The five new economies disrupting the workforce
We are in the 4th industrial revolution where change is happening at unprecedented pace, turbocharged by digitalization. While the previous mechanical, electrical, and internet revolutions empowered corporations, this one is empowering employees and equipping them with many options and tools. But this is a double-edged sword as the rapid progress in automation is allowing some to thrive, but at the same time also increasingly impacting a growing number of knowledge workers.
In addition to being aware and prepared, it is also important to be ahead of the curve and leverage the fast-rising economies along with the forces they are unleashing on traditional employment. There are five new economies increasingly being referred to, and even as their definitions and impact overlap one with the other, we need to understand their individual and collective impact.
1) DIGITAL ECONOMY — less need for physical things and more alternate instant solutions
What is it? Digital is not only connecting and transacting electronically, but advancement of technology also leads to less physical things as they are substituted by digital solutions, of course increasingly automated and autonomous
So what? In addition to disrupting many traditional markets of physical goods and services, digital is expected to reduce demand for transactional, repetitive and process tasks (even knowledge-type work), while putting a premium for emotional and relationship skills. A third of all jobs are at high risk of being disrupted by the adoption of digital technologies, either from changes to job roles and tasks or job losses.
Now what? To prepare for an increasingly automated world where people will change job roles (and employers) more quickly, individuals will need to embrace the concept of lifelong learning and be accountable to develop and follow an education and training program throughout their entire career. This includes becoming digitally savvy, and leveraging technology as a complement to our strengths and assets.
2) SHARING ECONOMY — less need for ownership and more focus on access
What is it? An economic model of acquiring, providing or sharing access to goods and services facilitated by a community based on-line platform. The concept of privileging access over ownership is not new in itself, but has been exponentially growing with advancements in technology.
So what? The sharing economy is currently leading the emergence of flexible, creative work as a full-time job, and has considerably eased the access to part-time flexible work. It also causes huge cost & efficiency gains for individuals, allowing a much cheaper alternative by pooling and sharing resources, and as a result requiring less income to maintain the same lifestyle with less material possessions. On the downside, combined with an increasingly automated society, competition for jobs within the sharing economy is likely to intensify. This will lead to considerable over-supply in flexible labour and downward pressure on wages from a plentiful supply of relatively cheap on-demand workforce
Now what? In a nutshell, the sharing economy is expected to generate more flexibility and autonomy, however with less job security and predictability of income. It could generate employment opportunities for low-skilled workers as well as provide opportunities for entrepreneurship. This reinforces the need for each person to have a Unique Selling Proposition (USP), and build a recognize brand they can be known for.
3) GIG ECONOMY — less need for permanent employees and more flexible workforce
What is it? Essentially a labor market where short-term contracts or freelance work is common, as opposed to permanent jobs. This is a natural and accelerated evolution of the fact that people increasingly change jobs several times throughout their career.
So what? gigs move the risk from organizations to the individual. This is in stark contrast to the secure 9-to-5 corporate arrangement in the past. The concept of work in general is becoming increasingly complex and entangled. Precise job titles and descriptions are less relevant than before as in-house workers have to undertake more diverse tasks. As such, more Fortune 500 companies now use online freelancing platforms like Upwork and PeoplePerHour to find marketing staff, IT specialists, designers, and other knowledge workers (at a cost sometimes 60% below that of in-house resources). For the moment it’s mostly used as a complement, not replacement of traditional employees, but it’s gaining traction fast, and expected to represent more than half of the workforce in the near future.
Now what? It’s clearly best to be an early mover and ensure we have a recognized and visible brand employers or clients can search and find us. Also since freelance workers are increasingly seen as a source of fresh ideas and “knowledge transfer” from the outside world, it’s good to be on the roster of a few companies for our specialized services.
“If you’re a skilled freelancer, you can work anywhere in the world with flexibility and good earnings, but if you don’t possess any marketable skills and you’re driven to platforms out of desperation…you’ll have to upskill” -Vili Lehdonvirta, University of Oxford
4) PLATFORM ECONOMY — less large companies and more brokerage between smaller players in a fragmented eco-system
What is it? The sum of economic and social activity facilitated by platforms (like Amazon, Airbnb, Uber, and others) that act like online digital matchmakers, and are transforming markets everywhere.
So what? platforms create value by acting as intermediaries between different players in the market, and their dominance is having a disruptive effect on the economy as a whole. It’s important to understand how they influence our market, typically by either being better positioned on the platform, or maybe in creating our own specialized platform.
Now what? Reciprocal ratings and feedback that guide decisions to do business together or not have made confidence a critical consideration. Consistency and earned trust will reward stellar performers with a steady volume for which they can charge above-market rates, while those with repeat negative feedback will be heavily penalized and struggle to survive.
5) CIRCULAR ECONOMY — less disposal and more reusing
What is it? It contrasts the traditional linear economy (make, use, dispose) with a new cycle (reduce, reuse, recycle) where we now keep resources in use for as long as possible, extract the maximum value from them during their usage, then recover and regenerate products and materials at the end of each service life. It also supports the Sharing Economy principle of selling access rather than ownership
So what? In addition to the obvious benefits to the planet and future generations, there are tangible business opportunity to contribute to the unmet needs and also to work assets harder, as a circular economy helps decouple environmental pressure from economic growth. On the other hand, not being sufficiently visible in this area (or even worst, behaving in an unsustainable way) may hinder our ability to earn revenues.
Now what? The number of new jobs circular economy will create is expected to be larger than those it will eliminate, and this will have an impact on all forms of employment, but particularly those in low/medium skilled workforce. There are plenty of opportunities to contribute to and benefit from, whether by creating new products or services to meet the needs, or visibly supporting the Circular Economy principles.
LOOKING AHEAD
Bill Gates said it brilliantly in his 1995 book “The Road Ahead”:
“We always overestimate the change that will occur in the next two years, and underestimate the change that will occur in the next 10. Don’t let yourself be lulled into inaction.”
The above forces have triggered the most radical re-invention of work since the rise of industrialization — a massive shift towards creative thinking, self-employment, and entrepreneurship. This fast-pace evolution will undoubtedly create winners & losers and reward those game-changers that evolve faster than the pace of external change. This is not an easy task, but the alternative of waiting for the storm to pass is not a viable solution.
Sammy Rashed, Principal at SRCD, Co-founder The Beyond Group AG
A strategic advisor and executive coach, author of the Strategize / Crystalize / Realize methodology (see article here), focused on having a clear purpose, building on your strengths, and developing & deploying a personal brand. Whether you choose to be an employee, intrapreneur, or entrepreneur, this allows you to be grounded, be positioned for a wide range of options and craft a fulfilling future.
Follow him on twitter at @RashedSammy or connect on LinkedIn https://www.linkedin.com/in/sammyrashed/
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