Lately, I’ve been reading a number of articles on the rise of so-called temporary organizations. While such types of teams have been around for a while (e.g., movie crews, emergency response teams), several related trends seem to be driving their prevalence. One is the reluctance of workers who get laid off to move elsewhere to find work. Related to this is the growing number of workers doing freelance work in what is known as the gig economy. Third is the rise of crowdsourcing. And fourth, with the increasing opportunities in technology and software for groups to get together quickly, so-called “flash organizations” are popping up, where freelance workers get together for a limited amount of time to work on specific projects with clear deadlines and end points (Valentine et al., 2017).
What do we know about such temporary organizations and their effectiveness? Are there lessons learned that we can apply to large, traditional organizations - management practices from these temporary organizations that are transferable to permanent organizations?
In their paper, Valentine et al. (2017) describe flash organizations as “crowds structured like organizations to achieve complex and open-ended goals.” In fact, they unequivocally state that “Flash organizations advance a future where organizations are no longer anchored in traditional Industrial Revolution-era labor models, but are instead fluidly assembled and re-assembled from globally networked labor markets.”
In a recent research piece, Burke and Morley (2016) propose defining a temporary organization as “a temporally bounded group of interdependent organizational actors, formed to complete a complex task.” (p. 1237) Such temporary organizations of course are nothing new, both within and outside the context of traditional or permanent organizations. Task forces, committees, project teams, surgical teams, and special assignment teams are examples of the former; movie or theater productions, software development teams, and emergency response teams are examples of the latter. What they all have in common is a fixed end point, whether that is defined by time or by the achievement of a certain objective.
On the other hand, it does not seem like large organizations are going away soon. The big four technology companies – Facebook, Amazon, Google and Microsoft – have been increasing their headcount every year, as have the largest U.S. Fortune 500 companies. In my recent book (Henson, 2016), I wrote that despite the changes going on in organizations today (especially with automation and robotics), the three organizational building blocks or “infrastructure” elements of structures, rewards, and processes will continue to be in place to help an organization achieve its strategy and objectives. The modern organization, despite much criticism, is arguably still a great invention, and will continue to evolve. And these building blocks of structure, rewards, and processes will remain essential to any organization.
Take the so-called “gig” economy, where there exists an increasing number of part-time and freelance jobs. According to a 2016 McKinsey Global Institute report, these constitute approximately 4% of the U.S. workforce. However, the Wall Street Journal (August 9, 2017) reports that this segment will most likely shrink due to a labor market that is strengthening as well as disillusionment with this type of work. After the 2007-09 recession, as companies reduced their workforce or shut down completely, the unemployment rate increased and laid-off workers sought part-time employment. With the labor market now growing, companies are hiring once again, and they are hiring full-time workers. Uber for example recently hired over 100 drivers for customer-support jobs. Even for their part-time and freelance workers, many companies are offering perks. Uber’s competitor Lyft has implemented a “tiered perks” program with enhanced tax, health and car-maintenance services to its 700,000 drivers, depending on the number of rides completed. DoorDash, a food-delivery start-up, offers its independent contractors health-insurance plans and next-day payments. Signing and referral bonuses are not uncommon in these companies.
McAfee and Brynolfsson (2017), who earlier wrote the masterful The Second Machine Age, recently published a sequel to that book. In their chapter entitled “Are Companies Passé?”, they try to answer this question by drawing on the work of the Nobel-prize winning economist Ronald Coase. Coase wondered why, if markets were so great, a lot still happens within companies. For Coase, the choice between firms and markets comes down to costs. While markets are efficient, they have higher costs than firms in several areas, e.g., the costs of negotiating and making decisions, the costs of concluding separate contracts and enforcing them. Therefore, he concluded, big firms will continue to exist. In addition, as McAfee and Brynolfsson point out, companies offer additional advantages:
“Companies also exist because they serve several other economic and legal functions that would be difficult to replicate in a world made up only of freelancers who constantly wrote contracts to work together. Companies are assumed to endure indefinitely … which make them suitable for long-term projects and investments. They are also governed by a large and well-developed set of laws … that provide predictability and confidence. As a result, companies remain the preferred vehicle for conducting many kinds of businesses.” (p. 319)
Having permanent employees provides advantages to companies as well: stronger psychological contracts between employer and employee, greater stability of the workforce, a larger repository of tacit knowledge, greater protection of intellectual property, clearer lines of succession, and a “stickier” corporate culture. Permanent organizations also help employees in these organizations achieve the four drives that Lawrence and Nohria (2002) have identified that we have acquired through evolution - to acquire, bond, learn and defend - more so than temporary organizations do.
While there will always be a segment of the workforce choosing to remain independent, many still find satisfaction with belonging to a company (see the four drives above). Uber found that in 2016, 45% of new drivers left the platform in their first year. According to a JPMorgan Chase Institute report, while about one in six workers in the gig economy are new each month, more than half exit within a year.
Not surprisingly, flash organizations make use of the three building blocks of structures, rewards, and processes, but with some twists. For example, as Valentine et al. (2017) have argued, permanent organizations have what is known as asset specificity, the pattern of relationships that gets established as employees work together over a period of time and learn to coordinate and collaborate together. In flash organizations, roles for workers are clearly defined, and these roles are then arranged in a hierarchy to make sure that authority and decision-making are also clear.
Valentine et al. provide examples of flash organizations in software, project and game design. In all three cases, the organizations lasted three weeks, and they all completed their goals to the satisfaction of the leader and received an acceptable quality rating by three expert reviewers. These flash organizations had 93 crowd workers, 22 team leads and 24 teams. As a specific example, one such flash organization was the EMS Trauma Report group, which was tasked to develop an Android application for emergency medical technicians that they could use to send advance reports to the hospital while they were still in the ambulance. Valentine et al. wax optimistic about the future of such organizations: “We envision a world in which anyone with an internet connection can assemble an organization from an online labor market and then lead that organization in pursuit of complex, open-ended goals.”
