The media makes lots of noise when a Silicon Valley stalwart like Yahoo ends its work-from-home policy, or when Boeing gets burned by outsourcing. But there’s an undeniable shift happening, toward judicious and strategic use of distributed talent — whether full-timers who don’t happen to live where your company has an office, or freelancers who prefer not to become anyone’s employee.
And that requires innovators to develop a new skill set: what oDesk chief executive Gary Swart, left, calls “remote management.” How do you manage people you may not be able to promote, or give performance reviews? People who may write be great designers, but feel more comfortable conversing via e-mail than hopping on a phone call?
While the outsourcing trend of the past two decades took massive projects or entire corporate functions, like billing or the call center, and handed a contract to one vendor, generally in search of cost savings, something different is happening here. Smaller, discrete projects — or pieces of projects — are flowing to the individuals and firms around the world that can do them best. Often, they’re flowing in search of talent that simply can’t be hired into the organization. Usually, there are ways to gauge results quickly, rather than waiting three years to see if things turned out OK (and praying to keep your job if they didn’t.)
The idea behind what we think of as “project flow” is that the winners will find ways to let projects and pieces of projects flow to the most talented people and firms around the world, without requiring that they don an employee badge. Startups will naturally be better at this than large companies, which will worry (sometimes justifiably) about the security and intellectual property risks of collaborating with non-employees. But here are three emergent trends under the rubric of project flow.
At oDesk, an online marketplace for freelancers based in Silicon Valley, there are 130 employees. But Swart says, “I pretty much tell any employee that they can go hire any contractor that they want, [using the site]. It’s leverage. I can’t hire fast enough.” Swart says there are about twice as many hourly contractors — the equivalent of about 250 full-timers — than people on oDesk’s payroll. And it’s not out of frugality: “In Silicon Valley, you can’t find talent nowadays,” he says, especially when competing against players like Apple and Google. oDesk’s customers include OpenTable, Unilever, and AOL, and Swart says many of them are taking the same approach, encouraging employees to amplify their capabilities by adding hourly freelancers to their project teams. “Companies are getting the best and highest use of their expensive resources,” Swart says — meaning their on-premises employees.
Yes, large companies will have concerns about sharing sensitive information, or involving outsiders in important new product development efforts. But this feels like the future: hiring the best people you can find who are willing to work in your office, and augmenting them as needed with freelancers and contractors spread around the world. (Worth a read is this oDesk e-book about managing online workers.)
Check out this list compiled by author and former Microsoft engineer Scott Berkun, of companies where half or more of the employees are geographically distributed, typically working from home. Berkun worked for one of them, Automattic (200 employees), for a year while writing the new book “The Year Without Pants”. Teams at the company, Berkun explains, use very simple tools to collaborate and communicate: text-based software like Internet Relay Chat or Skype’s chat mode are favorites. The entire company eschews e-mail. Berkun, a Seattle-ite who spent a year at Automattic managing a team, had team members in Los Angeles, San Francisco, and Ireland.
“A central element in Automattic culture was results first,” Berkun writes in the book. “Nobody cared when you arrived at work or how long you worked. It didn’t matter if you were pantless in your living room or bathing in the sun, swinging in a hammock with a martini in your hand. What mattered was your output.” So few people worked in Automattic’s San Francisco HQ, Berkun writes, that whenever a magazine journalist or TV crew visited, the founder would ask all of the employees in the area to show up on that day “so the place would look legitimate.”
Some companies, Berkun says, will learn to be flexible enough to hire talent where it lives. But most will be mired down by cultural or political barriers that prevent it.
Quantitative Measurements of Value
We’ve all hired law firms, recruiters, or design agencies and then wondered afterward whether we got the most value for our money. But choosing those outside partners has typically been based on long-term relationships or referrals, rather than real data about whether the project’s outcome really matched its budget.
Cloud-based services like Sky Analytics and Scout point to a different way of doing business. What if you could rely on all the data about your previous engagements with a certain kind of firm — law firms, in the case of Sky Analytics, and recruiters for Scout — and see the stats about who delivers the most value in a given situation? With Sky, you can see which individual partners do the best on particular legal matters (and, of course, what their hourly rate is). With Scout, you can find the recruiters that are best at filling specific kinds of positions. These services, and others, will add a layer of data to help companies make smarter decisions about which external collaborators to work with.
All three of these ideas fit under the umbrella of project flow, which is different from outsourcing. Instead of simply going where costs are lowest, projects flow to the people and firms that can make the most valuable contributions, and free up the bandwidth of your full-time employees. What else are you seeing? Post a comment.
Profile of a researcher on oDesk:
A typical attorney profile page from Sky Analytics: