Implications and opportunities for entrepreneurs



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implications and opportunities for entrepreneurs

free agency and the new economy


According to author Daniel Pink, a free agent is a person who works untethered to a big company or large organization. They include the self-employed, freelancers, e-lancers, independent contractors and dozens of more colorful names like 1099ers and techno-cowboys. Pink’s new book, Free Agent Nation, tells the story of a fundamental shift in the way people are viewing their careers, as well as the commensurate economic shifts. At this Morino Institute Netpreneur Coffee & DoughNets meeting held June 20, 2001, he talked about the implications and opportunities that the movement presents for entrepreneurs.
Statements made at Netpreneur events and recorded here reflect solely the views of the speakers and have not been reviewed or researched for accuracy or truthfulness. These statements in no way reflect the opinions or beliefs of the Morino Institute, Netpreneur.org or any of their affiliates, agents, officers or directors. The archive pages are provided "as is" and your use is at your own risk.

Copyright 2002 Morino Institute. All rights reserved. Edited for length and clarity.

mary macpherson: introduction
Good evening and welcome to Coffee & DoughNets Goes Late Night.

Last month's Coffee & DoughNets was about “Cramdowns, Ratchets and Other Four Letter Words,” which showed that there’s a whole language being created around early stage funding and some of the perils that are now associated with it. Tonight we're going to explore another new language, and we're going to talk about something that is happening--I'm not sure exactly what the right descriptor is, whether it's a movement, a cult, a tsunami--but it represents a sea change in how work gets done, where it gets done and who does it. There is a new supply chain, and some of the terms you'll hear tonight are “entreprenetworks,” “free agent operating system” and more. Woven throughout are some fundamental values that are not new at all.

We first met Dan Pink about two years ago, right after he started talking about the "Free Agent Nation" in Fast Company magazine, and before he went off to write his book. He joined us right here in this room for a Coffee & DoughNets in October of 1999 that we called “Newsapalooza,” and that featured a panel of journalists discussing public relations. Now he's back, the darling of the book party set, and we were delighted to see that the word used to describe one of his recent parties was “Bookapalooza.”

According to a recent Washington Post article, 11,000 workers have been laid off by companies in the Metro region in the last nine months, yet there is only a 2% unemployment rate. As Dan will tell you, the "Free Agent Nation" is exploding, and perhaps there is a correlation there, but before I turn the podium over to him, I'd like to thank the volunteers who came to help out tonight, Roger Erickson of 270Tech, Penny Sullivan of Open Systems Associates, Dan Cole of 2SG and entrepreneur Stephan Tibbs. Thanks very much for helping us with this event. Thanks also to independent bookseller, Politics & Prose, which is here tonight with Dan's book and a table outside where he'll be available to sign it. Dan is going to donate his royalties for all books sold here tonight to Suited For Change, an organization that raises money for clothes for women going from welfare to work. We'd also like to thank our partners TVWorldwide.com, who shoots and hosts our streaming video, and MAD Events & Productions, who works on the audio.

Now I'll turn it over to Dan who is going to regale you, I'm sure. He has lots of props, and I think you'll enjoy it.
dan pink: the free agent nation
All right. I'm going to go about this in a slightly different way than your typical business presentation. For starters, I don't have a PowerPoint presentation. I want to tell you some stories, draw you some pictures, show you some film clips and, depending on my mood and how much you laugh at my jokes and applaud my words of wisdom, I have some fabulous prizes to give away.

I don't know how many of you read my bio, but, for awhile, I worked for Al Gore. Anybody remember Al Gore? (Laughter.) Curiously four years ago almost to the day, I walked into Al Gore's office (I was working for him; I wasn't stalking him) and quit my job. He asked why and I said, "Well, sir, it's clear that neither one of us has any long-term job security." (Laughter) No, not really. I went into this kind of sad tale about how the job was eating me alive. Even though it had all the outward attributes of coolness and prestige and so forth--everything from meetings at the vice presidential mansion, to trips aboard Air Force 2, to chance encounters with Wolf Blitzer--the truth was that I was miserable because the job was all-consuming. I was grateful to have had it, but it was eating me alive. I had no control over my time and no control over my life. My wife and I had a daughter who I never got to see, and I was just flat-out miserable, so I quit.

He asked me, "Do you have a new job?"

"No."


"How are you going to support yourself?"

“Well, I don't know. I think I'll figure it out. My wife still has a job.”

What I didn't tell him was that it wasn't only that job, it was jobs in general that I think were getting me down. I figured that I'd try a little experiment. I’d go up to the third floor of our house in Washington, DC--we live in American University Park in one of those small colonial houses that all have attics. I fashioned an office out of ours and I said, "I'm going to give it a shot. I'm going to try writing speeches and articles for anybody whose checks will clear.”

One of the first things I did was to get a contract with Fast Company magazine where I'm a Contributing Editor. I said to my editors at Fast Company, "It seems that a lot of people are making this decision; a lot of people are going out on their own. It sounds kind of cool. How about if I check it out and write a story about it?” Well, I did it, and that story was called "Free Agent Nation." It appeared a few years ago, and a curious thing happened afterwards. Two things, actually. One, I got more email on that story than all of the stories I had ever written in my entire life combined. It was extraordinary. Every time I would hit "refresh," there would be another flood of emails coming in saying, "Oh, that is what I do! This is me.” or “I'm stuck inside a large organization. This is what I want to do."

This is going to sound like a joke, but it's really not. They said, "Oh, my gosh, thank you so much! I sent the article to my mother who has no idea what I do and doesn't understand how I could make a living without having a job.”

