Wednesday, April 22, 2015

The Old Models of Work Are Broken

The only sustainable way to avoid being commoditized is to learn to create value in ways that cannot be commoditized.

Though we are still in the early stages of web-enabled automation, it's already evident that the old models of work are broken--though few are willing to admit it.The primary model of work is being an employee in a hierarchy--Corporate America or the state (government) or a government-funded industry (defense, higher education, R&D, Medicare, etc.)

The foundation of employee financial security is the paycheck, which is earned for 1) showing up and 2) following orders.

In the employee model, ownership is generally limited to those with stock options. Those working for start-ups that successfully go public can cash in their options for extraordinary profits; those working for start-ups that fizzle can use their expired options as bathroom wallpaper.

The conventional employee gets no ownership of their work, and this disconnect between the employee and the value created by the employee's labor is the source of Marx's definition of alienation: the worker is alienated from the output of his/her labor, which is owned by others.

In the new model of work, the worker has ownership of his/her work and human capital. Security in the new model flows not from dependence on an employer but on ownership of the entire process of value creation which includes the social and human capital of skills, collaboration, accountability and creativity.

As Gordon Long and I discuss in this program on the changing nature of work, in the new model:

  • Each participant creates the work and owns the value proposition
  • Innovation and collaboration are paramount
  • Innovation, blah, blah, blah, right? Yes, the word is terribly over-used, but the point is to avoid commodification. Whatever tasks can be reduced to input, processes and output can be automated or done anywhere, i.e. the task is a commodity that can be performed by interchangeable workers.

    If the work can be performed by interchangeable workers, why pay a premium for labor in the U.S. Japan and Europe?

    The only sustainable way to avoid being commoditized is to learn to create value in ways that cannot be commoditized. That's the point of collaboration, accountability and innovation: software and robots are superb at repeating specified processes. Figuring out human emotions and markets and combining insights from different fields--not so much. Those still require human learning, communication, collaboration and ingenuity.

    Try programming a robot to navigate a flower bed on uneven ground, remove the rotten boards in a staircase and replace them with the appropriate type of lumber.Perhaps a robot will be able to do this cheaper than a human some day, but that day is not yet here. Being able to apply a variety of skills to ambiguous real-world problems is another set of skills that cannot be commoditized.

    It's tempting to pine for the days when just showing up and doing routine work was enough to earn a middle-class paycheck, but that's no different than sighing wistfully for the days when making buggy whips and shoveling horse manure off the streets were common jobs: those days are gone.

    Any employer who pays humans to do work that can be automated or performed elsewhere for a fraction of the cost will soon go broke as competitors eat his/her lunch. Employers that want to survive recessions and competition can only pay for the value their employees create in the marketplace. Consumers don't pay for blue sky, and so neither can employers.

    The government is currently immune to such pressures, but since the state is itself dependent on taxes skimmed from profits and wages, the erosion of the old model means the state's revenues are doomed to shrink right along with profits and wages.

    No sector will be immune to the changing nature of work and value creation.

    There is much more on the topic in the video program (31:55):

    view it on YouTube 

    Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)
    go to Kindle edition
    Are you like me? Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible. 

    And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

    You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

    Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

    So I sat down and wrote this book: Get a Job, Build a Real Career and Defy a Bewildering Economy.

    It details everything I've verified about employment and the economy, and lays out an action plan to get you employed.

    I am proud of this book. It is the culmination of both my practical work experiences and my financial analysis, and it is a useful, practical, and clarifying read.

    Test drive the first section and see for yourself.     Kindle, $9.95     print, $20

    "I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."
    Laura Y.

    Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers(25 minutes, YouTube) 

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