Workpop, a jobs platform for hourly workers, raises $7.9M

There are sites like Linkedin, geared for recruiting and hiring professionals through networking and content sharing. And of course, freelance placeforms (marketplace + platform) like Elance-oDesk support the growing proportion of the workforce operating as freelancers, and hooking them up with companies who need their services. But what about hourly workers? In many service industries, turnover is high and determining workers’ skills may be difficult. New startup Workpop is trying to fill that need.

Released in beta and limited to Los Angeles at present, Workpop orchestrates the process of workers creating profiles, importing information from Linkedin and Facebook. And for employers, the placeform supports the creation of job listings, with requirements, job descriptions, and so on. Candidates can record a video introduction so that employers can get a sense of their character and personality.

Here’s a listing of some jobs, with various filters to the left.

Screenshot 2014-09-22 07.55.22

I glanced at the employer side, and it looks clean and intuitive:

Screenshot 2014-09-22 07.57.47

Founded by co-CEOs Reed Shaffner (formerly GM of Zygna) and Chris Ovitz (Viddy co-founder), the company has raised $7 million in a series A round, after a seed round of $900,000. Smart money includes Ev Williams’ Obvious Ventures, Box’s Aaron Levie, and a long list of angels.

I expect to see Workpop rolling out in major US markets with that new funding.

This is only the most recent example of work placeforms meeting market demand, and being able to provide excellent market analysis for both job seeker and employer. At present, the service assists with onboarding new hires, and providing feedback to unsuccessful candidates. In coming iterations, the company will be rolling out dashboards providing all sorts of information for job seekers and employers.

Professional services marketplace Thumbtack raises $100M

Last week, Thumbtack, an online services marketplace, raised $100 million from Google Capital, a VC group at the search giant. This brings the total investment in Thumbtack up to $150 million, with participation in this round by Tiger Global Management, Sequoia Capital and Javelin Venture Partners.

Thumbtack was started in 2009, and serves as a marketplace for individuals or businesses find professional freelancers in their area, like photographers, gardeners, chefs, or movers. The company is operating in all 50 states of the US and sends more than $1.8 billion to over 75,000 freelancers.

Screen Shot 2014-08-25 at 7.46.28 AM

Thumbtack is part of the rising tide around networked marketplace platforms, or what I call placeforms. Like Airbnb, Uber, and eLance, Thumbtack makes a market where buyers and sellers can meet and exchange services for money. In essence they make an existing marketplace more liquid, better managed, and more transparent.

Thumbtack — like almost all placeforms — provides detailed profile information for the professionals it brokers so that buyers are able to make more informed decisions about the caterer they hire to create a memorable wedding day. They can solicit bids from providers and read customer reviews.

There is no doubt that placeforms are becoming the normal way to find help. The ease of use is a major consideration. For example, consider trying to get a number of quotes from house painters. Without a tool like Thumbtack, you’d have to find and contact some painters, extract quotes, send them specifications. However, using Thumbtack, the user just selects exterior painting from a list of services, fills in a form with specs, and then hits send.

Screen Shot 2014-08-25 at 7.55.50 AM


Later on, painters would be sending proposals to your email address, and you could negotiate a deal, and get your house painted. The professionals pay at the point of sending a quote, which is how Thumbtack makes money, like competitor, like NeedTo, Zaask, or Workstir.

This funding round for Thumbtack is just the newest news blip in what is going to be one of the major threads of the next few years. I expect that nearly every niche that can be reached by a placeform will be. Some — like Thumbtack may be more general, offering many service providers for a wide range of tasks. Others may be more specialized, like a placeform for software developers, which might be integrated with software testing tools.

I was surprised to see that Thumbtack does not have a social dimension, and in particular, the angle of seeing professionals that my friends recommend. Perhaps it’s just too early, and not enough people have signed up for that to make a difference. I expect that to be a growth area, and just as important as having a mobile client (which they do have).