Second, there was a curious reaction in what you might call the “elite press.” The New Yorker magazine (I was astonished that anybody at the New Yorker read Fast Company) said, "It's about the end of loyalty in America." It went on, "The manifesto about the end of loyalty in America was written by a man named Daniel Pink." I thought, “What? I'm just trying to make a buck here.”

“Manifesto about the end of loyalty?" They didn't mean that in a nice way.

A national newspaper ended up writing about the story saying something to the effect of, “Free Agent Nation, what a bunch of crap. This can't be right, and this Dan Pink ought to be on Thorazine.”

How many of you are on Thorazine tonight?

Actually, it's tragic. Thorazine is a drug for people who have hallucinations from, say, schizophrenia or really bad acid trips. This national newspaper was saying that I ought to be medicated for my hallucinations. I don't want to tell you what newspaper it was because the guy from the Washington Post isn't here to defend himself. I said to myself, "Well, I'm obviously on the right track because hundreds and hundreds of people out there who actually work for a living, who do great things, who are creating the economy, they’re saying, 'Right on.'" The stodgy, established, elite press was saying, "Oh, no."


the truth, or something like it

I started doing research at the Bureau of Labor Statistics and other government agencies and realized that we know nothing about this nation of people out there. I thought, "How does any nation endeavor to understand itself?" It goes out and takes a census, so that is what I did.

My census was modeled after the 1790 census, which Thomas Jefferson ran . . . This is not a joke. I'll tell you what, I'll raise my right hand when it's a joke, and my left hand when I'm being serious.

My census was modeled after the 1790 census. Thomas Jefferson ran it. He was the Secretary of State at the time, and it was the first census of the United States of America. Think about conducting a census in 1790. You don't have the Internet, you don't have telephones. What he had was 17 federal marshals on horses who went out and basically wrote these little notations about how many people there were and what they were all about. When he delivered the results to President Washington, he said, "Here are the results, Mr. President. I have the things that I know are right in black, and over here, in red, these are results that I think are . . . (and it's a lovely phrase) . . . very near the truth."

I said, "You know what, I'm going to do a census of Free Agent Nation and give results that are very near the truth." I went out for a year and I interviewed hundreds and hundreds of people. I went on the road with my wife and our daughter, and then another daughter, yes, our own daughter, and I interviewed hundreds and hundreds of independent workers, freelancers, “e-lancers,” self-employed professionals, independent contractors, interim executives, temps and “microentrepreneurs.” We traveled all over the country. I met them in libraries and Starbucks and hotels and Starbucks and Kinko's and Starbucks. I fashioned those “very near the truth” results into this book.

How many people have read this book?

I fashioned it into this book, Free Agent Nation, and I want to tell you a little bit about what I found. I want to talk about the numbers very quickly, and I want to talk about how this happened because I think it illuminates some of the challenges for small entrepreneurs. I also want to talk about how it's fundamentally changing the American work ethic. As Mary said in her introduction, that set of values might be among the most profound, significant and enduring changes. I want to talk a little bit also about how it works, both the attitudes of how it works and the mechanics of how it works. If you look at the mechanics, there are some incredible business opportunities. I actually think that I can come up with five or six business ideas to throw out to you if anybody wants them.

And I have prizes.


inside the numbers

The federal government divides workers today into two categories. The Bureau of Labor Statistics which produces the unemployment numbers--the figures that rule the markets--divides workers into two categories: farm workers and non-farm workers.

Anybody here in the non-farm economy? (Laughter) They're a little bit behind in how you count this.

It is actually through no fault of their own. The agency has some wonderful people there. I actually worked at the Department of Labor for a couple of years and there are some great people at the Bureau of Labor Statistics. They're under-funded and they don't have the resources to get the job done. Part of what is going on is that work is changing so fundamentally and so swiftly that our capacity to describe it and our capacity to count it is way, way behind. We're kind of searching for a new vocabulary and a new way to count, so I'm going to give you some very quick numbers.

I have my own taxonomy of free agents. There are three varieties. One is what I call soloists. These are your typical freelancers, the independent professional, the person working by him or herself, migrating from project to project. I mentioned the vocabulary, here are some great names that have come up for these sorts of people: freelancer, e-lancer, independent professional, independent contractor, consultant (which at one point was a euphemism for “unemployed white collar worker” and I think it has become that again) techno-cowboy, hired gun, lone ranger, guru, nomad, gypsy cab driver, information backpacker, lone eagle and (my favorite) 1099er. Only in America would you give people a nickname based on a tax form.

The estimates vary all over the place, but there are about 16 million of these people.

The second group are temps. We all know what a temp is. There are two kind of temps: high-end temps and low-end temps. Low-end temps have miserable lives. They work for meager wages in terrible conditions. They want to get a real job. They are among the most disgruntled workers in the American work force. There are also high-end temps, such as interim executives and interim nurses. There is a company out in Walnut Creek, California, called CFOs-To-Go that provides interim CFOs. I interviewed the CEO. There are about three million temps.

Last are microbusinesses. These are very, very, very small businesses. The federal government says that a small business is fewer than 500 employees (again, its notion of a small business is a little bit outdated). That is one definition. Another is fewer than 100 employees. Well, throughout this country there are legions of businesses with two employees, one employee, three employees. Here’s a startling factoid for you: 70% of business enterprises in this country have no paid employees.

