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Discussions on digital: How large and small companies build a digital culture

Why you need to build a digital culture…..

Experienced digital leaders know that when it comes to agility versus stability, start-ups and large companies can learn a lot from each other.

Building a digital culture has emerged as a key challenge for companies looking to thrive in the modern business era. How to build and adapt that culture is an issue that both large and smaller businesses struggle with. In this podcast, Brian Gregg, a partner in McKinsey’s San Francisco office who leads our consumer digital-excellence initiative, explores this issue with some of Silicon Valley’s leaders. Participating in this installment were David Lee, COO and CFO of Impossible Foods, an innovative developer of meats and cheeses made entirely from plants; Pavan Tapadia, chief product officer at Yammer, an internal social-networking service which is now part of Microsoft; and Dianne Esber, associate partner and brand leader at Digital McKinsey in San Francisco. What follows is an edited transcript of the conversation.

Click here to read the Conversation


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How telecom companies can win in the digital revolution

Things are changing, even for Telcos….

For telecoms, making smart use of digital technologies calls for a wholesale digital transformation. Five steps are needed to make it happen.

Telecom companies face increasingly tough times as digitization reshapes the industry landscape. In fact, telecoms come second only to media in the ranks of sectors expecting moderate or massive digital disruption over the next 12 months, according to a 2015 cross-industry survey of senior industry leaders.1

In the past five years, the telecom business has entered a period of slow decline, with revenue growth down from 4.5 percent to 4 percent, EBITDA margins down from 25 percent to 17 percent, and cash-flow margins down from 15.6 percent to 8 percent.2Competitive boundaries are shifting as core voice and messaging businesses continue to shrink, partly under regulatory pressures, but also because social media is opening up new communications channels. Among US telecom companies, for instance, landline and mobile voice now account for less than a third of total access, down from 55 percent in 2010, while data revenue has risen from 25 percent of total revenues in 2010 to 65 percent today.

But digitization is not just a threat; it also offers telecom companies an opportunity to rebuild their market positions, reimagine their business systems, and create innovative offerings for customers. Not surprisingly, most executives consider digitization to be one of their top priorities,3but few companies are close to capturing its full potential. We calculate that digitization could enable telecom operators to improve their profits by as much as 35 percent, yet the average improvement achieved is just 9 percent.

So how can companies bridge this gap? We have identified five ways to come out on top of the digital revolution.

1. Reinvent the core
2. Pursue adjacencies
3. Build talent and capabilities
4. Revamp IT
5. Start with the customer and work back

To read the full article click here

By Paul-Louis Caylar and Alexandre Ménard – McKinsey & Co


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The new tech talent you need to succeed in digital

The rules for labor are changing…..

In today’s rapidly changing digital landscape, companies that understand their talent needs and know how to meet them have a competitive edge. Here’s how they do it.

While few would debate the importance of technology talent, its importance in successfully executing a digital transformation is often underappreciated. Over the next five years, large companies will invest, on average, hundreds of millions of dollars—and some more than a billion dollars—to transform their business to digital. And given that top engineering talent can, for example, be anywhere from three to ten times more productive than average engineers, acquiring top talent can yield double-digit investment savings by accelerating the transformation process by even 20 to 30 percent.1Of course, such talent is hard to find. In the next five years, we expect the demand for talent to deliver on new capabilities to significantly outstrip supply2: for agile skills, demand could be four times supply; for big-data talent, it could be 50 to 60 percent greater than projected supply.3

The new capabilities you need

Understanding what talent is necessary starts with understanding what capabilities digital businesses need. While those will vary by market and geography, successful digital businesses share some common traits: they’re focused on the customer, operate quickly, are responsive and agile, and can create proprietary insights. And given the rapid pace of change, companies will increasingly need to be able to engage with broader ecosystems encompassing a range of businesses and technologies as well as position themselves to take advantage of emerging artificial intelligence (AI) and the Internet of Things.

