. Coming out of that will be a very different economy.

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