Read the Web Exclusive: Free Agent Nation (Still) Wants You!
There are the laws of economics. There are the laws of physics. And there are the laws of Free Agent Nation.
Ignore these laws, and you're in trouble. Misunderstand them, or misapply them, and you could end up in a world of hurt. But figure them out -- especially the ones that matter, and why -- and you can navigate the suddenly stormy seas of 2001.
Begin with the laws of economics. Contrary to what some people seemed to believe in headier times, those laws never were suspended. You still have to understand supply and demand, profit and loss, and the art of value creation. That much seems clear.
But when it comes to the laws of physics, business leaders have fallen under the spell of the wrong law: Newton's third, which holds that for every action, there's an equal and opposite reaction.
How else to explain a consensus that has lurched from hyped-up overpromise to self-flagellating overreaction in two short years?
1999: Twentysomething Internet entrepreneurs are paradigm-shifting geniuses!
2001: Twentysomething Internet entrepreneurs are pathetic chumps who have to move back in with their parents!
1999: Jeff Bezos is Time magazine's Person of the Year!
2001: Jeff Bezos is the Idiot of the Young Century!
1999: Everyone is going to be a gazillionaire!
2001: Everyone is going to be laid off!
We've swung from euphoria to hopelessness faster than a bipolar personality aboard a roller coaster. Some of the new despair, of course, is understandable. Things have changed. The days of money for nothing and clicks for free are over.
But in embracing Newton's third law, we've ignored Newton's first law: A body in motion stays in motion unless acted upon by an outside force. That's the law that governs these jittery days -- and that's the law that forward-looking business leaders ought to heed. Three years ago, I wrote a report in Fast Company on a state (and a state of mind) called Free Agent Nation. Over the past two years, for a book I've just finished writing, I've traveled the country and spoken with hundreds of people who are on work's new frontier. I've come away convinced that in these challenging economic times, the bodies in motion are bright, talented, technologically savvy free agents -- and that for them, there is no equal and opposite reaction. They are staying in motion. They are not returning to the life of The Organization Man. They are not renouncing their citizenship in Free Agent Nation.
The new economy has always been about the capacity of one smart, passionate person -- an inspired innovator, a dynamic leader, a wild-eyed entrepreneur -- to do extraordinary things. Nothing has repealed this central principle. No outside force has thrown it off its course. Indeed, now that Net companies have gone bankrupt, day traders have gone broke, and IPOs have gone bust, we can see through the wreckage something that we previously had overlooked: Free agency is the real new economy.
Get beyond the manic-depressive business psychology of the moment and just look at the facts. You'll see the future unfolding.
Fact: With roughly 16 million soloists, 3 million temps, and 13 million micropreneurs, Free Agent Nation is larger than the entire public sector. Free agents outnumber all of the people who work for federal, state, county, and local governments -- even when you include police officers and teachers.
Fact: According to the Census Bureau's latest figures, 70% of businesses in the United States have no paid employees.
Fact: In California, only one out of three workers has a traditional job -- the leave-your-home-in-the-morning-to-work-for-someone-else employment arrangement that is the basis of this country's labor laws, its health-insurance and pension systems, and its many public policies. According to the University of California at San Francisco, two out of three Californians don't have a traditional job. Hmmm. I wonder: Has California ever been on the edge of any trend in the United States?
Millions of people are alive and well and living in Free Agent Nation. Some have leaped there because of bad bosses, dysfunctional workplaces, or the false promise of Internet riches. Others have been pushed -- by mergers, downsizings, and a fresh wave of layoffs. It doesn't matter. What counts, for most companies, most bosses, and most workers, is that free agency has changed the game. What counts are the seven new laws of Free Agent Nation.
And if you want to compete on the new frontier of work, you need to respect the law.
Law 1: Independence is the best hedge against a downturn.
In this post-paternalistic age, we're all on our own. That means that when the economy plunges, free agents will suffer the most, right?
In fact, free agents are safer in an economic storm than their job-holding counterparts. The reason: They're diversified. Whether you're in the stock market, the farmer's market, or the talent market, the principle is the same: Don't put all of your eggs in one basket.
The dotcom debacle only deepened this lesson. Many people went to startups hoping to hit it big in the game of stock-option roulette. They put all of their work chips on job number 35 -- but when the wheel stopped spinning, someone else's number came up.