ISS to seek $1.47B IPO, and the third wave of outsourcing

ISS is one of the world largest private employers, with over 530,000 employees worldwide, but is largely unknown except to its workers and client companies. It is an outsourcing company, offering businesses with non-core services like cleaning, catering, security and building management.
The company plans an initial public offering of $1.47 billion dollars on the NASDAQ exchange, and will use the funds to retire various lines of credit. The company posted revenue of 78.5 Danish kroner ($14.45 billion) in 2013.
My interest in this is less about ISS, and more principally around the fundamental concept of outsourcing work.
At one time a large company like AIG, NBC, or IBM would hire its own cleaning staff, cafeteria workers, and security guards. But starting in the last decades of the 20th century, company started to outsource such services to specialists: Wackenhut for security, for example. After all, AIG doesn’t have enough of a need for security services to become expert in the field, and Wackenhut can scale up to the point where those working at the company can have meaningful careers, not just dead-end jobs.
But this has led inexorably past the ranks of blue collar services, like security and cleaning, and the second phase of outsourcing came along and started to move from non-core to core work. A company like AIG might outsource claims processing to a firm specializing in that based in the Philippines, or IBM might outsource chip manufacturing to ARM.
And in parallel with that, as companies began to look more closely at their obligations to employees, we saw the fraying of the social contract. Many folks that formerly worked as full-time employees were let go, or converted to freelance consultants. Some of this is simply cost-saving — reduced benefits, etc. — and some was to allow companies to be more flexible. If it is expensive to pay accountants who live nearby your New York City headquarters, why not move the jobs to Minnesota, or Des Moines?
I suspect that we are headed for a third wave of outsourcing. The first was blue collar hourly employees being spun out to companies like ISS. The second was back office workers: the accountants, planners, and designers that supported company operations, but were the cost centers, not the profit centers.
In today’s entrepreneurial companies, only those capabilities that are strategic to the business really need to be staffed with full-time employees. In principle, everything else could be outsourced.
The rise of placeforms (marketplace + platform) like oDesk, Work Market, and Elance has shown how this can work with designers, developers and other creatives that most businesses need on a project basis. My sense is that this demonstrates a trend: businesses are discovering what their core is by a process of outsourced elimination.
So one hotel chain may discover that it’s real core strength is marketing and customer service, not building management, so they might totally outsource the management of the physical side of the hotels: engineering, renovation, groundskeeping, etc. The economic downturn has accelerated this trend, as detailed back in 2009 in this Economist piece, that took a close look at InterContinental Hotels Group, which has sold off most properties to franchisees. Or a consultancy might find their core skills do not include the research side, so they might spin out a network of small research boutiques, skilled in various sectors, who also get work from other sources as well.
The decrease in friction in work because of the low cost and power of modern work technologies is making this more possible, and the decline of long-term employment and the resultant disengagement of workers gives everyone added incentives for these sorts of cooperative ventures. Companies may spin out everything but the one thing that matters, the one thing that defines the company.
I wonder how much, if any, of ISS’ IPO will be directed toward the third wave? Well, if not that money, there’s plenty of cash out there looking to be invested.

Kevin Kelly’s cool tools for self publishing Cool Tools

cool tools book

Kevin Kelly’s Cool Tools

I guess it’s not surprising that Kevin Kelly, the co-founder of Wired and now the magazine’s Senior Maverick, would be using state-of-the-art business practices and tools. He recently decided to self publish the next issue of Cool Tools, comprising 1,500 curated reviews of all kinds of tools in an 472 page book:

Cool Tools is a highly curated selection of the best tools available for individuals and small groups. Tools include hand tools, maps, how-to books, vehicles, software, specialized devices, gizmos, websites — and anything useful. Tools are selected and presented in the book if they are the best of kind, the cheapest, or the only thing available that will do the job.

Kelly details the path to self publishing in a recent post, and the part I found most interesting had to do with his use of Elance and Dropbox:

I used some cool tools to keep the costs low. Much of the work was outsourced to the freelancers of the world on Elance. About a million freelancers enrolled in Elance around the world will bid on a job. I had several jobs I outsourced to Elance (although many, if not most, of the freelancers work in the US). The layout design of the 472 pages was specified with the request to bid the job on a per-page cost. Out of the 30 or so Elance designers who bid, we picked 8 to do test pages, and then selected 6 to get the work. Their bids were not the lowest. They were in the middle range, but had good ratings from previous work. The 6 designers worked in parallel. The ones whose work we liked best we gave more pages to. The amount we paid was low for San Francisco area, but most important was the speed. We could design the entire mammoth book in only 4 weeks. We hired proofers on Elance as well, and again we hired them in parallel. We took bids on a per-page basis, winnowed the best candidates down with a few test pages, and then got them going all at once, giving more pages to those who did the best work. We proofread the entire book in several days. We also used Elance to find graphic artists who could remove the backgrounds from product shots; one worker hailed from Turkey. Elance has a very intelligent and easy-to-use interface, which aids in protecting buyer and seller, managing bids, and keeping track of work submitted. I consider it one of the chief tools in self-publishing.

A near-perfect case study in small, socially scaled fast-and-loose production, leveraging the Elance placeform (marketplace + platformplaceform) as the foundation of finding participants in the project.

The other indispensable tool we used was Dropbox. This allows folks to work remotely on files anywhere in the world, while also backing them up to the cloud. The book was prepared in InDesign, the layout program from Adobe. It’s been around for more than a decade, and it keeps getting better, integrating nicely with Dropbox. We kept our InDesign files, plus thousands of pictures, and other large files in our respective Dropboxes, and never needed to move them the whole time. (We upgraded everyone’s account to the pro unlimited storage version.) This made working remotely and collaboratively and rapidly easy and smooth. I don’t believe we could have done a book this large and complex over the net without something like Dropbox.

