Tuesday, October 25, 2005

Freelance economy & the European challenge

2caps_01_12caps_02_12caps_03_1Slightly less than a decade ago I came across the first of a series of interesting articles (The Dawn of the E-Lance Economy,  Being Virtual: Character and the New Economy, Paradox in Project-Based Enterprise: The Case of Film Making) published in the Harvard Business Review describing how the way we structure labour relationships would be transformed in the future. The articles made a very convincing argument in favour of an economy in which companies and individuals would hire talent for the duration of one or more projects for which their contribution was necessary. At the same time, they highlighted the challenges of such a "market-driven" organization of work and business, in particular as regards strategy and critical work on the core of a business that often requires a level of commitment that external subcontractors rarely provide. A decade ago (circa 1993) was  the time when the Balanced Scorecard was first presented in the pages of the HBR and that too seemed like a great idea (which I think it is if implemented with a bit of common sense rather than dogmatic commitment to theoretical orthodoxy). That triggered the current fashion of measuring and quantifying everything (and often the qualitative aspect and the analysis of what these heaps of data actually mean is lost in the process producing indicators). So the combination of these two trends made some researcher go as far as to suggest that individuals would
have their quote on a free market, a bit like the stock market.

I was immediately attracted by the model both because I felt it was the best way to allocate resources in a fair and unbiased manner to achieve optimal performance in the face of a challenge that was already apparent (emerging economies of India, China, Brazil). The fact that established companies of the Western world seemed not have much trouble of conscience laying off their people (a.k.a. "our most important asset" in their annual reports) by the thousands strengthened my belief that the best way to operate was to be a freelance professional. So that's one of the things that made me start working under that model, which provides no security whatsoever other than the satisfaction of the customer. At the same time, I do not consider myself to be a mercenary and I take pride in sharing a number of values with my customers. My ambition is to combine the freelance model (the way of Reason) with a genuine interest in making things work out for my customer to contribute to their success (the way of the Heart).

Of course there are important limitations that must be taken into account if this way of carrying out projects is to be used on a large scale to improve flexibility:

  1. this model is not for everyone : type of job, psychological profile, considerations of general interest and impartial government at the level of society...

  2. markets are not perfect (my sincerest apologies here to my former professor of finance) and are not necessarily driven by "objective" considerations because markets are made of humans and humans are not robots (at least not everyone and not all the time).

  3. the satisfaction of a customer is often more a matter of individuals rather than a matter of institutions: what does speaking of the satisfaction of company XYZ (the customer) really mean when one is a feelance professional?

  4. this model may not be for all the stages of a person's life: there is value in being part of an organization and sharing more than project objectives with colleagues at certain stages and that is in the interest of both the company and the individual (beginning of career and for very senior positions whose personal welfare should be more tightly linked to how the company they lead fares in the medium / long term and not to how golden the parachute will be when they are fired having achieved no results).

  5. the collective and individual capabilities of people are seldom managed as core business assets in large organizations and they often neglected for lack of awareness in smaller organizations. Therefore, the drive to get the most appropriate resources possible (that can be afforded) on a project is sometimes weak. Human resource departments often need to be restructured, starting from their name (I am not a "human resource", are you?), to become effective partners of the business who understand the organization's activity and can make a genuine contribution to getting hold of the most appropriate people regardless their status from the standpoint of labour legislation.

  6. in many cases the act of putting together a team of freelance profesionals is limited to the tasks required to identify and hire indivudal experts, without much attention being given to the dynamic of the group nor to the building of a team: who wants to invest in people they will not keep in the long run?

  7. the freelance model works very well for very focused experts and slightly less well for general management professionals, although the exposure of managerial profiles to a variety of situations in very different business environments is, in my opinion, one of the best ways to develop and mature their management skills.

Still this way of organizing entire chunks of a company's value-chain needs to be developed in Europe if we are serious about dynamism and growth. At the same time, the framework of welfare state that was developed during the last century, public service managed by democratically elected governments and heavy public investment in education and research must be preserved. We don't need to be as extreme in removing government from business as neo-conservative americans are (a fact for which neither the victims of Katrina, nor the working poors of America thank them), nor as rigid as the french socialists can be when it comes to making things easier for business.

Who can solve this equation?

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