Disruption Now, Disruption Later, and Disruption Forever

BY CHRISTIANE TRUELOVE

AMA Quarterly spoke with Jeff Schwartz, a principal with Deloitte Consulting LLP and the U.S. leader for the Future of Work and the U.S. leader of Deloitte Catalyst, Tel Aviv. Schwartz talked about his new book written with Suzanne Riss and illustrated by Tom Fishburne, Work Disrupted: Opportunity, Resilience, and Growth in the Accelerated Future of Work (John Wiley & Sons, 2021). He elaborates on the changes COVID-19 has made in the workplace, how the pandemic accelerated technology use, how many of these changes are expected to last once the pandemic is over, and the changing nature of the U.S. workforce from almost exclusively full-time employees to a mix of full-timers, freelancers, gig workers, and “ghosts.” He outlines the challenges managers and leaders will have in the future and what they must do to respond in a way that will create growth.

Your book is pretty comprehensive. It goes into what the new workplace is going to look like, with a hybrid of full-time and gig employees and everyone working remotely. What do you think leaders have to be doing in this time to prepare for this new reality, or even managing right now? What skills should they be developing?

Jeff Schwartz: The book is titled Work Disrupted. In some ways I have been working on the book for seven years, but obviously we went into warp speed in the first part of 2020. The book could have been titled “Management Disrupted,” or it could have been titled “Leadership Disrupted.” And it is about disruption in several different ways. I tried drawing a distinction, and I think this is useful for managers and leaders, that there is a difference between acceleration and disruption. We’ve been experiencing acceleration for the last 10 or 12 years. You can go back to 2007, which was a seminal year, in which the iPhone was released, and it’s also the year that cloud computing began to come onto the scene. And 2012 marked what I call the reintroduction of AI. So we’ve been accelerating around digital transformation, particularly mobile, social, cloud, and AI, for the last 10 years.

But something different happened in 2020, and this is what I think is relevant in management and leadership. Anne- Marie Slaughter, who [was interviewed for the book and] is the president of New America foundation and think tank in Washington, put it really well, which is “The coronavirus is a time machine to the future.” And she goes on to say that things we thought would take five years took five weeks, and I think in some cases, five days. And it’s this disruption piece that’s really interesting across the board. So what we tried to do in the book was look and talk about what was being disrupted, and I try to outline how people and machines are working together and how each of these disruptions is an opportunity, and how the employee-workforce ecosystem is being disrupted and how workplaces are being disrupted.

Let me give two data points that really anchor my thinking, things that we all saw in 2020. There was some research from MIT in the spring that reminded us that something like 5.3% of knowledge workers—people who could work virtually—were working virtually before the pandemic. By May and June, it was 50%. Half the people in the workforce were working remotely. Almost everybody who could work remotely, was. That’s a 10x increase. It went from 5.3% to 50%. Another example of this is what we saw in telemedicine. This is from Intermountain Healthcare, which is one of the largest healthcare providers in the country, out of Utah. From 2015 to 2019, their daily telemedicine interactions were 454. In 2020, through the mid-fall, the number went up to 4,300 a day. That’s 10x.

So the reason I find the data very interesting is [that] as managers, we are in a 10x world. But this goes back to the premise of the book, which can be summed up by a quote by Albert Einstein, which is, “You can’t use an old map to explore new worlds.” And that, in a sense, is what I am trying to talk about, which is when the nature of what we’re managing changes and the way people and machines work together. Machines are no longer just tools. They are assistants, they are colleagues, they are managers. The workforce is no longer employees and other. The workforce is an integrated ecosystem of full-time workers, part-time workers, managed services, freelancers, gig workers, crowd workers, and ghost workers. And the workplace is no longer where we go. Work is how we do it. These are the big shifts that we’re looking at.

The broadest challenge for us, and…an interesting question I raise in the book is, has management development changed enough given the way work has been disrupted? I think that’s really where the challenge lies. And in some ways, a lot of our management candidates still are very much focused on what I call in the book the last gasps of scientific management. The ghost of Frederick Taylor is still out there.

