BOOK REVIEW - 'The Alliance' by Reid Hoffman, Ben Casnocha, and Chris Yeh🔗
The 1950s and 1960s were the golden age of American capitalism. Having emerged victorious from the bloodbath that was World War II with a booming economy, life in the U.S. was transformed by the development of suburbs, middle-class access to TVs and cars, and the beginning of consumerism.
That stability and ever-rising living standards, which at the time looked like they would go on forever, required a new bargain between the employers and the workforce. The employers would invest in their workforce and guarantee them lifetime employment in return for loyalty from the workforce. In this framework, an employee would join a company at a young age, climb up the corporate ladder through promotions, and gracefully graduate in his sixties.
This is no longer the case. Globalization, the rise of the Internet, and the commoditization of software put an end to Industry 2.0 of the mid-twentieth century. Markets today are much more competitive and more easily disrupted than they were sixty years ago, which has rendered long-term, stable employment a distant memory. Nowadays, after two consecutive quarters of poor performance, a CEO starts to feel the heat from the shareholders, which usually ends with a massive layoff. The employees are aware that the old bargain no longer holds. That's why they don't hesitate to resign in droves as they did through the pandemic and hop from one job to another with the hope that things can improve somewhere else.
This month's book, The Alliance by Reid Hoffman, Ben Casnocha, and Chris Yeh, tackles the problem of stable employment in the corporate world. The book emphasizes that employers won't invest in employees who can leave at any time, and there will be no innovation without long-term investments. Looking for a way out of this situation, the authors propose a new kind of employer-employee relationship based on "mutual trust, mutual investment, and mutual benefit." The Alliance expounds on this viewpoint and makes use of a few key concepts while laying out the framework.
"Tour of duty"🔗
The central concept in the book is the "tour of duty." It is a phrase borrowed from the military and diplomacy, denoting the fixed term a soldier or a diplomat serves in a foreign country. The authors use the phrase to describe a specific, clearly-defined project an employee completes. "Tour of duty" strictly refers to a "transformational tour" in this context, although the authors explain the two other tours (rotational and foundational). A transformational tour is a personalized mission with clear goals negotiated between an employer and an employee. As part of this mission, the employee acquires new skills that will transform her future career while transforming her current company through the successful completion of a major project.
A transformational tour of duty usually does not involve a promotion or a change in the employee's job title. It is an "alliance" between the employer and employee who both realize that lifetime employment is no longer possible in today's gig economy and try to derive lasting value from an existing relationship. At the end of a tour, the parties can extend the current tour, design a completely new one, or give it up altogether.
The tour of duty concept reimagines professional life as a series of productive tours stitched together. There is no long-term commitment in this type of relationship. On the contrary, both sides are aware that it is bound to end at some point, but this does not stop them from engaging in a constructive alliance for mutual benefit.
Network intelligence and the alumni network🔗
Another important concept from the book is "network intelligence," which is the byproduct of an alliance. When the employee leaves for greener pastures, she does that on good terms with her company because both parties benefited from the relationship. There are no grudges, so future cooperation is possible and desirable for both sides. This employee becomes a trusted source of intelligence whenever her previous company turns to her for information about what's going on in her new industry.
With many sources of network intelligence at hand, a company has to institute a formal structure to capture, evaluate, and leverage the information gathered. There needs to be a push mechanism to collect information from past workers, pass it on to decision-makers, and use it to draw insights. This kind of an arrangement could give a company an edge over the competition at no cost.
The authors advise corporate decision-makers to engage with alumni of the company and try to give their networks a somewhat formal character. Such a step may not appeal to the bean counters on the board as it does not offer any short-term, tangible benefits. But the small expenses made to hold occasional dinners for these networks, buy small gifts for the alumni, and send them regular newsletters eventually pay off.
Nurturing the alumni network allows a company to tap into the problem-solving skills of a group of experts who still have some kind of a bond with the company. Feedback from such people is extremely valuable as they know the company, understand what it aims to achieve, and can offer an objective outside opinion. However, the greatest benefit of alumni networks involves the recruitment process. Knowing the values of the company in question and what it seeks in new employees, these people tend to make excellent scouts of talent, referring candidates that will be a great fit.
Taking these points into account, it is safe to say that building and sustaining an alumni network is one of the highest ROI investments a company can make.
Amazon to axe 18,000 jobs as it cuts costs — BBC News
Alphabet cuts 12,000 jobs after pandemic hiring spree, refocuses on AI — Reuters
Microsoft is laying off 10,000 employees — CNBC
Salesforce to lay off 8,000 workers in latest tech purge — LA Times
Almost 50,000 people working for four tech giants have lost, or are about to lose, their jobs. This figure is the equivalent of the population of a mid-sized town in Europe when you take their families into account. Similar news involving smaller purges barely grabs any attention. It is the order of the day. C'est la vie! But it wasn't always like that. Layoffs like these would be unthinkable for Ford, Chrysler, or General Motors in the 1950s. It is a different world we are living in.
The Alliance acknowledges the best days of the employer-employee relationship are behind us and searches for the second-best formula for a long-term, productive relationship between employers and employees. It offers no earth-shattering revelations; many companies have been taking their workers on 'tours' for years. However, the book does a great job of distilling those practices into an actionable playbook and highlights what both parties stand to gain from an alliance.
Mission statements, lectures on values, and banging on about how culture matters... These won't amount to much in the absence of an honest and transparent employment strategy that benefits everybody involved. It all starts with accepting that nothing lasts forever and having more modest goals, like building an alliance that will go beyond the duration of employment. The Alliance shows you how.