The "Industrial" is Over
Marketing is about a company identifying the current and future needs of a group of people, while determining which needs it will address with their products and services. What draws me to marketing has nothing to do with the products themselves but with the profound impact they can have on the people you serve. While customers should be high on your list of people to serve, there is also another important group we shouldn't ignore: your employees.
For much of the past two decades we've witnessed a changing technological landscape in the world. In short, people have never been more empowered to act. We are armed with smart phones and can connect with nearly any person or information in an instant. For people in the business of information (virtually all of us), this new empowered state has a profound effect on how we organize and ultimately compensate our employees.
When I write "the 'industrial' is over," I'm not talking about how manufacturing jobs are kaput. I'm also not criticizing those that work in or run factories. However, for those of us that do what Peter Drucker called, "knowledge work," we are in the midst of a major change in our work lives.
It's the dismantling of the "industrial model." Seth Godin says it best here.
Henry Ford pioneered the idea of giving people a salary, pension, healthcare and job security. In return, all he required was obedience. Show up. Do the work we need you to do. Get paid.
This concept of the factory was so alluring, we built an entire school system around it. Learn how to do what you're told and you will be rewarded. And for the employers it worked out just as well. Resources, whether machine or human, were replaceable, interchangeable, and came cheap. As a result, products and services we all love to use today are incredibly affordable and standards of living have skyrocketed.
This abundance, of course, comes at a cost,
Over the course of the 20th century, we watched as these jobs went overseas and to the computer. The industrial model stopped generating these incredible gains and people inside companies began to hear of new policies improving "shareholder value" and justifying massive headcount reductions in the name of performing one's "fiduciary responsibility." Work became less human and we clung to an industrial worldview we knew.
And what does this all mean for us today?
We are going to see a change in how employees are compensated.
A salary is a fixed price contract that expects an employee to yield X amount of value in return for Y amount of money. Henry Ford needed you to punch in 25 rivets a minute = X. In return, he'll pay you $5/hr = Y. As technology became integrated into our work lives, the "X side" of the equation has changed from a fixed amount of output (like rivets) to more abstract and subjective output.
The remaining white-collar jobs in much of the world today rely heavily on humans connecting with others and identifying new opportunities to keep up with a rapidly-evolving market. All an employee needs now is the freedom to make those connections and experiment with new opportunities. During my time at Boeing, I've been hard-pressed to find "knowledge workers" who know exactly what must be done for a group to be successful. The "yield-X-and-get-Y" model works well when the job is well-known, measurable and the employer expects nothing above and beyond X. We are too connected and too informed to be told we only deliver "X". I've heard so many executives practically pleading for employees to engage more and think of new ways of solving their problems. As a result, employees hear "come give us X^n...but we're still going to pay you Y."
In the good ol' days, employees, especially new ones, had to pay their dues. "Paying dues" meant companies would hedge their risk by limiting your responsibility, the information you were exposed to, and the people with whom you'd interact. We built cubicles, created departments and developed job functions, all in the name of Ford's brilliant industrial model. Once you proved your worth and obedience in one job, they might consider you for a better-paying job with more responsibility, information, and connection.
That industrial revolution is over. The gains from operating in this manner don't yield enough as they don't embrace what technology has done to connect us with the information, people, and capabilities needed to deliver large amounts of value.
The salary is dead.
Equity isn't just for shareholders anymore. The companies to recognize this first in the 21st century will win.