That requires IT systems that can process massive amounts of data, continuously deliver new infrastructure environments in minutes, be flexible enough to integrate with outside platforms and technologies, and deliver exceptional customer experiences—all while maintaining core legacy IT systems. This way of working is much more dependent on the collective skills and strengths of a multidisciplinary agile team rather than on the heroics or talents of any one individual. In short, this reality means people not only need to have strong technical skills but also to be able to function well in teams. Poor team dynamics can crush even the most talented individuals.

While there is a broad range of skills needed, this set should be part of any company’s tech-talent list:

  • Experience designers and engineers. As customer experience becomes increasingly important, companies will need to invest in the tech talent to deliver those experiences. These roles often straddle IT and other functions, with experience designers in particular focused on getting at the heart of the customer through ethnographic research, human-centered design, and rapid test-and-learn cycles with customers.

    Partnering with experience designers are in-place front-end and mobile engineers who can rapidly translate exceptional designs and digital experiences into working software that can be tested and iterated. This approach to rapid prototyping places a premium on user input and flexible software that can respond quickly to user needs.

    Experience designers tend to wear multiple hats, from driving insights through customer research to running rapid test-and-learn programs in the field. They should have considerable experience creating and iterating products or services based on real customer interactions (i.e., not just data) and translating customer research, insights and ideas into solutions using design tools such as personas, empathy maps, and customer journeys (to name just a few).

    Front-end and mobile engineers are typically software engineers with three to five years’ experience building high-performing, scalable, and elegant web and mobile user interfaces. They bring deep expertise in front-end web and mobile technologies that include browser-based HTML, CSS, and modern JavaScript frameworks (e.g., ReactJS, Angular.js, et cetera) and native mobile platforms on either iOS and/or Android. They should be comfortable creating “imperfect” code for the purpose of testing and have a clear understanding of how something will be used in the real world.

    In our experience, what separates a good from a great experience designer is the ability not only to focus on producing a sexy user interface but to be an advocate for the customer in solving customer-experience and design problems. This is someone who is motivated by customer empathy and can collaborate effectively with both product and engineering teams.

  • Scrum masters and agility coaches. “Agile development”—where software is rapidly developed in iterative cycles—is a core capability that drives the technology engine. Making the agile approach work relies on having “scrum masters” to manage teams during the development process. Scrum masters need great leadership and enabling skills, but also a deep understanding of technology and an ability to rapidly solve problems. As important as the scrum master is at the team level, to scale the agile culture across the broader organization, you need agility coaches. Think of them as Olympic trainers for the organization. They have strong communication and influencing skills, can create and roll out plans to support agile processes across the business, and put in place measurable key performance indicators (KPIs) and metrics to track progress.

    While it’s desirable for scrum masters to be certified, it’s more important that they understand the values and principles of agile (e.g., value-focused delivery, adapting to change, continuous improvement, et cetera) and have at least two to three years’ experience training, coaching and working to build high-performing agile teams. They are people leaders with the ability to deal with conflict, influence ideas, and have empathy. It is helpful for them to have baseline knowledge of software engineering best practices to appreciate what goes into building high-quality software.

    Strong agility coaches have deep experience working as change agents to transform how an organization thinks and works. To be successful, they need to be comfortable coaching people across different functions and levels of the organization, including senior executives. They are focused on impact and build organizational muscle around measuring progress.

    In our experience, what separates a good from a great scrum master is the ability to be a great people leader. A good scrum master protects the team from distractions, but a great one finds the root cause of distractions and eliminates them. For an agility coach, it’s building capabilities to help an organization create sustainable change.

  • Product owners. This role is often referred to as the mini-CEO of a digital product. Product owners clearly define the vision of a product or service, are fully empowered to make decisions that deliver high business value, and are laser focused on KPIs to track progress. The product owners work directly with developers, engineers, experience designers, and other stakeholders in the business on a daily basis. They need to understand technology and user-experience issues in order to make the right tradeoffs in deciding on the product or service features to develop.

