Building The On-Demand Workforce - Harvard Business School

A full 40% of users reported that accessing highlyskilled workers through new digital talent platforms helped improve speed to market, boostproductivity, and increase innovation. Only a handful of companies used new digitaltalent platforms to improve the performance ofcurrent business models and to innovate andcreate entirely new nimble, talent-light businessmodels of the future. Many leaders (60%) reported it was “highly” or“somewhat” possible that their core workforce inthe future would be much smaller. Similarly, 60% expected they would increasinglyprefer to “rent,” “borrow,” or “share” talent withother companies.Actions and recommendationsAs talent platforms proliferate across organizations, they have begun to reveal their true transformative potential because they address two painpoints. One, for companies, on-demand workforce models allow companies to find top talentfor hard-to-fill positions. Two, for highly skilledworkers, these arrangements allow talent to find away to stay productive and in the workforce whilealso managing their work-life priorities. To build ablended, on-demand workforce model, they willneed to: Remake the culture of the organization, changingthe definition of success to focus on attainingoutcomes over generating new ideas or managinghead count.The impact of Covid-19Covid-19 is hastening the transition to on-demandworkforce models. As supply and demand gaps forskills have widened, talent issues have put pressure on companies to be smarter about how theyutilize their workforce and more creative in how theysource the skills they need. Covid-19 has also forcedbusiness leaders to build new managerial skills suchas leading teams remotely and managing in unpredictable circumstances. Finally, problem-solving inthe frantic early Covid-19 months has achieved twounexpected outcomes. One, it untethered companies from the past, forcing them to adapt theirtraditional ways to survive the crisis. Pre-Covid-19,remote work was viewed with suspicion. PostCovid-19, it’s the norm. Two, it pushed companiesfaster toward the future in terms of embracing technology. Pre-Covid-19, managers might have beendiscouraged from working with outsiders, such ashighly skilled freelancers, due to procedural issues,such as legal and compliance. Post-Covid-19,companies have stronger muscles for changemanagement and workarounds in a crisis.As leaders prepare for a new normal and adapt theirbusiness models, they know they have an opportunity to think and act boldly. They can put thelearnings of the Covid-19 crisis to good use and usefreelancers to offset the lack of skills and capabilities that was holding back their ability to grow andcompete. By embracing flexibility in whom they hire,internally or externally, they can finally speed upoperations and deliver faster on strategy. To survivein a hyper-competitive world, especially postCovid-19, they must first win the war for talent. Rethink the employee value proposition, helpingemployees at all levels understand how they canbenefit from arrangements made with new talentplatforms. Redefine work into discrete components that canbe tackled by internal or external contributors. Reassess capabilities within the organization inorder to tap into underutilized talent. Rewire organizational policies and processes,smoothing the path for teams to integratetemporary talent.MANAGING THE ON-DEMAND WORKFORCE3

Rise of the high-skills freelancer economyWell before Covid-19, companies were dealing witha barrage of challenges: increasing automation anddigitalization, changing workforce requirements, shiftingdemographics, and rising competitive pressures. Caughtin the crosshairs of a paradigm shift, companies werealready grappling with fundamental questions around thefuture of work. What is essential to the work we do? Howcan we do it better and faster? How can we find people—especially people who are highly skilled and digitallyadept—in the numbers we need, when we need them?And finally, in the face of growing uncertainty, how can webuild a more agile, nimble, and flexible organization?Then came Covid-19.Countries across the globe battled the pandemic withshutdowns in 2020, and companies scrambled to stayin business. Suddenly, they needed answers to thosequestions within weeks, hours, even days. Stripped to thebasics of survival, it became clear that pre- or postCovid-19, finding the right talent was going to remain thebiggest hurdle to meeting their business objectives.A pressing need for new capabilities incompaniesOver the last two to five years, companies like Amazon,Enel, Royal Dutch Shell, Unilever, and Prudential PLCdiscovered an innovative, technology-led solution toclosing the gap for high-skills talent: digital talent platforms. These