It’s not about optimizing workflow. It’s a very different discus- sion. It’s about collective intelligence. It’s about augmenta- tion and collaboration between people and technology. It’s about managing workforce ecosystems. Even the employee lifecycle itself—attract, develop, retain—I raise the question of whether we should move from that to a focus on access, curation, and engagement. We’re no longer acquiring or recruiting most of the people who work with us. We’re accessing them. And how is access different than acquisition and hiring?

You’ve mentioned the attract-hire-retain model, and the access-curation-engagement model. What is the new paradigm that HR managers today have to start acclimating themselves to?

JS: I’m a senior partner in our Human Capital practice. I’ve been here at Deloitte since we set up this practice. I think this is a renaissance period for HR, which is a little different than saying this is HR’s time in the sun, which is what some people are saying, though I agree with that entirely. But I think it’s more than that. When I say it’s a renaissance period for HR, it’s a period where the role of people within organizations and in their work is more important than ever, but it’s more important than ever because it’s been disrupted and it’s been changing as well. It’s not as if suddenly everyone has realized that people are the most important asset in an organization. We’ve been saying that since I’ve been in consulting, for 35 years. What’s changed is the context, what’s changed for this is around the people issues that we’re seeing in HR.

HR has an opportunity to be really at the center of the reimagination and re-architecture of work. Our Human Capital Trends Report, which we just released for 2021, one of the headlines in that report is that we interviewed HR and business leaders—very senior executives, about 3,600 from around the world—and one of the questions we asked them is, “How are you viewing work transformation before COVID, and how do you think you’re going to view it after COVID?” And one of the statistics that really jumped out at us is that before COVID, about 29% said that their focus on work transformation before COVID was on reimagining work. The other 70% were really focused on work optimization, cost cutting, and redesigning work, which is using technology to substitute for labor. After COVID, when we asked these executives back in September or October, that number went from 29% to 61%. The 61% of executives around the world see their focus on work transformation, post-COVID, as reimagining work, thinking through what are the outputs, what are the outcomes, what are the combinations of technology and people, that are really focused on augmentation and collaboration. We actually refer to this as the re-architecture of work, because it’s not just an imagination exercise. We need to build something new.

So one of the biggest challenges for HR is being a leader and an orchestrator of the re-architecting of work. And by that, we mean two things. We mean looking at what are the outputs and the outcomes of work—not just doing it faster and cheaper and more efficiently, which is productivity, but also creating new value, more impact, and more meaning. This is going to be a huge part of the role of HR in the HR renaissance.

The other thing is the role of HR in orchestrating the workforce ecosystem. For many organizations today, the majority of their workers are not employees. Some of the biggest companies in tech, if you look at their 200,000-workforce space, half of their employees are “employees,” and half of them are in the other category. And this workforce ecosystem is not just commodity services. In many industries, the people working in these new categories—freelance workers, cloud workers—can be among the most important IP contributors to the work that’s being done. It’s certainly true in data sciences, it’s certainly true in innovation.

So what role do HR leaders play in the HR renaissance in helping to reframe the move from an employee-centric focus to an integrated workforce ecosystem focus—joining up with IT, procurement, and business leaders—so that when we look at the totality of who does the work in the organization, we’re looking at that ecosystem and we’re asking questions about culture, performance management, etc.?

The third challenge is being an orchestrator of adaptive workplaces—adaptive, flexible, hybrid workplaces and workplace strategies. Some of this is about space, some of this is about what equipment people need to have, some of it is about cybersecurity. But almost every organization we’re talking with today is asking a version of this question, which is, “We may have half of workforce today or all of workforce working remotely, so in 2022, what is it going to look like?” I think that adaptive workplace environment question is a huge question in the HR renaissance. Because it’s not a question of whether people are going to work from home, or work from anywhere, or work from the office, but managing this portfolio of people who prefer to work from home, people who prefer to work at the office, people who prefer to work from anywhere, or people who prefer to be road warriors. That portfolio of workplace personas will be as diverse as the workforce ecosystem is in terms of employment models.