    Product owners are not just proxies for the business-unit leader to manage the project. They need to be empowered to make product decisions. Product owner can often be the hardest job on an agile team, and those who do it typically require four key skills to be successful:

    • Vision: they can establish strategic vision for a product and align the organization around a clear view of what’s required to achieve business success.
    • Value focus: they possess a mini-CEO mind-set with a focus on delivering measurable business value, delighting the customer, and optimizing ROI.
    • Decisiveness: they are natural problem solvers who make decisions and prioritize initiatives using data and facts rather than intuition and feeling.
    • Product management: they typically have three to five years of strong product-management experience and a good sense for the intersection of business, user-experience design, and technology.

    In our experience, what separates a good from a great product owner is someone who has a strong sense of the complete product or service vision (and doesn’t get lost in the details of its parts), the ability to inspire and influence people to deliver on the overall vision (not just his/her piece of the project), and is focused on enabling the team by, for example, helping it make the hard product decisions.

  • Full-stack architects. These roles are particularly important in a more complex and rapidly changing technology landscape. The full-stack architect needs to be fluent across all technology components that include the web/mobile user interface, middleware microservices, and back-end databases, and have a “spike” (i.e., bring deep expertise) in one or more areas. As businesses increasingly engage with external ecosystems of technologies, full-stack architects can provide expertise in third-party packaged software, fluency in multiple best-of-breed technologies, and experience with multiple-technology integration strategies.

    Full-stack architects are generally hands-on developers with at least eight to ten years of software engineering experience and deep expertise with one to two core programming languages (e.g., Java, .NET, Node.js, et cetera). They also need to be knowledgeable and fluent across the different “stacks” of a large-scale software system (e.g., front-end user interface, middleware integration services, databases, et cetera). They are effective at linking the architectural vision with the business vision and building solutions that focus on business value, not just technical excellence. They have a deep understanding of how an architecture will need to evolve to meet changing business goals and like to produce working software as one of the best ways to illustrate a concept. In our experience, what separates a good from a great full-stack architect is not just the ability to provide technical excellence but also to embrace flexibility over building “bulletproof” systems. They are passionate learners who keep up with evolving technologies and techniques and are willing to experiment with them to test what would work for the business.

  • Next-gen machine-learning engineers. As companies move toward machine learning, they need a new breed of software engineer who knows how to use data, can program in scalable computing environments (e.g., Cloud, Hadoop, et cetera), and understands how to refine the algorithms in their software code. They are fluent in distributed computing techniques, have experience using different machine-learning algorithms and applying them effectively (e.g., choosing the right model, deciding on learning procedures to fit the data, understanding different parameters that affect the learning, et cetera) and understanding the trade-offs with different approaches.

    They work closely with customer-data managers in particular, who use machine learning to collect and rationalize the massive amounts of data—from social media to purchase activities—to create comprehensive 3-D pictures of customers. They have a strong computer-science foundation to understand how to structure data and make efficient use of computing resources (e.g., memory, CPU, et cetera) when designing and implementing machine-learning algorithms. They also have a baseline knowledge of probability and statistics (e.g., regression, probability theory, et cetera) techniques as well as experience in data modeling and evaluating data sets for patterns, trends, and predictability. This capability is important since machine-learning algorithms rely on these data sets to learn and iterate.

    What really makes a great machine-learning engineer is the ability to understand how an idea goes from concept to delivered insight. Throughout this process, a great machine-learning engineer not only focuses on the technical solution but is also effectively a thought partner to the business on shaping the problem to be solved, the insights generated, and the continuous learning required to improve the solution.

  • “DevOps” engineers. With the advancement of cloud computing and infrastructure as programmable software, infrastructure resources (e.g., networks, servers, storage, applications, and services) can now be rapidly provisioned, managed, and operated with minimal effort. To build and take advantage of these technology advancements, organizations need DevOps (the integration of development and operations) engineers who have the experience to navigate a rapidly changing development and cloud-infrastructure computing ecosystem. They can build out tools and automations that provide development teams with self-service and on-demand access and infrastructure resources at the click of a button (compared with today’s traditional multiweek and months-long process to provision similar resources).

