RITA GUNTHER McGRATH
PROFESSOR AT COLUMBIA BUSINESS SCHOOL AND COAUTHOR OF T H E E N D O F C O M P E T I T I V E A D V A N T A G E: H O W T O K E E P Y O U R S T R A T E G Y M O V I N G A S F A S T A S Y O U R B U S I N E S S
THE BIG IDEA: IN UNCERTAIN TIMES, LEVERAGE ENTREPRENEURSHIP FOR COMPETITIVE ADVANTAGE
We are all entrepreneurs in the
transient advantage economy. For many of us, the word “work” has come to be inextricably connected with the word “job.” And jobs have been in many ways characterized as relatively stable, long-term relationships between employers and their employees. The advent of the transient advantage economy has upended both of these assumptions, with some surprising consequences for the future world of work. In the field of strategy, a core assumption for some decades now has been that what companies should seek to establish is a “sustainable” competitive advantage. In more and more parts of our economy, however, the very idea of sustainable advantage is not tenable; instead, firms that are able to prosper have mastered the art of continually moving from one advantage to the next. If a competitive advantage has an increasingly shorter and finite life, the notion of being able to come to work and perform more or less the same tasks for a long period of time falls away as well. Instead, we may well find that jobs take on the rhythm of the life cycle of a competitive advantage. There will be tasks involving innovation, in the creation of new advantages. There will be tasks relevant to bringing a new discovery to scale. There will be tasks involving exploiting an existing advantage. And eventually, there will be tasks relevant to disengaging from an exhausted advantage and repurposing its resources. This pattern suggests that more work will be project-based, rather than being organized around products or functions. As advantages come and go, different skill sets will be useful at different stages in their life cycles. Some have referred to this as working for a “tour of duty” rather than in stable, hierarchical jobs. In these environments, job-hunting is more or less continuous as employees are permanently seeking their next “gig”. Employers, moreover, have a vastly increased pool of people they can access as increased digitization diminishes the effects of distance. The economics of transient advantage have also led many organizations to adopt the flexibility (and decreased expense) of remote working. Indeed, the 2013 Regus Global Economic Indicator report found, after surveying 26,000 business managers from 90 different countries, that 48% of them work remotely – either from home or another location – for at least half the week. As new technologies make it ever-easier to connect and share information from anywhere, work can happen anywhere. Work, moreover, is increasingly disassociated with a “job”. One recent observer noted that in the United States, 48% of work that is done is not necessarily tied to a conventional job. Indeed, an entire infrastructure of organizations has emerged to provide services that used to be provided by employees, but on an outsourced basis. Organizations have sprung up which offer temporary or part-time staff to companies that need make no permanent commitment to keeping them busy. Firms that are capable of offering a more traditional career are likely to become rarer. In a study published in the Harvard Business Review in 2011, profiles of ten companies who were able to grow net income consistently at a rate of 5% or more for ten years in a row were presented. Among the factors that led to their steady performance, even in an environment of tremendous uncertainty, was a deft combination of forces that create stability with forces that provoke and embrace change. Stability was maintained through an emphasis on values, culture, consistent leadership behaviors, and yes, people development. Agility, however, was promoted by frequently moving people around, by having leaders change jobs, by doing considerable experimentation and by investing in new skills. At Infosys, one of the companies in the study, the concept of “learnability” is used to convey the idea that skills need to be continuously upgraded as conditions change. One thing that is becoming clearer about the future of work is that many of us will need to develop the essential skills of entrepreneurship rather than depending upon an organization to provide us with a livelihood. We will need to become comfortable with ambiguous situations, since short-lived competitive advantages suggest the need for constant innovation. We will need to tolerate intelligent failures, as only through experimenting will the future direction become clear. As leaders, we will need to become more savvy about reducing the burdens of uncertainty on our people. And ultimately, as Peter Drucker was fond of saying, we will all need to become adept at “creating customers” for ourselves.