A very conservative estimate is that there are 13 million microbusinesses. A lot of them are operating at home. Some are second ventures for people. Many fly beneath the radar of the authorities. No, I don't mean criminals, I mean somebody who says that they’re going to moonlight fixing people's computers, get paid in cash and not declare it as income. Like that guy in the second row. (Laughter)

You add this up, and you have 33 million people who are independent, untethered from a large organization. That is almost one out of four workers.

As Mary said, I am a former speech writer. When someone says, "Dan, what makes a good speech?" I say "Three things make a good speech: brevity, levity and repetition." Let me say that again: brevity, levity and repetition. Thirty-three million people, nearly one out of four workers. Thirty-three million people, nearly one out of four workers.

I didn't see the memo from headquarters telling everybody to leave. This is a remarkable thing. Let's put it into some context. Manufacturing workers in this country number 18 million. If you add up everybody in the public sector--everybody in the military, everybody who works for the federal government, state governments, county governments, municipal governments, cops, teachers--you only get to 20 million people. Free Agent Nation is bigger than the public sector.

You're all fledgling entrepreneurs--if that is not a market, what is? If 33 million people, perhaps the largest single cluster of workers in this country, is not a market, I don't know what is. There are just remarkable opportunities out there to serve these people and help them run their lives.

I have a problem with factoids. When it comes to factoids, I'm both a junkie and a pusher. I love shooting up factoids, but I also like peddling them on the street. I want to give you two more because I think it's important. In Washington, where politics is a pitched battle, especially national politics, electoral politics is a pitched battle between big business and big labor. Fewer than one out of 10 Americans works for a Fortune 500 company. Fewer than one out of 10 Americans in the private sector belongs to a labor union. So, the politics is a pitched battle between big business and big labor, but the vast majority of Americans have relatively little direct connection to either one of them. You wonder about one of the many reasons why voter turn-out is down and why people are disengaged from politics? That is one reason why.

A final factoid. If you are not convinced that this is real, that this is big, that it is significant and worth paying attention to, I have one more factoid for you. I'm going to describe to you a work arrangement, okay? Here it is: you leave work in the morning, you go to work somewhere else for somebody else, and you do it full-time year-round. What portion of California's work force works that way? Any guesses? The answer is 33%. One-third of California's work force has that traditional employment arrangement. For those of you, like me, who were liberal arts majors in college, that means two-thirds don't work that way. Has California ever been on the edge of any social trend in America? Let's think about that for a second. Two out of three workers in California don't have the employment arrangement on which our tax code is based, our health insurance system is based, our retirement system is based and our transportation system is based. Two out of three don't have a traditional job, so this is big and it is a big opportunity for people smart enough to figure it out.
is that your final answer?

Here is where the fabulous prizes come in. How did this happen? A quarter of the work force has left traditional organizations. How did this happen? To incentivize you, because I know you are market-oriented people, I have some fabulous prizes. The question before us is, how did this happen? If you give me a good answer, you get the new issue of Fast Company. $4.95. That's for a good answer.

If you give me a great answer, and I do mean a great answer, you get this T-shirt. As Mary mentioned, I had a book party last week. You would think I’d have my book party at Kay Graham's house maybe, or some other Cleveland park mansion, maybe at Dumbarton Oaks. No, I had my book party at Kinko's. It was called Bookapalooza, and what you get for a great answer is the official, limited edition “Free Agent Nation Bookapalooza” commemorative T-shirt.

Now, if you give me a terrible answer, one that makes me think, “Who let this person in?” you get this, the audio edition of Free Agent Nation, which means you have to listen to this crap for three more hours.



Okay, so give me some answers. How did this happen? How did we go from an organization of organization men and, to a certain extent, organization women, to a nation where we have so many free agents and so many people who want to be free agents? Raise your hand and you might get a prize.
Audience Member: Women coming into the work force and they don't like the corporate environment.
Mr. Pink: That is an excellent answer. You should have saved it, because you might have gotten a T-shirt.
Audience Member: We watched our parents get fired.
Mr. Pink: Give this magazine to your mom. (Pink continues to distribute prizes after each answer.)
Audience Member: The 9-to-5 became 7-to-9.
Audience Member: More affordable technology.
Mr. Pink: Technology. That is an answer that I call not wrong, but not interesting.
Audience Member: People realized that you can make more money being a consultant.
Audience Member: Freedom. People don't want to have to listen to the boss and don't want to have to toe the company line.
Audience Member: All you do is trade one boss for five or six or however many clients you have.
Audience Member: Email.
Audience Member: Companies downsized too aggressively, laid people off, hired them back and workers found they didn't want to work in that environment.
Audience Member: Women not getting paid enough and going out on their own.
Audience Member: Too many people watch "Thyroids and Jokesters." (Laughter)
Mr. Pink: (Presents the booby prize.) I really don't have any idea what that means, but have a tape. And please never email or call me again.
Audience Member: No job security.
Mr. Pink: Another answer that is not wrong, but not interesting. Come on, give me a good answer.
Audience Member: People want more control over their life.
Audience Member: We've moved to a service economy.
Mr. Pink: Can you share the tape with that guy? (Laughter) We moved to a service economy in the 1950s, not that there is anything wrong with that answer.
Audience Member: Computers made middle management unnecessary.
Audience Member: Corporate America didn't have the jobs to give to 33 million.
Audience Member: People want blending in their life.
Mr. Pink: He said that people wanted balance in their life, but called it “blending.” What he is doing is signaling that he read my book, which is a suck up move that often works. But not tonight.
Audience Member: People built up their 401(k) plans and felt that they had enough money to leave. They left, and now they're in trouble, but don't want to run back to their company.
Audience Member: The bureaucracy in the public sector is getting worse.
Audience Member: Restrictive immigration laws and too few workers.
Audience Member: Workers own the means of production.
Mr. Pink: Okay. You're all absolutely right about these answers. They're all kind of swirling around the topic. Let me phrase them in slightly different ways.
the declaration of independents

Everybody talks about the end of job security. That is totally right. Everybody who said that was smack on. I want to put it in a slightly different way. We had this notion in this country that corporations would treat workers like parents treat children. We can attach this big fancy phrase to it, paternalism, but it was alive for a long time in this country after World War II. What is so interesting about it is that it wasn't only present, it was exquisite. Let me tell you what I mean. My grandfather worked at the phone company. What was the phone company called?