    DevOps engineers are generally software engineers with a passion to apply the same craftsmanship to IT infrastructure and operations. They typically have five to eight years of software-engineering experience and have now ventured into infrastructure-automation technologies (e.g., Chef, Puppet, et cetera), cloud platforms (e.g., AWS, Azure, et cetera), and more advanced containerization technologies (e.g., Docker). Besides technical excellence, DevOps engineers understand how technology serves business goals and are flexible in adapting approaches to changing business needs. What separates a good from a great DevOps engineer is the ability to role model the collaborative DevOps culture, think about infrastructure, and partner with the business to link solutions to real business problems.

Finding and hiring the talent

So now that you know what talent to look for, how do you find it? Any good talent strategy should focus on retaining and training existing talent, as well as on uncovering latent talent already in the business. But for the purposes of this article, we want to focus on how companies can acquire talent.

In most companies, IT recruiting typically is a slow process: the HR department creates and posts a job description for a candidate role. If they’re lucky, they find a midlevel employee in six months (and it’ll take another four weeks until s/he is productive). For an organization undergoing an aggressive digital transformation, that’s too slow.

To read full article click here

By Satty Bhens, Ling Lau, and Hugo Sarrazin – McKinsey & Co


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Employers Find ‘Soft Skills’ Like Critical Thinking in Short Supply

How do employers identify the ‘soft skills’?

Companies put more time and money into teasing out job applicants’ personality traits

The job market’s most sought-after skills can be tough to spot on a résumé.

Companies across the U.S. say it is becoming increasingly difficult to find applicants who can communicate clearly, take initiative, problem-solve and get along with co-workers.

Those traits, often called soft skills, can make the difference between a standout employee and one who just gets by.

While such skills have always appealed to employers, decades-long shifts in the economy have made them especially crucial now. Companies have automated or outsourced many routine tasks, and the jobs that remain often require workers to take on broader responsibilities that demand critical thinking, empathy or other abilities that computers can’t easily simulate.

As the labor market tightens, competition has heated up for workers with the right mix of soft skills, which vary by industry and across the pay spectrum—from making small talk with a customer at the checkout counter, to coordinating a project across several departments on a tight deadline.

In pursuit of the ideal employee, companies are investing more time and capital in teasing out job applicants’ personality quirks, sometimes hiring consultants to develop tests or other screening methods, and beefing up training programs to develop a pipeline of candidates.

“We’ve never spent more money in the history of our firm than we are now on recruiting,” said Keith Albritton, chief executive of Allen Investments, an 84-year-old wealth-management company in Lakeland, Fla.

In 2014, the firm hired an industrial psychologist who helped it identify the traits of its top-performing employees, and then developed a test for job candidates to determine how closely they fit the bill.

In the increasingly complex financial-services world, advisers often collaborate with accountants, attorneys and other planning professionals, Mr. Albritton said. That means the firm’s associates must be able to work in teams. “You can’t just be the general of your own army,” he said.

A recent LinkedIn survey of 291 hiring managers found 58% say the lack of soft skills among job candidates is limiting their company’s productivity.

In a Wall Street Journal survey of nearly 900 executives last year, 92% said soft skills were equally important or more important than technical skills. But 89% said they have a very or somewhat difficult time finding people with the requisite attributes. Many say it’s a problem spanning age groups and experience levels.

A LinkedIn analysis of its member profiles found soft skills are most prevalent among workers in the service sector, including restaurant, consumer-services, professional-training and retail industries.

To determine the most sought-after soft skills, LinkedIn analyzed those listed on the profiles of members who applied for two or more jobs and changed jobs between June 2014 and June 2015. The ability to communicate trumped all else, followed by organization, capacity for teamwork, punctuality, critical thinking, social savvy, creativity and adaptability.

Workers with these traits aren’t easy to come by, said Cindy Herold, who runs the Old Europe restaurant in Washington. In a moment of frustration, Mrs. Herold recently put a sign outside seeking workers with “common sense.”

