Digital transformation has increased work efficiency to an unprecedented level. If organizations followed the principles of neoclassical capitalism, some professions could witness as much as 90% staff reduction.
The term ‘Digital transformation’ seems trivial. It is a high-performance alignment of resources and ideas, via software and digital devices. In real life though, the digital transformation of the workplace does not bring a drastic reduction in employment. Why is that? What phenomena accompany and “soften” the digital transformation? How do demography, green revolution, zero-cost money, and – most importantly – saturated societies, offset and redefine what the digital transformation is bringing to the table?
The digital transformation alone is capable of shortening the workweek to four, three, possibly two days.1, 2 What’s happening in the background that gobbles up the fruits of the digital transformation? Why, for most people, work remains life’s main activity?
What is the work management digital transformation?
Here are, in a nutshell, the manifestations and outcomes of the digital transformation in an organization:
Table 1. Signs and effects of the work management digital transformation
||Clerks, accountants, controllers, HR recruiters, legal department staff, insurance company employees, and other mid-level positions are among those most at risk of mass layoffs.|
Where is digital transformation leading us to?
The massive increase in productivity is the most obvious benefit of the digital transformation in work environments. Then, why are the 4-, 3-, or even 2-day working weeks not catching on?
In full disclosure, we are taking the macroeconomic point of view in this article. HR managers, on the other hand, might tell you something very different – that the four-day, five-hour workweek is being tested around the globe and it might soon dominate the labor market.3
Following are a number of phenomena that have coincided with the digital transformation. They have an impact on the overall balance of the labor market.
Inverted demographic pyramids
The Western world is founded on the social contract: ‘Pension and healthcare for social peace’. We have been raised in the promise ‘work hard all your life, then get rewarded during the golden years’.
The two-day workweek would only be viable if the demographic structure of the developed world looked like a pyramid – the majority aged between 15 and 64 supports the retired minority. Demographic pyramids throughout the wealthy parts of the world might turn upside down not so far from now. Could it be that those in power will breach the social contract? Or will they elect to keep the five-day working week for the minority of people working?
The green deal is another policy to think of when envisioning digitally transformed organizations. Until ~2010, 2015, or perhaps 2020, there was this paradigm of constant GDP growth, as well as discretionary income growth. Produce more, stimulate, collect more taxes, boast about the increased prosperity in the media.
The ‘work more’ model will, most likely, still be prevalent in the future; with the novel ‘consume differently’ policy being administered at the same time.
The zero cost of money
When thinking about the future of digitally transformed work, do not ignore the zero cost of capital that we have been seeing for the last 13 years (in the U.S.A.).4 In spite of the stimulus, the FDI, Foreign Direct Investment, has been in a downward trend since 2007.5
Could it be that human needs were met and that there is not much room for more stuff?
Have people in power invented a pain-free tax? Could it be that the zero interest rates are keeping people busy?
The pandemic of 2020-21 brought an unexpected discovery: the westerners will endure more than the canon of a democratic state provided for. In the 2020s people look forward to welfare states. There is hardly a trace of the neoliberal fire of the 1980s. Adding to that the mainstream media dependence on government expenses, the social engineering to offset the demographic and climate challenges facing the world will be all the easier to do.
Youtubers, influencers, and the basic income
This essay wouldn’t be complete without touching on the new professions and sources of income that derive from the digital transformation.
Basic income is the first one. Until recently the basic income was criticized as ‘promoting voluntary unemployment’. The digital transformation, however, could make the basic income… sustainable. If government money becomes digital and capable of “being expired”, or “revoked”, doesn’t that make the basic income conditional in nature, similar to food stamps, available only to some and not to others?
YouTubers, streamers, and influencers. While digital transformation wipes out whole professions, it creates new ones, too. The YouTuber, streamer, and influencer professions were born out of thin air. While in the 2010s YouTube provided opportunities for a side business, being a YouTuber in the 2020s sometimes means a high-end job. Traditional media are quietly dying. When digital technologies enable more engaging and personalized media coverage, advertising budgets flow to the influencers and streamers who gather audiences.
Data scientists and online community managers are some other examples of digital era professions. Interestingly, digital transformation, despite first impressions, may increase the importance of soft skills. Following the development of low-code and no-code systems, smart management solutions leveraging Machine Learning to automate repetitive tasks, and the overall simplification of work via slick digital interfaces, the job market might soon prise skills such as teamwork, conflict solving, or human communication equally with the knowledge of a specific programming language.
The digital transformation leads to such an increase in labor productivity that an average westerner could be busy, professionally, four, three or even two days a week.
However, due to the processes coinciding with the digital transformation, the shorter working week might arrive later than one might think. The more plausible scenario is this: the working minority supporting the non-working majority. Social tension might ease off thanks to a whole new “influencers” industry revolving around social media.
What products will win?
What products will survive on the market in such an environment? If you are a CEO of an organization what kind of products should you invest in, and which ones let go of?
As the developer of BigPicture, a Project Portfolio Management software suite that supports agile, classic, and hybrid methodologies, we interact with hundreds of clients. We observe the following two trends in product development:
Software is weighing more and more in the cost structure of just about any product. Even as proven products as cars, make increasing use of software and cloud computing. Manufacturers begin to remotely turn on and off cars’ functions, depending on the client’s willingness to pay for the feature. Only recently, a renowned manufacturer announced a pivoting rear axle available by subscription. Paying for more engine power is a stone’s throw away.
Is your product compatible with the ‘subscription economy’? Will your cash flow be viable if XaaS, Anything as a Service model, prevails? These are good questions to test your product portfolio against.
Product management, rather than project management, dominates the landscape. Want to survive in digital reality? Product management delivers consumer value quicker and more efficiently.
BigPicture supports and promotes the transformation from project to product management by supporting both predictive, agile, and hybrid methods. At the time of writing, BigPicture is the #1 Jira portfolio management app.
2 Automation and Working Time. How to Reward Digital Labour, Bertie Wnek, IPPR, July 2019
3 The Future Of Work Will Be Five-Hour Days, A Four-Day Workweek And Flexible Staggered Schedules, Jack Kelly, Forbes, May 2021
4 Federal Funds Rate – 62 Year Historical Chart https://www.macrotrends.net/2015/fed-funds-rate-historical-chart
5 Foreign direct investment, net inflows (BoP, current US$) https://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD