Weekly Update

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.

circle

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?

placeforms

 

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.