Analysis of The End of Work By Jeremy Rifkin Part 1: The Two Faces of Technology

It has been well over two decades since Jeremy Rifkin wrote The End of Work. In this book, he explores the concepts of automation, corporate downsizing, and job losses associated therein. He theorizes that the technology which helped with modern industrialization will actually lead to the downfall of the world’s current workforce. Since first publishing the book in 1996, many of Rifkin’s theories have proven to have a substantial amount of merit, but not without challenge from other theorists. He is “credited by some with helping shape the current global debate” surrounding these issues. (2019) For the purpose of this analysis, I am going to review the key points from Part 1: The Two Faces of Technology.

The End of Work

In this section, Rifkin discusses the concepts of substituting software for employees, re-engineering, and a world without workers. According to Rifkin, “the new computer-based technologies promise a replacement of the human mind,” “re-engineering could eliminate between 1 million and 2.5 million jobs a year,” which leads to “worry about where the new high-technology revolution is leading us.” (Rifkin, 1995) While Rifkin still stands by his assessment today, there are some who agree with him and there are those who challenge this way of thinking. David Rotman, editor for The MIT Technology Review, conducted research on the effects of automation and he discovered information which coincides with Rifkin’s take on the topic and information which contests his beliefs. Dr. Erik Brynjolfsson, a professor at the MIT Sloan School of Management, believes “rapid technological change has been destroying jobs faster that it is creating them, contributing to the stagnation of median income and the growth on inequality in the United States.” (Rotman & Rotman, 2016) Another of Rotman’s colleagues, David Autor, an economist at MIT, provides information that points to a “sluggish economy” as the culprit for the sudden slow down in job creation.” (Rotman & Rotman, 2016)

(To read the full article, click here.)

Trickle-down Technology and Market Realities

Here, Rifkin tackles such topics as mass consumption, the post-war world, and the shrinking public sector. Rifkin argues that the “new labor saving technologies,” of the roaring 20s actually led to the great depression of the early 1930s, when the unemployment rate jumped from less than one million to 15 million, at its peak. (Rifkin, 1995) He goes on to point out, in the past, “new products—especially television and consumer electronics—helped cushion the blow and provide jobs for workers displaced by machines in other industries,” but, he believes this is a thing of the past as “the new economic realities… make it far less likely that either the marketplace or public sector will once again be able to rescue the economy from increasing technological employment and weakened consumer demand.” (Rifkin, 1995) Melanie Swan, of the Perdue University Philosophy Department, disputes such claims. She concludes the issue is not technological employment itself, rather, “The problem is that those who become unemployed by technology are not being reabsorbed or planned for comprehensively in today’s society.” (Swan, 2017) In essence, this means that we could technically avoid this phenomenon by strategically planning ahead. Even though it seems Swan could be oversimplifying a solution, it does make some sense in the bigger picture of things.

(To read the full article, click here.)

Visions of Techno-Paradise

To wrap up Part I,  we are given a overview of how the field of engineering changed the scope of the American landscape, from the invention of electricity in the late 1800s, to the launching of the Russian space satellite in the 1950s. These were, indeed, exciting times in history. Still, Rifkin believes those great historical feats, and the ones that followed, “hold out the long-anticipated promise of a nearly workless world…” (Rifkin, 1995) Mark Paul, a Fellow at the Roosevelt Institute, and a Postdoctoral Associate at the Samuel DuBois Cook Center on Social Equity at Duke University, argues that automation is not the end of the world. He reckons that, although “technological change has the potential to create job loss in the short term,” “job gains from technology often outpace the losses over time and allow workers to focus on better, high-productivity jobs.” (Paul, n. d.)

(To read the full article, click here.)

Conclusion

Clearly, Rifkin’s theories are open to interpretation and argument. While researching automation, I found many pros and cons. There seems to be as many proponents as there are opponents. I will leave you with this question to ponder: Who is right?

…Next, I will be discussing Part II of Rifkin’s book—The Third Industrial Revolution. Stay tuned!

Resources

Jeremy Rifkin. (2019, January 17). Retrieved February 3, 2019, from https://en.wikipedia.org/ wiki/Jeremy_Rifkin

Paul, M. (n.d.). Don’t Fear the Robots. [online] Rooseveltinstitute.org. Available at:http://rooseveltinstitute .org/ wp-content/uploads/2018/06/Don%E2%80%99t-Fear-the-Robots.pdf [Accessed 3 Feb. 2019].

