The 2017 State of the Services Economy Report

I’m happy to announce the release of the 2017 State of the Services Economy Report that I worked on for the past six months with Mavenlink, one of the best reports I worked on in the past several years. Visit this page to download the full report.

I co-authored the report with Ray Grainger, the CEO of Mavenlink. We were supported by a great team, and supported by ResearchNow. We also had great contributions from my research panel: David Coleman, Steven Fisher, Martin Gaedke, Maddie Grant, Jean Russell, Brian Solis, and Joachim Stroh.

We started with some core premises for the research. We believed that the rate of change in the service economy was very steep, and that turned out to be the case: Over three quarters (78.3%) of our survey’s respondents state business conditions are changing quickly, and 20% say it’s faster than ever before.

This sets the deep background for everything else discussed in the report: an unrelenting pressure to adapt to a rapidly changing business context, one that — at least for some — is changing as quickly as it ever has.

A major trend in services companies is the rapid transition to project-based work, away from retainer-based models, and the bigger the company, the quicker the transition. This transition seems tightly linked to the need for greater agility and flexibility by services companies’ clients.

We expected that the best defense against the onslaught of technology-induced change would be… more technology. 70% of those surveyed say they are adopting new technologies, and only a small group are holding out against new technologies.

The third big bang from the research has to do with competition. Times of great change can lead to increases in the level of competition, and our survey confirmed that.

We asked if companies are seeing increased competition:

  • 62% said they are.
  • Of those that are seeing more competition, 26.8% says it’s coming from existing competitors,
  • 36.6% indicate it’s coming from new entrants, and
  • 36.6% say it’s a combination of the two.

That means the greatest competitive threat is coming from new entrants, in general.

So, the hard bottom line: accelerating change, transition to project-based economics, more defensive and offensive technology, and more competition.

Welcome to the accelerating services economy.


This research was sponsored by Mavenlink, but the opinions stated are my own. Originally published at www.stoweboyd.com.

Facebook At Work Will Quickly Change Enterprise Social

It may not yet be generally available, but Facebook at Work is a quickly evolving solution that will change how enterprises think about and conduct social interactions. It will also dramatically change, if not eliminate, the single-person role of Community Manager.
Carrie Basham Young, an experienced and respected social business strategist, published a series of blog posts on Facebook at Work last week. Her main thesis across these posts was that Facebook is playing a long game in which the line between social interaction in people’s personal lives and at work becomes blurred or disappears altogether. Facebook is betting that it can change enterprise social to more closely resemble the way that people interact outside of work, on Facebook.
Young made many other astute observations in the posts, including,

  • Facebook controls the message with respect to its product and the social networking industry in mainstream media
  • Adoption (logging in for the first time) does not equal engagement (ongoing, purposeful use)
  • Facebook at Work is “incredibly easy” to use and may nearly eliminate the need for user training
  • Facebook at Work’s extreme end-user focus may cause problems for enterprises, and IT staff at big companies will have a negative view of Facebook at Work until it incorporates enterprise-grade identity management, security and information lifecycle management functionality
  • Facebook has the power to change the entire conversation, user expectations and their behavior without input from currently active community managers

Changing Nature of Work and Organizations

The present (and future) trend in the workplace is toward fewer managers in less hierarchical organizational structures. However, eliminating roles that command others’ work does not equate with getting rid of those who guide and coordinate work. The need for people who can design, facilitate and monitor people interactions within business networks will only increase as authority, responsibility and accountability are decentralized across the employee base of an organization.
If Young’s assessment of the irreplaceable contributions of community managers is correct, then Facebook’s intention to minimize or eliminate them may be a fatal mistake. Instead, Facebook at Work should give all employees access to the tools that Young cites as necessary for successful community management. By doing so, Facebook would accelerate the existing trend of democratizing authority and distributing work ownership. Everyone would be responsible for contributing to the management of communities in which they are members, and stewardship of them would shift contextually.
This vision is not unprecedented. Over the last two decades, Knowledge Management (KM) has moved away from being a top-down activity started and executed by an individual situated fairly high in a company’s organizational chart. Instead, the notion of Personal KM has gained favor, making all employees responsible for creating, capturing, sharing and using knowledge within their company.
It is possible that day-to-day community management will move in the same direction and become a distributed responsibility and activity. Young clearly acknowledged this when she wrote,

“Facebook will maintain a pure focus on viral adoption, resulting in an industry-wide slow shift away from the concept of managed communities and toward the concept of ad-hoc, self-driven collaboration as a new normal employee behavior”

I disagree with Young’s interpretation of Facebook’s goal for Facebook at Work though. I think Facebook seeks to de-emphasize or eliminate community managers, but not community management. It appears that Facebook at Work has been designed for distributed, bottom-up community coordination, rather than top-down, imposed management. (I sincerely hope that Facebook at Work does not intend to have communities ruled by algorithms that decide which topics and interactions are given preference in an employee’s activity stream.) While this will be unappealing to existing community managers, Facebook’s vision for more self-governed collaboration is consistent with the larger trends that are distributing and democratizing work coordination in increasingly flat, networked organizational structures.

