
The future of work: What happens when talent trumps capital? - turoczy
http://crashdev.blogspot.com/2011/10/future-of-work-what-happens-when-talent.html
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6ren
> spectacular business failures over the next decade as the incumbents who
> fail to engage the "technical creative class" are eviscerated by nimbler and
> more tech-savvy operators

Sorry, this is encouraging for us here, but I think it's silly. Clayton
Christensen studied why strong incumbents fail. He found again and again that
incumbents were the best at adopting new technology, even radical
architectural changes, _provided that the technology gave an improvement that
was valued by their customers._

They failed when the new technology wasn't valuable to their customers. Even
when they developed the technology in-house, to a level of excellence, it
didn't help them - if their customers didn't want it. The reason it eventually
caused them to fail was that _other_ people did want it, and firms grew up to
service them. Eventually, the new technology improved enough so that the
incumbents' customers also wanted it - but they bought from the new guys, who
had by now become the "incumbents" for that technology, and had all aspects of
the business worked out (engineering, product design, brand, advertising,
channels, distribution, support etc).

It will be the same here: if incumbents can harness new technology to serve
their customers, they will do so. If they are fighting for their lives, _will_
put their massive resources into play to secure the necessary technical
talent.

And the danger that is hard for them to fight: other firms serving different
customers, with technology that one day will be good enough for their
customers (but not yet).

e.g. target people who cannot afford the incumbents' product, with a product
that's not good enough for the incumbents' customers.

e.g. target people who can't use the incumbents' product in a specific
situation, with a product that is not as good as the incumbents' product in
the usual situation.

e.g. target people who lack the time, skills or expertise to use the
incumbents' product (i.e. not worth the hassle), with a product that is not as
good as the incumbents' product for their customers (who do have the time,
skill, expertise).

This is the mechanism - avoid threatening incumbents, and you have a chance.
Threaten them, and they will kick your ass (you will "provoke a competitive
response"). It's not as simple as lacking technical expertise.

~~~
vtnext
Except when a competitive response to your offering threatens the incumbents
revenue stream. That's the one case an incumbent will be slow to invest in
competing technology.

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lsc
>the best creatives would rather start their own company than work for someone
else

I do not believe this is true. There are many very good technical people who
don't mind running businesses, but my experience is that the best technical
people? they don't want the headache.

The best technical people I know lack the business/social skills to negotiate
what I think their maximum salary as an employee would be, much less the
ability to run a business.

We can't all be polymaths.

~~~
wccrawford
That's true to a point. But most companies aren't willing to treat their top
talent well enough to keep them. There comes a time when running your own
business is less headache than dealing with a bureaucracy, and they go do
that.

But again, I said 'most companies'. Some of them have a very clear view of the
situation and make sure that talent is happy and unwilling to move to another
company, let alone start their own. And I think there are more of those
companies all the time.