early adopters realized that there is plentyof talent to be found—if only they looked for it differently.Instead of hunting for full-time employees to join the organization, they began searching for part-time talent outsidethe company. To do this, they used a new crop of technology-led companies such as Toptal, Catalant, Upwork,and Fiverr that act as intermediaries. Since 2009, thenumber of digital platforms that offer companies accessto highly skilled workers—that is, those with a four-yearcollege degree or more—have burgeoned from 80 tomore than 330. (See Figure 1.) These talent platformsact as a clearing house to match people—highly skilled,extremely capable, and well experienced—seeking gigsor project work with companies that need their talent—inareas as diverse as marketing, finance, legal, projectmanagement, and even innovation and R&D.As early-adopter companies have become morecomfortable with shopping for talent in these digitalmarketplaces, they have begun moving toward new, moreflexible, agile organizations—ones that are built not on4fixed costs and head counts but on a blended mix of fulltime and part-time workers: the “on-demand workforce.”Consider the top three reasons companies find it compelling to work with outside talent.Increased labor-force flexibility: Digital talentplatforms allow companies to do more work withoutincreasing their fixed costs. Sometimes that meansexperimenting before deciding whether a company trulywants to invest in hiring full-time employees with the newcapabilities. Other times, it means flexibility in being ableto access different capabilities for different needs. Forexample, when Nestlé wanted to ramp up project development teams at its Silicon Valley Innovation Outpost,it brought on experienced project management supportthrough talent network Braintrust; and when the CIO wastasked with digitizing customer support activities acrossmultiple channels for an infant nutrition brand, he turnedto Braintrust to find skilled machine-learning experts whocould estimate the scope of the implementation projectand build early prototypes. As Nestlé moved further alongon its digitalization journey, its Purina brand contractedwith six Braintrust freelancers to develop digital experiences for customers. Nestlé managers were looking forflexibility in gaining access to different types of nicheexpertise—without always going through the cumbersome and more rigid process of hiring talent either as afull-time employee or as an expensive consultant.A bonus benefit: the deployment of freelancers throughdigital talent platforms also pushes companies to tapinto their own full-time employees’ latest skills. Thesetechnologies allow companies to identify underutilizedcapabilities that hide in plain sight within the organization. Once companies get accustomed to the idea ofbreaking down work into discrete projects—what SarahTang, Vice President of Enterprise at Freelancer, callsthe “datafication of work”—there is nothing to stop themfrom posting projects internally to tap into the hidden orunused aptitude within the company.Deloitte managers first began using Freelancer Enterprise to find talent skilled in data analytics, research,and design, among other areas. Once using externalfreelancers became routine, Deloitte managers beganwondering if they could use Freelancer’s technology todesign and implement an internal talent-sharing platformfor full-time employees. The result: Deloitte MyGigs,which now helps the consulting firm match employeesto work projects, as and when they arise. MyGigs workswell for both the company and its employees. When aspecial skill or capability is required, Deloitte managers

Figure 1: Growth of the digital talent platform ecosystem2009: 80 companies 180 million investment2014: 190 companies2019: 330 companies 110 new companies, 140% growth in number ofcompanies since 2009 140 new companies, 75% growth in number ofcompanies since 2014 600 million investment 1.9 billion investmentDigital freelancing marketplacesCrowdsourcing innovation platformsNote: This includes companies that are headquartered within and outside the U.S.Source: Authors’ analysiscan post their need for it. In turn, employees can “bid” towork on ongoing projects. For employees, it’s a new wayto use skills that might not be required in their currentfull-time role. For example, a consultant who is workingin the automotive practice may also have deep skills inuser interface and user experience (UI/UX) design froma previous role as a product manager at a technologycompany. MyGigs allows the consultant to offer theUI/UX skills to whomever urgently needs them acrossDeloitte.Accelerated speed to market: Most companies haveexperienced the chronic pain of not being able to findthe right people at the right time, and