Audience Member: Ma Bell.
Mr. Pink: Anybody here from Rochester, New York?
Audience Member: Kodak.
Mr. Pink: No, this is a yes/no question. Kodak, a big employer in Rochester, New York, called itself “the great yellow father.” Metropolitan Life Insurance called itself “Mother Met.” There is this notion that companies would be like parents and take care of people. Well, that is just not true anymore. It's flatly not true, and the dot.com bubble was the last great burst of corporate paternalism. I really do think a lot of these dot com companies were paternalistic in their own way. They were not like the stern taskmaster parents, they were more like the cool parents down the street. They let the kids come and go whenever they wanted. They said, "Oh, you can have whatever you want in the refrigerator. Hey, we'll even buy you a car." But the same thing happened when times got tough, they booted the kids out.

You can think of this as the end of America's adolescence. No one is going to take care of you, and that is why people are saying, "Well, if no one is going to take care of me, I might as well take care of myself." What is the lesson in that for fledgling entrepreneurs? Well, if you run a company, you have to treat people like adults. There are a lot of companies out there that are trying to have it both ways. They're saying, “You get all of the responsibilities of adulthood, but none of the privileges.” That is why a lot of people leave.

That is one factor. Another factor is the means of production. Anybody ever heard of Karl Marx? Anybody a Marxist? Karl Marx talked about the means of production. What did he mean by that? He basically meant the tools necessary to create wealth. In the industrial economy you needed large organizations to buy the means of production. Why? They were very big and difficult to house, like a factory. They were very expensive and difficult for one person to purchase. They were very cumbersome and complex and difficult for one person to operate. You needed large organizations to provide the real estate, the organizing mechanisms and the financial capital to purchase the means of production, then give workers a sliver of the profits those tools created.

What happened? The means of production changed. Can everybody see this laptop computer? This, my friends, is a means of production. Let's talk about the attributes of this means of production. Is it too expensive for one person to purchase? No. Is it too large for one person to house? No. Is it too cumbersome and complex for one person to operate? Pretend it's a Mac. (Laughter) So what is happening? Workers can now own the means of production and they're saying, “Why should I share a slice of the profits with the organization?” That is a big factor.

The lesson for fledgling entrepreneurs and people building companies is that you have to give people a piece of the action. That means not just money, but giving people a real say in the operation because, today, talented people need organizations a lot less than organizations need talented people. In part, that’s because of this means of production point.

Another point is prosperity. Somebody mentioned 401(k)s. Spot on. We're in a remarkably prosperous country, but it's not the kind of Fortune magazine, Bill Gates, Internet millionaire kind of prosperity. Deep into the middle class there is a kind of prosperity that is unheard of in human history and unparalleled in the rest of the world. In this country, right now, two out of three people own the homes that they live in. That is remarkable. What if I told that to my grandfather who lived through the Great Depression? It is a remarkable thing. More than half of American households own stock. Here’s another startling factoid: seven out of eight Americans today were not alive during the Great Depression. That means that they have no conscious recollection of any period of sustained widespread economic privation. Some people who are immigrants, depending on where they emigrated from, will have had that experience, but the vast majority of Americans don’t. People have this sense of, “Oh, it will work out,” so they're seeking from their work more than money and more than security. They're seeking a sense of meaning. The lesson is that you can't bribe people today. You can certainly bribe some people, but you're not going to seal the deal with new employees with money alone, especially the most talented people.

The final reason, and this is a curious fact, does anybody remember a company called Netscape? Let me tell you the story of Netscape. It was started in 1994, went public in 1995 and disappeared into AOL in 1999--a life span of a little over four years. Question: Was Netscape a company or just a really cool project? More important question: Does it matter?

What did Netscape do? It put a good product on the market that eventually got clobbered by Microsoft. They changed the face of competition and made some people enormously wealthy. More important than anything else, it equipped a lot of people with skills and connections and experience that they could take to other ventures. Now you have all these “Netscapees” starting all kinds of new companies and doing amazing work. The point is that in my grandfather's day, if I asked, "Do you think the phone company will be around in 40 years?" it would have been like asking whether the sun would come up in 40 years. The half lives of companies, the life spans of companies, are shrinking and shrinking and shrinking.

Let's do a test. How many of you think General Motors will be here in 10 years? Raise your hands. How many of you think Ford will be here in 10 years? How many of you think Firestone will be here in four years? (Laughter) How many of you think Apple Computer will be here in 10 years? The Mac Users Group will meet after this. (Laughter) How many of you think Amazon.com will be here in 10 years?

Now, this is a serious question: How many of you think that you will be here in 10 years? Not here at the Capital Hilton, but how many of you think you will be alive on God's green earth in 10 years? This is a remarkable change. Today, all of us can expect to outlive any organization for which we work. Think about that. It is sort of like David Carradine in the old Kung Fu television show: "Explain to me, Grasshopper, how you have lifetime job security." When you outlive the company, how do you have lifetime job security?