And to be fair to the rest, they probably can't afford it.

~~~
lsc
My experience has been that top technical talent doesn't want to focus on non-
technical things, like finding a new job, or even maximizing their income as
an employee, so I think keeping them happy has more to do with how you feed
them technical challenges and how much freedom you give them (and how you give
them that freedom) and how valued they feel than with how much you pay them. I
mean, if you pay them so little that it's a problem, they will deal with that
problem, but after that? yeah, I don't think that compensation is as important
as you say.

My experience has been that the people who really focus on maximizing the
money are folks like me; I mean, I'm no idiot, but I'm certainly nowhere near
the best of the best technically. And even me, I'll choose freedom over
maximizing my short-run income.

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sdrinf
In circumstances, where the means of software production outweighs the readily
available business intelligence (see: every "Show HN" poster, ever),
largecorps posting their pain-points might be sufficient alone to get things
started. Savvy engineers, armed with some knowledge of customer development,
can use this to kickstart problem validation, with a significantly higher
probability of turning into a viable startup, than the de-facto "let's make a
better mousetrap" way.

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johapers
I think it is an interesting scenario, but I don't think that every competent
software engineer will want to start their own business, even if the capital
cost is zero. I believe that even most of the competent people in the world
likes a safe employment where they are challenged. So maybe there is a middle
ground somewhere.

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Swannie
The toughest problems in large enterprises are not solvable by one or two
guys. And these are the problems that interest me. Where implementation of OK
software can save $100k+ a year, and implementing a _good_ software solution:
millions.

They can be solvable by a small team who raise capital, innovate, build a
team, win some smaller customers, grow their sales... but by that point they
are approaching 100 people and have been around 5 years.

That sort of success is around. I used to work for a company, started in 1996,
which was acquired around its 10th birthday. That's exactly what they did -
now part of a 20,000ish person company, they are now considered the incumbent
(and all of their peers from the late 90's have also been aquired!).

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viandante
You can acquire as many top talents as you want, but if you don't look at your
customers and their real needs you go as far as with a group of bottom
talented engineers.

The real problem big corporation face is that they don't even think there is a
problem. If they can't see the holes in such things as, let's say, SAP, how
can you even think to apply a better solution? And even when you manage to
convince them to see IT as a strategic part of the business, even there, you
don't neew top talents. The situation in corporations is so bad that almost
any decent programmer whose brain has not been killed by corporate software
'values' can bring something to the table.

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troels
I don't think it's quite that simple. The overarching problem that big
companies face is not single, hard knots, that can be solved in isolation by
an outside team of experts. The real problem are with infrastructure and even
culture. Big co. traditionally treat IT as a suppirtive function. Unless they
start thinking IT as an integral part of the company's processes, nothing will
change.

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zwieback
I think we're in a phase right now where small companies absorb a lot of the
top talent but many or most of these companies will fail and eventually some
of the really good people will be available for larger companies again. I can
attest, though, that hiring for mega-corps like the one I work for is very
difficult.

All this talk about how large companies are so horribly incompetent, etc. is
hogwash. I think it's just incredibly hard for a large organisation to solve
their inherent problems. From what I can tell the leaders generally figure out
exactly what the problem is but are somehow incapable of solving it. And it's
not a matter of salaries or benefits alone.

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ianterrell
> Those that failed to spot this trend early and lack a native culture of
> technical competence have very little hope of hiring the talent they need to
> survive, no matter how much they offer to pay.

When your argument relies on developers' not being able to do math, it's not
very convincing.

~~~
cliftonmckinney
Less a matter of math and more of culture, IMO.

Large organizations are, for the most part, slow to change, and they tend to
treat all "talent" in a similar way. They've been able to get away with this
for technical talent for some time because the grass wasn't greener on the
other side. Now, and for the foreseeable future, it will be.

Many large organizations (in my limited experience having worked for two non-
tech focused Fortune 100s) value years experience over real experience and
talent, have a stratified (and slow) system for promotions, are wary of young
people making critical decisions, are not meritocracies, and are not really
champions of the methodologies/technologies that most of the startup world has
adopted for years. Each of these things are working against them in a major
way.