This supports the Distributed Core model that I believe is the heart of creative work in the new form factor of work (see Social third-quarter 2013: analysis and outlook and The future of work: new paths to productivity). Dropbox and other file sync-and-share applications, like Hightail, Box, and Intralinks, are filling the gap of a distributed virtual file system. And, as Kelly stated, we just couldn’t do our work anymore without a distributed core for working socially.

Why do we still charge by the hour?

I read an article by Adam Davidson in the NY Times Magazine, discussing so-called “cliff jumpers”: service professionals that have dropped the idea of billable hours for their time:

During the past few decades, as the economic logic of the United States has changed, global trade and technology have made it all but impossible for any industry to make much profit in mass production of any sort. (Companies like G.E., Nike and Apple learned early on that the real money was in the creative ideas that can transform simple physical products far beyond their generic or commodity value.) Similar forces have ripped through professional services, particularly accounting, a profession that, until recently, was little changed from its 16th-century roots. Software like Turbo­Tax has made the most basic work worth little. Cheaper accountants in India, Ireland, Eastern Europe and Latin America have steadily taken over the more routine types of business, though not quite as voraciously as once predicted.

Just as Apple doesn’t want to be in the generic MP3-player business, [accountant Jason] Blumer didn’t want to be just one more guy competing to charge a few hundred dollars an hour to do your taxes. A few years ago, he said, he realized that the billable hour was undercutting his value — it was his profession’s commodity, suggesting to clients that he and his colleagues were interchangeable containers of finite, measurable units that could be traded for money. Perhaps the biggest problem, though, was that billing by the hour incentivized long, boring projects rather than those that required specialized, valuable insight that couldn’t (and shouldn’t) be measured in time. Paradoxically, the billable hour encouraged Blumer and his colleagues to spend more time than necessary on routine work rather than on the more nuanced jobs.

Davidson preceded this description of Blumer’s rationale for jumping the cliff by pointing out that the billable hour was popularized by the American Bar Association in the 1950s, when lawyers’ fees had been dropping relative to other professions. The ABA successfully promoted the billable hour, and the profession dropped fixed fee agreements, and the rest is history.

We know that the work hour is a fiction, on many levels. First of all, all hours we spend at work are not equal. Yes, you can track what project you are working on so that 10am-11am was work for the Johnson account and 1pm-2pm was dedicated to the budget project, but the value created in each of those hours is variable, to say the least. Besides, why should a client care how much time — or how little — is spent on their project? Shouldn’t it be about delivering value?

Many professional niches use flat billing, as in immigration law, where it is the industry standard no matter the size of the law firm.

Switching to a flat fee model requires the practitioner to carefully analyze their value, and perhaps to more narrowly focus their work. For example, an iOS developer might use standardized tools and techniques so that an initial iPhone app mockup could be “fee”-ed out at $12,000.

Davidson explores how the tax professional, Jason Blumer, transitioned to flat fees by becoming more specialized:

But those complex problems were the ones that Blumer wanted to solve, and he also knew his insights were more valuable than the time it took him to conjure them. So he identified a niche — creative professionals who struggled to manage their finances as their start-ups became mature businesses — and he endeavored to help his clients make (and save) enough money that they would gladly pay a significant fee without asking about the hours it took him to figure out what to do. Blumer has been so successful in his approach that he has become a leading voice among a national band of accountants who call themselves the Cliff Jumpers. Many Cliff Jumpers have abandoned the traditional bill-by-the-hour approach to focus on noncommodity accounting solutions for specific client groups. One focuses on entrepreneurs hoping to sell their new businesses; several work with people who are terrified about starting a small business.

I can’t avoid contrasting this with the billable hour regime that is baked into the placeforms of the freelancer economy. (Marketplaces built on software platforms = Placeforms.) I once discussed that with Gary Swart, the CEO of oDesk, and he made the case that it was too confusing for clients to compare the capabilities of freelancers in other ways.

My sense is that we are gradually becoming more aware of the intrinsic mismatch of value and hours of labor. Even in companies that track time against projects — and even where the time is billed out to clients — there is a tacit awareness that time and value are not proxies, except at the level of a convenient fiction.

Whether we will soon see the end of the billable hour is uncertain. My bet is that it will live on as an annoying relic, that we constantly have to work around, like the base 60 time system we inherited from the Babylonians. (Shouldn’t we switch to digital time? I will leave that argument for another day, however.)

I suspect that inside the most innovative companies the most innovative workers do not attempt to associate the hours they spend working on the value their work creates. But somewhere between that extreme and the factory floor work slides into being treated as a commodity, instead of the creation of value.

Short takes: Giggem, Podio Video, Hangouts Voice Calling

There are a lot of product announcements that I learn about that are interesting but don’t warrant a full post. I am going to queue these up and every few days or so I’ll post a collation of short takes.

