Some Work of Noble Note

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Labor-as-a-Service, or, the Next Industrial Revolution

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Lifehacking abounds these days, on sites like Quora, Reddit, startup blogs, even NPR.  It’s a perfectly rational trend for society to adopt.  Lifehacking promises not only to help us do things better, it promises to make us happier and give us more time in our lives.  Anyone who follows this trend realizes how closely lifehacking is tied to Silicon Valley culture.  (There’s a reason three out of four links above are from Quora, Reddit, and the hugely popular social media startup Buffer.)  Decomposing the phrase  “life hack” itself should tell you this; it co-opts the term “hack” which has only recently taken on positive connotations through unironic evangelizing by the respected tech establishment.  Hacking refers to subverting a traditional system through well thought out side roads.  In the lifehacking sense, it’s productivity arbitrage.

I can’t help but read deeper meaning into this connection between lifehacking and Silicon Valley.  Tellingly, lifehacking is rarely focused on improving your productivity for the sake of work.  Instead, it’s focused on improving your productivity for one of two things: a) personal fulfillment or b) personal efficiency. That personal focus is key: lifehackers lifehack for entirely selfish purposes.  (How many lifehacking articles start with, “20 Ways To Maximize Your Value To Your Employer”?) Which leads to the question, is it a coincidence that the originators of the “as-a-Service” movement are so desperately seeking ways to improve their own personal productivity?  No.  In fact, I’d argue lifehacking is the enabler of a new “as-a-Service” movement: Labor-as-a-Service (obviously, LaaS).

As-a-Service, as an ethos, if you will, is a utilitarian argument.  It sees massive inefficiencies in resource consumption, utilization, uptime, and allocation and then corrects for it by intermediating those processes.  It aggregates demand and supply and then intelligently allocates the latter to the former to optimize usage and minimize waste.  We’re a decade or so into applying this ethos to the “technology” market (for lack of a better word); “[X]aaS” has become the new de facto expectation in terms of technological delivery models.  Software, obviously, Infrastructure, Platforms, and so on.    We’re only just seeing this ethos applied to the human capital market.  For all the hand wringing about slow adoption of the cloud in certain industries, it will take significantly longer to advance this on the human capital side given how deeply society is tied to its conception of what labor entails.  (Namely, Western Businessly Attired armies of briefcase bearing bureaucreats, marching in file into tall glass buildings.)  Once it does take hold, it has the potential to effect a seismic shift in civilization akin to the Industrial Revolution or the advent of the Digital Age.

The Labor-as-a-Service movement is already nascent.  I’ll stay away from arguing that companies like Uber, Lyft, and Quora are examples of LaaS, even though they clearly are.  Instead, I’ll point you to companies like Mechanical Turk, TaskRabbit, Hourly Nerd, and TopCoder.  MTurk and TaskRabbit are marketplaces for low skill labor.  You use them to find and pay someone to do things like pick up your dry cleaning.  Hourly Nerd and TopCoder are more exciting because they create the same sort of marketplace for skilled labor, namely business and strategic acumen and programming skills.  (TopCoder has a brilliant gamification system built in.)

These platforms are already jettisoning the 40-hour-workweek, though admittedly for a tiny fraction of the population.  They are, though, serving as a supplemental income source for a larger group who are able to cobble together discrete and unrelated tasks based entirely on personal preferences.  They let you set your hours, determine the type of work you want to do, and provide labor based on a bid / ask spread.  It doesn’t require a leap of faith to see the potential for Hourly Nerd or TopCoder-esque marketplaces to become the sole source of many skilled laborers’ income many years down the road.

They force you to imagine a society where companies – labor demand – don’t need to “employ” anyone at all; they simply outsource all their tasks to skilled laborers by placing them up for bidding in a labor exchange marketplace.  Skilled laborers, who may or may not be affiliated with any company, can simply enter a marketplace and bid on different jobs to whatever extent they’d like.  Human capital is likely more efficiently deployed when it is empowered to choose whatever tasks it wishes to do and also when it is compensated exactly on its outcomes produced rather than through a blanket annual salary to cover all labor produced in a specific time period.

We’re far off from that world so I’ll spend less time talking through the various points of friction you would hit.  Obviously, many tasks in corporations require institutional knowledge and so the labor supply in those cases would need to proxy for that in some way (through longer term engagements, for example).  Accountability would be somewhat challenging especially when it comes to legal issues.  As a result, I view that world as an asymptote which we would never quite reach, but approach closer and closer over time.

And to further push us closer to a perfectly deployed Labor-as-a-Service world, technology isn’t just creating new marketplaces for it, it’s also providing the tools to support the disaggregation of labor supply from labor demand.  Every advance in teleworking and remote productivity (of which, again, coincidentally?, Buffer is a champion) empowers employees with a little more agency.  Mobile device management, video conferencing, workflow and collaboration, reduced travel friction – all of these help sever the employer-employee umbilical cord.  They build towards an economy where firms no longer need to collect all their labor supply in a few packed locations; consequently, there’s less need for a constant employee presence, compensation for which works best in the form of annual, or time-and-presence-based, salary.

Lifehacking is a subconscious acknowledgement on the part of Valley-vangelists that their labor will best serve them and their employers in a slightly more disintermediated state than the one in which it currently exists.  They may or may not see the future in the way I’ve described it above, but this focus on improved productivity and fulfillment helps them transform themselves into better individual units within a society, rather than better cogs in a single machine.  The causality goes both ways: when you’re the most efficient labor unit that you can possibly be, you can perform at a higher level and be better compensated for it, therefore you would favor further disaggregation of labor supply from demand to deploy your skills in a more bespoke manner.  Similarly, when labor is further separated from employers, you stand to benefit more by becoming more productive since it frees you up to pursue other interests.  Lifehacking and labor disaggregation are mutually reinforcing mechanisms.

As extreme as the ideas I’ve presented above may be, the key element is how asymptotic they are.  The disaggregation of labor is going to happen in some form or another; the benefits to all parties are simply too great.  Labor gets more control over the tasks it takes on; employers pay for work on a more tailored basis.  The arguments are the exact same as those that are made for cloud computing.  And in light of all the technological advances, both in a practical sense and in terms of society’s mindset, the question to me is not whether there are opportunities for labor to function more autonomously, but rather how far down that path will we, as a society, go?

Check out the second part of this post that explores the idea of disaggregation of labor in a broader context.  Hopefully it helps supplement the argument above.

Author: AJ

I'm an education enthusiast, growth equity investor, and MBA student at Wharton.

One thought on “Labor-as-a-Service, or, the Next Industrial Revolution

  1. Pingback: Business Megacycles & the New Labor Economy | Some Work of Noble Note

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