Enterprise Social Will Change Sooner Rather Than Later

Young is right that Facebook at Work will upset the status quo in enterprise social and community management, but I think her timeline is too long. This change is likely to happen in 3 years or less, rather than the 5-10 years she predicts.
It will be faster because Facebook can learn from other vendors in adjacent enterprise software market segments, most notably Box and Dropbox in the Enterprise File Sync and Sharing space. Like Facebook, both of those companies began as consumer-oriented services that emphasized user experience over other considerations, including breadth and depth of functionality. Box has since built an offering that meets many of the security, privacy, administration and integration requirements of business customers.
Dropbox has also undertaken that journey, although it did not begin it until well after Box started. That is an advantage in some ways. Dropbox is moving down the learning curve quickly because it has watched Box and learned from its strategic decisions taken and tactical moves made to effect the consumer-to-enterprise shift.
Facebook will do the same, gaining insight from both Box and Dropbox. This will allow Facebook at Work to become enterprise-ready in a fraction of the time that most expect. Watch for Facebook to gradually expand beta access to Facebook at Work over the coming months, then make a version that meets most enterprise requirements generally available by the end of 2016.

Dropbox Paper is a Wolf in Sheep’s Clothing

Last week, I wrote about the commoditization of the enterprise file sharing market and how pure play vendors are being forced to evolve their offerings to stay alive. My post focused on Hightail (originally YouSendIt) and its announcement of Spaces – a specialized file sharing, annotating and publishing offering for creative professionals.
Dropbox also made a product announcement last week, albeit quietly. The company has expanded beta testing of Paper, a new offering that was released in a highly limited beta, in March, under the name Notes.  Like Hightail’s new offering, Dropbox’s illustrates how they are responding to the functional parity that vendors have achieved with basic file sharing offerings and to their rapid downward price movement.

Yet Another Collaborative Authoring Tool?

Most commentators, including Gigaom’s Nathaniel Mott in his article from last week, described Paper as “a collaborative writing tool”. They compared it to Google Docs, Microsoft Office (especially its Word and OneNote components) and startup Quip. For sure, Paper has similar functionality to those products, and it allows people to write and edit documents together in real-time. However, I don’t believe that is the main point of Dropbox’s beta product. Instead, Paper is intended to be used as a lightweight case management tool.
Case Management is a discipline that brings resources, including relevant content, related to a single instance of a business process or an initiative into a common place – the case folder. While many think of Case Management as a digital technology, its principles were established in business activities that were wholly paper-based.
Think of an insurance claim years ago, where a customer filled out a paper claim form, and it  was then routed throughout the insurance company in a paper folder. As the process continued, additional paper documents, perhaps even printed photographs, were added to the folder. The last documents to go into the folder were the final claim decision letter to the customer and a copy of the check, if a payment was made on the claim.
Today, that same insurance claim process is likely to generate and use a mix of paper-based and electronic documents, although insurance companies are slowly moving as much of the process online as possible. However, the concept of organizing information related to the claim into a single folder remains, although the folder is now likely to be an electronic artifact, not a paper one.

A Wolf in Sheep’s Clothing

Take another look at Dropbox’s beta Paper. Do you see it? Paper is a single point of organization for new content, files stored in Dropbox (and other repositories), existing Web content and discussions on all of those things. It’s a meta-document that acts like a case folder.
Paper enables lightweight case management, not the industrial-strength, production kind needed to handle high-volume, transactional business processes like insurance claims. Paper is case management for small teams, whose work might follow a pattern over time, but does not conform to a well-defined, repeatable process.
Working on a new software product at an early-stage startup with only a few coworkers? Start a new document in Paper, then add the functional and technical requirements, business projections, marketing assets, sales collateral, even the code for the software. Everything that is relevant to the product is one place in which it can be shared, viewed, commented on, discussed, edited and used for decision making. Just like a case folder in Case Management.

A New Way of Working

Still not convinced? Dropbox Product Manager Matteus Pan recently said:
“Work today is really fragmented…teams have really wanted a single surface to bring all of [their] ideas into a single place.” “Creation and collaboration are only half the problem,” he said. “The other half is how information is organized and retrieved across an entire company.”
That sounds like case management to me, but not the old-school type that you are likely more familiar with. Instead, Paper reflects the newer principles of Adaptive Case Management.
Adaptive Case Management (ACM) is a newer technology set that has been evolving from Production Case Management (PCM) over the last few years. ACM helps people deal with volatile processes by including collaboration tools alongside the workflow tools that are the backbone of PCM.
Dropbox Paper may be viewed as an extreme example of ACM, one which relies completely on the manual control of work rather than automating parts of it. In that regard, Paper takes its cues from enterprise social software, which is also designed to enable human coordination of emergent work, rather than the automation of stable processes. As Paper is more widely used in the current beta and beyond, it will be interesting to see if its adoption is stunted by the same obstacles that have limited the wholesale changes to established ways of working that social software requires.