The nature of companies is changing, so people inevitably are going to migrate from place to place. Is Netscape a project or is Netscape a company? It doesn't matter. It exists for a certain period of time, then we go on. The lesson for entrepreneurs is that you have to make people real promises. You can't say, "Oh, we'll be around. We're built to last. We're here forever. Your grandchildren will be proud of us." No way.
the new work ethic

I want to get a little touchy-feely on you. I think the work ethic is fundamentally changing, and there are a new set of values that people are bringing to work. I want to run through them briefly, and I want to talk about them by using some movie clips. Why movie clips? Well, I think that pop culture both shapes and, more important, reflects some of the deeper yearnings that are out there, including the sorts of things people don't talk about explicitly. They'll watch a movie, or make a movie, in a way that is very different from research.

The first one is sort of the “before” clip. It is from a movie called Office Space. Has anybody seen it? Wow! It has greater recognition among netpreneurs than Al Gore. It's about a guy named Peter who works for a company called Initech. Initech is on the ropes, so what does it do? It brings in some high-priced consultants. Everybody knows what that means: prelude to bloodletting. In this clip, Peter has an interesting strategy. He's just going to tell the truth. He is sitting down with these two consultants and he tells them honestly about what it's like to work at Initech. Now, I don't like to make outlandish claims, I don't want to overpromise, but I'm about to make an outlandish claim and perhaps overpromise. I am convinced that if every HR director in America saw this clip, the world would be a better place. Here is Peter talking to the consultants.
(From video clip)

Peter: It's not that I'm lazy. It's that I just don't care.

Consultant: Don't care?

Peter: It's a problem of motivation, all right. Now if I work my ass off and Initech ships a few extra units, I don't see another dime. So where is the motivation? Here is something else, Bob, I have eight different bosses right now.

Consultant: I beg your pardon?

Peter: Eight bosses. Eight, Bob. So that means that when I make a mistake, I have eight different people coming by to tell me about it. That is my only real motivation, not to be hassled. That and the fear of losing my job. But, you know, Bob, that will only make someone work just hard enough not to get fired.

Consultant: Could you bear with me for just a second, please?

Peter: Okay.

Consultant: What if, and believe me this is a hypothetical, but what if you were offered some kind of a stock option equity-sharing program? Would that do anything for you?

Peter: I don't know. I guess. Listen, I'm going to go. It's been really nice talking to both of you guys.

Consultant: Absolutely. The pleasure is all on this side of the table. Trust me.

Peter: Good luck with your lay-offs. I hope your firings go really well.
All right. This is brilliant. I mean if you think about all the discontent in the traditional workplace, that is captured in that 60-second clip.

The new work ethic. There are four elements of it: freedom, authenticity, accountability and self-defined success. I want to show you some more clips and explain each of those.

Somebody mentioned freedom earlier. Freedom is an essential part of this new work ethic. As I interviewed people around the country, it kept coming up and coming up and coming up. Now, freedom can take on a number of different dimensions. It can be freedom to spend your time the way you want, or freedom to work with great people, or freedom to pick great projects. I'll give you a surprise from these interviews. Many people mentioned ethics as the reason they left large corporations. They said, "You know what? I was asked to do something that I didn't really feel comfortable with." It kept coming up and coming up and coming up. It was really astonishing. There is an element of freedom of conscience there, too. So people want freedom. It sounds self-evident, but it's powerful a powerful force in getting people to leave.

Another factor is authenticity. This is a little bit touchy-feely, but I want to tell you about some of the language I heard from people. They would say, "Well, Dan, when I was working in my other job, before I left I felt like I had to put on a game face every time I went in. I felt I had to put on a mask and couldn't be who I really was." One woman described herself as a “Stepford worker.” She would go into her company in this zombie-like trance, and could come back and be herself only when she was home. People want to be themselves. For many people, work is a form of self-expression, and the best companies allow people to be fully who they are. The fact that so many companies, though, don't do that is why people are bursting out and wanting to go out on their own. This authenticity takes a number of different dimensions. It is so powerful among gays and lesbians and among racial minorities. There is a guy I interviewed for the book who said, "Listen, I was doing great. I was working for Honeywell in Minnesota, but it was 1978, and I'm a gay man. Those two worlds are going to collide." He felt that he could be better, more authentic on his own.

I want to show you a clip about authenticity. This is from a movie called Erin Brockovich. To summarize the plot very quickly, Erin gets a job at a law firm and Albert Finney is her boss. In this scene he goes in and sees her. It's lunchtime. She's all alone. "Where is everybody?" he asks. Erin says, "The girls went out to lunch." Finney says, "Well, you're a girl, why aren't you out to lunch?" Erin replies, "I guess I'm not the right kind of girl." That prompts a comment from Finney and a response from Erin.
(From video clip)

Finney: Look, now. Now that you're working here you may want to re-think your wardrobe a little.

Erin Brockovich: Why is that?

Finney: Well, I think some of the girls are a little uncomfortable because of what you wear.

Erin Brockovich: Is that so? Well, it just so happens I think I look nice and as long as I have one ass instead of two I'll wear what I like, if that's all right with you. . . . You might want to re-think those ties.
There you go. Again, I know it's only a movie, but it's based on real life. The reason that Erin Brockovich was able to do her job was that she was willing to be herself. Albert Finney was allowing her to do that.

