Whether you are leading a start-up, your own company as an owner / operator, or a large enterprise, we all have what amounts to a binary decision for assembling teams.
1) Hire permanent full-time employees. This works for most positions in large companies. But it is inflexible, like owning and operating your own factory.
2) Hire consultants for projects through traditional consulting firms or staffing agencies. This is flexible, but includes expensive overhead. We pay high consulting rates for analysis that we don’t really need, usually justified by something along the lines of, “This is our proven methodology to ensure project success.” We pay for consultants that we don’t really need because they are brought to us as a team. If we go through a staffing agency, we pay the recruiting fee… forever.
Airbnb, RelayRides, Uber or Lyft show us how a whole community of independent operators can deliver what customers want, at a time that they need, and at a fair price.
The sharing economy is shredding the tyranny of that binary choice between rent vs buy. Instead of two parties (renter and rental company) we have three parties: the renter, the rental provider, and the company which facilitates the transaction.
Airbnb and Uber aren’t getting to those big valuations on marketing alone, although their marketing IS excellent. There are huge economic drivers behind them, the momentum of economic evolution. Soon that binary choice, rent vs buy, will sound like life before the industrial revolution.
Business is also plunging into the sharing economy because there is waste in choosing between only two general alternatives: operate our companies with permanent full-time employees or go through traditional consulting firms and staffing agencies to deliver corporate projects.
We cannot respond effectively to continuously variable demand with a workforce made entirely from permanent full-time employees.
Product cycles are shorter. The business planning horizon is shorter. There is more uncertainty about customer demand. In response, companies have growing portfolios of projects and change initiatives to keep up. Essentially we are continuously re-tooling our productive capacity. It means the team we have this year isn’t the team we need next year.
Some companies still try by going through hiring binges followed by mass layoffs. And then we wonder why we have a problem with employee commitment to the company.
To get the right people at the right time, a significant portion of our total workforce will include contractors and consultants engaged for current projects and the current product cycle, until transition to the next.
The Third Way for business is the ability to get the right people at the right time, without the burden of a permanent full-time employment relationship AND without the overhead of traditional consulting and staffing.
For decades, freelancers, independent professionals represented the appeal of engaging the right people at the right time without excessive consulting overhead or agency fees. However until now, engaging them meant we either must pay them as 1099 contractors or create a new corporate vendor agreement for each new consultant. Both options aren’t practical, and they’re often forbidden in large companies.
Now we have The Third Way: a single traditional corporate vendor relationship that gives access to a vast market of talented independent professionals. This is the business equivalent of what Airbnb, RelayRides, Uber and Lyft have done. Through a single relationship we get safe and insured access to wide variety and competitive rates delivered by thousands of independent providers.
Like Open Source software and Bring Your Own Device in the past, or Airbnb and Uber now, The Third Way may feel weird to some. Do I want to stay in someone else’s home? Do I want to ride with an Uber driver?
Remember that Fear Uncertainty and Doubt about Open Source Software? (“We will never run it in our data center. It’s not safe, it’s not supported.”) or Bring Your Own Device (“We cannot support our network and keep it secure with a huge number of unknown devices connected to it.”). Now, most data centers run open source software and it’s acceptable in many companies to perform work on a personal device.
Early adopters of The Third Way in business will enjoy competitive advantage over peers. They will find agility. They will respond to market conditions by engaging the right teams at the right time, essentially matching workforce supply of talent with customer demand.
Free Agent Source is paving The Third Way for business. To make consultants a cost effective and sustainable part of your total workforce. Start here.