Crashing Waves

I have not yet seen a demo of Dropbox Paper, but the screenshots, textual descriptions and comments from Dropbox employees that I have absorbed are enough to reveal that the product is more than just another collaborative authoring tool. If I was asked to make a comparison between Paper and another existing or previous tool, I would say that it reminds me of Google Wave, not Docs or Microsoft Office. Like Wave, Paper is a blank canvas on which you can collaborate with team members and work with multiple content types related to a single idea or business process in one place.
Google Wave was a powerful, but unintuitive tool that failed to get market traction. Will Paper suffer the same fate? Perhaps, but Dropbox hopes that the world is now ready for this new way to work. In fact, Dropbox is, in some regards, staking its continued existence on just that, as it tries to differentiate itself from other purveyors of commoditized file sharing services.

Research Agenda of Larry Hawes, Lead Analyst

Greetings! As my colleague Stowe Boyd announced yesterday, I am part of a fabulous group of smart, well-respected people that have joined the rebooted Gigaom Research as analysts. I was affiliated with the original version of Gigaom Research as an Analyst, and am very pleased to be taking the more involved role of Lead Analyst in the firm’s new incarnation, as detailed in Stowe’s post.
For those of you who don’t know me, I’ve spent the last 16 years working as a management and technology consultant, enterprise software industry analyst, writer, speaker and educator. My work during that time has been focused on the nexus of communication, collaboration, content management and process/activity management within and between organizations ─ what I currently call ‘networked business’.
I intend to continue that broad line of inquiry as a Lead Analyst at Gigaom Research. The opportunity to work across technologies and management concepts ─ and the ability to simultaneously address and interrelate both ─ is precisely what makes working with Gigaom Research so attractive to me. The firm is fairly unique in that aspect, in comparison to traditional analyst organizations that pigeonhole employees into discrete technology or business strategy buckets. I hope that our customers will recognize that and benefit from the holistic viewpoint that our analysts provide.
With the above in mind, I present my research agenda for the coming months (and, probably, years). I’m starting at the highest conceptual level and working toward more specific elements in this list.

Evolution of Work

Some analysts at Gigaom Research are calling this ‘work futures’. I like that term, but prefer the ‘evolution of work’, as that allows me to bring the past and, most importantly, the current state of work into the discussion. There is much to be learned from history and we need to address what is happening now, not just what may be coming down the road. Anyway, this research stream encompasses much of what I and Gigaom Research are focused on in our examination of how emerging technologies may change how we define, plan and do business.

Networked Business

This is a topic on which I’ve been writing and speaking since 2012. I’ve defined ‘networked business’ as a state in which an interconnected system of organizations and their value-producing assets are working toward one or more common objectives. Networked business is inherently driven by connection, communication and collaboration, hence my interest in the topic.
While the concept of networked business is not new, it has been gaining currency in the past few years as a different way of looking at how we structure organizations and conduct their activities. As I noted in the first paragraph of this post, there are many technologies and business philosophies and practices that support networked business, and I will do my best to include as many as possible in my research and discussions.

Networks of Everything

This research stream combines two memes that are currently emerging and garnering attention: the Internet of Things and the rise of robots and other intelligent technologies in the workplace. In my vision, networks of everything are where humans, bots, virtual assistants, sensors and other ‘things’ connect, communicate and collaborate to get work done. The Internet, Web, cellular and other types of networks may be used in isolation or, more likely, in combination to create networks of everything.
I’ve had a book chapter published on this topic earlier this year, and I’m looking forward to thinking and writing more about it in the near future.

Microservices

How do we build applications that can support business in a heavily networked environment? While the idea of assembling multiple technology components into a composite application are not new (object-oriented programing and Service Oriented Architecture have been with us for decades), the idea continues to gain acceptance and become more granular in practice.
I intend to chronicle this movement toward microservices and discuss how the atomization of component technology is likely to play out next. As always, my focus will be on collaboration, content management and business process management.

Adaptive Case Management and Digital Experience Management

These two specific, complementary technologies have also been gathering more attention and support over the last two years and are just beginning to hit their stride now. I see the combination of these technologies as an ideal enabler of networked business and early exemplars of component architecture at the application level, not the microservice one (yet).
I’ve written about ACM more, but am eager to expand on the early ideas I’ve had about it working together with DEM to support networked business.