A third factor in the new work ethic is accountability. People want to be held accountable. I am convinced of that. I think it's part of our human yearning. The problem is that accountability is often diffused by means of the organization. I know he's not real, but think about Peter in the clip from Office Space. Is it worse being Peter, or being one of Peter's eight bosses? People are going to be blamed for everything or get credit for nothing, and they feel like they're not making any kind of contribution or being held accountable for anything.

The fourth factor is what I call “self-defined success.” People are changing their notions of success, and I want to show you another clip, this one from the movie The Insider. Has anybody seen this movie? This is actually a great movie. I saw it for the first time only eight or nine months ago. It's about a guy played by Russell Crowe who is a scientist at a tobacco company and he ends up being a whistle blower. In the scene we're about to see he is with Al Pacino who plays a 60 Minutes producer who is trying to get him to come out and tell his story. This scene is less dramatic, less pointed, but I think it really reflects a lot of conversations that are going on out there in America. He talks about how he went into these companies because he was a man of science and he felt like he was doing some good things. Pacino asked him, "Why did you go to a tobacco company?"
(From video clip)

Pacino: So here you are. You go to work for tobacco. You come from corporate cultures where research, really creative thinking, these are core values. You go to tobacco. Tobacco is a sales culture and sell enormous volume. Go with the golf tournaments, to Hell with everything else. What are you doing? Why are you working for tobacco in the first place?

Crowe: I can't talk about it. The work I was supposed to do might have had some positive effect. I don't know, it just could have been beneficial. Mostly, I got paid a lot. I took the money. My wife was happy, my kids had good medical, good schools, got a great house, I mean, what the Hell is wrong with that?

Pacino: Nothing is wrong with that. That's it. You're making money, providing for your family. What could be wrong with that?

Crowe: I always thought of myself as a man of science. That is what is wrong with it.
He said, "I always thought of myself as a man of science. That's what's wrong with it." I really think that these not-so-dramatic kind of conversations are going on throughout America. People are defining success in different ways. One, it's not about money. You can only have so much money. You need a base of money, obviously, but more money does not motivate people.

Promotions. There are a lot of people I interviewed whose path to free agency was getting promoted. They were great at doing graphic design and their reward was getting promoted to manage people who did graphic design. In other words, they stopped doing work they loved and were great at, so they left. Remember the Peter Principle? That you rise in the ranks of an organization until you reach your level of incompetence? I think the cousin of that is what I call “the Peter-Out Principle,” where you rise in the ranks of an organization until the fun peters out and people leave.

If any of you are managers out there, and you're intent on crushing the job satisfaction of creative or technical people, the surest way to do it is to promote them into management. It works every time, and they'll be out the door in six months.

Two final clips that I think really illustrate this sea change in the work ethic. One is from The Man in the Gray Flannel Suit, the other is from Jerry Maguire. If you want to know everything about how the work ethic has changed in America over the last 50 years, rent these two movies and watch them back-to-back. You'll learn everything you need to know. You don't have to read my book. You should buy it, but you don't have to read it. They’re two eerily similar scenes.

The Man in the Gray Flannel Suit is a fantastic movie from 1956. The protagonist is a guy named Tom Rath. He has a job and he wants to get a better job, one that pays $8,000 a year. He wears a gray flannel suit; he lives in the martini, post-war suburbs of Connecticut; and he rides the train in every morning. His friend hooks him up for a job interview at this giant company called United Broadcasting Corporation. The scene we're about to see is Tom's interview. He's asked to go into a room and write about himself and, at the end of the essay, finish the following line: The most important thing about me is _____. He has an hour to do this, starting at 12:00. For the first 40 minutes he paces around, he smokes, he has flashbacks. We pick up the scene at 12:40. I want you to watch the scene carefully because I think that it tells you a lot about the initial work ethic and how it's about to change. By the way, for those of you under 30, that device you see is called a typewriter.
(From video clip)

Executive: Is this all [you have written]?

Rath: That's all.

Executive: But you still got 12 minutes.

Rath: I have written all I think is necessary.

Executive (reading from what Rath has written): “The most significant thing about me, so far as the United Broadcasting Corporation is concerned, is that I am applying for a position in its Public Relations department, and, after a reasonable period of learning, I believe I could do a good job. I would be glad to answer any other questions relevant to this application for employment, but, after giving it serious thought, I am unable to convince myself that any further speculation on my importance could be of any legitimate interest or value to the United Broadcasting Corporation.

Rath: Anything else?

Executive: No. We'll call you when we decide anything.

Rath: Good-bye. Thank you.
He did not get the memo about work as a form of self-expression, obviously, and did not subscribe to Fast Company magazine. He also got the job.

Can you imagine if you did that exercise today with the people in this room? You give people an hour and I'm sure they would have registered their own name as a domain. Give them two hours and they'll probably have a website up. Three hours, they probably would have filed an S1 to go public. It's just remarkable to think about that, and it tells a lot about the old work ethic and the new work ethic.



