October 11, 2024
Our latest guest on The Desana Podcast is Kelly Monahan, Managing Director at the Upwork Research Institute. In discussion with Desana CEO and Co-Founder Michael Cockburn, she shares insight from the latest Upwork study “Work Innovators: A Playbook for Innovation in an Uncertain World”, as well as other workplace nuggets like the role of generative AI and the importance of upskilling your workforce.
You can listen to their conversation below, search for 'The Desana Podcast' wherever you get your podcasts, or read on for our key takeaways.
As detailed in the UpWork report, a defining trait of Work Innovators is their incremental approach to change. Rather than pursuing massive overhauls they focus on small, iterative changes, preferring rapid experimentation, continual learning, and the scaling of successful practices. The foundation of this approach lies in the concept of Kaizen, a Japanese philosophy that focuses on making small, iterative changes based on feedback from frontline workers.
Corinne Murray shared similar insights during our ‘So your RTO failed, what now?’ webinar, explaining that those with successful return to office policies had pursued an iterative and consultative approach. In both use cases the approach brings the same benefits; organizational agility and responsiveness.
Upwork’s research found ample evidence of the benefit of following an incremental change approach. For example, some businesses have gradually transitioned to a more distributed workforce by initially allowing remote work on a limited basis and then scaling as they refined their processes and technologies. Others have initially only introduced generative AI tools for specific tasks, such as content creation or data analysis, before then expanding their use to other areas.
Whatever policies are being introduced, effective change management strategies - like clear communication, employee training, and stakeholder engagement - are vital to ensuring a smooth transition. Leaders should also create an environment where employees feel empowered to experiment, take risks, and learn from failures. Kelly explains that:
“Innovation thrives in a culture that encourages curiosity and continuous learning,"
Those that have embraced the ‘Work Innovator’ model to seamlessly integrate remote work, AI-powered automation, and flexible talent solutions, are reaping significant financial rewards. The Upwork Research Institute's findings reveal that Work Innovators enjoy 30% lower operating costs, higher year-over-year free cash flow, and lower debt-to-equity ratios compared to their industry peers.
By leveraging the power of distributed teams and tapping into a global pool of skilled freelancers, Work Innovators can significantly reduce overhead expenses associated with traditional office spaces and full-time employee benefits. This strategic approach to talent acquisition allows companies to access top-tier expertise at competitive rates, optimizing labor costs without compromising on quality.
This enhanced cash flow is a testament to the ability to streamline operations and boost efficiency. By harnessing the potential of generative AI to automate routine tasks and optimize resource allocation through alternative talent models, these agile organizations can redirect their resources towards high-impact, revenue-generating activities, ultimately driving their cash flow to new heights.
Moreover, the lower debt-to-equity ratios observed among Work Innovators indicate a more robust financial foundation and greater flexibility to adapt to changing market conditions. By minimizing operating expenses and maximizing cash flow, these companies can reduce their reliance on external financing, enabling them to reinvest their savings into strategic initiatives that fuel long-term growth and innovation.
The financial advantages of adopting innovative work practices are clear. By reducing costs, enhancing efficiency, and improving financial agility, Work Innovators are well-positioned to invest in the future, driving sustainable success in an increasingly competitive global marketplace.
These pioneers serve as powerful examples of how embracing distributed work, generative AI, and alternative talent models can transform businesses and drive success. Kelly talks about Caterpillar, which has implemented both flexible work arrangements and targeted recruitment strategies to create a more inclusive environment for women. By prioritizing diversity and innovation, they’ve improved company culture but also boosted performance and creativity, demonstrating the tangible benefits of progressive work practices.
In the healthcare sector, where labor shortages are a pressing concern, providers are turning to alternative talent models and cutting-edge technologies like telemedicine and remote patient monitoring to meet their staffing needs. These innovative solutions have not only improved access to care but also optimized resource allocation, ensuring that patients receive top-quality treatment despite industry challenges.
Another example Kelly shared is NASA, an organization she commends for their exceptional approach to crowdsourcing ideas and leveraging flexible talent. Through open innovation initiatives like the NASA Tournament Lab, the agency invites external experts and enthusiasts to contribute solutions to complex problems. This collaborative approach accelerates problem-solving and cultivates a culture of creativity and innovation within the organization.
Kelly previously worked at Meta, and reflected on her experience:
"Perfection is often what gets in the way of so much goodness within organizations. And I do think Mark [Zuckerberg] knows that and has certainly built a company in that way."