Work Chat

Simply put, I would be remiss to not investigate and write about the role of real-time messaging technology in business. I’ve already called work chat a fad that will go away in time, but it needs to be addressed in depth for Gigaom Research customers, because there are valid use cases and it will enjoy limited success. I will look at the viability of work chat as an extensible computing platform, not just as a stand-alone technology. Fitting with my interest in microservices, I will also consider the role that work chat can play as a service embedded in other applications.
Phew! I’m tired just thinking about this, much less actually executing against it. It’s a full plate, a loaded platter really. The scariest thing is that this list is likely incomplete and that there are other things that I will want to investigate and discuss. However, I think it represents my research and publishing interests pretty  well.
My question is, how does this align with your interests? Are there topics or technologies that you would like to see me include in this framework? If so, please let me know in a comment below. Like all research agendas, mine is subject to change over time, so your input is welcomed and valued.

The Return of Middle Managers

“That experiment broke. I just had to admit it.” — Ryan Carson, CEO of Treehouse Island, on his attempt to run the company without managers

There is currently a widely-held view among organizational design experts and pundits that managers, particularly middle managers, are a harmful artifact of hierarchically-structured, command-and-control organizations. Conventional wisdom holds that middle managers, and their responsibilities and stereotypical behaviors, are outdated and severely constrict the speed at which a business can operate. Flat, democratic organizations made up of loose, recombinant relationships have gained favor in the org design world today because they enable agility and efficiency.
There’s just one problem with that view – it’s not entirely accurate. It represent an ideal that may be right for some organizations, but very wrong for many others.
Carson and Treehouse Island’s failed experiment was one of the examples given in a recent Wall Street Journal article (behind paywall) titled “Radical Idea at the Office: Middle Managers”. The common thread between the companies mentioned in the article was that the elimination of bosses had the opposite effect of what had been envisioned. Productivity decreased because workers weren’t sure of their responsibilities and couldn’t forge consensus-based decisions needed to move forward. Innovation also waned, because new ideas went nowhere without a management-level individual to champion and fund them. Employee morale even took a hit, because no one took over the former middle management’s role of providing encouragement and motivation when they were needed.
Research of over 100 organizations conducted by an INSEAD professor led to this conclusion, cited in the WSJ piece:

“Employees want people of authority to reassure them, to give them direction. It’s human nature.”

Enabling Technologies that Don’t

Another problem experienced by many of the organizations mentioned in the WSJ article was that technologies meant to enable employees to work productively in a manager-less workplace failed to do so. Enterprise chat systems were specifically fingered as a culprit, for a variety of reasons.
At Treehouse Island, which had never used email, decision-making was severely compromised by employees opining on chat threads when they had no expertise on the given subject. This led to “endless discussions”. The chat technology drove conversations, but ideas rarely made it past discussion to a more formal plan. Work tasks informally noted and assigned without accountability in the chat application mostly got lost in the shuffle and weren’t completed. Treehouse Island eventually turned to other communications channels and even acknowledged that email has valid uses.

Worker Education and Training, Not Managers, Are the Problem

While I agree with the assessment that human nature is a barrier to effective manager-less workplaces, I also think that our base impulses can be minimized or completely overcome by alternative, learned attitudes and behaviors. Society and institutions in the United States have programmed multiple generations to submit to authority, seeking and accepting its orders and guidance. Our educational system has largely been designed to to produce ‘loyal and reliable’ workers who can thrive in a narrowly-defined role under the direction of a superior. Putting individuals who have been educated this way into situations where they must think for themselves and work with others to get things done is like throwing a fish out of water.
As for enterprise chat technology, it has seen documented success when deployed and used to help small teams coordinate their work. However, most of those teams working in chat channels either have a single, designated manager with the authority to make things happen, or they are able call upon a small number of individuals who can and will assume unofficial, situational leadership roles when needed. Absent people to act with authority, chat-enabled groups become mired in inaction, as document in the WSJ article. As I put it in my recent Gigaom Research post on enterprise real-time messaging,

The real reason that employees and their organizations continue to communicate poorly is human behavior. People generally don’t communicate unless they have something to gain by doing so. Power, influence, prestige, monetary value, etc. Well-designed technology can make it easier and more pleasant for people to communicate, but it does very little to influence, much less actually change, their behaviors.”

We will see more experiments with Holocracy and other forms of organization that eliminate layers of management and depend on individuals to be responsible for planning, coordinating and conducting their own work activities. Some will succeed; most will fail. We can (and should!) create and implement new technologies that, at least in theory, support the democratization of work. However, until systemic changes are made in the way people are educated and trained to function in society and at work, companies without managers will remain a vision, not a common reality.

Defining the new office suite: 5 essential apps for work

With the adoption of iPads, tablets and smartphones into our work flow instead of just sitting at a laptop computer here are five categories of apps positioned well for becoming a fundamental part of our day to day work environment in this mobile era.