initially, digitaltalent platforms helped companies make headway insuch cases because they offered the means to speed upprocesses, meet deliverables, and ensure outcomes in apinch. Many managers began using ad hoc arrangementswith digital talent platforms to deliver results faster,better, and very often more cheaply. Now, over time,these makeshift agreements are getting baked into moreroutine, deeper engagements.For multinational alcoholic beverage company AnheuserBusch InBev (ABI), the need to use digital talent platforms stemmed from an urgency to explore new marketMarketplaces for premium talentopportunities. The company realized it needed to expandin areas where it had very little in-house expertise—nichecustomer tastes for craft beer, hard seltzer, cannedwine, and even spiked kombucha tea. Instead of wastingtime hiring full-time talent with digital analytics skills,ABI turned to Catalant to source individuals with marketinsights and consumer analytics. The company nowuses on-demand experts on a regular basis for functionsranging from project management, business analytics,and corporate strategy to technology, marketing, andaccounting.Last year, when Singapore-based Matt Collier, a seniordirector at Prudential PLC, was entrusted with reimagining learning for 5,000 insurance agents in Singapore, hefound himself grappling with a looming new deadline—todeliver clear, cogent, and compliant training materialswithin a month or so. When he began going through thetraining materials, he discovered they were distributedacross more than 3,000 PowerPoint slides—all different,all pertinent. Every slide had to be reviewed and synthesized into a larger narrative, and eventually Collier neededa concise, cohesive training presentation. Collier knewhe did not have the time to hire anyone, and when heshopped around Prudential for someone with the rightskills and excess capacity, few could help him on suchMANAGING THE ON-DEMAND WORKFORCE5

short notice. He went to Toptal to find designers andother talent to create the training materials in time and ata lower cost than any other option. That first successfulexperiment led Collier to helping other colleagues figureout how they, too, could use Toptal as well as other digitaltalent platforms.Innovation through new business models: In an erawhen fast ideation and execution separates the winnersfrom the also-rans, digital talent platforms offer a wayto amplify both innovation intensity and operationalefficiency. Early on, Upwork noticed that many of itscustomers were venture-backed start-ups. These fledgling companies used Upwork freelancers to quickly staffteams to test new products and business models. NowUpwork finds frontline managers in large companies arealso using its platform for the same reasons: It’s cheaper,faster, and easier to increase the innovation pipeline bytapping into the global talent pool.When Italian energy company Enel decided to sign onto the United Nations’ 2030 Sustainable DevelopmentGoals, it knew it would face a challenge to meet theobjectives. Managers entrusted with generating newideas for sustainable innovation contacted severalcrowdsourcing platforms, including InnoCentive, forhelp. The logic behind the open innovation approachwas simple: In addition to the collective problem-solvingpower of its 67,000 Enel employees, Enel could tap400,000 InnoCentive “solvers” worldwide to source goodideas. What started as an effort to generate strategies fortransforming into a sustainable energy company resultedin not just meeting the Sustainable Development Goalsbut also in new recruiting processes to access talentand capabilities. Says Angelo Rigillo, head of innovationgovernance, intelligence, and partnerships at Enel, “Anopen approach provides high-quality innovation at lowcost. Engineers are happy because they receive manymore higher-quality ideas in their innovation funnelfrom people who are in industries other than the energyindustry. Shareholders are happy because we cancontinue innovating at a dramatically lower cost thanwe were spending on entirely internal innovation. That’swhy, after the crowdsourcing test, three years ago, welaunched our own crowdsourcing platform,www.openinnovability.com.” By mid-2020, Enel hadcollected more than 5,000 ideas from more than 100countries, unlocking millions of euros in value.Earlier this year, Enel’s open innovation ecosystembecame an invaluable tool for addressing disruptionsto business continuity that were caused by Covid-19. Inparts of South America, for instance, Enel customersaccustomed to paying bills in cash could no longer do sodue to social distancing, nor were they able to pay online6because of a lack of infrastructure for online payments.Local managers posted a challenge to crowdsource ideasfor solving the bill-payment issue. Within