I was going to write about my career as a model and male dancer in this episode of the newsletter, and what I learned that has helped me so much in business. However, as I was thinking of what to write, I saw a headline that stated that companies are locked in a battle of wits with their employees to get them to return to work. This is a link to the article.
COVID-19 resulted in millions of people working from home. Working from home resulted in millions of people reevaluating their lives with most people coming to the conclusion that instead of having a life where they commute to an office, they simply work from home. Forever.
As COVID rates decreased and employers asked their employees to return to the office, workers rebelled and resisted. The workers are winning. Many of the largest companies in the world are either allowing their employees to work remotely full-time or they’ve implemented a hybrid model of work from home with one or two days in the office.
I understand why employees want to work from home. I’ve worked primarily from home since 2010. Neither Deloitte or Capgemini required me to work out of an office. I utilized a hybrid model at Amazon. I’ve worked from home exclusively since I opened my own practice. I get it. I know why people want to work from home.
However, here’s what the millions of people who have a job that allows them to work from home don’t understand – they’re expendable. As corporations conclude that they have a workforce that only wants to work remotely, corporations are going to do the following:
- Labor arbitrage. This is the term used to describe moving jobs to nations where labor and the cost of doing business is inexpensive. Corporations are going to identify every job that can be outsourced to another country. What’s the difference between having an employee working remotely in the U.S. or working remotely in Israel, the Philippines, Romania, India, and so on? The bottom line is that the person isn’t in the office so it doesn’t matter where they work. Why not choose the country with people who will work for the lowest wages?
- Yes, but my company could have already outsourced jobs at any time and they haven’t so why would they do it with a remote workforce? Because once a company realizes that their employees won’t return to the office, the company will have no choice but to accept that there is no need to maintain a traditional organizational structure within the company. Companies will identify a new operating model that will allow them to operate effectively as a company using an optimal remote workforce, and using an entirely different organizational structure that requires less management. In essence, what’s about to happen is a new form of outsourcing to accelerate adoption of the virtual corporation.
- AI, Machine Learning, Robotics, Avatars, and the Metaverse. I don’t believe most people understand how quickly their careers are going to disrupted by 2030 as companies embrace technologies that can be leveraged to replace humans. I’ve seen videos of customer service representatives that speak flawless English and other languages and that look human. They’re not. They’re deep fake avatars.
- Low Barrier to Entry. It is becoming incredibly easy to launch a tech company and apps. Regardless of the pullback in tech funding by investors, there is a low barrier to entry by startups, and investors will continue to fund technology that will have the biggest impact on business,
The danger faced by employees who are insisting on working remotely is that they will accelerate themselves out of a job. Be careful what you wish for.
TOPICS OF INTEREST THIS WEEK
Gorillas and Getir
Two of the leading rapid grocery delivery companies, Gorillas and Getir, have both announced massive layoffs and changes to their strategy and operating models. This isn’t a surprise. I’ve advised the majority of the rapid grocery delivery companies, and I’ve stressed to each that the only way they survive is by changing from being what I refer to as “gimmick” companies, to being retailers that truly add value to people’s lives.
Delivering snacks in 10 minutes is a gimmick. Any company that uses such a model is guaranteed to lose money on every delivery. In addition, the companies severely limit their ability to ever become profitable as there is no way to automate 10-minute deliveries. However, by implementing delivery models whereby deliveries are made in 30 to 45 minutes consistently, rapid grocery delivery companies can automate their operations, plus increase the assortment of products that they sell.
Gorillas is in a world of hurt. Delivery Hero owns 9% of Gorillas. I anticipate that Delivery Hero will have to inject cash into Gorillas and eventually take over the company. It’s possible that goPuff, DoorDash, or Uber may be interested in acquiring Gorillas but if they do so, it will be at a significant discount.
Getir has foolishly continued to scale their operations globally. The company has finally realized that they must stop scaling and instead, place their focus on reducing costs and becoming profitable. I’m confident that Getir, with a valuation of nearly $12B, will be worth less than $4B by Q3 or Q4 of 2023.
Until next week,