Do services like Uber, Sidecar, Angie’s List, and others in the Collaborative, Sharing, or On-Demand economy really create jobs? Or do they shift work within the same population? Is there benefit for all involved: the workers, the service company, or the economy?
To date, most of these are based on revitalizing a fairly old business model: the classifieds or matchmaking business. Yes, they are substantially advanced in how they execute business with apps, algorithmic matchmaking, and social proof (recommendations), but in essence they still are a listing service.
First take a look at the variety of services in Figure 1 created by Crowd Companies, launched by former Altimeter analyst, Jeremiah Owyang. His organization observes this nascent market segment and connects companies like Visa, Walmart, Disney, Hyundai, Nestle and many others to a growing community of startups and experts in this space.
Figure 1. The Collaborative Economy Honeycomb (source: Crowd Companies)
Farhad Manjoo of the NY Times recently described Uber’s Business Model could change your Work. He indicated economists are in debate about the impact of the on-demand economy. Some like Princeton economics professor and former chairman of the President’s Council of Economic Advisers, Alan B. Kruger in his recent report, “paints Uber as a force for good in the labor market,” as Manjoo describes.
Let’s put aside Uber’s lion’s share of public attention and consider can this model be improved, and perhaps we can identify the great opportunity for a business. What is coming next and how will it affect work culture globally?
Finding More Work
Today nations like the Brazil, Germany, Japan, and USA have 70% of their jobs in services (see Figure 2), and with the rest of the world following suit. This includes services all levels of skills. Per my prior article, even with unemployment crises in Greece and Spain, there is a looming $10 Trillion shortage in talent coming within the next 15 years predicted by the Boston Consulting Group. No major economy is safe if this, as Rainer Strack of BCG indicates, will spread across 25 of the leading economies simultaneously. Even if the first-world concern of robots taking jobs comes to be, there still remains the issue of how will citizens make money to keep the economy going.
Figure 2: The Shift from Production to Services (source: Rawn Shah, International Labor... [+]
The challenge is not finding more workers or creating new jobs, but how people can do more work within the same framework. The prevailing models of being employed in a single job for one company is being challenged as more and more people move into freelance or self-employed positions, and working multiple jobs for different customers (not employers). In fact, there is a subcategory to differentiate from the pure entrepreneurs: those who perform irregular work.
The Uber’s and Angie’s Lists of the world make it possible to do this, often in idle hours that people have. Per Manjoo’s article, “The [Kruger] report found that on average, Uber’s drivers worked fewer hours and earned more per hour than traditional taxi drivers, even when you account for their expenses.” What is more interesting is that they cater to what are (unfortunately) labeled low-skill services—driving cars or fixing plumbing versus doctors.
BeyondJobs and a new Look at Work
In the UK, the BeyondJobs project is doing the same but with a different operational model than that of the listing services. I spoke to Wingham Rowan, Director of BeyondJobs, on how their model supports irregular work. First a look at what this means, and then a look at the pros and cons of their model.
Figure 3: Wingham Rowan (source: Wingham Rowan)
Irregular work inspires ideas of those who fill in part-time to run errands like picking up your dry cleaning, transcribing podcasts, or making deliveries. This sort of work is quite common on sites like TaskRabbit or Fiver. It can be hyperlocal (deliveries) or international (remote assistants). It seems like work some folks might do on the side, but there are others who are permanently in a position of irregular work. Consider the following possible scenarios.
Sarah, a caregiver who makes home visits to assist Mr. Peterson, a paraplegic who lives independently, and others like him. Sarah’s work is sometimes periodic (once a week) and sometimes irregular, because she never quite knows when her clients might need her help. Yet, this is a full time job for her. Her availability also in turn enables Mr. Petersen and others like him, to spend more time doing his work-at-home job than household or other tasks.
Another scenario is the dynamic schedules of folks like David—restaurant Wait staff such as servers, baristas, and waiters—whose schedule changes frequently, and is sometimes called in into multiple restaurant locations when they find themselves short. Finally, it is one thing when the customer knows you and your skills, but to expand the possibilities of irregular work, it is even better when those beyond are aware of the worker’s skills and abilities.
Figure 4. Wingham Rowan speaking at TEDxSalon 2012
Such kinds of irregular work are not a rare situation these days. According to BeyondJobs, 22% of population need hours of blue-collar work that fit around unpredictable commitments. According to the Guardian, in the UK, full-time jobs account for only 1 in 40 since their recession. “[Irregular work includes] millions of people who need to work, and that number is growing. In the UK that is about £30 Billion a year,” says Wingham Rowan.
For the Buyers as well as the workers like Sarah and David, the ability to know their availability in advance and not just in the moment is crucial. To do this, rather than simply listing Sarah or David as ‘available’ at all times—a meaningless status—it is necessary to know just when, and what skills they bring. For employers, it helps in resource planning for particular engagements (see Fig. 5). For the worker, the BeyondJobs model goes beyond what a listing or matchmaking service that just reports on current availability, but looks at projected availability across multiple "jobs" throughout the week or month.