In a world of churn and heightened risk, smart people are realizing that they're safer spreading their human capital across a portfolio of projects, clients, skills, and customers -- rather than investing the entire chunk in a single employer. "If one of my clients disappears, I'll survive because I've got several more," said Seattle's Nancy White, 43, formerly COO of BullsEye Internet News Service, a failed technology startup, and now president of Full Circle Associates, a one-woman microbusiness.
Let go of the idea that free agency is only for wild and woolly risk seekers. When you think about it, it's the only sensible strategy for playing the talent market.
Law 2: When times get tougher, quality counts.
It's long been a law of investing; now it's a law of the workplace. When a bull market stumbles, investors make what's called a "flight to quality," redirecting their money toward more-stable, secure investments. The same approach now applies to the world of work, as skilled workers make their own flight to quality -- quality of life, quality of execution, and quality of purpose.
In the Pleistocene era (circa 1998 and 1999), we truly believed in the promise of risk-free instawealth. With visions of Mark Cuban dancing in our heads, platoons of new-economy warriors marched to startups. Some were looking for work that mattered, but as the Gold Rush escalated into Gold Fever, more and more were looking for their big score. Nothing wrong with that.
Today, the fever has broken, and most of us are back to reality: We're not going to become insanely rich . . . but we're not going to be desperately poor either. And, goes the thinking, if we still have to work, we might as well do something that satisfies some deeper yearning. That's why we'll see this new flight to quality -- this broader quest for meaning -- with more people going solo, more people working in the third sector, and more people starting and running microbusinesses that aim to make a difference rather than just make a killing. It's no longer "all about the Benjamins," to borrow the title of hip-hop bad boy Sean "Puffy" Combs's 1997 hit, which could have been the anthem of IPO-dazed America.
Take Liz Tobiason, a thirtysomething marketing consultant who lives outside of San Francisco. California-born and the youngest of seven children, she began her career by selling advertising, and then moved to doing market research for Bay Area newspapers. In the mid-1990s, she landed a job at a Wells Fargo bank, where she was a high achiever. But after five years, she decided to go solo.
"The lightbulb really went on during bonus and salary-increase time," she told me. "I got the biggest bonus by far that I'd ever gotten -- triple the one from the year before. I was totally disappointed."
"Disappointed that it was less than you expected?" I asked her.
"No," she said. "I was disappointed that I didn't care. I realized that it wasn't the money that would make me happy, because I didn't like the job."
Two weeks later, her bank account flush but her soul depleted, Tobiason became a free agent. She worked on her own for a few years, and then last year began an assignment at Pagoo Inc., an Internet-telephony startup. After a few months, the company offered her a "permanent" job. Although she was hesitant (in part because she was pregnant with her first child), she accepted. After all, the people were great, the technology was promising, and the company let her work from home. Tobiason did her job, had her baby -- and in January, the company downsized her. "Am I glad to be a free agent again? Yes, thrilled," she says. "Will I ever take another real job? Probably not."
Law 3: Free to be you and me? We've got to be you and me.
As free agents around the country told me their stories, they repeatedly used the language of disguise and concealment to describe their previous jobs. They spoke of putting on "masks" or "game faces" at work. They talked about donning "armor" and erecting "smoke screens," because exposing themselves in a large organization could be perilous. Only when they returned home after work could they return to being who they truly were.
This personality split exacts a cost. Deborah Mersino, a 33-year-old public-relations free agent whom I spoke with in Evanston, Illinois, recalled a conversation with her then-fiancé and now-husband that persuaded her to go solo. After she'd returned from another bruising day at her job with a PR agency, he told her, "You're not you anymore." Shortly thereafter, she went out on her own.
The Organization Man workplace -- and to some extent, the cultish firms of the new economy -- tended to homogenize individuality. In the new flight to quality, more and more of us are pursuing work that will celebrate, rather than suffocate, our authenticity.
Listen to Joni Joyner-Tyre's story. She spent 20 years working for such large companies as Sheraton and Miller Freeman, where she planned meetings and organized conferences. But in her forties -- in an act that "was the single most scary thing I had ever done in my life" -- she became a free agent. She now works for herself from her home in Brooklyn.