“I can teach somebody how to slice and dice onions. I can teach somebody how to cook a soup. But it’s hard to teach someone normal manners, or what you consider work ethic,” she said.

Training new workers in technical skills takes time and resources employers say they are less willing to invest in workers who don’t have the soft skills to succeed in the long run. That may be one reason hiring has lagged its pre-recession pace despite a near-record number of job openings, according to Labor Department data.

With a stubbornly high share of Americans looking for work or stuck in part-time jobs, employers should have plenty of job candidates, but many of them aren’t biting—at least not very quickly.

Academic research also suggests demand for those workers is picking up. Employment growth has been especially strong in jobs requiring both cognitive and soft skills, according to a 2015 paper from Harvard economist David Deming, who found that pattern held true up and down the wage scale.

Paul McDonald, an executive at staffing firm Robert Half, said soft skills have always been important tools for managers, but now employers are finding them more important than ever before “at the lower end of the org chart,” and “the focus is earlier on in one’s career.”

The combination of soft skills and high grades can attract multiple job offers and premium starting salaries for recent college graduates in technical fields such as computer sciences, accounting and finance, he said.

Many employers, frustrated by the difficulty of identifying job candidates with the right soft skills, have adopted more rigorous hiring practices.

At Two Bostons, a small chain of pet boutiques outside Chicago, owner AdreAnne Tesene conducts at least three rounds of interviews before she hires someone.

For higher-level positions, she invites job candidates and their significant others out to dinner with the rest of the management team, “so we can see how they treat their family.” She also has her employees fill out an evaluation of a new co-worker after 90 days.

Ms. Tesene, who opened her first store 11 years ago, said she sees fewer candidates who can hold a conversation, want to interact with people and are eager to excel.

“Trying to find people like that is becoming harder,” she said. “But also, I think our standards continue to increase.”

By Kate Davidson – Wall Street Journal

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CIOs, Facing IT Skills Gap, Eye the Gig Economy for Talent

Now the Chief Information Officer has to take notice of the Gig economy in order to fill in skills…

CIOs are facing staffing challenges that include retiring Baby Boomers and a widening “skills gap” in key areas such as cloud infrastructure

Ever use Uber Technologies Inc.? If you have, you’ve experienced a disruptive business model, masquerading as a ride-sharing service, that is poised to radically redefine the very nature of work across many industries, across many job disciplines, including IT, for many years to come.

This new approach to employment even comes with a popular moniker: “the gig economy.” It’s a benign term that conjures images of IT workers hopping from one contingent project to another, deciding when and where to work, and more focused on achieving work/life balance than receiving a regular paycheck from one employer.

The gig economy is anything but benign. On closer inspection, there is far more going on. Confronted by staffing challenges that include retiring Baby Boomers, difficult to hire and retain Millennials, and a widening “skills gap” in key areas like cybersecurity, cloud infrastructure, Big Data and mobile application development, chief information officers need to take notice. To get work done, now and in the future, IT leaders must embrace the dynamics of the gig economy.

Many already are. The CIO Executive Council forecasts 46% of chief information officers will employ “contingent workers,” a more formal label for gig workers, in 2016. Deloitte Consulting forecasts corporations will “increase” or “significantly increase” their use of contingent workers over the next three to five years.

Kevin Brady, an IT consultant in South Florida, explains the popularity of this new way to work. “Many chief information officers have specific jobs that require specific skills for specific periods of engagement,” he says. “A highly skilled gig worker is often the best, and least costly, solution.”

Darrin Clawson, CEO of Engage Mobile Solutions, a Kansas City tech firm, disagrees with Mr. Brady’s point about lower costs. “Many IT executives mistakenly think cost savings is the primary driver of using contingent workers. But project preparation, detailed scope, design and documentation costs associated with contingent workers largely offset any potential savings. Hiring contingent workers is much more about having access to the best talent than trying to save a few bucks.”

Chief information officers will find it difficult to ignore the gig economy. It is just too big. The U.S. Government Accounting Office says 58 million men and women comprise the gig economy. That’s 40 % of all workers in America. The Internal Revenue Service reports 91 million “gigs” were completed in 2014.

