Once upon a time in an economy far, far away, there was something called the “one man shop.” It was essentially a solo enterprise where a skilled artisan would tinker with products all day long, producing something valuable for other people in the community. Traditional one man shops still exist in a sense: there are cobblers, mechanics, and carpenters. But they are the exception, not the rule.
However, with the rise of computer technology, the one man shop is making a comeback. The digital transformation has made it increasingly easy for solo entrepreneurs to shift a lot of the burden of starting and running a company off their own shoulders and onto the shoulders of other people in a kind of new network business model. Companies, it seems, no longer have to go through the hassle of getting all the skills they require to run their operations in-house: now they can just buy them in like a blacksmith might have ordered in raw materials in the past.
What does this mean in practice? Take CIO strategy, for instance. In the past, companies would have had to develop their own digital strategy themselves and would have had to hire a chief information officer in the process to run the operation. But according to SimpleGrid Technology, this is no longer the case. The company says that it is now possible to effectively buy in CIO strategy services from third parties, freeing up entrepreneurs to “do their thing.”
This isn’t the only way in which entrepreneurs are shifting the burden of running a business onto other companies. They’re also outsourcing things like marketing, accounting, and other information-heavy tasks.
The question, of course, is why? It all seems to come down to the flow of information itself. Before entrepreneurs could easily track and monitor the activities of outside companies, it was difficult to overcome what economists call the principal-agent problem. The principal – that is, the business leader – always found it difficult to monitor what the third-party company was doing. Third party companies could get away with providing a substandard service because of the lack of oversight they were subjected to. In response to this, businesses had no choice by the subsume these functions into their own operational structure at great expense.
But with digital technologies, the game has changed. Monitoring digital technologies and using modern analytics is essentially free. Because of this, outside companies can’t get away with failing to act in a business’s best interest, like they could in the past. All their actions are being carefully monitored and scrutinized in fine detail – more detail even than would have been possible in-house in the past.
Now that this hurdle is being overcome, top executives are talking about the upcoming era of “everything-as-a-service.” In other words, your company could have a million dollars in revenue and still not need to take on additional staff.
It appears, therefore, that we might be going towards a digital version of the “one man shop,” except this time, they’ll be making a lot more money.