In a recent article about their research and on the rise of flash organizations, the journalist Noam Scheiber (2017) point to three lessons from these types of organizations. First is the importance of technology in facilitating the emergence of these teams. Some groups collect many data points on potential candidates to identify the best mix of members. Second is the need to define clear roles and responsibilities. And third is the need for what Scheiber calls “middle managers” but who are actually team coaches, project managers or leaders. None of these lessons are particularly unique to flash organizations; in fact, these organizations are continuing to utilize the infrastructure elements of structures and processes.
For those responsible for organizing temporary teams, here is some advice. First, select team members carefully, making sure the teams have the right technical skills but also the right balance of interpersonal and soft skills needed for members to work together and develop what Meyerson et al. (1996) call swift trust. Swift trust is important especially when these temporary teams are virtual, as many of them are. Iacono and Weisband (1997) have suggested that trust in such virtual teams is built around “doing” more than “relating” and these involve two mechanisms: initiating interactions, and relevant and timely responses. In their study, those virtual teams that had frequent messages initiated by members regarding work content, and frequent as well as timely responses to these messages, tended to build trust more quickly and ended up performing better than other teams.
Second, define roles and responsibilities carefully while allowing for some flexibility. This is especially important when managing and resolving conflicts with members or groups in the temporary organization who identify with different entities. For example, in an interesting case study of the Panama Canal Expansion Program, where there were multiple parties (including a local Panamanian company and U.S.-based contractor), conflicts often arose that were not necessarily resolved by defining roles and responsibilities alone (van Marrewijk et al., 2016). The authors found that interventions (such as having celebrations, creating images of a unified team) were necessary. Presumably, this also helped to build trust. There are some who have argued that since members of these temporary organizations are not likely to work again in the future (with some exceptions; this is certainly not true of temporary organizations within organizations), they are less concerned about long-term benefits (for example, acquiring teamwork skills). Rather, the focus of these teams is on the task, for example, clarifying roles and responsibilities. However, as the Panama Canal project study has shown, an exclusive focus on the task is not sufficient. Interpersonal relations still need to be considered. Furthermore, because of the need to develop swift trust, leadership skills become very important.
Third, for teams that are embedded within large organizations, proactively shape the right culture for the team. Some of the key cultural elements to have in place include transparency, adaptability, trust, and teamwork. And fourth, make sure the leader is an effective “boundary-spanner.” Such leaders have not only the desire but the skills to network, build alliances, involve different kinds of stakeholders, and the ability to influence upward and laterally. They willingly share information and collaborate with different groups. When these teams are embedded within a larger organizational context, the issue of knowledge sustainability and transfer become critical. Capturing lessons learned is important, not only in terms of the content of the project but also in terms of collaboration. The larger organization can learn a lot about effective collaboration from those temporary teams that become truly effective.
In addition to a rise in temporary organizations, we are also seeing a rise in temporary workers within organizations. Estimates are that roughly 20-30% of the workforce is made up of independents working for more than one organization. Independents are “separate and not equal” in many organizations.
There is perhaps a larger issue here that is beyond the scope of this post, but worth mentioning. Some have suggested that the decline of permanent employees may have contributed to the rise in wage inequality in the United States. In the past, when organizations hired many employees for all sorts of work (including janitorial work), there was at least in principle the opportunity to get promoted. With the increase in outsourcing, many organizations have trimmed their permanent payroll to focus on their core activities. Such outsourced firms generally pay less, with fewer benefits and fewer opportunities to get promoted and get pay raises.
At the same time, as McAffee and Brynollfson have pointed out, jobs that require high social skills have increased as a share of total employment. They state three reasons for this. First, since the world is becoming more complex and fast-paced, managers are needed to serve as “transmission belts” and facilitate the challenges of coordination (e.g., communicating, negotiating, etc.). Second, we are more persuaded by good stories and anecdotes than statistics and data. Third, we are social animals and like to work together. They argue that the companies of the future need to be more egalitarian and more transparent, i.e., that they share more information more widely than those in the past.
Bakker, R. (2010). Taking Stock of Temporary Organizational Forms: A Systematic Review and Research Agenda. International Journal of Management Reviews, 12: 466-486.
Burke, C. and Morley, M. (2016). On Temporary Organizations: A Review, Synthesis and Research Agenda. Human Relations, 69 (6): 1235-1258.
Iacono, C. S. and Weisband, S. (1997). Developing Trust in Virtual Teams. https://pdfs.semanticscholar.org/49fb/0072ab1c85bbb6a2ec3c60c85594f1f9f24d.pdf
Meyerson, D. et al. (1996). Swift trust and temporary groups. In Kramer, R.M. and Rylwe, R. R. (eds.), Trust in Organizations: Frontiers of Theory and Research. Thousand Oaks, CS: Sage, pp. 166-195.
McAfee, A. and Brynjolfsson, E. (2017) Machine-Platform-Crowd. New York: W. W. Norton.
Scheiber, N. (2017). The Pop-Up Employer: Build a Team, Do the Job, and Say Goodbye. The New York Times, July 12.
Valentine, M. et al. (2017). Flash Organizations: Crowdsourcing Complex Work by Structuring Crowds as Organizations. www:http://hci.stanford.edu/publications/2017/flashorgs/flash-orgs-chi-2017.pdf
Van Marrewijk, A. et al. (2016). Clash of the Titans: Temporal Organizing and Collaborative Dynamics in the Panama Canal Megaproject. Organization Studies, 37 (12): 1745-1769.