Workmarket, an on-demand employment software firm, says gig workers are mostly “mid-career” professionals, age 35-55, who complete job assignments that average 32 weeks. Edelman Berland, a global public relations firm, identifies several types of gig workers:  independent contractors who focus on one job at a time (36%), diversified workers who balance multiple assignments (26%), moonlighters (25%) and temporary workers who work for employment firms (9%).

A report from Fieldglass, a contingent labor subsidiary of SAP SE, advises chief information officers to tap the brakes before rushing into a contingent workforce model. The report cites concerns such as a lack of visibility and intelligence into the ultimate ramifications of this new approach to work, the difficulty of fully assessing and verifying a contingent worker’s skill set and the overwhelming volumes of federal and state labor guidelines that come with employing gig workers.

Another key hurdle chief information officers must overcome when engaging with contingent workers is intellectual property protection. This poses a dilemma explains Joe Lampien, director of Kelly Services Engineering Center of Excellence. “On one hand, chief information officers have a fiduciary responsibility to protect confidential product and process information which you don’t want walking out the door with the contingent worker,” he says. “On the other hand, contingent workers with the right skills and talent experience can greatly contribute to the creation of intellectual property.”

To solve this risk-reward problem, chief information officers often require gig workers take company-sponsored training courses on IP property ownership and confidentiality before beginning work at the firm. Many also mandate contingent workers sign a “work made for hire” contract that ensures the company, not the contingent worker, owns the IP of the work being performed and that the firm is notarized as the author and automatic copyright owner of the work.

Though chief information officers must embrace the gig economy, they must also compete with it. Ninety percent of individuals who complete at least one gig never go back to working full time. This means chief information officers must identify key employees and sell them on the benefits of continuing to work full-time at their firm. A recent report from McKinsey recommends corporations invest more resources in corporate training and development as a necessary step.

Robert Reich, the former United States Secretary of Labor, says “the gig economy is the biggest change in the American workforce in over a century.” If Dr. Reich looked further back in labor history he would have made an even bolder statement.  The gig economy is the biggest change in how the world works since Adam Smith, in his 1776 bookThe Wealth of Nations, ushered in the industrial age with his division of labor economic theory.

The gig economy is that important. It is the “uberization” of work. Chief information officers would be wise to take it for a test drive soon.

By Gary Beach – Wall Street Journal

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IT firms like Infosys, Wipro rely on external subcontractors more than ever before 


Even india is getting in on the sub contractor act…

Amid rising onsite wages, high visa rejection rates and a politically-charged environment in the US, where a debate on outsourcing is waging, India’s IT firms including Infosys, Wipro and TCS are relying on external subcontractors more than ever before.

For the financial year ended March 2016, Infosys, Wipro and TCS spent more on parcelling off more customer projects to smaller vendors, according to their financial reports. According to top executives of these companies, most of the subcontracting work took place onsite in the US, resulting in higher expenses.

In the year ended March 2016, TCS spent Rs 7,823 crore on external consultants’ fees, compared with Rs 6,116 crore in the year-ago period. The subcontracting expenses as a percentage of revenue climbed up to 7.2% from 6.46% last year.

By Anirban Sen – The Economic Times

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An Operating Model for Company-wide Agile Development

Change to software development and how you think and staff for it is here. The key to scaling agile software and product development…..

Organizations are succeeding with agile software and product development in discrete projects and teams. To do so in multiple business units and product groups, they must rethink foundational processes, structures, and relationships.

Many digital companies are using agile development practices to deliver goods and services to customers more efficiently and with greater reliability. Using this software-development approach across all business units and product groups, digital giants have been able to design and build features quickly, test them with customers, and refine and refresh them in rapid iterations.

By contrast, few traditional companies—those with both online and offline presences—are using agile methodologies across the majority of their product- and application-development teams. Many banks, for instance, have established digital units to develop and release mobile apps or website features quickly. But those groups typically remain physically and strategically disconnected from the rest of the IT organization and the rest of the company.

