The Rise Of Rōnin and The Liquid Economy

Sara Horowitz, the founder of the Freelancers Union (through which I get my health insurance, by the way), makes the case that we are moving into a new US economy where rōnin (or freelancers) are becoming a significant force:

Sara Horowitz, The Freelance Surge Is the Industrial Revolution of Our Time

Everywhere we look, we can see the U.S. workforce undergoing a massive change. No longer do we work at the same company for 25 years, waiting for the gold watch, expecting the benefits and security that come with full-time employment. We’re no longer simply lawyers, or photographers, or writers. Instead, we’re part-time lawyers-cum- amateur photographers who write on the side.

Today, careers consist of piecing together various types of work, juggling multiple clients, learning to be marketing and accounting experts, and creating offices in bedrooms/coffee shops/coworking spaces. Independent workers abound. We call them freelancers, contractors, sole proprietors, consultants, temps, and the self-employed.

And, perhaps most surprisingly, many of them love it.

This transition is nothing less than a revolution. We haven’t seen a shift in the workforce this significant in almost 100 years when we transitioned from an agricultural to an industrial economy. Now, employees are leaving the traditional workplace and opting to piece together a professional life on their own.

The term ‘free lance’ was originally coined by Walter Scott in Ivanhoe (1819), to represent a mercenary warrior not sworn to any lord’s service (and not that the warrior’s efforts would be free of charge). In the 1860s its meaning became figurative.

I favor the term rōnin over freelancer, perhaps because it hasn’t been tinged with 100+ years of use in US economics. Perhaps more of a consideration for me is that the term rōnin literally means ‘wave man’, suggesting one who is operating in a more liquid, less solid, sort of connection to the world and others. And this explosive growth of rōnin workers started with the rise of the web, which has lowered the costs of independent work, on both sides, for both the rōnin and the companies that employ their efforts.

The government isn’t doing a good job of monitoring the rōnin side of the economy, according to Horowitz:

As of 2005, one-third of our workforce participated in this “freelance economy.” Data show that number has only increased over the past six years. Entrepreneurial activity in 2009 was at its highest level in 14 years, online freelance job postings skyrocketed in 2010, and companies are increasingly outsourcing work.

[…]

We don’t actually know the true composition of the new workforce. After 2005, the government stopped counting independent workers in a meaningful and accurate way. Studies have shown that the independent workforce has grown and changed significantly since then, but the government hasn’t substantiated those results with a new, official count.

I suggest that we are rapidly moving toward an economy where the majority of workers will be rōnin. Companies have increasingly small incentives to take on full-time workers for many of the functions in their business, and the secondary costs of full employment are not just the full benefits of long-term employees, but many others:

Increased Agility — A company that can react and quickly act to changing conditions has to possess a different sort of balance. One way is to find or train a company of quick change artists: inventive polymaths. Alternatively, a company can bring together short-term teams of specialists to attack new opportunities, and if they fail, they can do so quickly, at low cost, and simply disband the team.

Swift Trust — Companies can avoid the high and seemingly inescapable costs of internal politics with permanent employees struggling for power and autonomy as soon as a hierarchy is created. Networked rōnin operate completely differently. Neil Perkin recently wrote about this is in The Rise Of Talent Networks:

Corporate down-sizing and technology have combined to create an influx of highly talented individuals into the market with the ready means to turn that talent into real value. There have always been freelancers of-course, but this is talent that is equipped with cheap, effective, readily available yet potentially transformational tools and technologies, and connected to inspiration, to opportunity, and to each other, like never before. It’s a world powered by ideas, enthusiasm, and know-how. But it is also a world powered by collaboration, supported by increasing numbers of co-working spaces and a whole raft of ‘unconference’ style meet-ups, events, and hack days that are both the originator for and a catalyst of innovation. The difference is that the number of people working in this way, equipped with the enterprise tools to enable it, means that perhaps for the first time, the possibility of a real ecosystem of talent networks operating at some scale has suddenly become viable.

