Creative Destruction and New Ways of Working

Hybrid work is finally here to stay. According to a new survey by Advanced Workplace Associates, just 3% of over 10,000 finance, technology, and energy workers want to return to the office full-time. On top of that, 86% of the workers surveyed said they want to work from home at least two days a week. This data is backed by a recent study from the Pew Research Center, which indicates that almost 60% of American workers believe their work can be done from home. Perhaps what’s more telling is that 78% of the people currently working from home would like to continue working from home after the pandemic.

While corporate leaders are a little behind in this sentiment, surveys over the past year from Deloitte and McKinsey indicate that corporate executives are coming around to the idea that working from home at least part of the time, or hybrid work, can be good for the employees who can do so. It can also be even better for their organizations.  This trend is no surprise, especially for those of us who have been extolling the virtues of remote or hybrid work for years. While most of us are looking forward–with much anticipation–to a “post-pandemic normal,” it is clear that working life will not be returning to the way it was prior to March 2020.

However, do we really need a pandemic-sized event to force most of us into better ways of working? A look beyond the headlines into the principles of “creative destruction” can help us take advantage of this permanent change in the workplace while mitigating its potentially negative effects. It can also explain why some organizations thrive in the face of uncertainty and disruption while others languish.

Creative Destruction as an Economic Force

Creative destruction as a concept was first introduced in the mid-20th century by Austrian economist Joseph Schumpeter to describe continuous change in the socio-economic environment. As a fundamental principle of capitalism, creative destruction “revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating the new one”[1] in a perpetual process of evolution. This concept is important because it puts research and rigor around the cliché, “the only constant is change,” and describes the causes and effects of such change in our social and business environments.

The most important principle for leaders to recognize about creative destruction is that there is no such thing as a lasting equilibrium in business contexts. Competitive advantage, whether it be for customers or for talent, is fleeting. Rather, it is continuous innovation and adaptation on large and small scales that can sustain one company’s advantage over another in a market-based environment.

An important and related principle is the willingness to deconstruct established attitudes and norms around ways of working that become outdated as environments change, and then recombine them into new ones that work better in the new environment. Attachment to old norms, whether intentional or not, can derail change efforts and severely hinder innovation around the future of work. Attachments to outdated norms can also sustain unhealthy or unjust working conditions.

Outdated Norms in the Future of Work

One of the most challenging examples of attachment to old norms in the move to remote and hybrid work has been around productivity and compensation. Coming out of the last century, the dominant paradigm of compensating workers has been built around tasks and time in varying combinations depending on job titles and roles. In this context, the role of the manager has been to monitor workers to focus their activities and to troubleshoot exceptions to highly repeatable processes in pursuit of productivity.

With digital transformation came an increasingly personalized approach to creating customer experience and value, and less reliance on people performing highly repeatable processes. When COVID-19 hit and we were forced into the world of working virtually, many managers struggled with the question, “How do I know my people are being productive when they are not in the office?” Even with technology-based monitoring solutions available, this clearly portrayed the lack of trust many managers had for their teams and the dire need to think differently about how we manage and reward our workforce.

As a result, many talent and rewards experts have started to call for increasing incorporation of skills- and outcome-based compensation, rather than just paying for time, experience or widgets produced by employees. It has also amplified the calls for increased recognition of workers as part of a total rewards strategy and the design of team-based incentives. This helps bring intrinsic motivation and additional purpose to the work alongside an opportunity to forge more collective, equitable work paradigms in organizations, based on human learning and potential.

However, these goals are not achievable without looking closely at established norms and mindsets while carefully deconstructing them and recombining useful elements into something entirely new. In many occupations such as service desks, for example, the need for a base wage or salary will remain while experimenting with outcome-based rewards. In other occupations, such as creative, technical and other specialized fields, updated ways of rewarding work are starting to take hold. This may include approaches such as management by objectives (MBO), that have until recently been reserved for select segments of the workforce, or entirely new modes of compensation such as cryptocurrencies.

Ultimately, we’re not “blowing up” productivity and compensation models or practices that no longer serve our purposes and starting over. Rather, we’re studying what we currently have, throwing out what’s not useful and using what is beneficial to build something completely new. This is the core of intentional creative destruction.

Organizations that have taken a proactive approach to creative destruction with their workplace norms have thrived before, during and after pandemic disruption. Those that don’t will continue to lose workers and could eventually collapse.

And, if you think the pandemic has disrupted work, then just wait for the metaverse to arrive.

[1] Schumpeter, J.A. 1942. Capitalism, Socialism, and Democracy (3rd ed.).

Jeff Mike

Jeff Mike

Managing Director, Flextrack

Jeff Mike works closely with HR, Procurement and IT leaders to design extended workforce ecosystems that fuel and future-proof enterprise talent strategies. Jeff brings over 15 years of experience leading HR functions, along with five years leading global HR- and workforce-related research, to combine the best thought leadership, business practices, and platform technology into purpose-built solutions.

Jeff Mike