Fig. 5. Checking when workers are available (source: BeyondJobs)
This is the model that BeyondJobs focuses on. To achieve this, the model needs an inventory, a database, not just a list. This means understanding a worker’s expertise, their reputation, their service area, and their schedules. BeyondJobs puts this together in their Central Database of Available Hours (CEDAH). Any worker can set their schedules, describe their skills and even set their conditions for accepting work. Employers—or more accurately, Buyers—can search the database for their own criteria and select particular workers as they see fit—a faceted search for you techies. Their reputation or more specifically, their Reliability factor is rated with each completed work.
Per Mr. Rowan: “We designed this around three principles:
- Give workers who degree of control. E.g., TaskRabbit doesn’t work [for the long-term]. After a while this kind of work feels demeaning.
- Amazon-like simplicity for the Buyer.
- All have to be completely legal.”
One problem is that the market for such irregular work is inefficient. “An awful lot are operating on the shadow zone. A lot of work is suppressed because it is so difficult to hire someone,” indicated Mr. Rowan pointing to the legalities of this. The practical need is there but employment paperwork today can be fairly onerous considering the irregularity of it all. Models like this, AirBnb and others take care of the situation by being the broker, particularly for tracking information for taxation as well as terms of service.
I asked about the TaskRabbit comment. “Sarah Kessler wrote in ‘Pixel and Dimed’ [in Fast Company], one the of biggest problem, is that the buyer will deliberately underestimate the job. The site will penalize you for the work.” The point is that work that is sized by-the-task versus by-the-hour hits this snag frequently. Regardless of the complexity of the task, it drives the Buyer to deliberately low-ball--define the job vaguely and underestimate the amount of time it takes. When the customer complains, this dings the reputation of the worker, and affects their future.
I will note that on the other hand, for more complex jobs where you cannot specify exactly what needs to be done, as common in a good deal of knowledge work, I do think by-the-task can fit better, and encourages the worker to strive to become more efficient. There is a dearth of frustration in utilization metric frequently used in the consulting world. The real problem with by-the-hour work here is more in how companies set fixed and often high utilization percentage goals for their consultants on an annual basis that takes little account for the dynamic nature of the work. But as Mr. Rowan pointed out, this isn’t the same case for most blue-collar work, where by-the-hour is common, and better estimation of times for particular tasks are well known.
How does it Help the Economy (and the rest of us)?
From the economic view, Mr. Rowan replied, “What we’re trying to do is trying to track the rate of partial employment in the labor market.” This along with other categories such as the contingent workforce—as it is called in the US but not so favored in UK or Belgium as I’ve discovered—are not tracked very well in our national economic indicators.
For cities and localities, BeyondJobs is even more important than oDesk or TaskRabbit where some jobs do not require the person being geographically near—for example, it doesn’t matter where your virtual assistant or the person who transcribes your audio or edits your video resides. It keeps it local. It also applies to small and medium businesses. “The Starbucks, and Burger Kings of the world already have flexible markets. The people who need it most are Joe’s Café down the street,” says Mr. Rowan.
The real challenge is not in finding workers to take the work. They are more than happy to sign up says Mr. Rowan: “A London borough in their first week their residents had 18,000 hours of availability.” The challenge has been in finding the Buyers, particularly those who would be interested in access to a large population at a time. In that regard, he has been sharing his story with mayors, national leaders, and major associations.
This model does not have to be a single monolithic centralized system for all jobs in a single town or city. I pointed out that trade associations like local carpenter’s or electricians unions might be good to keep it relevant and draw a specific audience of both buyers and sellers. Mr. Rowan agreed and pointed out that it doesn’t need to apply to unions alone. It becomes a branding and scoping of particular types of jobs; e.g. bar work in Birmingham, UK for anyone who can bartend when needed. In that fashion, you could theoretically even build the next Uber-like business around the central core technology of CEDAH.
Mr. Rowan thinks that governments should absolutely not be in the business of running such work markets. Instead, his example is in national lotteries which have been quite successful for decades. It is a government recognized program which creates jobs, development and investment, but it is run entirely by commercial businesses—within the limits designated by the government to prevent scams.
The CEDAH and BeyondJobs model can be take the task of brokering of work to a new level. It could apply to a large variety of work, including irregular work, and become as complex as necessary for high skilled work. Or it could be simplified and normalized to one task a la Sidecar, Lyft, or Uber. It emphasizes local job growth and is suitable small and medium businesses. But it can also be applied internally in large companies as an expertise location system, similar to how tech companies like IBM, SAP, Jive and others describe enterprise use cases of their collaboration software systems. It essentially is a platform for creating Collaborative Economy services. Most of all, it creates a new category for job creation, or rather, work creation, globally that enhances labor mobility and shines the light of transparency on the shadow work economy, which cities and nation-states can readily apply.
