Innovation within an organization may be impacted by a variety of different external factors, such as the economy, industry regulations, labor strikes, etc. One major external factor that could impact innovation within a specific company significantly is the rise of alternative work environments. An example of this is the gig economy.
As defined by techtarget, the gig economy is “an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements.” Some industries and occupations lend themselves to the gig economy, including ride sharing (i.e. Uber, Lyft), delivery driving, consulting, computer programming, and engineering design. What’s the impact of this new work option on innovation? We don’t know yet, but I believe it will be positive. In other words, we should expect to see more breakthrough innovations as a result of the rise of the gig economy. Here’s why.
With the gig economy gaining much traction in the last few years, with it comes an increase in collaboration between independent contractors (commonly referred to as freelancers) and gig clients (often established companies). In an effort to support strategic intent and define/identify potential new business domains that might be crucial in the future (but which might not be possible now), these companies invest heavily in what is known as the “discovery” phase of innovation. As part of this investment, these companies look both internally and externally for new, breakthrough ideas. Participation in the gig economy is one way of doing this. By hiring external, independent contractors, larger organizations are able to (as mentioned by Fortune) use “freelance workers as a source of fresh ideas and ‘knowledge transfer’ from the wider world (better yet, their broader industry)” and tackle the same problem in order to come up with a variety of solutions. This increase in collaboration between established organizations and external parties (as a result of these idea-generation investments) lead to increased teamwork and more free-flowing ideas from the company’s perspective, since hiring independent contractors pushes the company to coordinate with multiple parties and gives them a wider perspective on and more diverse solution set to major issues they might face, thus increasing the likelihood for both evolutionary and revolutionary innovation to occur. As Ian Morley mentioned in his article, The rapidly expanding gig economy is not merely a response to changing economic conditions, “Just about everyone agrees that more collaboration is what’s needed in the modern workplace. That’s because teamwork generates more and better ideas, driving the innovation needed to be competitive in the global economy.”
By allowing for people to not be restricted to one sole employer, the rise of the gig economy gives independent contractors the freedom to work with many different organizations within an industry (and not be constrained/limited by one specific organizational culture). By doing so, their perspective is widened to a variety of industry and market issues. This diverse perspective may then be leveraged by and used to benefit established organizations, exposing them to a different, unique way of thinking, allowing them to gain access to expertise they don’t currently have in-house, and aiding in the facilitation of identifying breakthrough opportunities through extrapolation and application of these diverse solution sets (created by independent contractors) to major industry issues. As previously mentioned, this significantly supports the “discovery” phase of innovation (which can often be very costly, as shown by the pharmaceutical industry) and allows companies to increase their chances of identifying potential breakthroughs. Upon identification and proper evaluation, these ideas then have the potential to be incubated and commercialized (accelerated) using organizational resources and investors.
Although the gig economy brings with it an increase in collaboration and the exchange of ideas, there are definite drawbacks to organizations seeking to commercialize externally-generated innovative ideas. A major disadvantage is that the opportunity recognizer does not work for the company. Does this “innovation migration” lead to an overall increase in breakthrough innovations within industries? Or does it ultimately deprive brilliant innovators of resources necessary for them to change the game and subject these breakthrough ideas to those who don’t fully understand them?
- [Business Insider] NYU MBA STUDENT: Young people are avoiding the rat race — and settling for something worse
- [The Innovation Enterprise] The Gig Economy: The Good, The Bad, And The Ugly
Shaeed McLeod is a student at Rensselaer Polytechnic Institute pursuing a master’s degree in Systems Engineering and Technology Management. A native of Jamaica, NY and brother of Alpha Phi Alpha Fraternity Incorporated, Shaeed has been active in a multitude of on-campus organizations such as the Multicultural Leadership Council, Black Students’ Alliance, and the National Society of Black Engineers. After graduation, he will be working at Deloitte’s New York office as a Business Technology Analyst.