Research indicates that many traditional companies are experimenting with agile practices in discrete pilot projects and realizing modest benefits from them. But fewer than 20 percent consider themselves “mature adopters,” with widespread acceptance and use of agile across business units. Meanwhile, according to our own observations, the companies that are deploying agile at scale have accelerated their innovation by up to 80 percent.

There are many reasons traditional companies have not been able to successfully scale up their agile programs, but we believe a chief impediment is their existing operating models and organizational structures. In most of these companies, the process of software or product development remains fragmented and complex: a business request for a new website feature can kick-start a development process involving multiple teams, each tackling a series of tasks that feed into the original request. For instance, one team working on the front-end application, another updating associated servers and databases, and still another reconciling the front-end application with legacy back-end systems. What’s more, the supporting business processes (among them, budgeting, planning, and outsourcing) and existing roles and responsibilities in both the IT organization and business units continue to adhere closely to the legacy waterfall approach.

Read full McKinsey article here

By Santiago Comella-Dorda, Swati Lohiya, and Gerard Speksnijder –  – McKinsey & Co

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Is tech turning contract work into the future of employment?

More and more work is happening over the web…..

Technology has made it easier than ever for employees to work remotely. TechRepublic talked to experts and CEOs about why more and more companies are using contract workers.

Technology has made working remotely easier than ever. And many companies are taking advantage of this­­—not just by having workers telecommute, but by outsourcing certain jobs to contract workers. The movement towards contract work—think platforms like Amazon Mechanical Turk, ClickWorkers, CrowdFlower—is part of a larger trend away from regular employment and towards piecing together tasks.

Gartner analyst Diane Morello has been working with companies for years to help them keep up with workforce trends. The movement towards contract work “reminds me of when my immigrant grandparents came to work in New York City and did piece work,” she said.

While the technology is certainly there, she thinks that the success of piecework hinges on the “basics of organizational and institutional competence.”

“It’s about whether or not companies can make this work,” said Morello. “That’s the bigger challenge out there.”

Morello thinks that companies need to catch up with the idea that they need to outsource work. She speaks to 10-12,000 companies around the world, employing about 250,000 people. Among all those companies, she sees “a very small fraction understanding that they can start to break down work into increasingly smaller components and break it apart to some kind of massively parallel processing mode,” she said. “They can have bits and pieces done and then reassemble that onsite.”

Most companies she talks to still think of this as outsourcing. “They’re not really advancing their models and thinking around how work is getting done, or more important how technology in this digital technology platform enables them to reach hundreds of people to get work done in smaller chunks in a faster way,” said Morello.

The big difference, she said, is that it’s a shift towards work as a transaction versus a relationship. Not only do business want work done in small pieces, but she sees “a consuming audience who wants to do that.”

“The businesses we talk to who are struggling to find the right talent and the right people say they want the relationship,” she said. “But when you delve into it, what they’re looking for are people who can finish work products.”

Businessowners agree.

“I absolutely see larger companies outsourcing things that are non-core,” said David Chang, entrepreneur-in-residence at Harvard Business School, and previous co-founder of SnapMyLife.

Chang used Trip Advisor as an example, where “the sheer volume of work” created a huge demand for contract work. “At TripAdvisor, we had classifiers who helped with that,” said Chang.

He also sees a distinction between core and non-core functions as important. In core tasks, “the company wants to build up a competency or muscle around a key area,” said Chang. “For Apple, hardware/software is core, so they don’t outsource it,” he said, “while at Microsoft, they happily let others deal with hardware (e.g. Dell, HP).”

It’s all part of meeting a huge demand to complete tasks.

“There are thousands and thousands of companies that are all feverishly looking around for people to do work in the context of information and technology and web design and the like,” said Morello.

“This is a channel to get some work done.”

Businesses, Morello believes, will “splinter into two different directions. One will be those businesses that have extraordinary cultures, core sets of values, and taken advantage of all the aspects and ways that they can piece together someone’s expertise in the work,” she said.