Rifkin, J. (1995). The end of work. 1st ed. New York, N.Y.: Putnam’s Sons.

Rotman, D., & Rotman, D. (2016, September 01). How Technology Is Destroying Jobs. Retrieved February3, 2019, from https://www.technologyreview.com/s/515926/how-technology-is-destroying-jobs/

Swan, M. (2017). s Technological Unemployment Real? An Assessment and a Plea for AbundanceEconomics. [online] https://www.researchgate.net. Available at: https://www.researchgate.net/publication/315217034_Is_Technological_Unemployment_Real_An_Assessment_and_a_Plea_for_Abundance_Economics [Accessed 3 Feb. 2019].

Organizational Creation and Growth Strategies: Interrogate and Extend Concepts

ENT 630 – Co-written with Essence Walton 

Why is it important to consider the implications of veil piercing in the planning stages of an organization; and how can a company maintain the “corporate veil?”

Veil piercing can be detrimental to the owners, stockholders, and employees of a business entity. For this reason, it is imperative for entrepreneurs to examine the consequences of such occurrences before launching a new venture. In doing so, the risk of future lawsuits can be minimized.  Once a business has been established, there are ways to avoid veil piercing. According to Matthew A. Griffith, Senior Attorney, Griffith Law Group LLC , “Maintaining the corporate veil is not difficult, but it does require business owners to complete some simple tasks and stay vigilant;” and, those tasks include, but are not limited to:

  • “Never commingle personal and corporate finances.
  • Create and maintain a company record book, which should include minutes of all company meetings.
  • Learn and follow any requirements unique to the state where your business operates.” (Griffith, 2017)

To read Griffith’s full article, click here.

Is an exit strategy needed? How does an owner’s exit strategy affect the decisions they make regarding their business?

Not all business owners create an exit strategy; however, it is important to have one in place when looking for investors. An exit strategy shows an investor how they can get a return on their investment. From the time an owner sets an exit strategy, the decisions they make are usually in alignment with this choice. For example, selecting a legal structure is done in the early stages of a startup. An owner with plans to remain in complete control of their business may prefer a sole proprietorship or limited partnership versus forms that are heavily regulated by the state like a corporation. Although an exit plan is subject to change as businesses grow, it is easier for an owner to change from particular structures to another such as switching from a corporation to a sole proprietorship. To avoid these complexities, it is highly recommended that owners develop an exit plan as soon as possible and get legal advice when doing so.

Referring once again to Noam Wasserman’s trade-off theory, if a business owner prefers to maximize their wealth rather than their control this will even influence their decisions on cofounders, investors, whom they hire, whether or not they will have a successor and other factors (Wasserman, 2013). Owners more interested in keeping their control will be less likely to hire people who are specialists in their fields so that they can do all of the decision makings. So to recap, an exit strategy is not necessary but is recommended because it influences the choices an owner will make regarding their business as they aim to reach their goals.

For a video synopsis of Wasserman’s book, click here.

Works Cited:

Griffith, M. A. (2017, July 17). A Checklist for Maintaining Your Corporate Veil. Retrieved November 24, 2018, from https://www.legalzoom.com/articles/a-checklist-for-maintaining-your-corporate-veil

Wasserman, N. (2013). The Founders Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton Univ Pr.

Organizational Harvesting Strategies

ENT 360 Organizational Growth – Co-written with Merida Bohanemus

All good things come to an end, right?! It is important for businesses to write into their agreements and plan/ an exit strategy. Market Business News defines a harvest strategy as “a business plan for either canceling or reducing marketing spending on a product,” (Nordqvist, 2018) A harvest strategy is used when a product or a business is underperforming and “the objective is to produce higher profits to fund expansion in other areas.” (Henricks, 1997)  As Charles Crawford describes in his What is a Harvest Strategy in a Business Plan? “When a business plan contains a harvest strategy, equity investors and lenders are assured that the owners intend to…eventually sell it…” (Crawford) This is especially true when dealing with a partnership of any sort. Thinking of the end, at the beginning, can signal confident and competent approach. Better yet, it can also help garner support from investors and loan officers.