"When I was working in a corporate environment, I would put on my little corporate suit -- a Stepford Worker -- and I went in there and did what was expected," she told me. "The minute I walked out of the building, I was Joni Joyner-Tyre again. But this way, as a free agent, I'm me all of the time."
But, of course, with profits down and layoffs up, Joyner-Tyre must be ready to give up the luxury of authenticity for the security of a "normal" job, right? Wrong. Even the thought of returning to traditional work, Joyner-Tyre said, "terrifies me. It would be like muzzling myself, gagging myself."
Law 4: You're on the line. Where else would you want to be?
Yeah, authenticity is groovy. But if it's your only goal, it can be hard to get anything done. That's why an equally important rule of the free-agent frontier is this: You've got to put your livelihood and your reputation directly on the line.
The fact is, most people want to be held accountable for their work -- provided they reap both the rewards for success and the penalties for failure. And most people instinctively seek variety, challenge, and passion in their endeavors. However, many independent workers told me that in traditional jobs, accountability was often diffused through layers of management -- or, in flailing dotcoms, was completely missing through no management at all.
Free agency makes the lines of responsibility and contribution absolutely clear. "In working on your own as a free agent, you have tremendous freedom. That's one of its great lures," marketing analyst Michele Foyer told me one afternoon near South Park in San Francisco. "And you also have immense responsibility. You're determining everything."
For many free agents, accountability means liberation. They put their names on their businesses and their livelihoods on the line. "You don't have administrators who don't understand what you do telling you when and how to do what they don't understand," explained Claudia Slate, a 49-year-old "virtual assistant" who lives on the Rosebud Sioux Indian Reservation in south-central South Dakota. "You succeed or fail on your own merits."
Sure, times are tougher now. Which means that most traditional employees are left twisting in the winds of uncertainty: Is my job secure? How am I doing? Will I be the next to go? Free agents know how to keep score: Is my project a winner? Am I delivering what I promised? If you're a free agent exploring this new frontier of work, you know where you stand.
Law 5: Up isn't the only direction.
In the Organization Man economy, the higher you climbed, the more successful you were. Each spot above you on the org chart was like your mechanical bunny at the greyhound track for careers, taunting you to race faster to catch it. And when you did catch it? For a lot of people, it turned out not to be worth the chase.
Denise Apcar, 45, began working for pharmaceutical and medical-devices companies in 1980. In the early 1990s, her employer was acquired. "I was promoted into a meaningless, thankless job where I was on a plane to New York almost every other Monday. It was middle-manager hell," she told me on a rainy November night at a cramped Starbucks in Foster City, California. "The mentality was politics first, quality second."
The more time she spent in the high reaches of her company, the more she yearned for the freedom of the flatlands. "The higher up I got, the more I lost everything I enjoyed doing," she said. "I wanted to do what my staff people were doing. It was one of those things in the corporate world that you're not supposed to admit." She quit in 1995 to become a solopreneur.
I call this the Peter-Out Principle. The Peter Principle, formulated in 1969 by management professor Laurence J. Peter, held that workers would ascend the ranks of an organization until they arrived at a position where they were incompetent. Its successor, the Peter-Out Principle, holds that people rise until they stop having fun.
Law 6: Bigger isn't better. Better is better.
If money and promotions are no longer the sole measures of success, then what is? One answer might be growth. In the mythology of business, the goal of a small enterprise is to become a larger enterprise -- the garage becomes an office tower; the corner drugstore becomes a national chain. But on this dimension, too, free agents are questioning what truly constitutes success in the new economy.
Dennis Benson, 54, runs a microbusiness in Columbus, Ohio called Appropriate Solutions Inc., which conducts public-policy research and management consulting. When he started the firm in 1978, he and his four partners worked out of their homes. Then the company grew and found "real" space. "When we signed our office lease, it was sort of a symbol that we'd made it," Benson told me.
By the mid-1990s, the firm employed 30 people. But an expanding company got to be an expanding hassle, so Benson began paring back his operation. He could have made more money, but he decided that it wasn't worth the aggravation. He downsized his own firm, canceled his office lease, and moved the company into his suburban home. By 1998, Appropriate Solutions was down to a two-person microbusiness -- Benson and his wife, Sandy.
But wait! Isn't growing a sign of success and shrinking a sign of failure? Not to Benson. He was spending less and less time on what he enjoyed doing and what he did best. And that proved inconsistent with Appropriate Solutions's philosophy: "It has to be good. It has to be fun. It has to be profitable. When it stops being fun, do something else."
