The advent of organisations with liquid structures in the digital age
Rajiv Jayaraman August 15, 2018
Organisations are increasingly operating in a boundary less fashion, both internally and externally, in the digital age. Uber boasts of over a million drivers globally in its network with 50,000 drivers getting added every month.
These drivers and their cabs are all external to the organisation. Airbnb provides accommodation to millions of travellers around the world but doesn't own any of the rooms in its network. Closer to home in India, the food delivery app, Swiggy, has taken less than four years to reach the fastest unicorn status by leveraging its network of restaurants.
These digital born companies are not in the business of producing the product that the buyer consumes. They are in the business of facilitating interactions between producers, partners and consumers on a digital platform in a seamless fashion.
Organisations are applying the same principles to the way work gets done internally. Organisational silos of the industrial age divided organisations along functional lines - sales, marketing, finance etc. This model is based on the value chain concept, where each team adds incremental value to the core product or service before the offering reaches the customer. In this model, the customer is at the endpoint of the value chain and the organisation's product or service is at the centre of the organisational design. This model is giving way to a new model that puts the customer right in the centre and the organisation creates teams around each customer touch point.
Publicis, the French multinational advertising and public relations company, is a case in point. The organisation has recently unveiled Marcel, an Artificial Intelligence driven platform that promises to bring all its 80,000 employees into a common platform to break all silos. On Marcel, employees can bid to take part in client projects, team up, get work done and disband themselves. This enables the organisation to tap into their wide network of talent that exists across boundaries and serve the unique needs of its customers in innovative ways. Accenture, the global professional services firm, has also created an internal platform for its network of employees to contribute to projects as part of its liquid workforce initiative.
The idea of liquid structures, however, is neither new nor limited to digital born organisations. The movie industry has used liquid structures for a long time. A typical Hollywood movie is made on a budget of roughly $50 million and takes anywhere from 12 to 36 months and a team of 400-500 specialists. For this complex operation, a combination of freelancers, studio employees, diverse skill sets and technology must be drawn upon. Liquid resources have been prevalent in the world of business consulting as well where consultants come together for a specific client engagement and disband once the project is complete.
What is different now is that platform-based business models are accelerating liquid interactions between diverse set of producers, partners and customers in a seamless fashion at scale without the support of fixed structures. ITC Limited, the large Indian conglomerate, kick-started an initiative called e-Choupal in the year 2000 across many villages in India to directly link with rural farmers for procurement of agricultural products. As of 2017, the company provides computers and internet access in 6,100 e-Choupal centres in 40,000 villages in 10 states in India, touching the lives of around 4 million farmers. The company benefits by reducing procurement costs and gets direct access to many farmers directly across the country. Online access helps farmers stay up to date on best farming practices and to place orders for agricultural inputs such as seeds and farm equipment. As the next step, the company wants its well-established network to morph into an aggregator of agricultural services. This is a great example of a traditional company using a digital platform to tap into large external networks to achieve its business goals.
Furthermore, the labour market is showing an increasing preference for short-term contracts or freelance work ("gigs") as opposed to permanent jobs. The freelance workforce grew from 53 million in 2014 to 55 million in 2016 and currently represents 35 per cent of the U.S. workforce, according to a study commissioned by Upwork and the Freelancers Union. This is enabling a model, where companies look for ways to connect with talent available anywhere to get things done instead of relying on fixed internal structures.
Agility is a crucial capability for organisations to survive and thrive in the digital age. Liquid structures play a big role in enabling organisations to become agile and nimble. Organisations can operate in an asset light fashion and need not get weighed down by investments in fixed resources. This allows an organisation to change its course in a flexible manner in response to the constantly changing business landscape.
(The writer is CEO & Co-Founder of talent transformation company KNOLSKAPE)