What is next to fall?
The talent barrier is already coming down. In the past, companies offered workers a straightforward bargain: give up what you want to do to do what we want you to do, and in exchange we will give you full-time employment, a title, and a hierarchy. Trade freedom for predictability.
But today, corporations are increasingly swapping permanent staff for temporary, nearly half of American workers are freelancers, and marketplaces that help match talent with temporary projects (Elance, Upwork, HourlyNerd, TaskRabbit, Roamler) are notching up high double- and triple-digit growth. For more than 5,000 years the “hierarchy” has been the superior model for performing one of the most critical functions of society, connecting human talent to the most productive use. But as the costs of coordinating people falls, and the shelf-life of your skills falls (a skill that once guaranteed you a lifelong career today may only last five to ten years), we are witnessing a new form of talent market emerging. Whatever you call this model – the “on-demand” or “freelance” or “gig” economy – in many sectors it is raising productivity, increasing organizational flexibility, and helping workers find work that is both fulfilling and lucrative.
The machine that once stood between talent supply and demand is falling.
The creativity barrier is next. Historically we only paid people to create who had PhDs, wore lab coats, and enjoyed intense 14-hour days in laboratories hunting for a breakthrough.
Then organizations like Edison Nation and InventHelp proved anyone can produce brilliance. Edison Nation runs a TV show on PBS called “Everyday Edisons” in which everyday people pitch product ideas, like a woman who wanted to boil an egg but not have to peel it. Edison Nation’s CEO Louis Foreman shared with me that their team of patent experts checks if the idea is protectable, their engineering team tests if it can be built, and their marketing team measures the market potential. Their process surfaces promising ideas and commercializes them (usually by licensing the idea’s design to corporations) more efficiently than most corporate R&D processes can. Their model, in which the inventor and Edison Nation split licensing revenue 50/50, has enabled the mom with the no-peel hard-boiled egg, and many other “everyday Edisons,” to make considerable income through their creativity.
InventHelp, one of largest services of its kind in the world, helps individuals with ideas develop and protect their inventions and then sell or license them to corporations. A key to their success, President Robert Susa shared with me, was having enough companies willing to take your call that you can match the idea with just the right corporation. Success, in other words, comes not from convincing a company to commercialize an idea but rather from being able to match the right idea with the right business.
Both InventHelp and Edison Nation are creating an open marketplace for ideas that better matches ideas with the entity best suited to commercialize them. You might call this “open innovation” or the “creative economy.”
Note that both of these activities – matching talent to needs and matching ideas to businesses – have historically been core functions of corporations … indeed the key reasons why corporations exist. As better external models emerge, forward-thinking organizations are adapting, changing the nature of business. However, what comes next, we believe, could drive a more radical evolution.
Companies are simply not great structures for allocating capital. They hold on to, essentially, the same central planning approach first adopted around 3,200 B.C. in Greece, in which states controlled production, had no currency, and essentially fed and housed citizens who were expected to work for the state. In other words, each of these states resembled what today we would call a “corporation.”
While economies and markets evolved, replacing central planning with more open markets, corporations have remained centrally planned organizations. Gary Hamel has for several years argued that this will change and that the companies who thrive in the future will create an open market for capital. MIT Sloan School of Management Professor Donald Sull’s research shows that corporations are highly ineffective at shifting resources across business units to support their strategy.
Corporations’ centralized approach has persisted because it has not had to face meaningful competition … until now. Susa shared with me that InventHelp is about to launch a crowd-funding platform that will allow inventors to approach outside individuals before they pitch their ideas to corporations. There are three reasons why going outside for capital before going to a company makes sense:
- New regulations now allow it. Before you had to either pre-sell products in a kick-starter campaign or limit yourself to high-net-worth investors, but now you can solicit the public for funding. Susa has been working on InventHelp’s crowd-funding platform for a while but regulations are now finally allowing it to become real.
- You prove your idea. Interest from investors is now seen as an indication of interest in your product/idea. Susa believes that approaching a company with an idea that already has 100 investors will make for a more compelling pitch.
- It increases bargaining leverage. By getting funding and developing your idea further (by, for example, building a prototype or starting to sell a first edition) before pitching it to a business, you will get a higher valuation of the idea.
The talent barrier has fallen. The creativity barrier is coming down. The capital barrier will be next.
Whether you are an independent entrepreneur or an employee, know that you can find work that fulfills you and a home that will embrace your ideas, and you will soon be able to tap an open market for the capital you need.