Here's the bottom line: The one-size-fits-all approach to success -- measured in promotions and denominated in dollars -- is over. Welcome to the my-size-fits-me approach to success, measured by personal metrics and denominated in anything from time to freedom to authenticity to prestige to challenge. Maybe Bob Dylan -- and, thankfully, not Puff Daddy -- is the Francis Scott Key of Free Agent Nation. "A man is a success," Dylan once sang, "if he gets up in the morning and ... does what he wants to do."
Law 7: Forget survival of the fittest. Think Golden Rule.
This may be the most grating misconception about Free Agent Nation: Critics have said that the rise of free agency means the triumph of a "survival of the fittest, I'm only in it for me" ethic in American life. Not at all. In fact, it's the opposite. In a free-agent economy, we need one another more, not less.
Here's how Notty Bumbo, a northern California health-care consultant, summed it up: "If you and I are on the playground and like to go on the teeter-totter, and I'm a jerk who likes to jump off and leave you to fall on the ground, how many times will you get on the teeter-totter with me?" Reciprocal altruism is the underlying process that allows the free-agent economy to function. And it ruthlessly eliminates those who violate its terms. Treat somebody badly, and there goes a portion of your free-agent business network.
You can dismiss this as enlightened self-interest, or deride its naked pragmatism. But consider: The same principle -- "Do unto others as you would have others do unto you" -- is the cornerstone of every major world religion. In Christianity, it comes from the book of Matthew. In Judaism, the Talmud teaches: "What is hateful to you, do not to your fellow man. That is the entire Law; all the rest is commentary." Islam holds: "No one of you is a believer until he desires for his brother that which he desires for himself."
So we are left with what seems like the ultimate paradox: The underlying operating system of the freewheeling, individualistic, hypercapitalistic free-agent economy is . . . the Golden Rule. The DOS, Windows, and Mac OS of the real new economy is one of the oldest principles of human civilization. In other words, the way to be better off is to be better. That is the entire law of the new economy; all the rest is commentary.
Daniel H. Pink (email@example.com) is a Fast Company contributing editor. This article is adapted from his new book, Free Agent Nation: How America's New Independent Workers Are Transforming the Way We Live (Warner Books), published this month.
Sidebar: We Hold These Truths ...
Three developments have catapulted talented individuals to the center of the story -- and will keep them there in the coming chapters.
First, economic adolescence is over. The Organization Man worked in a climate warmed by the sun of corporate paternalism. Giant companies such as AT&T ("Ma Bell"), Kodak ("The Great Yellow Father"), and Metropolitan Life ("Mother Met") promised to take care of their workers. But in the late 1980s and early 1990s, when globalization and technology squeezed those companies, as well as the rest of their matriarchal and patriarchal ilk, they booted out their employees like wayward teenagers. Curiously, dotcom companies revived the family metaphor -- only this time Mother and Father were like the cool parents down the block, the ones you always wished were yours. MomAndDad.com gave the kids a huge allowance. They let them have a dog. They turned the office into a rumpus room. And when times toughened? They booted out the kids. The lesson: This economy is rated strictly for adults.
Second, workers now own the means of production. In the industrial economy, the tools necessary to create wealth were too expensive for one person to purchase, too cumbersome for one person to operate, and too large for one person to house. Not anymore. Today, the tools necessary to create wealth -- for example, the iBook on which I'm writing this sentence -- are easy for a lone individual to purchase, operate, and house. So why would that lone individual want to share the profits that he or she is creating? The lesson: Even with layoffs on the rise, organizations need individuals more than individuals need organizations.
Third, corporate life spans are shrinking. Remember a little outfit called Netscape? Netscape was formed in 1994, went public in 1995, and was gone by 1999, subsumed into AOL's operation. This giant of the new economy reached only its fourth birthday. Question: Was Netscape a company -- or was it really an extremely cool project? More important question: Does the distinction matter? Here's what does matter: That short-lived entity put several products on the market, prompted powerful companies (notably Microsoft) to shift strategies, and equipped a few thousand individuals with experience, wealth, and connections that they could bring to their next project. The lesson: People, not companies, are "built to last." Most of us will outlive any organization for which we work.