In short, it's about more than the paycheck, and in the current environment
that's especially true. Large corporations have to be willing to adapt and
make the changes necessary to adapt to this fact, but their slow moving and
old school cultures won't allow it. It's going to require a change from the
ground up, and only the most progressive organizations will embrace this fact.
But, then again, if they're progressive, then they're probably one of the few
that don't need to worry about this issue.

~~~
ianterrell
Your points are all valid, but still: developers won't overlook that for
$200k? 300k? 400k? 500k? 600k?

------
SyedMuhammedAl1
Hi.

------
NY_Entrepreneur
For the changes the article is predicting, for at least 20 years there's not
even as much as a weak little hoot of a tiny chance of the change happening to
any significant extent.

It's an OLD story with a very well known outcome -- the change struggles,
dies, and doesn't happen and people give up.

And the reasons are very well known:

(1) Downside Only.

Broadly in companies, people in middle management are evaluated very strictly
on very specific criteria. Basically for a job description, a superior writes
it and the subordinate is to DO IT.

The norms for nearly all the company and especially for middle line
management, are rock solid that the job descriptions never require doing
something, as in the article, creative to save the company.

So, no middle manager ever gets a negative mark for failing to do something
creative, that likely no one in the company understands, to save the company.
Doesn't happen.

A middle manager who sponsors a project that fails gets a really BIG black
mark that can end his career. So, for sponsoring a creative project, there is
a big downside.

Suppose the manager sponsors a creative project and it is successful, say,
quite successful, even saves the company? What is the upside? Since usually
the middle manager doesn't have an equity position in the company, there is
little upside.

And if the project is seen as successful internally, then everyone else in
management will feel threatened and will undercut, sabotage, gang up on, and
otherwise destroy the career of the 'successful' manager.

Net, for a middle manager to sponsor a creative project has essentially only
downside.

(2) Managing Creative Projects.

To do something 'creative', from the aspect of practical management within a
large company, there are really only two approaches:

(A) The CEO sponsors such projects. However typically in a large company, the
CEO is too busy to sponsor a project.

(B) The CEO sets up a 'creative division'. Such a division typically gets
resentment and no cooperation from the rest of the company and, finally, gives
up on helping the company and spends its time in make-work, junk-think, busy-
work, nonsense projects. When the next CEO comes in, the group is axed.

(3) The Extant Business Model.

A large business has a successful 'business model'. Mostly what the company
does is JUST execute that business model, that is, stay with their 'bird in
the hand' and not go looking for more birds in the bush. Or finding good birds
is difficult; they already have one good bird; so, they would rather nurture
that bird than go on the difficult search for more good birds. To execute the
business model does not require, in any very direct or accepted sense, doing
something new and creative. So, net, creative projects are not welcome.

(4) Professionalism.

There is a role for creativity in the economy, but one important condition is
a lot of highly respected professionalism of the creative workers. Such
professionalism typically has some high formal education requirements, a
strong professional society, professional peer-review, professional liability,
and government licensing. Examples include law, medicine, and some fields of
engineering. So far, 'creative software' does not qualify.

Without the professional respect, a creative worker is trying to paddle a
small canoe up a tall waterfall.

Note: For law in companies, how do lawyers not get eviscerated by the rest of
the middle management? One way is, there is a rule in the legal profession
that any working lawyer must be supervised only by a lawyer. So, really, in
companies, lawyers are insulted from the usual middle manager organizational
struggles.

(5) How to Be Creative.

If someone has a great idea for something creative that will be valuable, then
they should start a business. They should be the CEO of that business, the
main source of creative ideas for that business, and the main sponsor of
additional creative work for that business. The creative direction of the CEO
becomes the 'business model' for that business.

Then the valuable results are provided to other businesses as products or
services. If the 'creative' work can make money this way, then fine.
Otherwise, net, f'get about it. Sorry 'bout that.

To some extent, the large companies change. So, something that starts off
being creative and becomes quite successful can be taken up by the 'field' of
the business as standard, accepted practice. A good example was using linear
programming to manage an oil refinery. How? Each day at the refinery, you have
supplies of crude oil available with an analysis of each supply. You also have
the selling prices of the various possible products -- naphtha, gasoline, jet
fuel, kerosene, motor oil, heating oil, etc. So, your mission, and you have to
accept it, is to say how much of each crude supply to process and how much of
each of the possible products to produce to make the greatest profit.

When this bit of 'optimization' first became possible, the gains were large
enough that the work was accepted as part of the standard technology of
operating an oil refinery. Indeed, the Chicago branch office of IBM was
selling mainframe computers, at some millions of dollars each, for just this
calculation.

Actually, however, it is still the case that much of the creative work is
performed by specialized companies that supply their results to the refiners
and not by the refiners themselves.

An "old story"? Right: The bones in the graveyard have tombstones reading
applied statistics, management science, operations research, applied research,
etc.

Net, a big company that might be 'saved' by some creative work in computing
mostly won't worry because there is little chance there will be any competitor
who will make any significant business progress from any such creative work.
So, why bother? Usually the answer is, don't bother.

There is an example of how to make such creative projects work: Find a nice
area and set up a research group. Fund the research group directly by the
company and as approved directly by the CEO. Have the research group visit the
operating groups and select problems to work on. The research group selects
their own problems. The research group works on the problems on their own
funding. Typically a project goes from two months to two years before it ends.
When the research group believes that they have something valuable for an
operating group, that group is contacted. The operating group decides whether
to implement the project. If the project is implement, then the financial
results are carefully tracked. For the first three years of implementation,
half the financial gains are credited to the operating group and half to the
research group. After the first three years, all the gains are credited to the
operating group. With such accounting, typically only about one research
project in 10 is successful in making money for the company, but the research
group can return about $3 to the company for each $1 in the funding of the
research group. When the research group goes for funding, the CEO always
offers more money than the group wants, and the group always declines the
extra money! That's one way to execute 'creativity' successfully in a company.
It can help if all the general managers of the operating groups have Ph.D.
degrees, say, in chemical engineering, and if the company is owned by the CEO.

~~~
medinism
I would seem to me that if anything is going to change now is the time.
Performance reviews are becoming more evaluative (is that a word?) of both
upside and downside of not taking a particular action. Also, as competition
within a company heats up, internal folks will look for outside talent to help
their projects shine more. The argument you made could have been made for
facebook, groupon, and a number of other startups/concepts that have been
tried before and failed but "for some reason" are working now