Networks, whether of individuals or small firms, are naturally extremely efficient. You can select and partner with some of the best talent in the industry. You make use of the talent you need when you need it. And you don’t have to pay an overhead when you don’t. You benefit from a broad talent pool that brings diversity of thinking and ideas, yet is unencumbered by corporate habit or channeled thinking. And there are numerous pieces of research that prove the value of skill diversity in innovation.

Large organisations have a tendency to pull people into a vortex of internal focus. The smart ones are beginning to recognise that more flexible structures that allow them to interact with, learn from, and work with this external pool of talent will give them genuine competitive advantage. The smartest are structuring their businesses to be agile and flexible enough to allow collaboration of this kind to not be the exception, but the norm.

Impermanent teams operate as well as they do because of a well-researched — and profoundly important — social phenomenon, called swift trust, first detailed by Debra Meyerson and colleagues (see Swift Trust and Temporary Groups).

I’ve written about this recently, building on Myerson’s explanation, that impermanent teams can come together and accomplish projects with the least amount of politics, because a/ the participants are all aware that the project is of limited duration, b/ the team members are able to assume functional roles based on their previous experience with a minimum — or zero — training, c/ the project is based on distributed, complex, non-trivial tasks that require deep expertise, and ongoing coordination or work activities, and d/ people can suspend their need to build deep trust because it is a project comprised of other rōnin.

Stowe Boyd, The Meaning Of Work, Connectives, And Swift Trust

These techniques that resemble deep trust, but are lighter-weight and faster to adopt, can be used to quickly get down to business in an ad hoc team, and focus on doing what is needed to get done; instead of getting bogged down in actual trust development, which can take weeks or months to build.

I believe that swift trust is becoming the default for creative work, and that we are all increasingly operating as if every activity we are involved in is impermanent. Increasingly, at least for most creatives, that is the case anyway. But some people, like me, are intentionally adopting the ad hoc project team as the form factor for all creative work.

Partly this is to take advantage of swift trust — where deep trust activities are deferred or completely put aside — and the team members operate in a social demilitarized zone, putting aside long-term obligations and politically-negotiated power arrangements. Instead, we join such teams and rapidly assume the role that fits us, people interact based on the nature of the roles that all members play. We suspend our disbelief and agree to trust within the confines of the groups narrowly defined goals.

And just as important, as a consequence of deferring the complex and involved discussions of personal purpose, every ad hoc team member can cast the project in terms of how it lines up with their personal meaning for work. The members do not need to collectively agree to a single shared reason for existence. That is shelved, since the team members will be going forward on their own life paths, as soon as the project is completed.

This last point is where the liquid economy is most central to the discussion. The rōnin does not have to be 100% committed to the long-range strategic plans of the company behind a short-term project: his goals are his own. The company and the rōnin are just walking down this next few miles of road together, and after that, they will part ways.

The rōnin is perfecting her art, pursuing a muse, developing a long-range scheme for a better bank, pruning ax, or sailboat, while working for companies in completely different lines of business.

And this non-convergence, this lack of long-term collective agreement, is not a detriment: it is in fact the reason that the friction in short-term projects is so low. Because the participants are only cooperating as short-term ‘connectives’ — when considered in any timeframe larger than the duration of the project — they avoid the social inertia of forming long-term ‘collectives’ (as styled by @shiftctrlesc). The externalities of deep, long-term social integration are avoided, or at least dramatically decreased.

This is where the social liquidity comes from. People avoid the costs of developing deep trust, and the tiered social ties that necessarily grow from that. Instead of organizing our work, communications, and social ties around slow-forming, slow-changing, and inflexible crystalline work matrices, the liquid economy is based on an increasingly quick-forming, quick-changing, and flexible liquid medium for work, based on streaming social communication models, and a hybrid sociality where an increasing proportion of connections are short-term and reliant on swift trust.

This is a form of superlinearity for business to aspire to, where doubling the amount of work performed — and revenue received — grows at a better than linear rate. And it’s clear that liquid work — given a population of rōnin capable of making it all work — surpasses the productivity of solid work. That’s why a million individual decisions — of rōnin and their handlers with businesses — are trending toward a liquid economy: it’s more productive and less restrictive.

[This is one of the major themes of the book I have been researching this year, soon to be a Kickstarter project: ‘Liquid City: A liquid, not a solid; a city, not an army’.]