Meta has consistently been at the forefront of embracing new technologies and ways of working. As their blog on workplace innovation highlights, the company is actively experimenting with mixed reality, artificial intelligence, and other cutting-edge tools to enhance collaboration, productivity, and creativity. However, Kelly notes that whilst the Metaverse will undoubtedly provide opportunities for innovation, this is potentially years away, and so her focus remains on what is working and accessible right now.
While the strategies employed by these Work Innovators vary, they all share a common thread: the courage to embrace change and experiment with new ways of working.
Perhaps the most formidable challenge faced by Work Innovators is change management. Kelly reminds us that many leaders are “under a lot of pressure to do something completely different”, whereas the evidence suggests that:
“Companies that have success are doing this in a much more disciplined, incremental change way because, let's be honest, the workforce is burned out. People are tired of change and so we have to also manage the human side of this and make it feasible, so it works with the way that humans are wired right now.”
Generative AI is already shaping how businesses approach problem-solving and innovation, through new and streamlined ways of analyzing and presenting complex data sets. AI has the potential to transform various aspects of business operations, from automating routine tasks to enhancing decision-making processes, and driving creativity.
A significant opportunity for work innovation lies in the integration of generative AI into organizational workflows. As Kelly emphasizes, organizations need to move beyond simply using AI for content generation and towards having AI assistants execute tasks and support knowledge creation. She explains:
"Companies getting this right right now are doing what we just talked about in the Work Innovator Report. They're disrupting the work. I have to really think about how my job is going to be disrupted? What can I begin to outsource to an AI model? Whether that's more machine learning or whether that's more from a generative AI, I can then create new knowledge from that.”
What’s really interesting about the report and Upwork Itself, is that they practice what they preach. Kelly explains more in the podcast saying:
“One of the things I really feel strongly about as the Upwork Research Institute is that we're not going to publish research that we don't indeed ourselves experiment with or try. It may surprise a lot of your listeners today that I only have two full-time workers who support the Research Institute. Everything else I'm running is based on alternative talent models.
The other thing I'm experimenting with that we're going to be launching with the research report is learning to work with AI as a research assistant. So, how do we incorporate the power of large language models? How do I help scale and speed the content that we need to be creative? Really being on the forefront. I certainly consider our work innovator research assistant as part of my team.”
Embracing alternative talent models, such as freelancing and gig work, is a hallmark of the Work Innovators' philosophy. These flexible approaches empower organizations to dynamically scale their workforce, access niche expertise, and optimize costs. By cultivating a fluid talent ecosystem, companies can swiftly adapt to evolving market demands and customer expectations.
However, managing a fluid workforce is not without its challenges! Ensuring seamless collaboration, upholding consistent quality standards, and nurturing a sense of belonging among a distributed team can be complex. Work Innovators must develop strategies to surmount these hurdles and successfully integrate alternative talent into their organizational fabric.
Kelly’s upcoming book, Essential: How Distributed Teams, Generative AI, and Global Shifts Are Creating a New Human-Powered Leadership aims to provide a playbook for leaders who want to shift their management style from the industrial frameworks of old towards the world we live in now, which is rooted in technology and agility. The book is inherently practical and packed with case studies and research making it, as Kelly hopes, the ideal playbook for forward thinking leaders.
The book is broken into three key sections, as Kelly explains:
“There is no great theory that we can draw from our leadership to actually navigate today's times. There's no diversity of thought when it comes to our leadership theories. And so what I wanted to do with my co-author, Christie Smith, is really begin to get practical and think about how the world of work has changed? That's part one.
We spend part two in the book unpacking what the needs of humans are at the workplace? So often we think of what the needs of organizational leaders are from the workforce as opposed to flipping that question; What am I as a leader? What is my organization? What can I provide to people?
Then part three is probably my favorite because that's where it gets practical. It begins to describe what those essential leadership behaviors are that you need to adopt today in order to become that antifragile organization, in order to make sure that your workforce is ready. So that you're not having to look people in the eye and let them know they're no longer employed and they no longer have the skill sets because of technology. How do we actually get that human intelligence and artificial intelligence to create new models of work?
What we unpack in part three is really what you have to get right today as a leader. And a lot of it comes down to your mindset. Are you ready to suspend yourself in trust? Are you making time to cultivate a relentless curiosity about the way that your workers are working today? And most importantly, do you have what it takes to create a culture of excellence, to be able to create these small incremental changes over time?”
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