Bill Joy, Co-Founder of Sun Microsystems, famously commented, “No matter who you are, most of the smartest people work for someone else.”
It’s true, no matter if you’re Google, Microsoft, Tesla, or OpenAI. In a world of millions of brilliant scientists, engineers, and programmers most of the world's brilliant people statistically work for someone else.
But what if you could gain access to those brilliant individuals, even for just a few hours per week? What if they worked for you on a project or “gig” basis?
One of the key attributes of an Exponential Organizations (ExO) is the way they minimize “full-time” employees and instead use STAFF ON DEMAND.
In this third installment of our ExO series (having mastered an MTP in our last blog), it’s time for us to dive into the “external attributes” of ExOs. A set of 5 attributes remembered by the acronym S.C.A.L.E.
The first external attribute (the “S”) is Staff on Demand (SoD).
SoD involves using a pool of prequalified workers who are hired on an as-needed basis to help perform specific operations. These responsibilities include everything from simple tasks to complex work, and can even include mission-critical processes.
Staff on Demand is all about agility. And during a period of exponential change, agility is critical to your success.
In today’s blog, we’ll look at how SoD works, its benefits, some examples of successful SoD platforms, and why this approach to staffing matters in our fast-changing environment.
But before we dive into the details of SoD, let’s look at a story about Airbnb that highlights the power of this ExO attribute…
NOTE: Understanding how to turn your business into an ExO and increase your growth and impact is a key component of my year-round Abundance360 leadership program.
Staff on Demand in Action: Marriott vs. Airbnb
During the initial stages of the COVID-19 global pandemic, Marriott Hotels, with its 1.4 million rooms in 7,399 properties globally, furloughed tens of thousands of jobs and slashed executive salaries by 50%.
Needless to say, the stress on the remaining employees and on the quality of guest services was extreme. Marriott’s well-tended image took a major hit. Marriott Hotels’ EBITDA between 2019 and 2020 was slashed by 75%, dropping from $2.2 billion to $562 million.
Meanwhile, competitor Airbnb, which had 4 million hosts in 220 countries, faced similar challenges. They lost 80% of their business in just eight weeks.
The difference?
Airbnb is a fully Exponential Organization, using all 11 attributes of the ExO model.
Airbnb refunded $1 billion in deposits to people who couldn’t travel. They paid $250 million from their balance sheet to the hosts. They cut 25% of their core staff—just 2,000 people—but also added customized services (enhanced cleaning) for the pandemic. They noticed a significant rise in domestic travel (people needing a holiday who couldn’t travel abroad, people who needed a home office, and people visiting their families but not wanting to stay with them). Even on significantly lower revenue, the company's 2020 adjusted EBITDA was $251 million—almost identical to their EBITDA of $253 million in 2019.
As Airbnb CEO Brian Chesky summarized:
“This crisis revealed just how adaptable our model is. Whatever is in store for me won’t be as bad as losing 80% of our business in eight weeks. After what we’ve been through in the last eight months, we’re absolutely prepared for what is to come.”
What Exactly is Staff on Demand?
The term “Staff on Demand” (SoD) is about a decade old, but the idea is hardly new. In fact, it dates back to the beginning of the 20th century.
Essentially, SoD is the practice of retaining an external pool of workers and having the ability to add or subtract more staff as needed. A classic example is the temp agency, which contracts out independent workers (e.g., clerks and other non-professionals) to corporate clients for temporary duties.
So, while there have always been “temp” workers in the corporate world, here are the main differences with SoD:
Examples of successful SoD platforms:
Perhaps no company in the last decade has leveraged SoD as well as Uber.
Indeed, Uber is synonymous with Staff on Demand. Uber likely wouldn’t work as a full-employment company. If it were, Uber would have an estimated 5 million employees and be the largest employer on the planet!
Needless to say, Uber initially had a brilliant MTP. “Everyone’s Private Driver” is simple and short—and nebulous enough to eventually allow for everything from airplanes to personal helicopters. It’s easy to focus on the second and third words of Uber’s MTP: that the company provides users with private chauffeurs. In fact, the most important word may be the first. “Everyone” commits the company to make its service available to anyone who wants to use it everywhere. That may seem an impossible goal, but that’s the point of MTP, isn’t it?
And the use of Staff on Demand enables Uber to reach every small neighborhood on the planet.
As most readers know, there are downsides both to Uber’s business model and its practices: price surge pricing, lack of transparency, insurance issues, and tensions surrounding the employment status of its drivers. But there’s no denying the pervasive breadth and depth of the company’s success.
Yet there’s also no denying that the success of Uber has stirred economic, legal, and legislative tensions around the world. Indeed, the rapid dominance of Uber in hired transportation across the planet, supplanting full-time employees (taxi drivers in particular) with gig workers, has forced a re-think of the social contract between workers and employers.
That debate is just beginning.
Benefits of the SoD Model
Staff on Demand is one of the key attributes of a successful Exponential Organization, and the more an ExO can outsource, the better.
Thanks to the rapidly growing gig economy, implementing SoD in your company offers you several powerful competitive advantages:
Why This Matters
Staff on Demand is the present and future of work.
Between 2005 and 2015, 94% of new jobs created were in the gig economy, enabled by—among other things—technological breakthroughs, new legislation that protects gig workers, and the rise of an online global marketplace that enables companies to hire from anywhere on the planet.
For example, in 2020, there were more than 3 million app-based gig workers in Mexico and an estimated 12 million across Latin America.
Fifty-eight million freelancers work in the United States, contributing more than $1.4 trillion to the national economy. Not surprisingly, freelancing is predicted to become the US majority workforce by 2027.
SoD exemplifies the new Zeitgeist of the sharing economy, crowdsourcing, and the shift of power to ordinary people over Big Business, Big Media, and Big Government. One obvious and recent example of this is OpenAI beating the mighty Google to the punch with ChatGPT, but there are many others.
So, how will YOU use Staff on Demand to increase your company’s growth and impact?
In our next blog in this ExO series, we’ll explore the power of Community and Crowd.