days, solutionsstarted pouring in to fix the problem. By August 2020,Enel had received more than 600 proposals aimed atimproving resiliency and mitigating the negative effectsof the pandemic; the company has already implementedmore than one in five of the suggestions.Growth of high-skills digital talentmarketplacesWhat is gig work? Even up to a couple of years ago, theword would be associated with ride-hailing platformslike Uber and Lyft, platforms that provide access tohome-repair services like Thumbtack, or moving serviceslike Bellhop. These platforms connect consumers withlocal service providers such as plumbers, contractors,caregivers, delivery persons, or drivers with a car. Amuch more silent but equally swift surge has taken placefor high-skills work, where companies can connect withmarketing specialists, scientists, lawyers, designers,editors, and even C-suite talent such as CHROs, CFOs,and CEOs—all looking for part-time, project-basedengagements.Today, there is not just a proliferation of digital talentplatforms of all types, there is growing specializationand sophistication within categories. Even within themore cognitive, high-skills type of work (see the top-rightquadrant of Figure 2), digital talent platforms currentlycluster into three categories:Marketplaces for premium talent: These platforms,which include Toptal, TalMix, and Braintrust, allowcompanies to source niche experts, including legaltranslators, financial modelers, and big-data analysts.Experts can be hired for project work or embedded inproject teams. The project assignments can range inlength from a few hours to more than a year. Toptal claimsit represents the “top 3%” of freelancers from aroundthe globe with hard-to-find capabilities, such as softwareengineers, UI/UX designers, project managers and scrummasters, financial modelers, and even interim CEOs.Digital freelancing marketplaces: Platforms likeUpwork and 99designs match individuals with companiesfor discrete, task-oriented projects—for instance,designing a logo or writing a project proposal. Theyoffer access to workers from around the globe with awide variety of skills, and payment is often based onper completed task. When Amazon needed to explorewhether to expand into custom social-media content fornew TV shows, it tested the waters with Tongal, a platform for accessing freelancers with media skills. Instead

Figure 2: The growing differentiation within high-skills and cognitive digital talent platformsHighRenovation and remodel(HomeAdvisor)Data analytics(Toptal)Skilled trades(TradeCrews)Strategic planning(Catalant)Craftsmanship(Thumbtack)Web development(Upwork)Media production(Fiverr)Laborvalue addedLowRide-hailing(Uber)Data Moving(Bellhop)Document processing(Amazon Mechanical Turk)PhysicalType of workCognitiveNote: The types of work in each quadrant are examples and are not exhaustive.of investing in an in-house team or contracting to atraditional media agency, Amazon used Tongal to quickly“fail fast” and learn exactly what kind of capabilities itwould require to expand into developing social-mediacontent.Crowdsourcing innovation platforms: Crowdsourcingplatforms such as InnoCentive and Kaggle allow companies to post problems and challenges to their websites.They reach large user communities with sophisticatedtechnical skills, and thus they tap into a worldwide poolof experts to generate solutions. Problems range fromsimple coding tasks to complex engineering puzzles.These digital innovation platforms allow immediateexposure to a web of external experts with highly specificskills. Often, they offer prizes as a reward for winningsolutions. Enel now uses crowdsourcing platforms togenerate ideas for a host of issues, including how toimprove recruiting, how to identify and alleviate cybersecurity risks, and what to do with thermal plant sites nolonger in use. InnoCentive’s pharmaceutical clients usethe platform to get instant access to more researchersthan they could ever afford to have on their payroll. Forexample, AstraZeneca used InnoCentive “solvers” todevelop a retrievable device to deliver oligonucleotides(DNA or RNA molecules used in research and testing).Roche, after struggling to find a better way to measure aclinical specimen in its internal R&D, used external InnoCentive talent to develop a solution.1 In both cases, thecompanies were able to widen the funnel of innovationwithout burdening themselves with expensive fixed costs.Enel now uses crowdsou

Harvard Business School Joseph B. Fuller is a Professor of Management Practice at Harvard Business School. He co-chairs the HBS Project on Managing the Future of Work and is a visiting fellow at the American Enterprise Institute. Manjari Raman is a Program Director and Senior Researcher for Harvard Business School's Project on