There’s this incredible set of opportunities for HR in the renaissance, but it’s not doing always what HR has historically done. It’s growing into the question of how do people and machines work together, how do we manage a workforce ecosystem, and how do we lead adaptive and hybrid workplaces.

What are the skills HR managers need to manage these hybrid workplaces, to adapt to what’s going on? If there was a class, what are the things that would need to be taught?

JS: This is a thought-provoking question. If members of the American Management Association, these HR leaders and business leaders, believe that work is being disrupted, then we have an opportunity to ask, should management education also be disrupted? I think it’s really worth considering. Even asking the question of what should the core of an HR curriculum be. I think the core of the HR curriculum today, at most organizations that have an HR degree, and the HR courses that are taught at business schools, they are really anchored in a 20th-century view of an employee lifecycle. They’re 20th-century models of attract-develop-retain, with almost the entire focus on full- time employees in linear, prescribed career paths. We need, I believe, 21st-century mental models and maps for careers and work and business and certainly HR. So that raises the question of not only what should be the substance of the course, but what the curriculum should look like.

At a high level, there are probably four things that need to be in the curriculum. The first is the role of strategy and the workforce. And by the workforce, not only employees on and off the balance sheets, but I also mean technology. Technology is actually part of the workforce today. Many companies today have something that is called “a digital full-time equivalent.” We are issuing software licenses to RPA systems to access ERP and other systems. So we need to look at the workforce in its totality. And when I say strategy and workforce, for many years companies would come up with a strategy, and then they would staff the strategy. HR was a derivative function. It wasn’t a driving function. Today, your workforce strategy can drive what your business is. You can’t have an Uber or a Lyft without the workforce strategy of a platform-based ecosystem—I mean maybe when we have self-driving cars we’ll be able to do it. We’re seeing an increasing number of business strategies that are driven by the workforce strategy.

Number two is an understanding of collective intelligence and how people and machines work together. This is a really great and interesting area because nobody seems to own it now. It’s not IT, it’s not HR, it’s not business. But understanding the integration and evolution of AI and robotics and the way that work is done by people and teams, is huge.

The third is the whole workforce ecosystem, and the fourth is adaptive workplaces.

Let me mention another perspective on this. I have a chapter in the book looking explicitly at the future of work, and work disrupted, and management and leadership. And I list about a half a dozen disciplines that today I think are probably on the outskirts of HR and management but really need to move to the center. Number one is behavioral economics, the role of psychology. I actually start the chapter by talking about Dan Kahneman. He won the Nobel Prize in economics. He was a psychologist, but he never took an economics class. But he’s one of the creators of behavioral economics. I think the role of behavioral economics and the role of psychology, that whole area is important.

The second is the role of managers as coaches. I especially talk about the role of player-coaches, and the shift from management as a supervisory and compliance function to a coaching function—the role being to fuel performance, not just to manage it. We talk about the role of HR managers and managers as diviners of the future. We just don’t have to manage the future of work, we have to design it—so there’s the whole role of design thinking, both for HR processes and all work processes and workplaces. And then of course, digital—the role that we have as HR people managers to understand the intersection of people and digital technology, obviously for HR itself but also for the broader work experience. Those are just a few thoughts.

What are the barriers to adapting to this mindset? Where are people struggling and what can be done to help them?

JS: One of the barriers is the challenge of literally moving from one mental model to another mental model. This mental model in HR and management of the employee lifecycle is very deep. The mental model of a career as being a three-box model—training or education, work, retirement, meaning you train for 20 years, you work for 25 years, and then you retire—these mental models are very deep. They’re very highly ingrained, and they’re also very deeply ingrained in our educational institutions.

