If you haven’t yet read ‘What the gig economy means for the white-collar freelancer’, consider it part one, and this part two. We finished by painting a vision of the future of work: people are rising up against a sea of faceless projects in pursuit of personal purpose and a chance to be their best selves. The companies booking professionals are thinking differently about where they search for talent. And technology is a catalyst for change, providing platforms connecting people looking for work to companies booking the work.
There is, however, a missing voice in this story: the professional services firms. If this were a fairytale the gig economy, chomping away at the talent nurtured at the Big Four firms, would be the big bad wolf, leaving the incumbent firms to fill Little Red Riding Hood’s shoes. But any good plot has twists and turns. So while we might pity the girl in the red cape right now, don’t judge too soon.
London Business School’s (LBS) Institute of Innovation and Entrepreneurship event on professional services shed light on whether the gig economy really threatens to wipe out established firms. Thinking that incumbents are inherently slow to evolve and react to the shifting demands of employees and clients is a dangerous assumption to make, according to Martin Laws, Partner at Deloitte.
Professional services firms: defend your case
“My defence is this,” said Laws. “There's a hybrid market. There's room for us all. I think the gig economy can work well with traditional firms.
“Please don’t think we’re stagnant; we may be passing on some work to the gig economy but we’re building new things – we're changing as well.” Traditional firms must give high-calibre professionals the confidence to “challenge how things are traditionally done” to retain (and attract) them, he said.
Laws pointed to a raft of Deloitte initiatives breaking the traditional mould. For instance, Deloitte Pixel, a worldwide crowdsourcing offering that enables its teams and clients to find new solutions to problems by asking the crowd: “smart, dedicated” people “often as flexible as the activities they can perform”.
As well as developing its own technology, Deloitte champions new ventures. Take, for instance, cloud-based analytics service Propel, which targets start-ups and SMEs needing help with their accounts. It’s a clever service that in the long run will help Deloitte widen its client reach from big fish to smaller fish. The venture received £2.5 million in funding from Deloitte’s Innovation Investments, the scheme encouraging entrepreneurial employees to turn start-up ideas into businesses. Over the past few years, the fund has injected cash into 30 start-ups – 20 of which have been founded by Deloitte employees. The tailored support coupled with “the mass power of Deloitte”, said Laws, has helped Propel take off like a rocket. In a fortunate twist, many of the ventures are likely to become Deloitte clients in the future.
No team has the exclusive on innovation, said Laws, “The smartest ideas come from every level of the organisation.” He offered the example of Forefront – a marketplace connecting a curated community of professional freelancers (mainly ex-Deloitters) to interesting projects at great enterprises. When employees leave in search of independence, they stay plugged into the organisation, just as astronauts stay attached to their spaceships, and return once they’ve finished exploring. The concept that people are like fans who identify with firms over time leads LBS’s Tammy Erickson to talk about managing a “portfolio of current and future talent”. So even when someone has spent their formative years at a company – say, one of the Big Four – and they move on, the firm should still invest in maintaining the relationship.
Forefront mirrors Peerpoint, a platform belonging to the magic circle legal firm Allen & Overy. The business exists to create opportunities for lawyers to self-direct their careers. Peerpoint provides its panel of independent lawyers with support and coaching while enabling the community to come together to address what can be the isolation of being a consultant. It also allows Allen & Overy to build its portfolio of talent. Since being formed in late 2013, Peerpoint has grown impressively. There are currently over 200 lawyers on the global Peerpoint panel with consultants working on a variety of high value placements at the firm’s clients and alongside employed professionals as part of A&O’s own engagements. The business has a presence in Amsterdam, Hong Kong, Singapore and Sydney as well as London.
So this is the case: new technology and crowdsourcing talent, employees turned entrepreneurs and networking services to help professionals identify over time. Is it enough to keep Red Riding Hood out of the woods?
The gig economy: defend your case
What does it mean to do gig work? It sounds truncated and shallow, doesn’t it? Media headlines such as ‘The gig economy is the end of employees’ dramatise the scale of change. We are led to believe that talent is trapped in a badly managed M&A scenario: gig work is like a dominant firm taking over an acquired professional services firm, poised to fire its employees. It’s the big bad wolf of the talent market if you believe what you read. But in fact, a more nuanced picture is emerging where the traditional concept of work can blend together with a newer model.
There are significant opportunities for the professional services industry. Let’s examine two.
1. Evolve or die
As mentioned in part one, alternative professional services providers, such as strategy consulting firm Eden McCallum, are compelling big firms to make big changes. The company connects talented freelancers with track records at well-known firms to high-end gigs. Put simply, it’s a competitor in all but scale to the big strategy consultancies like McKinsey and BCG.
Established firms must, therefore, work harder to differentiate themselves from their sassy challengers. LBS’s Costas Markides writes that finding a competitive advantage is the secret sauce to any company’s success. “You can’t just make choices,” he advises, “you need to make ones that allow you to stand out from the crowd.”
Of course, incumbents must fight the perception of inertia – but layers of complexity (and customs such as job titles) can make that hard. Part of the corporate evolution requires a new way of thinking about career goals – with other aims beyond “make partner”. Until these traditional models evolve it will be hard to fight inertia.
2. Collective knowledge
“Do you think we've made a mistake by thinking of the gig economy in terms of individuals?” asked LBS’s Lynda Gratton. She suggested that instead we should consider building coalitions of people and collective knowledge. Part of a traditional firm’s charm is its tacit knowledge – the kind that’s hard to transfer and easy to lose, such as invisible reporting lines and how to present information to tricky clients. But that tacit knowledge doesn’t necessarily get lost in a world of gig-based work. As we’ve observed, high-end specialists can remain connected to firms without being employed by them.
The gig economy is not as transactional as headlines make out, implied Tim Morris, Professor of Management Studies at Said Business School, Oxford. “We've stylised it as people basically hiring themselves out.” Instead, he predicted that the professional working model will become more about capturing value than capturing time and that a hybrid approach could serve big firms in the future. “The existing partnership model may have more life left in it than we might think,” he said.
And the verdict is
There is an irresistible force for change underway, but the traditional professional services firm has lasted for centuries and isn’t about to disappear. Incumbents such as Deloitte are magnets for talent. Last year Deloitte hired around 72,000 people worldwide – there is more talent flowing in than there is flowing out.
Laws said: “Just as any business evolves, services change shape and change value. You change your delivery model to match; you become smarter, smoother, slicker. Clients become more knowledgeable, they need less from you. But we've got to innovate in a way that clients will value.”
So, will the gig economy wipe out all employees? It’s hard to imagine. But this is no longer a story about the wolf and the underdog; this is an emerging tale about capturing and creating value in novel ways – something the professional services industry has always strived to do.