The new work ethic is in an eerily similar scene from the movie Jerry Maguire. Great movie. Nicole Kidman's ex-husband plays a sports agent who wants to play the game a different way. In this scene, very early in the movie, he has a dark night of the soul. He's at a corporate conference in Miami and begins spacing out. He begins hallucinating. He begins pondering what his life is all about. He also has a writing exercise. It's very similar to that clip from The Man in the Gray Flannel Suit. Here is Tom Cruise.
(From video clip)

Cruise: I couldn't escape one simple thought: I hated myself. No, no, no, here is what it was: I hated my place in the world. I had so much to say and no one to listen. And then it happened. It was the oddest, most unexpected thing. I began writing what they call a mission statement. Not a memo, a mission statement, you know, a suggestion for the future of our company. A night like this doesn't come along very often. I seized it. What started out as one page became 25. Suddenly, I was my father's son again. I was remembering the simple pleasures of this job, how I ended up here out of law school, the way a stadium sounds when one of my players performs well on the field, the way we are meant to protect them in health and in a dream. With so many clients, we had forgotten what was important. I wrote and wrote and wrote and wrote. And I'm not even a writer. I was remembering even the words of the original sports agent, my mentor, the late great Dickey Fox, who said, "The key to this business is personal relationships." Suddenly it was all pretty clear. The answer was fewer clients, less money, more attention, caring for them. Caring for ourselves and games, too. Just starting our lives, really. What I was writing was somewhat touchy-feely. I didn't care. I had lost the ability to bullshit. It was the me I'd always wanted to be. I took it in a bag to the CopyMat in the middle of the night and printed 110 copies. Even the cover looked like The Catcher in the Rye. I entitled it "The Things We Think And Do Not Say: The Future of Our Business."

CopyMat Employee: That's how you become great, man, hang your balls out there.

Cruise: Thanks.
I have in my hands the shooting script of Jerry Maguire. It's just remarkable; the guy is talking about Free Agent Nation. If you go back to the monologue we heard, "I hated my place in the world." He had money, but no meaning. He said, "I was remembering the simple pleasures of the job." He’s talking about fun. "The key to this is personal relationships." He talks about caring for people. He talks about fewer clients. He talks about less money. He says, "I was 35, I had started my life." Hmm, that personally sounds quite familiar to me. He says, "I had lost the ability to bullshit. I was the me I'd always wanted to be." That is very much like these people who I talked to at Starbucks and in hotel lobbies, saying, "I needed to take off the mask.”

"Even the cover looks like Catcher in the Rye." I'll give you a magazine if you can answer this literary question. In Catcher in the Rye, what did Holden Caulfield despise more than anything else?


Audience Member: Phonies.
Mr. Pink: We have a multiple prize winner. That's right, phonies. Phonies are the opposite of authenticity. He called it “The Things We Think And Do Not Say,” which is sort of like Peter’s clip from Office Space.

Anyway, I want to read the stage directions here after that last line of the clip we saw. It says, "Jerry nods. This guy sounds and looks like a prophet. In fact, everyone in Kinko's at 3 a.m. does." Truer words were never spoken.


free agent opportunities

I'm going to take two more minutes to make one more point. I promised you some of these business ideas, and I'll sweeten the pot a little bit by giving away one more prize. Here is a question: What business is Starbucks in?


Audience Member: Real estate.
Mr. Pink: I want to tell you about Starbucks. I did huge numbers of these interviews at Starbucks, more than any other place. Why? Well, for the price of coffee I could sit there for several hours. In fact, some days, I would do interviews in two different ways. One I call traveling salesman mode, the other I call dentist mode. In traveling salesman mode, I would get in my car and go from place to place knocking on doors. "Hello, Mrs. Jones, would you like to talk about the deeper meaning of work for two hours?" Then I’d go off to the next place. The other way I did it was in dentist mode, where I would schedule appointments. Fred comes in at 9:30; Judy comes in at 11:30; Sally comes in at 1:30. I would station myself, in many, many cases at Starbucks, and sit there the entire day as people came in for their appointments.

Do you think the Starbucks people got angry at me and tried to kick me out? No. Let me tell you something else. I've had Starbucks baristas (that’s what they call the people who work there) take phone messages for me in Minneapolis, Minnesota; in Glenview, Illinois; in Foster City, California; in Manhattan. That's kind of interesting.

Starbucks is not in the hot beverage business; it is in the commercial real estate business. You go around today, downtown and especially in some of the outer areas, and there are people in Starbucks all day with laptops, holding meetings and so forth.

Starbucks is in the commercial real estate business. So who cares? Who cares about that? Well, you ought to care about that if you're a fledgling entrepreneur, because what has emerged in the free agent economy is what I call the “free agent infrastructure.” It's a physical platform on which free agents can do their work. You don't have all the services of a big corporation; you don't have a supply closet; you don't have an MIS department; but a whole series of private establishments have emerged in a totally self-organized way. Woven together, they form an infrastructure for getting people to do their work. You have Kinko's, the Cheers bar of Free Agent Nation where everybody knows your name and they're always glad you came. You have postal centers, like Mailboxes, Etc., which are the mail rooms of Free Agent Nation. You have office supply superstores like Staples, the supply closets of Free Agent Nation. You have Barnes & Noble and the big chain bookstores, the public libraries of Free Agent Nation.

You have a booming business in executive suites. There is actually a great company down here in Washington, DC, called Executive Office Clubs. They rent work stations for nine bucks an hour, private offices for 12 bucks an hour. They also offer free Starbucks coffee. Think about that. At Starbucks, you buy the coffee and get the office for free; at this place you buy the office and get the coffee for free. They're in the same business with just slightly different business models. It is a gigantic, billion-dollar industry.

Let's go back to Starbucks for a second. The last two big deals that Starbucks has done, who were they with? Do you think they were with Smuckers to get a new brand of jam in there? Or with Sara Lee to get a new kind of pastry? No. The two biggest deals that Starbucks has just done in the last few months are with Compaq Computer and Microsoft. What are they doing? They're putting wireless Internet connections in one thousand Starbucks locations. They know they're in the commercial real estate business. In fact, they redesigned their stores. Remember the very thin countertops, the very uncomfortable chairs that were kind of done to shuffle people out. There’s been a total redesign of the interior architecture and interior design--big comfy chairs facing each other, big tables--Starbucks knows what business they're in.