Giggem is a self-described “matchmaking tool for all musicians and music industry professionals to meet and connect for improving their music career.” Another placeform, in this case a social platform making a marketplace for musicians to connect with each other and with songwriters, managers, labels, and fans.

Citrix announced immediate availability of 1:1 video integrated within Podio, the company’s “social collaboration/project management platform” (or what I more concisely call work management). It is built into Podio Chat in an intuitive way. This also supports integration with GoToMeeting for group conferencing. Here’s my wife, Sarah, conferencing with me. (She’s a heavy Podio user.)
podio video

Google has brought back voice calling, formerly available via Google Voice, but now integrated within Hangouts, according to the official Google Blog. (I was one of the many folks unhappy about losing that capability.)

Business and academia pointing fingers: who’s responsible for graduates’ readiness?

There is a very strange dance going on between colleges and business, where employers rely quite heavily on a college degree as a basic requirement for hiring but believe that colleges are doing a bad job of preparing graduates for the workplace. But academic respond that they are teaching students to think, not to work.

Karin Fischer, A College Degree Sorts Job Applicants, but Employers Wish It Meant More
Sine Nomine Associates, Mr. Boyes’s firm, works with high-tech companies like Cisco and IBM. However, it’s fundamental abilities that he says recent graduates lack, like how to analyze large amounts of data or construct a cogent argument. “It’s not a matter of technical skill,” he says, “but of knowing how to think.”
Mr. Boyes, who takes on one or two new employees a year, isn’t alone in finding recent graduates weak in those areas. While fresh hires had the right technical know-how for the job, said most employers in the survey, they grumbled that colleges weren’t adequately preparing students in written and oral communication, decision-making, and analytical and research skills.
That might come as a surprise to college leaders, who frequently cast the value of a degree in those very terms. But Julian L. Alssid, of the nonprofit Workforce Strategy Center, says that although business and higher education may use the same language, it doesn’t always have the same meaning. Educators often think of such competencies “in a purely academic context,” Mr. Alssid says, while employers want “book smarts to translate to the real world.”
“It’s a matter of how to apply that knowledge,” he says.
Such a push, however, tends not to go over well with faculty members who look down on any instruction perceived as vocational.
The Boeing Company in 2008 began to rank colleges based on how well their graduates perform within the corporation; it plans to conduct the same evaluation again this year, says Richard D. Stephens, senior vice president for human resources and management.
“To expect business to bring graduates up to speed,” Richard D. Stevens, senior vice president for Boeing human resources and management, says, “that’s too much to ask.”While the results have not been made public, Boeing did share them with colleges. Some took the findings seriously, even working with the aerospace company to refine their curricula, while others dismissed them. Colleges’ responses, Mr. Stephens says, have affected where Boeing focuses its internship programs and hiring.
“To expect business to bring graduates up to speed,” he says, “that’s too much to ask.”
With many people now moving from job to job and employer to employer throughout their careers, on-the-job preparation no longer makes economic sense to a lot of companies. Mr. Boyes, the technology consultant, puts all new hires through a yearlong training program, but he’s an outlier.
“Once upon a time, ‘trainee’ used to be a common job title,” says Philip D. Gardner, director of the Collegiate Employment Research Institute at Michigan State University. “Now companies expect everyone, recent graduates included, to be ready to go on Day One.
“The mantle of preparing the work force,” he says, “has been passed to higher ed.”
Whether colleges want to accept that responsibility is another matter. While some institutions tout their career centers, internship offerings, and academic programs designed with industry input, others argue that workplace skills ought to be taught on the job. Higher education is meant to educate broadly, not train narrowly, they say: It’s business that’s asking too much.

So, who is responsible for training graduates in the skills needed in the office?
Boeing seems to think that colleges and universities are part of their supply chain, and that they should be providing cogs that will fit the corporate gearbox, without any tooling by the business at all.
Historically, however, American business spent a great deal of effort training new hires. This was partly due to the companies desires to train people to do things the ‘company way’ but also as a practical response to the inexperience of candidates. How would a new high school or college graduate have had access to the tools available on the factory floor? Or exposure to logistics at railways or ports? Or practical experience in erecting skyscrapers or bridges?
But we have moved into a different era, where much of the work being performed in business relies on the coordination of human thinking, mediated by computers, software, and the web. Yes, we still have factories, and we are building bridges, but the proportion of jobs involved in those sectors have dwindled dramatically. in 2005, a milestone was reached, according to the Federal Reserve Bank of New York, with more than 50% of jobs in the US becoming non-routine and cognitive, shifting from 40% of jobs in 1975 to around 60% today (as I discussed in Work is rapidly becoming nonroutine).

