and decompression of the data. But where to find the right kind of programming talent? The existing employees didn't have the time or expertise, so the leaders at Ion Torrent turned to Topcoder for help. Topcoder, despite its name, does not employ an army of software code-writers. Topcoder reaches out to its pool of 700,000 freelance technologists and sets up a competition with an attractive prize. The challenge this time? Find a great compression solution for Ion Torrent's problem. The result? Many programmers proposed novel ways to tackle the issue, with the best one improving compression by 41 times. Through Topcoder, Ion Torrent leaders found the right talent, and achieved outstanding results quickly and cost effectively.4
How might Ion Torrent have gotten this work done without Topcoder? The most traditional way would have been to hire coders as full-time employees. Ion Torrent leaders would need to either motivate and retrain their existing coders to solve the compression problem or hire and construct a team of some of the highest-performing coders in the world. Would the existing in-house employees or the high-performing coders outside the company be available to take the job? Could Ion Torrent bring them on board quickly enough to solve the problem in time? Did Ion Torrent have the internal training and development resources to bring coders up to speed? When you think about it, the “natural” decision to hire or deploy your own regular full-time employees to get work done is actually complex and risky.
As an alternative, Ion Torrent could have used someone else's employees, like hiring a consultancy to do the work. This approach offloads the troubling burdens of employment onto the consultancy. Yet the consultancy must maintain or hire coders on its team of permanent employees, and that cost shows up in the higher price of using consultants to do the work. A consultancy may have employees with skills that Ion Torrent doesn't have, but few consultancies can tap a population of coders as large as the pool accessed by Topcoder. Also, it's still not certain that the best-qualified coders for this particular work would want to work full-time for a consultancy.
Part of the economic argument behind Topcoder is that they can find the very best people to do a particular project. A company might have dozens or hundreds of skilled internal programmers to choose from, but that collection of talent pales compared to the 700,000 free agents in Topcoder's network. The second part of the economic argument is that the Topcoder arrangement is cheaper and less risky because coders compete, and the company pays for only the best end product.
The Ion Torrent case leads us to the inevitable question: Are free agents, when organized by a platform like Topcoder, inherently more efficient and effective than regular full-time employees working inside a company or consultancy? Should you ever get computer coding work done by regular full-time employees? The answer, of course, is that it depends on your situation. The fact that it depends means that leaders must make decisions. As a leader, are you confident that you know when to use free agents via a platform like Topcoder? Why was it the right solution for Ion Torrent? Should you make it your strategy? If software coding is pivotal to your strategic success, the answer may determine whether you can compete at all.
It takes about 180,000 workers to run one of Europe's largest energy companies, but the company does it with far fewer regular full-time employees. More than 100,000 of the workers are not employees. Most of the work there has escaped the employment contract, not to freelance platforms like Topcoder, but to contractors.
This case is a vivid example of shifting work from employees to contingent workers. At one time, contingent work was considered suitable only for low-skill jobs, but today contractors can do the work of professionals and even managers. The contingent arrangement has many advantages for firms: It can be less expensive when one considers the total cost of employment (wages, benefits, etc.), in part because it creates a workforce that can shrink and grow as needed. It also helps a company access the skills it requires and get rid of those it does not with fewer costs than if it were hiring and firing employees.
A workforce consisting mainly of contractors presents its own challenges. Will they be as committed as regular employees? Will they be around long enough to develop the depth of knowledge of the company and the operations needed to handle difficult situations? Will the churn of contractors mean that each new worker will require extensive orientation and training? In the case of this energy company, a “beyond-employment” model based largely on contractors proved best. It figured out how to have significant aspects of its work down through a “plug and play” model that optimizes productivity and knowledge transfer.
Your own organization may well use some free agents such as contractors or contingent workers, so you may feel that you have mastered their use. Yet, consider this question: “Why not use mostly free agents the way this company does?” As you lead through the work, are you confident that your organization achieves the right mix of free agents and regular full-time employees?
Dr. David Baker, a biochemist at the University of Washington, had a problem. He studies proteins, which, when stretched out in a line, consist of a long sequence of amino acids. What makes things complicated, though, s that they don't stay in a straight line. They fold back onto themselves, and predicting how exactly they do so is a famously difficult problem.
If Baker had had an unlimited budget, he could work the problem by hiring a large team of regular full-time employees as researchers. However, most universities can't afford such expenditures, and even if his university could, it would have been tough to find just the right researchers for the job. Indeed, university scientists and R&D scientists at biotech companies had used all sorts of methods, including supercomputers, to try to crack this riddle, with little success.
Working on a tip from Mary Poppins, Baker knew that in every job that must be done, there is an element of fun, so he turned the work into a game. His team created a website and software tools so that enthusiastic amateurs could compete to find the best solution to the folding problem. Over time, the game, called Foldit, attracted a pool of talented volunteers who successfully solved protein-folding problems simply for the fun of it.
Using the Foldit game achieved better and quicker results, with no employees, and with no payment whatsoever. As a leader, should you consider this merely an interesting story, or should volunteers playing games be a component in your arsenal of tools to innovate quickly and efficiently? Are you solving your R&D and other creative riddles by hiring R&D scientists and building laboratories, when a crowdsourcing game could engage the best and brightest workers…for free?
As the previous examples have demonstrated, there is an emerging shift in the way companies both large and small are getting work done. In the traditional model for getting work done – such as writing code, solving a research problem, designing products, or creating a TV commercial – you needed regular full-time employees. Traditionally, we organized employees by creating job descriptions, reward structures, systems for recruitment, and so on. It's a bit like building a house out of bricks; it's a lot of effort, but ultimately, you end up with something quite stable and permanent.
The problem with a house of bricks – with all due respect to the fairytale view of these structures – is that they are expensive, slow to build, and hard to change. If you frequently need a bigger or smaller house, or simply a house in a different place, then a brick house is not the way to go.
Emerging approaches allow you to lead through the work, by organizing the work and workers to get exactly the talent you need when you need it. It's like throwing together a high-tech pre-fab structure, snapping the pieces into place for something inexpensive, fast, and disposable.
Yet, it's not as easy as simply shifting away from regular full-time employment as your work model. In a stable environment, the brick house wins. In an environment that is constantly changing, the pre-fab structure can adapt more effectively. As a leader, what environment should you be preparing for?
Ibid.
