From static hierarchy to dynamic labor market
How does your company apply talent to tasks? How does it form teams? Is the workforce organized for maximum flexibility, productivity and engagement? We believe the time is ripe for many enterprises to rethink their answers to these questions and dramatically reimagine how their workforces are structured.
Why think about these questions now? Because the digital era creates both the need to become much nimbler and the means to do so. Change happens very quickly in the digital age, putting pressure on companies to rapidly reshape themselves in large ways and small in order to defend the markets they occupy and conquer new ones.
At the same time, digital technologies are now maturing: crowdsourcing platforms are proliferating; and technologies that facilitate seamless collaboration across distributed teams have become ubiquitous. Just as the cloud-based virtualization of computing enabled more flexible IT, we see crowdsourcing and related technologies driving a “Workforce Virtualization” trend, providing a nimbler approach to allocating labor. This note is the first in a series about moving organizations toward workforce virtualization.
Market mechanisms versus planned enterprise economies
Today, the modern enterprise leads a dual life. Externally, it operates in a market economy where it buys and sells products and services. This market is good at efficiently allocating society’s resources, rewarding high performance, incenting innovation and driving rapid adaptation to changing market conditions. However, internally things are different, with talent allocation looking more like a planned economy. In most large businesses, employees carry out work within a structure of divisions, groups and teams. This traditional workforce model is coordinated centrally and produces stability within the enterprise. Typically, managers oversee a set of employees and assign a task to any one of them—regardless of whether the employee is the best available person in the company to perform the work.
Labor markets within and across the enterprise boundary
However, some economists have long imagined the model working differently.1 They have asked: Why not directly apply market mechanisms to the allocation of work? Imagine an enterprise where the organization chart plays a much smaller role in determining which employee is assigned to carry out a task. Managers’ core teams become much smaller, and the managers distribute the majority of work to one or more crowds via online talent markets. Each task owner’s labor needs competes on these markets for the best talent. At the same time, talent owners (workers), who may be anywhere within the enterprise or even outside it, similarly compete for choice assignments.
This is the idea behind Workforce Virtualization, and the potential benefits are very exciting, as outlined in Figure 1. We have been exploring this paradigm for a few years at Accenture Technology Labs, running experiments and developing tools and techniques to make it work. In short, we have found that achieving the promise of crowdsourcing labor to online markets can be achieved, but it is not simple to do it right.
Figure 1: Benefits of crowdsourced virtualization of the workforce
While the concept can be applied to a broad range of work—from simple tasks to large projects—this variety of work also calls for a range of crowd types, tools and techniques. For example, for some types of work, we have deployed internal labor markets that are open only to enterprise employees; for other kinds of work, we have found that public labor markets managed by third parties are the best approach. Overall, we see the need for a concept we call the “privately curated, external crowd,” composed of talent owners who are not employees of the task-owner’s enterprise, but whose experience and abilities provide extensive, proprietary knowledge. (See Figure 2.)
Figure 2: Differences between the traditional workforce structure and crowdsourced workforce virtualization
In the notes that follow, we will explain more about the various types of labor markets available to enterprises that want to virtualize their workforce. We will also discuss the challenges companies must address to use these markets, as well as what we are doing to make it easier to resolve these challenges.
1 For example, Coase, Ronald H. (1937). "The Nature of the Firm"