My argument is this:

  1. Historically, company training programs focused on the routinization of work: teaching trainees how to work as bank tellers, clerks, or assembly line workers. It was intended to teach manual skills, and the application of thinking done by others.
  2. Since the ’70s, company training programs have dramatically decreased, as a function of cost cutting initiatives and a growing sense that companies weren’t getting back a return on the investment made. People were changing jobs too quickly for the benefits of anything but the most basic of training to be felt.
  3. At any rate, what is needed is a completely different set of skills, cognitive and improvisational skills needed in the vastly different work context of 2013.

I’ve argued elsewhere (see Hireart is another placeform interceding in the broken labor market) that we need actor to fill the gap in America’s broken labor market. The traditional actors — business, academia, and government — are involved in a Mexican standoff, pointing their fingers at each other, and taking no responsibility for fixing the problem. Government has slid so far out of the picture that it goes unmentioned in Fischer’s article, except implicitly, as an underwriter of funding for community colleges and so forth.
Here’s a way to look at it. In a well-organized world we’d have some coordination between government, business, and academia. Imagine a recent graduate and job candidate, Bette, looking for a job applying her degree in Spanish Literature (with a minor in Chemistry).  Her factual knowledge — the principles of chemistry, American History, and Spanish — has been provided by her college, and application of that factual knowledge in the business context — making better rubber gaskets for Latin American markets, perhaps — would be the province of her hypothetical employer. However, several companies where she’s interviewed think she doesn’t have enough business experience, and that she lacks needed financial skills, like understanding cash flow and currency fluctuations. The federal, state, and local governments have no programs to school Bette — and the many other recent graduates — and she opted to work part-time during college, especially during the summers, to pay for part of her college expenses rather than taking on an unpaid internship. However, she still has over $20,000 in student debt.
The picture looks like this:
three circle
The relations here have been boiled down to the most basic economic ones, which is a vast oversimplification. While at college, Bette also built a network of friends and colleagues at the Gap, where she worked as a retail clerk. But her network does not overlap much with the working world at the sort of companies that might want to hypothetically take advantage of her skills in Spanish and chemistry. And none of the three players wants to take responsibility, after Bette has graduated, for the additional training, networking, or outreach that might be necessary for Bette to connect with a job.
A Modest Proposal
I think we have to wind this back and imagine how it might be if there was a fourth actor in the picture from the start of Bette’s time in college, one organized for the purpose of avoiding the vacuum that Bette and millions of other graduates fall into.
A placeform is a for profit enterprise that creates and mediates a marketplace using a software platform, and leveraging scale on all sides of the market in ways that the other actors may not have the capacity to do.I have been using the idea of placeforms (marketplace + platformplaceform) for the past few months, and I propose that this is the answer, and perhaps the only possible answer to this problem. A placeform is a for profit enterprise that creates and mediates a marketplace using a software platform, and leveraging scale on all sides of the market in ways that the other actors may not have the capacity to do. (In essence, they are undertaking what a more benevolent government might do, but which ours cannot, fo a complex series of political reasons.)
Let’s describe an imaginary placeform — — that was started by a group of recent college graduates with some initial seed funding (from Linkedin founders) and grants from government programs. Imagine this happened 10 years ago, 5 years before before Bette started college, and she was one of the fifth year group of college freshman to be involved in the project.
How is this scenario different for Bette?

  • While Bette might still have studied Spanish literature, her BeLabor advisor, Carla, would have set up a mentorship with a local Spanish-speaking business woman of Gautemalan background, to help Bette learn more about the local, Latino business community, and perhaps to find practical opportunities to apply her language skills. That led to a job in a local Spanish newspaper in her junior and senior years, instead of the Gap job she started with, and led her to consider adding some accounting courses.
  • BeLabor provided Bette with a great deal of information about the job market, and BeLabor’s online network (designed along the lines of Angellist and Linkedin) allowed Bette to follow recommended companies — those that matched her interests, skills, and personal values — and for those companies to follow her, as well. This connected here with dozens of contacts within those companies, some of which became initial points of contact in her job search.
  • BeLabor applied psychodynamic characterization of corporate culture and Bette’s psychological orientation to help identify ‘best fit’ recommendations for her and participating companies.
  • BeLabor worked with Bette and companies that expressed initial interest in her, and starting in her junior year, BeLabor suggested specific online courses and seminars that Bette should take, to better meet the needs of potential employers.
  • Bette scored very high in certain tests, leading BeLabor to offer her a full-time summer internship in her junior year, counseling high school students preparing for college and considering BeLabor relative to competitive placeforms.

How can BeLabor pay for this?

