What does innovation literature predict about the organizational challenges of adopting online freelancing platforms – and how to address them?
Digital technologies have fueled a new wave of outsourcing opportunities where firms leverage online labour platforms to access freelancers on and on-demand basis. These developments inform estimations that in the coming years, 80% of large corporations will be substantially increasing their use of freelancers. Indeed, we are observing a 30% demand-increase in the amount of work outsourced through platforms. But nevertheless, most platforms are still struggling with an unbalanced distribution of users, whereby more freelancers than clients use their marketplace. Underlying this uneven distribution is a challenge that platforms present to clients: How to organize for successful platform adoption? In the first part of this two-part blog, I draw upon innovation literature to identify some of the challenges that firms face when adopting platforms and how they can successfully address them.
The impacts of platforms on organizations
One might think that using online freelancers is something that firms can simply decide to adopt. But in practice. realizing successful adoption often proves more complex. While recognizing the benefits of online freelancing platforms, firms also experience their disruptive effect on existing organizational arrangements. Especially large corporations, such as the Fortune 500, have extensive processes and practices in place for hiring and managing their employees, contractors, and various outsourcing relations. Therefore:
“With little guidance on how to organize the sourcing process with online freelancers, platform adoption can actually prove quite challenging.”
Realizing expected benefits of online freelancing platforms requires firms to successfully integrate platforms and online freelancers with the everyday work practices of its members. Viewing platform adoption through an innovation lens, helps to identify some of the challenges that firms may need to address when they consider to use platforms.
Implementation, not adoption
Innovation scholars Klein and Knight have argued that firms often adopt innovations, yet fail to successfully implement them. Innovation adoption refers to the decision to use an innovation, yet it is during implementation that people become increasingly skilled, consistent, and committed to its use in practice. This distinction between adoption and implementation is helpful to further our understanding of how firms start to use platforms. It makes us realize that successful platform adoption is not a given but something you can organize for. Further, it re-directs our attention from viewing platform adoption in terms of success or failure towards people’s use of platforms in everyday practice. Viewing platform adoption as a process, rather than a binary outcome highlights that anticipated benefits are to be realized through company members’ active and coordinated efforts. An important question then becomes: What challenges prevent people from using platforms and how can firms successfully address them?
“Viewing platform adoption as a process, rather than a binary outcome highlights that anticipated benefits are to be realized through company members’ active and coordinated efforts.”
The challenges of implementing platform-use
It is during implementation that organizational members explore and gain experience in using platforms for hiring and working with online freelancers. From an innovation perspective, realizing successful implementation may be challenging for several reasons:
- Platform’s product offering may not automatically be a perfect fit for your company. Many innovations are intentionally imperfect or incomplete by design, especially in fast-changing environments. While platforms offer standardized solutions, successful implementation may require firms to make modifications during use, to create the optimal fit between the tools, technologies, and services offered by platforms and their internal processes and infrastructures.
- While decisions to adopt platforms are often made at executive management levels, platform users are often found at departmental levels. Whereas executive managers strategize around how to achieve operational excellence through innovation, project managers, team leaders, and individual contributors tend to focus on getting things done, and therefore are more skeptical regarding the merits of an innovation. Related to platform adoption, people on the work floor may thus be inclined to maintain the status quo when they are uncertain about how the use of platforms will benefit them.
- To successfully use platforms, people may need to acquire new knowledge, skills, and competences. Especially when an innovation comprises new technologies, people may need time to learn and become competent in using it. This is especially true for platforms, where people often receive little guidance. Platform adoption therefore requires investments in time and resources. Further, on the short term, it may initially lead to problems and delays in getting work done.
- Implementation may require a change in organizational members’ roles as well as their work practices and routines. Implementing an innovation requires people who previously worked independently, to share information and coordinate their activities. Platform adoption may thus require establishing new work relations, roles, and routines that are likely to differ depending on which area of the organization is guiding the adoption and implementation process, and whereas firms aim for local or company-wide adoption.
Solutions for successful platform adoption
Innovation literature also provides possible solutions for addressing these challenges. My review of the literature suggests that key factors that shape the implementation process relate to (1) creating a supportive climate for implementation and (2) creating a safe space for experimentation.
- Creating a supportive attitude and climate for implementation. To address resistance to change established work roles, relations, and routines, one antecedent of implementation success relates to creating a supportive attitude and climate for implementation. A supportive climate for innovation implementation is an important predictor of innovation use. When users view adoption of an innovation positively, they will regard its implementation and use as a priority instead of a distraction from their real work. Strong management support is another important factor in the implementation process, especially when it requires people to work together. Managers can for instance provide their team members with a strong narrative around their motivations for adopting an innovation and how it addresses their needs. This often goes together with a third and fourth factor: the availability of sufficient financial resources and a long-term orientation. Financial resources are necessary for training, experimentation, and support. A long-term orientation helps to achieve the benefits of sustained innovation implementation, while realizing that it may diminish productivity and performance in the short term, as people are learning to use an innovation.
- Creating a safe space for experimentation. To assess the fit of platforms for your company, and support the learning and training of users, another antecedent of implementation success relates to creating a safe space for experimentation. Experimentation is supported by fostering a strong learning orientation towards skill development, learning, and growth, as well as allowing users to take risks and experience failure in a safe environment. Innovation implementation is rarely an immediate success and a learning orientation can help overcome obstacles in an innovation’s use. Such an orientation can be created by viewing implementation as a collective learning process, in which users are encouraged to experiment with new practices and routines.
In this blog, I’ve adopted an innovation lens, to identify some of the challenges of platform adoption, and how they can be successfully addressed. To ensure that people become increasingly skilled in using online freelancing platforms, firms are advised to intentionally organize for platform adoption, by fostering a supportive attitude and climate for implementation as well as creating a safe space for users to experiment with platform-use. In part Two, I will share the stories of two Fortune 500 firms who successfully adopted and integrated online freelancing in their business models.
“To ensure that people become increasingly skilled in using online freelancing platforms, firms are advised to intentionally organize for platform adoption, by fostering a supportive attitude and climate for implementation as well as creating a safe space for their members to experiment with platform-use.”