One of the challenges for us, whether it’s HR or management, is simply to be conscious about what are the mental constructs that we’re using. I quote very extensively in the book Gillian Tett, the editor of the FT, who wrote a book five years ago called The Silo Effect, because we are really deeply rooted in cultural silos. One of the ways to get out is simply to become aware of what those mental models are and ask if these are the right mental models going forward. But these mental models are reinforced by educational institutions, certification programs. I’m not being critical of them. I am just raising the question that if we buy the premise that work is actually being disrupted, what are the management disruptions that we want to be driving so that we can most effectively lead and manage.

And one of the things that we’re seeing, certainly in businesses today—and it’s related to the social disruption we’ve seen, racial equity in 2020—companies are asking themselves, “If we are going to address racial and social issues, what do we need to do to our management development programs going forward?” And the recognition is that tweaking them is probably not the right answer. And I think the same is true for work disruption. Tweaking the programs that we have may not be the right work disruption. It will be very interesting, if you are developing programs for managers generally or for HR managers, to be asking the question, how are we balancing 20th-century requirements with 21st-century requirements?

Because I think we’re a little too weighted on what has worked in the past and not enough weighted on some of the shift we’ve been talking about.

The last barrier I’ll mention, our workforces and our employees are in many ways more adaptable than our leaders. Whether it’s working in teams, working in these adaptive, flexible, hybrid ways, what I’ve seen over the last year is that the closer you get to the people doing the work, the more adaptable they are. The further you get from the workers, the more these mindsets of “This is the way we’ve always done it. We need to do it this way” sinks in.

And I don’t think it’s just generational. I think it’s the closer you are to the work, the more adaptable you are. And that’s a really positive signal for us, because we’ve certainly seen in 2020 amazing adaptability among workers and students around the world.

How will policy have to change to support these disruptions, taking into account things such as business-related tax write-offs and other business regulations?

JS: The last third of the book looks at growth. There are three “playbooks” described there. They’re mindsets and actions. We start with individuals, because they are, as I’ve mentioned, the most adaptable. Individuals will have a disproportionate share of the responsibility to make the changes we need to make happen to thrive in the future of work. The next chapter looks at business and organization leaders. Organizations are adaptable, but not as adaptable as individuals are. And the focus that we look at there is how do business and organization leaders co-design the future, and how do they also make sure that they’re looking not just at efficiency and productivity, but at value and the role of teams in making that shift.

The final chapter is about growth and our role as citizens and communities and society. In many ways, society and public institutions are incredibly important, but they are the least adaptable. And that chapter is titled “Reset.” Again, if we buy the premise that work is disrupted, that careers are different, that the way people and technology work are different, that the primary employment model is not a full-time employment model—but that half the population relatively soon will be earning a significant amount of their income in what we call in the U.S. the 1099 economy—when the 1099 economy is bigger than the W-2 economy, we need to rethink employment models. We know we need healthcare micropayment and benefit systems. Everyone who works in a fractionalized job in some way should be part of some system, including Social Security and unemployment compensation, that is set up for whether you’re working for an hour or a year.

So that is part of the reset. We need to reset the social contract, we need to reset regulation, we need to reset education. Not rebuild entirely, but think about how they are configured. We talk about how to reset assistance around job transitions. Do we need a social safety net? Of course! But if the average person is going to have 12 to 14 jobs in their life, we need to make job transition something that is supported by public and social institutions as well as by the individual and the company.

You mentioned tax policy. I am not going to make recommendations on tax policy, but we need to look at our tax policy and ask, how is it incenting human capital development and how is it incenting physical capital development? How is it incenting investment in IP? And are the incentives that we’re putting into the tax code pointing the direction we want to go in how people and technology work together.

And there are a whole set of ethical questions that go with this. One of the ways that we end the book is to ask the question, if we look at the future of work disrupted and management disrupted, it’s both about creating economic value and the intersection of economic value with social values. And that’s certainly something that we’ve seen accelerated and disrupted in 2020, whether it’s social values related to health, social values related to economics, or social values related to racial equity and justice. How do we think as HR and business leaders about the intersection of business and economic value and social values. That is all very much part of the agenda, and I hope it would be part of the curriculum!