Predicting the Aftermath of the Economic Asteroid Known as COVID-19 As restrictions are lifted and local economies begin to recover, it will become evident that the Industrial Era has crumbled, giving way to the digital age.
Opinions expressed by Entrepreneur contributors are their own.
This article was written by Duncan Robins, a member of the Entrepreneur NEXT powered by Assemble content team. Entrepreneur NEXT is our Expert solutions division leading the future of work and skills-based economy. If you're struggling to find, vet, and hire the right Experts for your business, Entrepreneur NEXT is a platform to help you hire the experts you need, exactly when you need them. From business to marketing, sales, design, finance, and technology, we have the top 3 percent of Experts ready to work for you.
When the asteroid that is COVID-19 struck world economies, the market was in the middle of a protracted, painful transition out of the Industrial Era. That asteroid will cost the global economy anywhere from $10 trillion to $15 trillion. It will also speed us on our way to the next era, the digital age.
The times are a-changin'.
Physical infrastructure was the backbone of the Industrial Era. Management relied on rigid organizational structures and demanded a repetitive production from a loyal workforce of Baby Boomers.
Times are changing, however.
In the digital age, the businesses that dominate their industries and market niches will almost definitely do so by embracing technology. They won't ask their millennial workforce to be loyal to unfilling jobs requiring redundant labor—instead they'll ask for agility and creativity. To make this radical shift, organizations will need to rethink every aspect of Boomer-era employee-employer relationships. They'll also need to force politicians to reconstruct funding mechanisms for government programs, while their formerly community-centered businesses and marketplaces dissolve.
Technology-enabled, Distributed Services organizations ("TEDS' for short) will likely dominate the post-COVID marketplace. These agile and efficient organizations, and their ecosystems, will thrive during the digital age. Their backbone will be the digital platforms that connect their distributed workforces, support their marketplaces, and enable their market-facing applications.
These platforms will also allow for the ubiquitous deployment of automation, robots, and A.I. (in physical and digital forms). You can expect continued advancement and optimization of these tools throughout the digital age.
They came. They saw. They conquered.
TEDS represent a new form of organization that will likely dominate global markets for years after the Industrial Era has given way. The most successful of these entities will share many of the same organizational characteristics. They will:
1) Be technology-enabled
2) Have distributed workforces
3) Mix physical and digital assets in their service offerings
4) Be extremely agile and efficient
We know this because the current incarnation of TEDS includes not only behemoths like Alphabet (Google), Amazon, Facebook, Apple, Uber and Airbnb, but also smaller startups like Assemble Technologies.
These beasts and babes aren't just out to disrupt markets and industries, they want to dominate them. Many of these current companies and their ecosystems include a platform, a marketplace, and an application (App) or software-as-a-service (SaaS) offering. The most successful have already discovered how to incorporate distributed workforces and physical assets in novel legal structures. They use this edge to achieve maximum agility and efficiency, while offering their workforce new opportunities and flexibility.
The largest TEDs have evolved into voracious organizations, devouring markets and industries at a fantastic rate. Consider that in 1995 - 12 years after AOL got its start - the top 15 internet companies were worth $17 billion. In 2015 - 12 years after Facebook launched its social media platform - the top platform companies (the precursors to TEDS) were worth a whopping $2.5 trillion. Economists predicted pre-COVID that the digital share of the global economy was expected to grow from 15 percent in 2015 to 25 percent in 2020.
They forecasted the potential dawning of the digital age.
The number one problem shared among entrepreneurs today is finding, vetting, hiring, and retaining expertise.
Millenials will choose their future.
Although TEDS appear to have the upper hand over their workforces today, balance will be quickly restored. Millennials will be a powerful counterforce to TEDS as they become the majority workforce, consumer market, and voting public. They will surprise many musty politicians, officials, and community leaders by what they demand, and how active they will be.
Most freelancing millennials will not fight for employee status. According to polls, most millennials prefer the independence of freelancing. Forty-two percent of millennials participated in the Gig Economy in 2018, and many more are interested in doing contract work in the near future. Successful millennial freelancers do not necessarily want to become employees. However, they are interested in benefits that are currently tied to employment including:
1) Work-related training
2) Access to healthcare
3) Tax incentives to invest in retirement
However, none of these benefits need to be tied to an employer-employee relationship. If millennials get their way, they won't be much longer.
This is because freelancers are very politically active. Eighty percent of freelancers expect to vote in the coming election, almost twice the rate of non-freelancers. Over 80 percent of full-time freelancers would cross party lines to support candidates that solve their needs. They also vote with their wallets and feet, supporting organizations that align with their values, boycotting ones that don't, and moving to communities that support their "work as life" choices.
Darwinian evolution–thriving post-asteroid.
For businesses to survive and thrive in the post-COVID digital age, most will need to align with one or more TEDs by joining their ecosystems. The alignment will give these organizations a fighting chance, but they will still need to evolve. They'll still need to use new platforms and digital tools to gain agility and efficiency in order to survive.
Unfortunately, when formerly physical connections to customers are digitized, businesses will find themselves increasingly reliant on their TEDS' ecosystems.
While there will be many legal and political efforts to slow the rise of TEDS, most attempts will be futile in the long run. Businesses scrambling to adjust should not be distracted or lulled by these efforts. Rather, they should stay focused and resolute on adapting for the future of work.
The new future.
TEDs operate in stark contrast to Boomer-era hierarchical organizations. They redefine the worker-employer paradigm in such a way that courts, legislators and officials worldwide will find it difficult to apply outdated laws, policies and practices. Formerly straight-forward questions will be difficult to answer.
For example, what is the relationship between an organization and the worker? Or, what is the legal relationship between each of these entities and the customer? Are the workers independent contractors, sole proprietors, or employees? Are the guests or passengers the workers' customers or the company's or both?
In the future, we expect five workplace trends to prevail:
1) Workforces and technology will morph as physical robots and digital bots become ubiquitous.
2) The definitions for "employee' and "job' will become blurred as organizations incorporate more flexible staffing models.
3) Organizations and the nature of work will be defined more by teams and their digital collaboration tools than by centralized, corporate-controlled, physical spaces and organizational structures.
4) Upskilling and reskilling programs will become competitive advantages of organizations, required of, but also sought after by their skills-based workforce.
5) Traditional employee, pre-tax benefits like healthcare and 401Ks will become decoupled from workplaces.
The future of work looks bright for many workers. Millennials will force improvements to their quality of "work as life," winning increased independence and flexibility by leveraging their skills and expertise. More people will have access to a more liquid labor market which will be more merit-based and "color blind."
However, governments will need to work with the TEDS to develop updated training and upskilling programs, as well as roll out additional technology to struggling communities. This will bridge the digital divide (a massive and growing social and economic challenge) to the benefit of everyone.
To hire the Experts you need, exactly when you need them, visit next.entrepreneur.com to schedule a meeting with our Expert solutions team.