Creative disruption is often how the old gives way to the new. New companies or technologies enter a market and fundamentally alter the way in which business is done. With the massive interest in the use of generative AI tools to markedly increase productivity and quality, this question is likely top of mind for business leaders and professional, skilled talent.
Moreover, disruptive change rarely happens in one dimension. So it is for the evolving future of work, where the growth of the gig economy, aspirations driven by generational shifts, new technologies, and fundamental macro economic alignments, are all morphing and melding at the same time. The key question that we want to explore today is what does history tell us about the impacts of disruption and should we be scared of it?
Let’s look at this from the lens of two well known examples – the rise of ride hailing services, and the continuing transformation in the world of recruitment.
Uber is the innovator and the poster child for the ride hailing industry. Founded in 2009, the company quickly established itself as a major player, and for many years fought contentious battles with local government and industry incumbents to gain access to their operating markets. Prior to the arrival of Uber, a few large taxi operators held a near-monopoly in their regional domains based on established operations, ownership of licenses, aided by powerful connections built through long-term incumbency. While pricing was generally regulated, both drivers and passengers had limited choice around which provider to work or travel with. Customer experience varied based on the operator and the individual driver and could range from exemplary to abysmal – but generally the system worked unchanged for decades.
Before the rise of ride hailing, the global taxi industry clocked in at approximately $100 billion in revenues annually. Post the advent of Uber and its ilk, with increased choice offered by more vehicles and gig drivers and better customer experience – the industry has tripled to over $300B in a decade and gig employment has put additional money in the pocket of new part-time workers an order of magnitude larger than the erstwhile cab driver population. The driver or part-time entrepreneur also now enjoys higher flexibility and return on investment by utilizing their multi-use (personal and ride sharing) asset. Keeping aside the employment rights of gig workers for a later discussion, the advent of ride hailing has brought democratization to the masses for a common utility and its only the favored capitalism of incumbent taxi companies that has been dented. Not a bad thing at all.
Another industry that has been continuously upended by new players and business models is employee recruitment. Initially, the advent of the Internet enabled individual job seekers to gain direct access to a wider variety of opportunities offered by potential employers, and reduced the power of recruitment and placement companies. In the next stage of disruption, the likes of Monster.com and others that flourished during the heydays of online job boards in the 2000’s, were quite abruptly superseded by the power of social profiles and network connections. LinkedIn created new value based on network effects and the simple search algorithm that early players depended on was not enough. However, a new crop of players like Indeed and Simply Hired also emerged by reinventing the dedicated online recruitment platform with simpler user experiences, powerful search and match technology, and extended lifecycle services.
More recently, AI driven tools for resume filtering and matching against job requirements are further helping employers dramatically cut down the time and cost of finding best fit talent. Through all this, the job of a recruiter has been undeniably improved, with faster and better access to candidates without the drudgery of sifting through resumes, and deeper context gained from a candidate’s public social footprint. On the flip side, the network effect enabling employees get early access to opportunities has also fueled attrition, and hiring top talent has gotten harder and more expensive. As an industry though, HR and recruitment has continued its slow but steady growth reaching upwards of $700B annually.
Don't Fear, Be Ready to Adapt
From both of the examples above it is apparent that technology driven disruption creates new and equitable possibilities for all participants, and repeatedly breaks down inefficient concentration of power and profits. As we face the interminable progress towards a new future of work, we can draw comfort that this will again be the case as new tools and business processes drive higher productivity and make work more flexible, enjoyable, and creative. What we need to do as participants in this evolving system is to be ready to adapt to what transpires.
Will direct employment with a fixed pay give way to more flexible engagement models that instead compensate for outcomes? Will the benefits of loyalty to an employer and a job function, be superseded by the need for a more diverse set of experiences across industries and skillsets that help perform better synthesis than deep learning AI decision models? There are shades of these organizational characteristics already prevalent in professions like consulting, and they may morph further into a new future of work that is now sprouting. One thing is for sure though – these transitions will take time to germinate, but when change comes it will happen suddenly and in a hurry. We have to position ourselves to be ready, whenever that is.