SaaS, Mobility and "Shamrock" Organizations Support More Home-Based Skilled Work

-- Daja Phillips

Ricoh's North American market is changing -quickly. Trends such as the volatility of the job market, frequent down-sizing and the recession are behind a new organizational structure known as the "Shamrock Organization" and vast numbers of highly skilled home-based workers known as homepreneurs. New data indicates that these homepreneurs class will only grow. 

These are the corporate workers who are still business people, but work from home. In the future they will create virtual organizations. They are a new demographic that is very likely to adopt SaaS + device solutions because they are simply, and mobile, and are another reason why Ricoh Innovations is researching digital services and devices for the mobile worker.

Shamrock Organizations Have Emerged, Giving Rise to Homepreneurs

Predicted by the Irish economist, Charles Handy in 1989, the  three leaves of the "shamrock" represent the three components that make the organization work:

• The core staff
• A set of contractors on the fringe of the organization
• A significant temporary workforce

Shamrock Organizations Support/Harmonize with the Trend toward Self-Employment

In the "shamrock" organization, a permanent core of managers and employees inside the company is supported by independent contractors and part-time workers.  To a large extent, these contractors are homepreneurs. We can define homepreneurs as white collar workers primarily working for large and mid-size firms.

Laptops, SaaS and Cell Phones Allow Support Work Anywhere -Supporting Homepreeuring

As the popularity of cell phones, personal printers and other hand-held devices complemented the emergence of the World Wide Web in the 1990s, location began to matter less and less.  Now, with most of the American economy performing knowledge work -- as opposed to the manufacturing of physical goods -- it's become possible for workers and entire businesses to thrive in the home setting. 

That trend, in turn, is giving rise to even more new technologies that facilitate the phenomenon of leaving the traditional office behind.  Cloud computing, online collaboration tools, Web conferencing, and smart phones have all become part of the modern home office. 

As the technological feasibility of home-based businesses has increased, there has also been a subtle shift in attitudes.  For example, the corporate world once viewed businesses run out of the home as hobbies or else as quaint, marginal operations not worth noticing.  But today, large and mid-sized firms increasingly recognize home-based firms as useful suppliers and valuable customers. 

More Than Half of US Businesses Are Run From the Home Today

According to BusinessWeek¹ more than half of all the businesses in the United States are run out of someone's home, not in traditional office space -- and  their  employees collectively account for more workers than all the companies backed by venture capital firms

According to a report published by Business Know-How, a major factor behind the homepreneur trend is the increasing number of layoffs and the lackluster jobs market.⁴

Combined with new technologies and diminishing economies of scale, this economic uncertainty has caused more people to feel that they stand a better chance of succeeding by being their own bosses.  Many employees see their present jobs as dead-end, due to frozen salaries and a lack of opportunity for advancement, as higher-ups stay in place for fear of entering the job market.

Home Businesses, on Average, Are More Profitable Than New Ventures or Corporations

A new report from Emergent Research² in Lafayette, California -- which is itself a home-based business -- analyzed data from the U.S. Census, the Small Business Administration, and the Small Business Success Index.  It found that only 35 percent of these home businesses have revenue of more than $125,000, and yet they compare favorably to traditional small companies in the benefits they provide for workers, their approach to marketing and innovation, and their access to capital.  For home-based businesses, the main areas of concentration are professional services, construction, retail, and personal services. 

Home-based businesses employ more than 13 million people, usually in businesses that have only two employees.  By contrast, the National Venture Capital Association reports that the traditional businesses backed by venture capital firms employ only 12.1 million people.³  Likewise, home businesses keep more of their profits -- 36 percent, versus 21 percent for conventional operations -- because they have lower overhead per dollar of revenue. 

Future Forecast: Homepreneurs Will Create Virtual Corporations

According to Trends Magazine, by pooling resources in the virtual world, homepreneurs in a particular field -- say, accounting -- could garner significant market share, without having any fixed headquarters.  Corporate customers will value this arrangement because managing full-time employees and temps in your office is not the same as managing far-flung entrepreneurial workers who can shift allegiance at a moment's notice.  Expect to see new firms arising with the specific aim of coordinating contractors for larger companies.  This is already showing up in the form of Web-based firms that provide connections between larger companies and homepreneurs.

References:

1. BusinessWeek Online, October 23, 2009, "The Rise of the 'Homepreneur,'" by John Tozzi.  © Copyright 2009 by Bloomberg LP.  All rights reserved. http://www.businessweek.com

2. To access the Emergent Research report on home-based small businesses, visit the Grow Smart Business website at: http://www.growsmartbusiness.com

3. To access the National Venture Capital Association report on traditional venture-capital-backed businesses, visit the PricewaterhouseCoopers website at: http://www.pwc.com.mu

4. To access a report about increased layoffs contributing to the home-business trend, visit the Business Know-How website at: http://www.businessknowhow.com