Just because it is an important step, however, doesn’t mean it will be a simple procedure to manage from within the business. “A harvest strategy is difficult to manage but includes an attempt to optimize cash flow.” (Raza, 2017) There are two harvest strategies most commonly utilized by businesses—“the outright sale of a company or division,” or “sharply cutting investments in assets, labor and other costs of a slow-moving product line or business.” (Henricks, 1997) When it seems a company or product has reached it’s maximum potential peak, selling the business could make the most sense. On the other hand, if there is potential for the resurgence of growth, it may be best to take things more slowly. Historically, for “a business on the wane has been a “harvest” strategy—eliminate investment, generate maximum cash flow, and eventually divest.” (Harrigan, Porter, 1983) Although this is not to discount the ability to weather a storm, or reinvent with funds from a mature product, it is a healthy place to start, and to discuss upfront in business partnerships. This provides maximum clarity to all parties involved and helps build the trust needed for any successful endeavor.

Works Cited:

Charles Crawford, What Is a Harvest Strategy in a Business Plan?, Retrieved 18 November 2018, from: https://smallbusiness.chron.com/harvest-strategy-business-plan-52874.html

Henricks, M. (1997, September 01). Harvest Time. Retrieved November 20, 2018, from https://www.entrepreneur.com/article/14594

Kathryn Rudie Harrigan; Michael E. Porter, End-Game Strategies for Declining Industries, retrieved on 18 November 2018, from https://hbr.org/1983/07/end-game-strategies-for-declining-industries

Nordqvist, C. (2018, July 29). Harvest strategy – definition and meaning. Retrieved November 20, 2018, from https://marketbusinessnews.com/financial-glossary/harvest-strategy/

Sheeraz Raza, Four Strategies For Firms In A Declining Industry, Retrieved on November 18, 2018, from https://www.valuewalk.com/2017/12/declining-industry-moats/

 

 

Organizational Growth Strategies: Franchise Agreements, Support systems, and Obligations

ENT 630 Organizational Growth

Growth strategy is “Strategy aimed at winning larger market share, even at the expense of short-term earnings.” (https://businessdictionary.com) When it comes to taking a business to next level, there are many strategies which can be used to promote growth. However, one particular strategy is usually at the forefront of this topic of discussion: Franchising. This tried and true method has proven to be successful for many decades. Think NAPA Auto Parts and McDonald’s. Such franchises require a lot of planning, and those who are interested in such an undertaking would be wise to explore the ins and outs of franchise agreements, support systems, and the obligations which will be involved throughout the process.

Franchise Agreements

A franchise agreement is a legal and binding contract between a franchiser and a franchisee. According to Kerry Pipes, contributing writer at franchising.com, there are “10 fundamental provisions outlined in some form or fashion in every franchise agreement,” which includes the following provisions:

  1. “Location/territory.
  2. Operations.
  3. Training and ongoing support.
  4. Duration.
  5. Franchise fee/investment.
  6. Royalties/ongoing fees.
  7. Trademark/patent/signage.
  8. Advertising/marketing.
  9. Renewal rights/termination/cancellation policies.
  10. Exit strategies.” (Pipes | 68,923 Reads)

To read the full article, click here.

Support Systems

Having a solid support system as a franchisee is essential for success. The franchisee should evaluate franchise opportunities thoroughly, making sure they have access to crucial resources such as training and ongoing support from the franchiser. The article, Franchise Support: What you can expect, is a good resource for those who are considering franchise opportunities as it conveys very valuable information on what to look for in franchising opportunities and how to evaluate those opportunities in an effective manner. The article challenges “prospective franchisees” to do “research,” beyond talking with a representative of the franchise; it also suggests having “in-depth conversations with other franchisees in your investigation because if they have been satisfied with the franchise support system, you most likely will be as well.” (Franchise Support: What you can expect) One of the most important questions any potential franchisee can ask is, “How much is this really going to cost me?” However, this can be a loaded question. Franchisees must learn “whether or not the fees and costs that must be paid to a franchise are fair, reasonable and appropriate.” (Elgin, 2006) To find answers to these questions and more, click here.

 Obligations

The franchiser and the franchisee are legally bound to one another to create a successful and profitable business venture. Each has their own unique set of obligations, and these obligations may be different from company to company and from state to state. Some of the “ongoing responsibility a franchiser may have” are “marketing strategies,” “financing,” and “brand building.” (Franchiser Responsibilities) According to Franchisedirect.ie, the franchisee’s responsibilities may include, but are not limited to, “financial responsibility, business responsibility, and personal responsibility.” (Dawson, 2017) As previously stated, the responsibilities of both parties will be defined in the franchise agreement.