  1. BeLabor charges companies a 15% finder’s fee (based on first 12 months salary) for placing a candidate. This is in line with industry norms for headhunting, and is a small price for avoiding the costs of mishires.
  2. BeLabor charges the successfully placed candidates a 5% fee (at the end of the first 12 months of employment), but candidates can opt to provide counseling and advice in lieu of payment, if BeLabor agrees. Their is also an option to contribute time to charitable work in lieu of payment as well. Successfully placed candidates can also opt to continue to rely on BeLabor as an agent for a fee — like a sport’s or entertainment agent — to negotiate on Bette’s behalf for pay raises, promotions, and assignments. (I discussed this idea in Freelancers need agents like companies need head hunters.)
  3. Belabor — after its initial few years of operation — became a private student loan division. Because of its involvement with students, BeLabor was able to decrease the cost of loans for those in good standing.
  4. BeLabor works with colleges and universities, many of whom have outsourced their student placement and related services to the company, reducing expenses for the institutions while opening a very profitable business for BeLabor.
  5. BeLabor manages internship and new hire training programs on behalf of corporations who wish to outsource them, again, saving money for the company and a significant profit for BeLabor. BeLabor can leverage its skills in big data and the broad information it has on company culture and candidates psychological make-up to make better matches. It also handles the new (mythical at present, but coming soon) federal regulations on internship pay and reporting on behalf of the companies.

Well, you get the picture. Bette got a great job with Proctor & Gamble, based in Cincinnati, focused on business development in Latin America for health care products. She opted to advise youngsters in lieu of payment back to BeLabor, and fifteen years later — as a SVP at P&G — she was asked to join the board of  BeLabor, which she did.
three circle 2
[I am aware that this scenario is not very well-represented in these diagrams, a failing I will rectify in a report I am planning for August on the topic of placeforms.]

Where are the boundaries in a rapidly changing world of business?

I had a number of interesting conversations with readers, colleagues, and vendors last week, some inspired by posts published here, particularly Shadow IT is growing because everything is IT, BYOD, and various discussions around the idea of placeforms (markeplace + platforms = placeforms). I think these are all working together to indicate a shifting of boundaries and certainties in the business, and I think it is critical to get a sense of where this is heading, both on the IT side, and for business strategy in general.

Everything in today’s business hinges on IT. There is no sector of any market where digital literacy and mastery is not critical, and in many areas, those skills and techniques are the most critical for competitive advantage. Every waitron, retail clerk, police officer, and GigaOM analyst of the near future will find their personal digital tools central to the majority of work the perform each day. Most importantly: these tools — both apps and devices — will become so embedded in our work patterns that we will no longer be able to accomplish our work without them, just like telephones were essential in 1970s business, and email was in the 1990s.

The difference is that today’s work tools are increasingly personal. They are ‘proximal’ devices: always close to hand, and they travel with us at all times: in the bus, in the rest room, watching TV, and in meetings.

As I stated in Shadow IT is growing because everything is IT,

Bring Your Own Device is really Bring Your Own Mind

These devices are a central aspect of personal productivity and identity. People want to choose these tools based on how they do their work. So BYOD should really be considered a shift of the boundary where the company’s control over the way we work — which equates to the way we think — is receding.

The takeaway from the BYOD trend is not just the company saving a great deal of money, or the furor about what can and cannot be used (The War On Dropbox). It is the strategic withdrawal of the business from one of the traditional border zones between the company and the employee: the sanctioned computing foreground.

As we have moved to an always-on world it is the average staffer who is always on, always connected. It is their hand on the tablet at 11pm on Saturday, dealing with a client emergency, or preparing for Monday’s briefing. So perhaps this is a tradeoff, a shifting of the social contract. But my bet is that in the final analysis, the decision on BYOD will be part of a larger withdrawal by the company, a part of a greater loosening and relaxing.

In a world where decision-making has to be decentralized in the company is to react in a timely way to market shifts and customer needs, what do you continue to centralize? Or, where do you decide to remain slow and resistant to change? Today, CIOs are drawing their Maginot line somewhere near  BYOD, but in a few years this will be a forgotten battle, and CIOs may be fighting for a table at the chair.

In a world where everything is IT, the CIO might start to seem like the Chief Breathing Officer. But the IT staff can’t do the breathing for everyone in the company. There is no boundary there, anymore, between the worker and their tools. And increasingly, full-time employees will want to be more like freelancers, in this regard. Every freelancers owns their own shovel, and digs their own hole. The days when a division VP would email the CIO about having a hole dug, and get back an estimate of six weeks and twenty staff days of work, well, those days are over.

There will be a very fast retreat of IT’s domain in the business, like the fall in sea level just before a tsunami.

One Certainty: The Retreat Of Business

The tsunami is the withdrawal of a great many conventional business functions in the business from direct interaction with their corresponding marketplaces. This first diagram is a (poor) attempt to characterize the traditional arrangement with functions in the business and their interaction with markets. Note that I have two-headed arrows since these functions may have already adopted social communications with the various people involved, like HR using Linkedin and Twitter communications with potential job candidates. But the shift I am talking about is post-social.


