November 2010

As we slide towards the year-end holiday season, many companies are preparing for a holiday shut-down to purge untaken annual leave from their books. Agility Update November draws your attention to the extraordinary Annual Leave non-Policy instituted by US movie rental company Netflix. Will its adoption spread, or will it be dropped after a change of management or its becoming abused? Time will tell. Other stories in this issue are just as intriguing – the commercial ‘colonisation’ of the Web, the commoditisation of labour in an as-a-Service of Cloud model and the rise of Vietnam as a consumer society.

The Annual Leave non-Policy
Unused holiday leave can be a huge issue for employers. Australia has 118 million days of accrued annual leave by full time employees, equating to $33 billion in wages, according to Roy Morgan Research March 2010. A US company, Netflix Inc has solved this by having no holiday policy. At the streaming video and DVD-by-mail service, salaried employees can take as much time off as they'd like, whenever they want to take it. Nobody – neither employees nor managers – tracks annual leave days. Rather than a recipe for anarchy, Netflix regards its non-policy as more attuned to the nature of 21st century work, and even to the values of industriousness and self-discipline, than its sterner counterparts. As Netflix employees pointed out, they were responding to emails on weekends, they were solving problems online at home at night. And every so often, they would take off an afternoon to ferry a child to the doctor or to check in on an ageing parent. Since Netflix wasn't tracking how many hours people were logging each work day, these employees wondered, why should it track how many holidays people were taking each work year? Fair point, said management. Today, Netflix's roughly 600 salaried employees can vacation any time they desire for as long as they want – provided that their managers know where they are and that their work is covered. The same goes for expenses. Employees typically don't need to get approval to spend money on entertainment, travel, or gifts. Instead, the guidance is simpler: act in Netflix's best interest. This ultra flexible, freedom-intensive approach encapsulated in Netflix’s "Reference Guide on our Freedom & Responsibility Culture" hasn't exactly hurt the company. Launched in 1999, Netflix amassed 15 million subscribers and now has a market cap of nearly US$7bn. Meanwhile, its chief rival, the video rental chain Blockbuster was recently delisted from the New York Stock Exchange. Read more at: http://www.telegraph.co.uk

The Web is Dead. Long Live the Internet!
One of the most important shifts in the digital world over the past few years has been the move from the wide-open come-one-come-all collectivist utopianism of the Web to semi-closed platforms that use the Internet for transport but not the browser for access. According to Compete, a Web analytics company, the top 10 Web sites accounted for 3% of US page views in 2001, 40%in 2006, and about 75% in 2010. An example is Facebook. With 500 million users, it’s the third largest country in the world after China and India. And guess who controls 10% of Facebook? Russian investor Yuri Milner. As Milner says: “Big sucks the traffic out of small. In theory you can have a few very successful individuals controlling hundreds of millions of people. You can become big, fast, and that favours the domination of strong people.” Another example is the meteoric rise of apps – short for application programs – driven primarily by the rise of the iPhone model of mobile computing. Consumers are increasingly choosing apps, not because they’re rejecting the idea of the Web but because these dedicated platforms bring the screen to them e.g. Domino’s Pizza pizza-ordering app released in November 2009 generated A$2 million worth of sales in just 12 weeks. Read more at: http://www.wired.com

Labour-as-a-Service Model
Many readers are familiar with the term Cloud Computing or its previous iteration XaaS where X stood for Software, or Infrastructure or Platform and aaS was ‘as a Service’. Get ready now for the spread of the Labour-as-a-Service Model to help companies reduce overheads, increase efficiency and lower costs by breaking large projects into smaller tasks, and distributing them to a virtual workforce. The new labour marketplaces include CloudCrowd, CrowdFlower, ClickWorker, crowdSPRING, LiveOps, editLift and Amazon’s Mechanical Turk. At the moment, most of these services are only available in the US. What types of jobs can be done? According to CrowdFlower’s website: “Jobs are most efficient when they contain a high quantity of units in which accuracy can be controlled by creating a series of hidden tests within the form. These tests allow us to record the quality of a worker’s performance and reject a worker once their accuracy drops below a defined threshold. We refer to these hidden questions as ‘Gold Standard Data’.” However, some standards may be subjective and the view from the labour side may not be as pretty – read this blog. It can also go badly wrong for companies perceived to be trying to get work done on the cheap e.g. clothing company GAP faced a PR disaster and had to withdraw its new logo and reassure customers that they don’t crowdsource.
Read more at: http://www.globalservicesmedia.com

Vietnam Discovers Retail Therapy
Vietnam is more than a source of low-cost clothing and a cheap holiday destination. With its fast expanding economy, it’s an attractive market for consumer goods companies. Vietnam’s population is rising by a million people a year, and the middle class – now 7 million households – is growing fast. What makes Vietnam distinctive, says McKinsey, is how quickly its consumers are moving up the consumption ladder. Urban Vietnamese women aged 20 to 45, for instance, spend 18% of their monthly income on apparel, and the Ministry of Industry and Trade forecasts that the market for beauty products will grow by 15% a year for the foreseeable future. Another McKinsey observation is that companies should factor in digital media in their marketing plans. Almost all Vietnamese consumers are literate - and also highly literal – so companies had better live up to the claims they make about their products.
Read more (free, registration required) at: https://www.mckinseyquarterly.com