The other group “will continue to work with a single pipeline that tends to go through HR. It’s probably not going to operate at the speed that the modern business community is operating at.”

Digital technology, she said, will “blow the employment model apart. It will send people in one direction where there are a lot of users of digital technology to find the expertise they need anywhere on the planet.”

There’s a risk, Morello said, for not taking this seriously.

“You are either leaders or you are laggers,” she said. “Nobody can be in the middle.”

The 3 big takeaways
  1. Platforms like Amazon Mechanical Turk, CrowdFlower, and ClickWorkers take advantage of a remote labor force to get tasks completed.
  2. Outsourcing small tasks is part of a bigger trend that shifts business models from “relationship” to “transaction,” according to Gartner analyst.
  3. Separating core and non-core work is essential to managing flow of work—and many companies are becoming more efficient by farming out non-core tasks.

By Hope Reese – Tech Republic

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M&A Bankers Saying No to More Junk

Looks like the large debt deals are slowing down due to risk….

Banks retreat from the lucrative but risky business of backing debt-heavy buyouts

Banks are increasingly turning down companies seeking financing to pay for debt-laden takeovers after the recent market rout left them saddled with debt from earlier deals.

Credit Suisse Group AG, Jefferies Group LLC and Wells Fargo & Co. are among the firms turning down new requests for financing—typically from low-rated companies—as they retreat from the lucrative but risky business of backing debt-heavy buyouts, people familiar with the matter say.

Banks guarantee the funding in these deals, hoping to then offload all or most of it to bond and loan investors. They promise to provide the money themselves if they can’t find others to buy the debt. But as markets swooned in the months since the summer, investors have lost their appetite for the riskiest securities, making them harder to sell.

Some banks have unloaded the debt at discount prices, taking losses, while others are holding the loans in hopes of getting better prices later, which ties up bank capital and can hurt profitability. Banks were left with at least $1 billion in debt on their books over the past 12 months, according to banks and analysis by The Wall Street Journal.

With banks less willing to underwrite the most leveraged loans, the flow of new takeovers has slowed. U.S. mergers and acquisitions announced this year have fallen 21% from a year earlier to $229 billion, according to data from Dealogic. The pullback has made it hard for private-equity firms, which use a lot of debt in their takeovers, to get deals done. Those that are getting done, many are built to minimize junk debt, or debt rated below investment grade.​New junk-bond sales are down 70% this year.

Banks including Wells Fargo and Jefferies have also started cutting the number of finance bankers in response.

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Making collaboration across functions a reality

There are already tools and networks that make collaboration across functions a reality….

Fast-changing global markets put a premium on simplifying processes radically and breaking through silos.

Companies have long struggled to break down silos and boost cross-functional collaboration—but the challenge is getting more acute. The speed of market change requires a more rapid adaptation of products and services, while customers increasingly expect an organization to present them with a single face. Even well-established multinationals routinely fail to manage operations end to end.1The result: interactions with customers are sluggish; complex, customized products are hard to create on time and on budget; and blocked lines of communication make new sales and distribution channels difficult to navigate.

The basic principles for improving performance—imposing stretch targets from the center, empowering cross-functional teams, standardizing processes, tightening up execution—are mostly familiar. But making these things happen is a different matter. In many companies, ownership of processes and information is fragmented and zealously guarded, roles are designed around parochial requirements, and the resulting internal complexity hinders sorely needed cross-business collaboration. What’s more, in our experience, companies that apply traditional solutions (such as lean and business-process reengineering) either exhaust their managers with efforts to rework every process across business units or, by contrast, focus too narrowly within functions.

Our observations of 25 companies in a wide range of industries in Europe, Asia, and North America have led us to conclude that perspiration is as important as inspiration in addressing these challenges. Here’s the story of how two companies launched new approaches successfully. One needed to focus narrowly to fix a critical process that compromised its core business. The other, swamped by the complexity of its processes, required a broad-based transformation.

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By Ruben Schaubroeck, Felicita Holsztejn Tarczewski, and Rob Theunissen – McKinsey & Co

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