Is Elance Pointing the Way to A New Labor Market Function for the Staffing Industry?

Leading Online Staffing player, Elance, announced a major move that should make us all think a little bit harder about Online Staffing platforms (and their potential). By partnering with two other innovative platform providers, Smarterer (for online testing) and SkilledUp (for online learning), Elance may have taken a game-changing step. As far as I am aware, this concentration of numbers of workers and testing and training capabilities (for work related knowledge and skills) — all online, basically on one main platform — is unprecedented.

The principle is a simple one: if workers are online, then they can be tested online, and they can learn online — easily, all within the same “user experience” space. Further, their test results can be used by those who may want to hire them for very specific knowledge and competencies, potentially further validating them. More importantly, “demand signals” can now be used to drive learning content and test development.

Back in June 2012, I wrote about the challenge of “Solving the Labor Market Paradox” in light of the “Manpower Skill Shortage Survey,” and I wondered: “This might seem like a bit of a pipe dream (just like solving a paradox), but if one looks at the dramatic changes — often technology-supported — that are beginning to occur in the education sector (e.g., more — and even free — online classes; increasing post-secondary certifications done online in lieu of traditional college degrees, etc.) and the potential to integrate skill development and skill assessment with a feedback loop (one perhaps supported by talent-hungry organizations), then new possibilities start to emerge. And such a world may not be so far off.”

Now just a little more than a year later, with university MOOCs (Massive Open Online Courses) seeming almost passé, this development at Elance may be taking us a step closer to that world.

There are a number of ways to look at this development, such as “Elance is offering some new services to differentiate itself and contribute more value to its users.” From my perspective, there is no doubt about this, but I also see this as an illustration of how online service platforms can be used (even in the staffing intermediation business) to create value in innovative ways by developing “service ecosystems” that digitally link together and merge partner services into new value-creating configurations (in this case, work arrangements, skills testing, and learning capabilities).

Doing something like this (staffing, testing, skill development) in the staffing business has been thought about for quite some time, but the complex logistics and the costs have been prohibitive. Yet, now, this new thing — online platforms — may make it possible.

Elance is certainly a two-sided “work arrangement intermediation” platform, enabling full-cycle (search/find-to-pay) work arrangements (talent-as-a-service) between workers and the organizations that need their services. But now we are seeing more clearly that Elance is actually a multi-sided platform, bringing together and creating new value through more than two constituencies. In this case, Elance is doing this (creating a kind of “super service ecosystem”) by joining with those two other — complementary — online service providers: Smarterer and SkilledUp.

What is interesting is that these two businesses are platform businesses in their own right.

Smarterer (as I described in an earlier article) is a platform that dynamically adjusts its work-related skill test contents based upon the performance of each given test subject during the test, thus being able to hone in on specific skills and specific levels of competencies. But that is not all — the tests, that Smarter delivers, are developed and validated by curated crowds of experts — online — thus combining relevance and currency with efficiency.

SkilledUp, according to its mission, is a platform that “organizes, curates and reviews the world of online education, with an emphasis on skill-based learning that helps people gain marketable, in-demand job skill.” These courses can come from potentially any online course creator, but SkilledUp curates and organizes them according relevancy, etc. and provides access with economical pricing models.

So what you have now, in effect, with Elance and its partners, are multiple (digital) service ecosystems that have been joined into totally new-value-creating service configurations. Not only will freelance workers and businesses benefit from them, but so too will the online course creators and the expert test developers working in a curated crowd. What is emerging is a kind of set of “virtuous circles” — often referred to as “network effects.”

So this Elance example suggests how online service platforms can potentially be very powerful engines and transformers in the world of labor markets and work arrangement intermediation. Traditional firms and business models are hard-pressed to accomplish these kinds of things.

But designing and building — usually over many years — an online service platform is hardly an established “management science” – it is somewhat more at an experimental stage, with certain “maestros” (like LinkedIn’s Hoffmann, Facebook’s Zuckerberg, Amazon’s Bezos, Salesforce.com’s Benioff, et al) combining art, experimentation, and science to demonstrate notable levels of mastery in “platform and ecosystem” building. A recent article at VentureBeat, “How Elance Looks to Partners in Delivering Talent-as-a-service,” suggests that Elance’s CEO (perhaps we could say Chief Business Architect) Fabio Rosati may be on a similar “platform and ecosystem building” path.

Elance is boldly attempting to take a major innovative stride in the contingent workforce and work arrangement intermediation space, seeking to fight the “talent wars” with “unconventional weapons” – peaceful ones called “online service platforms and ecosystems.” One of the many challenges that Elance will face (a central challenge of all platform designers and builders) will not only be selecting the right partners and having the right APIs and other technology plumbing, it will also be creating that “user experience space” that will (like Disney) “make the magic happen” — keep users engaged in the value co-creation process.

“Platform and ecosystem building” is not for the risk-averse and faint-of-heart, but Online Staffing and other Human Cloud platform models are now clearly demonstrating that they can have significant transformative effects in the staffing/work-arrangement intermediation sector. And if this particular development proves successful for Elance and its partners, it might also show that the staffing/work arrangement intermediation sector can have new impacts on closing skill and employment gaps that have been, until perhaps now, structural.

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