A Blog by Jonathan Low


Feb 3, 2014

Disruption at the Core: How the Cloud Will Commoditize the Upper Middle Class

Almost as a matter of faith, we accept that disruption is a feature of this economy.We get that technology is rapidly evolving. That devices and the statistical packages that run them can now perform the same functions that humans used to do.

It is just that for many, the assumption is that such disruption will happen to someone else rather than themselves. 

We have taken whatever comfort we can from the notion that there are certain tasks requiring judgment and experience and human interaction that will always require some of us to keep making the big decisions that pay the big bucks because, well, the guys at the tops dont get this tech stuff too well and they need us to make sense of it for them.

Except that there arent too many of those 'guys' anymore, because survival for any guy or gal in that sort of position increasingly demands a familiarity with, if not deep expertise in the implications, inferences and possibilities that tech holds for the enterprise and their future.

So, as the following article posits, new management approaches and demands are going to change the nature of the disruption. Enterprises like Haier, Zappos and Virgin Media are eliminating middle management positions. Employees are voting on which projects to support. Leaders are chosen by consensus, with the decision based on competence, expertise and merit.

This is not to say that there will ever be a best of all possible worlds. Just as the end of history turned out to be anything but, so the elimination of greed, sloth, envy, ambition and naked aggression can never be legislated or managed out of existence, neither can it be 'technologized' away. But it is reasonable to assume that the factors driving performance will change as more information and better processes evolve. And that no one will be immune to these developments. JL

Ashwin Viswanath comments in GigaOm:

The loss of enterprise sales and HR jobs thanks to cheaper computing, SaaS and big data analytics is only the beginning. Jobs in R&D and product management will fundamentally change.
A combination of the rise of software as a service and the increasingly complex analytics available to companies will commoditize an increasing number of white-collar jobs. In the first post on this topic, we examined how several upper middle-class jobs within ‘outer functions’ such as HR, sales, and marketing would be eliminated by the growth and adoption of cloud technologies. In this article, we assess how the cloud could automate roles within “core” functions such as such as product management, IT, and R&D. We also examine the overall effect this commoditization will have on middle management roles.

Transformation of product managers into design experts

A product manager’s primary responsibility is to interact with customers, and distill their requirements into a set of prioritized features for R&D to build out. A product manager is seen as the ultimate owner of the product roadmap, and consequently, sets the schedule of when important functionality should be built.
While product managers perform their functions for hardware and software products, many hardware products are commoditized due to efficient and automated manufacturing techniques. As more software moves to the cloud, the infrastructure components of these cloud applications are standardized with the only difference being the UI. Consequently, the only value a product manager can add in differentiating such products from its competition is in designing superior user interaction functionality. Look for more product managers to transition into UX-designer roles and use in-built analytics within cloud applications to generate heat maps that aid in their decision-making.
As for product management’s role as the ultimate owner of the roadmap, this is where R&D’s role itself changes to take on these additional responsibilities.

R&D becomes full-fledged product owners

Part of owning a product roadmap involves product management spending a lot of time in ensuring that developers commit to their schedules. However, cloud-based project management tools are making it incredibly easy for developers to manage schedules and deadlines themselves. In fact, some of these tools even include functionality that allows developers to start client projects and invite them into a collaborative discussion, sharing documents, files, mockups, and other content. In this manner, developers can do many of the customer-facing functions performed by product management in a more efficient manner.
But won’t interacting with customers leave less time for developers to do the actual coding? Not quite. Some of these project management tools include several code integration features that help developers be more efficient with their time.
As it stands, because of the highly specialized nature of R&D, and the depth of cognitive abilities needed, even vast advances in cloud functionality will not be able to automate the work of developers, scientists, engineers, and researchers.

IT moves “up the stack”

IT departments ensure that all technology deployed within an organization helps employees collaborate better, and that valuable data is protected. IT departments have several functions including custom application development, system administration, database provisioning, integration and middleware, security, and application deployment.
With the increasing adoption of cloud infrastructure-as-a-service offerings, IT System Administrators will need to move higher up the stack to add value to their employers. On the database side, relational databases will eventually give way to cloud-based databases. There lies a huge opportunity for database administrators to help with the migration of data from on-premise relational databases into the cloud, and also learn new skills with other competing database technologies such as NoSQL and Hadoop.
IT personnel involved in custom application development, security, middleware, and in deploying new cloud applications will have much broader roles, thanks to the plethora of new cloud offerings in their organizations, and will not have to worry about their jobs being commoditized.

Implications for the future – the elimination of middle management

With several upper middle-class roles at risk of being completely eliminated by cloud technologies, the very existence of the middle-management functions that oversee their work is also threatened. Recently, Virgin Media slashed 600 of its top and middle management positions, citing the need to be more “agile and efficient” in its business operations. Haier, the Chinese appliance-maker completely eliminated its middle management, and reorganized its individual contributors into self-managed teams, each responsible for their own profit and loss.
Employees, customers, and suppliers voted upon new ideas, and the sponsor of the winning idea became the leader of that project. The future of the cloud-empowered upper middle-class workforce will increasingly consist of highly qualified R&D personnel, designers, and product marketers working in self-managed teams. Their daily operations would receive direct visibility from executive management, and redefined roles within legal, IT, HR, and finance departments would provide support when needed.
With the flattening of management hierarchies, individual contributors will certainly face some chaos in the short term as competition intensifies for funding projects. However, this short-term chaos will eventually give way to long term stability. Future advancements in Big Data technologies will result in a metrics-oriented approach towards assessing the probability of success of any particular project. These deep data insights coupled with a democratic work culture that allows employees to vote on their choice of projects will automatically result in the best projects being funded, and individual contributors choosing which projects to participate in.


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