Works Cited:

Dawson, A. (2017, December 19). Home. Retrieved November 20, 2018, from https://www.franchisedirect.ie/information/the-franchisees-rights-and-responsibilities

Elgin, J. (2006, August 14). Is the Price Right? Retrieved December 02, 2018, from https://www.entrepreneur.com/article/164820

Franchisor Responsibilities. (n.d.). Retrieved November 20, 2018, from https://www.franchiselawsolutions.com/franchising/franchisor-responsibilities.html

Franchise Support: What You Can Expect. (n.d.). Retrieved November 20, 2018, from https://whichfranchise.co.za/franchise-support-can-expect/

Pipes, Kerry | 68,923 Reads. (n.d.). The Franchise Agreement. Retrieved November 20, 2018, from https://www.franchising.com/guides/the_franchise_agreement.html

What is growth strategy? definition and meaning. (n.d.). Retrieved November 20, 2018, from http://www.businessdictionary.com/definition/growth-strategy.html

 

Taking Risks: The Investor’s Side

There may come a time in a founder’s journey when he or she must admit the financial resources have been tapped out. Of course, there is no shame in this as many startups would not be able to get very far without the help of outside investors. After weighing the risks involved, that founder may decide securing funding from an outside source is, indeed, the best recourse. While this is a potentially risky move for an entrepreneur, investors also face the risk of uncertainty when it comes to investing in a startup. Investors can come in the form of friends and family, angel investors, or venture capitalists. Each of these types of investors stands to lose money if they do not chose wisely. One wrong investment could prove to be catastrophic.

A lot of entrepreneurs turn to their friends an family as a means to raise money for their venture. On the surface, this seems to be the less risky option. These investors are more accessible, because founders “have frequent contact, long-term trusting relationships, and an emotional connection” with them (Wasserman, 2012.) There is much less pressure involved and a lot less leg-work to get funded in this manner. However, this type of arrangement can have a bleak outcome. Alicia Syrett, Founder and CEO of Pantegrion Capital, cautions against this practice citing “ they may be unsophisticated investors,” meaning “they may not know how to negotiate fair,” “the lines between your work and family relationships may become blurred,” and “you may not want the stress of letting your loved ones down” (Syrett, 2017.)

The next option for an investment is an angel investor. While angel investors are tougher to sell than friends a family, getting funding from an angel investor is easier than getting it from a venture capitalist. However, according to author, Murray Newlands of startupgrind.com, using an angel investor can have a few cons. For instance, angel investors usually have “higher expectations,” “you hand equity over in your business as a portion of the deal,” and they rarely take a “hands off approach” when making an investment (“Pros and Cons of Using an Angel Investor to Fund a Startup.”) While this may sound risky for the founder, these things are good for the angel investor, although those benefits do not come without risks. “Early stage investing is inherently risky;” furthermore, “high-level risks,” such as  “financing risk, technical risk, and market risk” are prominent and should be in the forethoughts of every angel investor (“Key Risks of Angel Investing.”)

When all else fails, a founder may be able to secure an investment from a venture capitalist. Venture capitalists “focus on investing in high-potential startups” (Wasserman, 2012. ) There are not as many risks for venture capitalists as compared to other investor; still, there are potential risks. Some venture capitalist firms are funded by outside resources. When one of these firms make a failed investment into a startup, it causes a ripple effect to those who invested at the time. So, while the risks are not as great, there are still some hazards involved in this type of investing.

When a startup is successful, all parties involved reap the benefits. When it fails, the loss can be felt by founder and investors alike. Not only should entrepreneurs choose wisely when it comes to investors, those investors should also weigh their options as well.

Resources

“Key Risks of Angel Investing.” Angel Investing Returns – A Guide to Exits for Angel Investors | Seraf-Investor.com, seraf-investor.com/compass/article/key-risks-angel-investing.

“Pros and Cons of Using an Angel Investor to Fund a Startup.” Startup Grind, http://www.startupgrind.com/blog/pros-and-cons-of-using-an-angel-investor-to-fund-a-startup/.

Syrett, Alicia. “What You Need to Know Before Letting Friends and Family Invest in Your Company.” Inc.com, Inc., 8 June 2017, www.inc.com/alicia-syrett/what-you-need-to-know-before-letting-friends-and-family-invest-in-your-company.html.

Wasserman, Noam. The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton, N.J: Princeton University Press, 2012. Print

Rolling with the Go-Getters

Emotional detachment can be viewed as a harsh character flaw under certain circumstances. Let’s face it; it is tough to deal with someone who seems uncaring and unapproachable at best. It is also fair to say we have been conditioned to only accept things that have been properly sugar-coated to our liking. Under these conflicting conditions, it can be tough for the leader of an organization to fill the necessary rolls in that organization with employees who not only can go the distance with them, but actually aspire to do so. This is where different hiring approaches come in to play. Hiring dilemmas are the norm, and the type of hiring blueprint a founder chooses can mean a world of difference.