We are witnessing the emergence of placeforms that act as brokers, as intermediaries, between job candidates and possible employers (see HireArt is another placeform interceding in the broken labor market), between freelancers and client companies (oDesk, Work Markets, Elance, etc.), or even between interns and businesses seeking them. And that is just focussing on HR. The same sort of intermediates can appear in marker research, sales lead generation, and customer support (e.g., call centers).

How will that look? Where will the new boundaries be?



The business will retract from direct interaction with these markets, and individual marker participants — customers, freelancers, prospective employees, etc. — will welcome intermediation as well, and for simple reasons:

  1. These intermediaries will specialize at  narrow and deep knowledge, relationships, and technology, and all but the very largest companies will not be able to match the placeform’s ability to amass and mine big data regarding their niche. For example, a company that routinely has 20 or 30 freelancers working for it simply will not know as much about them and their relative value as a freelancer placeform company that works with hundreds of companies and tens of thousands of freelancers.
  2. The intermediaries will be able to scale their operations — based on working with large numbers of clients and large numbers of individuals in the market — in a way that is not possible for other market participants. So, they will be able to make serious profits while market participants benefit financially. For example, a company using a placeform to manage call centers will spend less and get better results, because a specialized placeform with scale advantages will be better able to match workers with the type of support needed, and can invest more in training, for example.
  3. The scaling of the intermediaries acts as a check on the information imbalance in many company-individual interactions. For example, a freelancer dealing directly with a company is unlikely to be able to determine if that company has a good track record of on-time payments to freelancers, or whether other freelancers believe the company is a fair partner. However, a placeform company can amass that information, and actually influence companies’ behavior by threatening sanctions, like closing their access to  its freelancers.

Businesses will still use conventional branding and marketing to get their story across, but the transition to marketing through social platforms — Facebook, Pinterest, Tumblr, Twitter — will accelerate, and increasingly those ‘social networks’ will be evolving into placeforms themselves, providing tools and programs to better position the company in a social mediated world. As these companies do more, the corresponding functions in the business are pulling back, and relying more on the data analysis and trend spotting of outsiders to help guide their direction.

So, on two major fronts, business is pulling back, redrawing the boundaries at the edge, and reconsidering where the edge should be. This is happening in parallel with the general loosening of ties within the business, and the overall increase of connection: the fast-and-loose business that I have been discussing here the past several months. The connections between the core of the business and the intermediaries that help implement the companies objectives will continue to grow, so along with the retreat from the direct market, the company is also advancing into the market through its intermediaries. A business working with oDesk, for example, is privy to more information about the freelance market than it could ever amass independently: it is made smarter by the sum of its connections.

The Final Word

So, the final word is that the enterprise is retreating form many areas it once considered central, and its is handing over a great deal to employees and to placeforms. This will make businesses leaner, faster, smarter, and looser.

Shadow IT is growing because everything is IT

My old friend Dion Hinchcliffe threw out a tantalizing statistic in a piece that started like this:

When they write the history of the early days of the networked era, it will be noted that the centralization of technology services in most enterprises largely ended within a few decades of the arrival of the Internet. Networked technology became so profoundly widespread, pervasive, and inexpensive, that the sheer variety and richness of the cloud first swamped and then disintermediated the old methods of providing a few approved apps and devices. What’s more, as all forms of digital became more and more central to the core business models of organizations, the traditional IT department began to lose a growing portion of the strategic discussion around technology.

And then he throws a hand grenade, saying that shadow IT — the IT not handled by the official IT group — is expected to become 90% of all IT purchases by 2020.

I see a few trends that support this contention, to the point where I am going to suggest Dion’s numbers are too conservative:

Bring Your Own Device is really Bring Your Own Mind

The capabilities of tablets and smart phones are growing so rapidly it is hard to even recall what it was like a few years back, using dumb phones. Let me start with a short rant. We need to stop unceremoniously lumping tablets and smart phone into the ‘mobile’ category, because tablets actually are used more like laptops, despite the touch interface and similarities in OS. And laptops are ‘mobile’ too. The separation should be this: proximal devices (the smartphones or Google Glass-style devices) are the ones that people always have with them. We take them to bed, to the toilet, and we use them while using the other, distal devices, like tablets and laptops. These devices are a central aspect of personal productivity and identity. People want to choose these tools based on how they do their work.

So BYOD should really be considered a shift of the boundary where the company’s control over the way we work — which equates to the way we think — is receding. I’ll go so far as to make the almost obvious but contentious observation: I personally can’t do my work without my proximal and distal devices of choice, my iPhone and MacBook Air. I need these devices and the specific aids that I use on an hourly basis, down to the level of specific Chrome plugins and Mac OS menu items. And I am certain it is the case with other people. If I were forced to use, for example, a BlackBerry and a Windows PC, I know my productivity would fall, and would stay there for months, if not forever.

On top of that, businesses can save a great deal of money by letting employees manage the provisioning and repair of devices themselves at the Apple store or at AT&T. And this drains away some of the juice of the internal IT department. You will hear all sorts of things about security and regulated environments, but providing a small suite of company-mandated apps and tools on peoples devices — like a company selected file sync and share application — will probably be the only thing left for corporate IT, regarding these devices.

