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Archive for January, 2016

Why These Startups Aren’t Betting on the Uberization of Work

W2 or independent….. not a one fit model when it comes to people without skills.  Bob L

 

In July, Kevin Gibbon made an announcement that could turn out to be the best, or worst thing to ever happen to his startup — depending on who you talk to.

Gibbon is the founder and CEO of Shyp, a three-year-old package delivery startup with $62 million in funding. The app-based service, lauded by many as the “Uber for shipping,” allows users to summon a courier to their door and pick up anything that they want to ship across the country. Initially, the 31-year-old founder relied on contractors to do this work “for all the reasons all the big startups do,” he said. Gibbon liked that the employee model would allow him to scale quickly, and Uber’s colossal success proved that a big workforce wanted contract employment. Or so he thought.

But after two years running the San Francisco-based business, Gibbon realized the super-scalable model of employment that Uber is now famous for just wasn’t going to work for Shyp. He needs to train his couriers and tell them where to be at a certain time —  both requirements that contract employment forbids. And while Uber or Lyft can handle any million-dollar lawsuit thrown its way for not hiring its drivers as full time workers, Gibbon says his still fledgling startup can’t afford that risk. So this summer the founder told his couriers that everything about their jobs would soon change. He would be transitioning his entire 245-person staff to W-2 employment. Part-time couriers would receive paid vacation, lunch breaks, workers’ compensation, and more. Full-time couriers would get healthcare benefits as well.

Is this new economy moving us forward or backward?

For some employees, this announcement was cause for celebration. Some even cried tears of relief — finally they had job security, benefits, and perks. One courier, however, quit. To the outside world, the perks of being a W-2 employee sound good. But the biggest on-demand startups — like Uber and Lyft — argue that their workforces are happy as contractors because of the flexibility and independence that comes with that designation. Also known as 1099 employees, contract workers can work for multiple firms, set their own hours, and come and go as they please.

This polarized reaction did not come as a surprise to Gibbon. He is, after all, at the center of the debate over how the on-demand economy is reshaping the future of work. “I do worry about what these jobs mean for the future of employment,” he said. “I’d be curious about how happy the people in the thick of it really are. Is it something they just have to do? Were they pushed out of something else? I just don’t know.”

The decisions these companies make now will have dramatic implications on the future of work. By 2020, the pool of Americans working on-demand jobs is predicted to grow from 3.2 to 7.6 million. Startups like Handy, Postmates, TaskRabbit, DoorDash, and Washio, continue to treat a vast majority of their workforce as contractors; others like Luxe, Alfred, Instacart, and Kitchensurfing are reversing course. And as these venture capital darlings walk the fine line between saving on labor costs and breaking the law, regulators and politicians are watching, and critiquing, their every move. The lines being drawn here raise critical questions: Should workers embrace the freedom the digital world offers? Or should they try to hold onto the rights that their predecessors fought over 100 years to win? Is this new economy moving us forward or backward?

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Transforming expert organizations

Capturing industry knowledge with validated experts and making it available is the future.

McKinsey & Company Insights – by Albert Bollard, Clark Durant, Rohit Sood, and Matt Tobelmann

Improving operations and client experience in B2B organizations is hard because they rely so heavily on highly skilled experts. But those experts can also be the source of a solution.

Think back 20 years. Buying a mortgage or filing an insurance claim was difficult and time consuming for almost everyone: days of phone calls and appointments, mistakes to correct, and duplicates to send in the mail.

Then a few leading companies started giving consumers what they wanted within days or even minutes rather than weeks. Faster processes also had to be more reliable and easier to understand. And now consumers can file a medical claim or apply for a basic loan with just a few taps on a mobile phone, and check the status at any time with a couple of more taps.

The value these leaders created was vast. For many of them, what made it possible were the four integrated disciplines of lean management. The combination of delivering value efficiently, enabling colleagues to contribute their best, discovering better ways of working, and aligning strategy and purpose to day-to-day work helped these organizations perform better on multiple indicators at once: shorter turnarounds and increased accuracy and higher employee engagement and faster adaptation to the digital world. Early leaps in performance were followed by consistent increases year after year.

What kind of value could B2B and other expertise-heavy organizations—from law firms or utilities to financial-information providers and risk-management departments—create if their processes were as transparent, reliable, and time sensitive as these consumer leaders?

Yet even organizations that recognize the threat from potential disrupters—particularly those offering the latest digital tools—often remain unmoved, citing the complexity and expertise that specialized sectors require. “We aren’t a factory or call center. Our work requires unique insights from experienced, credentialed professionals. Treating each project as unique is a big part of our value to customers.” That, in a nutshell, is why changing expert organizations is so hard. Despite what some may believe, what experts do really is a hard-to-define art—at least some of the time—and that makes experts skeptical of ideas that try to make their work more “efficient.”

Nevertheless, there’s also a science to expertise. That means that even in the most complex, bespoke projects, a lot of the work is actually standard—or could be. That’s where the insights underpinning lean management can help. The problem is identifying those standard elements, understanding them, and improving them, so that experts can spend more of their time on the art—while clients get an improved experience and the organization can improve its strategy.

Who better to solve the problem than the experts themselves? That’s what a few standouts have discovered. Aiming experts’ intellectual firepower at the organization’s own practices can lead to unexpected operational breakthroughs. A financial information provider, for example, took only four months to reduce its backlog of documentation issues by about 70 percent, and its time to market by 15 to 20 percent (exhibit).

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