Will the model for hiring employees be based on the desire to build “a family-like culture,” or will it be based on the objective of building a “formal hierarchy,” which calls for employees who are well-equipped with “functional skills” (Wasserman, 2012)? Both of these approaches have good points and drawbacks. Being treated like family at work can be beneficial. In this type of environment, employees may be willing to settle for less pay, do more work, and have an overall better attitude toward their jobs. The drawback is that allowing employees this type of freedom can create workers who are less likely to respect the authority of their superiors, causing a breakdown in the employee/supervisor dynamic. Some would say the formal hierarchy would be the better approach of the two. Afterall, this method promotes a higher sense of executive and management control and a structured work environment more prone to enticing those who “can make big contributions and achieve significant goals” (Herrenkohl, 2013.) Unfortunately, the problem here is it can be tough to establish clear lines of communication between founders and their employees.

The approach used to establish the model for hiring employees relies heavily on the vision of the founder and how objective and emotionally involved, or aloof, he or she tends to be. Notably, there is no flawless plan for recruiting and keeping key employees. Avoiding the pitfalls of hiring dilemmas is tricky and requires a lot of planning. Acquiring top-notch talent is a necessity for a business to grow in leaps and bounds. How a founder and his or her team goes about this process can mean the difference between finding bodies to fill positions and finding talented candidates who are all in.

Resources

Herrenkohl, E. (2013). How to Hire A-players: Finding the Top People for Your Team- Even if You Don’t Have a Recruiting Department. Hoboken, N.J.: Wiley.

Wasserman, Noam. The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton, N.J: Princeton University Press, 2012. Print

Who’s in Charge, Anyway?

I am sure just about everyone has heard the term “too many chiefs” and may have even experienced this phenomenon at school or on the job. While this is almost always an unpleasant situation, it can be very detrimental to a new startup. Choosing who gets the title of CEO in a company can be a daunting task. One idea person would not dream of letting anyone else hold the coveted title, while another could avoid it all together. Deciding who will take over the top positions is not something that should be taken lightly. There are may factors that goes into making the final decision. Sometimes the end result yields success and, sometimes, it produces disastrous results.

Evan Williams and Meg Hourihan of Blogger, the blogging website that was created for the novice blogger, found themselves in a very sticky situation once the company began to take off. According to Noam Wasserman, author of “The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup,” there was “ambiguity about who was really in charge,” which “caused disagreements” and led to Meg’s untimely exit from the business (Wasserman, 2012.) Shortly after, all of the employees in the company were laid off. Cleary, the blurred lines of imprecision did not pay off for Blogger in the early days. Both Williams and Hourihan wanted to be chief, or CEO. As we can see, that model simply did not work. Although the blogging platform went on to be successful, it’s hard not to sit back a reflect on what could have been achieved if they had only thought more about how their roles impacted the company, their employees, and themselves. Desire alone does not make for a great leader.

One can only imagine the issues that arose when Williams and Hourihan got to the point where they needed to hire employees. Under the circumstances, it seems it would have also been very trying for them to choose their staff. For the sake of argument, let’s assume their creative differences carried over into the hiring process. Maybe one wanted team members who were familiar with the industry, while the other wanted people with more life experience as opposed to skills that were acquired in corporate America.  Inevitably, “it only makes since to find a pool of people who already possess the hard-to-teach skills that are vital to your company” (Herrenkohl, 2013.) That’s probably a feat best conquered by founders who do not “adopt overlapping day-to-day tasks” as did the founders of Blogger.

Deciding who is in charge and defining roles may not cause a rush of excitement for even the most seasoned entrepreneur, but it is a necessity, nonetheless. I think it is fair to say no one wants to find themselves in the middle of such a heated conflict as did Evan Williams and Meg Hourihan. The impending implosion of what was once a thriving venture is a scary thought. It makes me want to ask: “Can’t we all just get along?”

Resources

Herrenkohl, E. (2013). How to Hire A-players: Finding the Top People for Your Team- Even if You Don’t Have a Recruiting Department. Hoboken, N.J.: Wiley.

Wasserman, Noam. The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton, N.J: Princeton University Press, 2012. Print