Here is another company that knows what business it's in. There is one in Seattle and one in San Francisco. Here is a menu from a place called Circadia, a lovely menu. This place is a lovely little place. It has tables and chairs. Each table has a phone with a data port. I'll read you some of the things from the menu: caramel mocha, Tazo tea, smoked salmon something or other, breakfast focaccia plate, eggplant something sandwich. They have beer. They have a wine list. They have spirited coffee and hot coffee drinks. They have cool and refreshing cocktails. Oh, wait a second, look at this last page here, they have The Green Room, a private room that you may book for meetings. The room seats 10 and provides a media wall showcasing the latest technology from Gateway. They have a live Internet connection and a big conference table in this room for $50 an hour off the main floor. You can rent laptop computers there. You can buy floppy disks there. They have an Internet kiosk there. Guess who owns Circadia?
Audience member: Starbucks.
Mr. Pink: Exactly. Smart companies are realizing what’s going on. I'll give you another example, Staples. The whole office supply industry is like this. Staples made an announcement, a tragic announcement a couple weeks ago. Next year they're only going to open 100 new superstores. If you have been to a Staples, you know that it is not like a little mom & pop storefront, it's like 20,000 square feet of retail space. Who do you think is buying at Staples products? Do you think Steve Case at AOL and Bill Gates are running to Staples to get some paper clips? Do you think that people in companies are doing that? No. Staples is serving free agents.

I think that there are just gigantic opportunities for businesses to serve this space, and most people don't know how to do it well. Most people, with the exception of Starbucks and Kinko's and, I think, to a large extent Apple Computer, don't really understand the psychology of who these people are and why they work this way.

I'll throw out a whole bunch of business ideas. I write a column for the Online Wall Street Journal, called "The Idea File" where I take an idea for a business and run it through its paces. They’re usually really bad ideas, but you can learn something about business. Although one reader emailed me and had this idea. He said, "I’ve got this great idea. I call it Mutts.com. You use the Internet to breed dogs."

Here’s a business idea: talent agencies. In the staffing industry, most of the intermediaries represent the buyer of talent. Relatively few represent the seller of talent. Today, 5% of workers who earn over $75,000 are represented by a talent agent, and more and more workers are going to do that. It's sort of a William Morris or ICM for free agents and is a possibly huge business.

Here’s another. Who is going to fix these computers? I work for myself on the third floor of my house. I am my own MIS department. Who is going to fix my computer? If something goes wrong, if Windows crashes again, what do I do? Is swearing going to fix it? No. Do I have some kind of endemic problem? I don't know. I don't really know what I'm doing. At the same time, you have all of these teenagers who are absolutely expert in computers for whom it's second nature. Why not organize a brigade of teenage techno types to service the computers of home office workers? There are something like 20 million Americans working at home and 19 million of them use computers.

Insurance is a big pain in the neck for free agents. I have to buy health insurance and disability insurance on the open market. I have to redo my homeowners' insurance. It's a huge hassle. If there were a one-stop shop or a portal for free agent insurance, I think it would be enormously lucrative because people are terrified about insurance and they don't want to deal with the hassle of it.

I think there are a lot of interesting ideas for real estate. One of them actually just appeared in Washington, DC. I had this notion in my book, what I called “a free agent’s Elks Lodge,” which is a new kind of office where free agents can go to congregate. Well, there is a very interesting company here with offices in Adams Morgan called The Affinity Lab. It's not an incubator and it's not an executive office suite, it's somewhere in between. I think that there are going to be a lot of real estate ventures. Basically, you rent a desk and you are part of a common community and you get some common office services. There are a couple of these now in San Francisco and there is a new one in New York. They’re the sort of thing to help people overcome isolation and provide some business services. I think it is going to be a huge business.

Here is a product that I can't believe is not on the market, so please do it. Nobody knows how to become a free agent, they only sort of know. I can envision a “Free Agent Starter Kit,” a box you buy at Staples or Kinko's or wherever. It includes certain forms you need, certain online things you need, certain software you need, checklists of what you should do before you make the leap, lists of groups and a copy of my book. I think people would pay $40 or $50 for it. I think that would be an amazing thing.

I'll give you one last idea. If anybody starts this company, I want to know about it. This is the most outlandish idea. We are 10, 15, 20 years away from a huge labor shortage. You have the baby boomers retiring, and behind them the demographic cohort is much, much smaller. The working age population is actually going to stop growing here in the United States. That is why I think that a lot of baby boomers are going to be called out of retirement, partly because they're not going to want to spend 30 years playing canasta and people are living so much longer. They'll come back working as free agents, part-time, sometime, any time free agents. The problem, though, is worse in western Europe, particularly in Italy, so here is the idea: a combination temp agency/travel agency. (Laughter)

I'm serious. You get an Italian company who has nobody to do the work and you bring in these very healthy, very talented 65-year-olds. You give them a trip to Italy as compensation and they do some work for the company. It's not that outlandish of an idea and a short step from courier services where you basically get compensated for your service with the ticket. I'm telling you, talk to me in 2015. Somebody will start a temp agency/travel agency.



There are a lot more ideas to talk about, but I will not do it right now. I have talked to you enough. Thank you for your time.
Ms. MacPherson: Thank you very much, Dan. We appreciate it. Thanks, everyone, for coming and we'll see you next month.


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