Every Job Is Digital

BYOM is only the first wave, because ubiquitous connectivity will be amplified by ubiquitous computing. Cars are becoming computers, wristwatches connect to smartphones, and we will soon be controlling the temperature, ambient noise, and door locks by apps. Literally everything we touch and interact with will become controllable and conversant.

Conventional approaches to meetings are already shifting. I have recently had several face to face meetings where those in the room together still were logged into a GoToMeeting session on their devices of choice, looking at a shared screen or a presentation, instead of using a projector and screen. I bet that will be the norm in less than three years. (Might even become the norm at conferences, if they can ever straighten out the bandwidth issue at events.) It’s just easier to not futz with projectors and so on, and to be able to make screenshots, take notes, and so on, on your own machine.

Already, today, the great majority of knowledge workers do the great majority of their work on computers. They are using computers even while talking with other people, or coworking with others. There is no aspect of nearly any job that doesn’t rely on computers. Even retail clerks are carrying tablets, and soon flight attendants will too.

In an economy where everything relies on the digital foundation that the web has provided, you can’t channel all that through the CIO. Decisions at the personal level need to made by people who “know their own mind”, which has a brand new meaning, today. Decisions at the customer support sector should be made by the Chief Customer Officer. Decisions at the marketing sector should be made by the Chief Marketing Officer. The CEO might make the strategic commitment to shift from owning and maintaining dedicated servers for core enterprise software, and instead sign up for Office 365, Sharepoint, and Yammer in the cloud, taking away half of what her CIO used to spend his time on.

Not Outsourcing, Placeforming

We’re in an increasingly free agent economy, and that trend is likely to continue as companies continue to redefine the boundaries of what must be managed internally and what can be better and more cheaply done by outsiders. That might still involve call centers in India, but could take a much different form.

I have written a great deal recently about placeforms (marketplace + platfromplaceform) which are communities managed (generally for profit) by third parties who act as brokers between the business and other participants in the company’s sphere. (See A new model for apprenticeships in the USHireArt is another placeform interceding in the broken labor marketAs management connections loosen, mentoring becomes the individual’s burden, and UserScout connects participants and market researchers ). For example oDesk and Work Market are placeforms that make online marketplaces for the use of freelance workers. They add value for the business by assessing the skills and productivity of workers, handling paperwork (like tax documents), reducing the need for the company to do vet the candidates. And the add value to the freelance worker by weeding out unscrupulous companies, managing negotiations, and handling the collection of money. In some cases they may even offer insurance for freelancers, based on having a large population to get better rates than individuals might.

Business are going to be strongly inclined to adopt the offerings of this explosion of placeforms. Why manage your own internship program when a placeform can do it better for 40% of the cost, and bring in interns with a better fit? Likewise, why spend too much on training/retention programs for your call center staff, or searching for the best sales executives? The human resource functions of many companies are almost totally taken up with concerns like these, but placeforms can do this work better based on having broader access to candidates, and from working across companies. They are naturally in a better place to exploit data advantages and to learn best practices earlier than small HR teams.

So this means that human resources as conventionally defined will be “gone” in a few years. There still will be HR professionals in the organization, but they will principally be managing the relationship with a collection placeforms, and articulating those programs into the other functions of the business.

Placeforming will also become the norm when trying to connect to large populations outside the form, as in crowdsourcing innovative ideas, market research, and other large population exercises.

These and other related activities formed another major chunk of the work that  IT has traditionally focused on, and it’s all going to be placeformed.

Every Company Is Digital

The last trend is the obvious one: every company is digital, today. Ever company is competing based on the ability to harness and leverage digital technologies to the highest degree possible. Every window maker, concrete company, and fast food chain is competing digitally, and not just on the quality of their products. The effective use of digital tools is essential for planning, product planning and development, customer satisfaction, profitability, and growth. There is no part of the business where digital mastery isn’t critical.

As a result, the most far-sighted CEOs will realize that the way to handle IT is just like the way that businesses have to manage everything today. This requires the same lean and resilient techniques. Pushing decision-making and experimentation out to those closest to the decision to be made, which means decentralization, and the end, inevitably, of centralized IT. The CEO might want a small technologies group, monitoring what’s going on inside the company and determining best options for future directions, but it won’t be like today’s IT organization, at all.

The Bottom Line

These four trends — Bring Your Own Mind, Every Job Is Digital, Placeforming, Every Company Is Digital — represent the imminent end of IT as we know it, and the role of the CIO.

Yes, some services will still be required, and regulated industries will still need or want private servers and greater degrees of security. My bet is that these will be provided by outside services, and they will charge half as much for more reliable and better solutions. That’s where all the out-of-work CIOs will be working.