Tag Archives: portfolios

Which risk is greater?

More and more of us have discovered that our résumés don’t fit into a nice neat pattern any longer.

They’re punctuated: companies we worked for went out of business, were acquired (and we were purged as a part of “making the deal pay for itself”), or outsourced our jobs.

We’ve got bits and pieces of self-employment scattered in and around the jobs we’ve held. We’ve got multi-industry backgrounds, not necessarily by choice, but simply by having had to chase down a new position time and again.

There’s a lot of advice out there these days saying that this kind of broad background is precisely what employers want. So how come your résumé never gets past the scanner or low level clerk handling incoming applications?

(There’s also a ton of articles written about how CEOs value humanities degrees, because they create flexible thinking employees. Seen many of those on the CEO’s team lately? They’re not being presented as candidates by executive search or by being passed on by the CEO’s admin assistant or human resources VP. Going to the top, in other words, doesn’t get you past anything much these days.)

We are in an economy with a binomial distribution (for those of you who are not math-orientated, that simply means if you drew the data out as a curve, it would have two humps). You can be firmly in one or the other, but moving between them can be a nightmare.

Both are what people who do work in complexity call “fitness peaks”. You have to take on a lot of risk to leave a fitness peak and try to cross over to another one.

In one of the humps, or parts of the economy, or fitness peaks (they’re all the same thing), linearity rules. Here a résumé showing steady progression up career ladders, staying pretty much in one industry, with only occasional hops from one company to another, is the expected norm. People with a lot of outside experience, or a “difficult” résumé (if you’ve ever looked at yours and said “but the chronological sequence doesn’t really tell anyone what I have done”, you’ve got a difficult story to tell), are rejected as “not one of us” out of hand.

For companies that so far have avoided being eaten in the eat-or-be-eaten world of M&A, or for whom their markets haven’t fallen into difficulties yet, nothing has disturbed the equilibrium of continuing to do more of “what’s worked for us up to now”. Whether hiring you as a consultant, or hiring you for an open position, “fit” to norms will be everything.

Over in the other hump, all that diversity is definitely prized — as long as what it adds up to is (a) accomplishment and (b) proof you can dance. “Dance?” Yes, change, adapt, flex, and stay on the leading edge of changes in society.

Right now that second hump is smaller than the first one. But their relative sizes are changing. More importantly, the nature of work in the second hump is changing as it expands.

It’s not filling up, in other words, with companies offering nice jobs with all the perks that have “seen the light” that their old linear thinking was wrong. Instead, it’s filling up with opportunities to “do a little something”.

A growing number of positions these days depend on funding from grants, or shares of project results, or a host of other “risky” approaches. Now these situations also come (generally) with people in charge who recognize that somewhere you have to be bringing in a buck or three. The grocery store checkout clerk wants cash for food, not promises, share certificates, or “I’ll get paid when the foundation makes up its mind”. So they recognize that you’ll be living a portfolio life, where they don’t own you 24/7 and in turn someone else is putting a few coins in your jeans.

But the résumé you build living like that (I speak from experience, having done so for a decade now) is a nightmare for anyone stuck in the linear mould.

If you choose to build your prosperity over in linear-land, you’re taking on two big risks. One is that this zone is shrinking, not growing. It’s tied to the economy as a whole, and requires that it be growing most of the time for the linear model (in the private or public sectors, or in major not-for-profits) to be sustained. That’s not the economy we’ve had since 2008, nor is it likely to be one we’ll have anytime soon.

The other risk, of course, is that your particular employer (because you have to choose one to work at) prospers — and yet, at the same time, isn’t taken out of the game for its prosperity.

The risks over in portfolio-land are different. You might work hard and never see a dime. You might fall off the bleeding edge of change, not for lack of trying but because you just don’t get into the right things at the right time. You have no security day-by-day. But the hump is growing in size and complexity, so opportunity is growing here even though the economy as a whole isn’t.

Now, you may ask, what lies in between the two?

That’s the realm of traditional entrepreneurial life. Open a store, open a small factory, open a software house, you name it.

Ultimately these are preyed upon both by the big players in the economy (and especially governments looking for tax revenues: it’s the little guys who pay full freight on business taxes, not the big ones) and, if the entrepreneur isn’t careful, she or he misses out on the virtues of the portfolio world, too.

Bottom line: you can make a living in any of these zones, but you are taking on risks doing so. So which risk is greater (for you) and which risk do you want?

The power of networks

What the evolving state of the economy — with its ever-increasing downsizing, rightsizing, management buyouts, acquisitions and divestitures, and the like — points to is a career strategy that depends more than ever before on the strength of your network.

Great!, thinks the extrovert, who loves to do the “hey, man, howzitgoin’?” of working the room. Aarrghhh!, thinks the introvert, “I’m doomed!”.

Well, no, actually, you’re not. Nor do you need to be someone you’re not.

You just need to understand how to work a network in your favour.

Suppose, just for a moment, we do a thought experiment.

You’re a deep introvert. You have a very few close personal friends — the kind where years can go by and then a subject gets picked back up.

Acquaintances, on the other hand, you don’t spend a lot of time with. You beg off of the reception at the end of the conference — the quiet of your hotel room is far better than the free drinks and noise of the room. You don’t, at the end of the day, know many people.

But you’ve been dumped out into the cold, so you’re going to have to do something.

Your network doesn’t have to start with a bunch of effectively cold calls to anyone whose business card you can find in an old email somewhere.

You’re going to have to keep busy, so you find a volunteer position here, maybe do a little project there. These are the beginnings of your network (beyond those few close friends, who are supporting you emotionally at this point in time).

Suppose you got to the point where you were working regularly with 8 other people. Just 8.

If those 8 know 8 more each, that’s 64 pathways to follow.

Even the deepest introvert can get to 8, and feel comfortable with 8. (By the way, deep introverts tend to have other deep introverts as friends — they’re not attracted to those they perceive as “glad-handers” and “superficial” [that’s not necessarily true of extroverts, but it is a popular introvert description of them] anyway. So don’t expect, if you’re an introvert, that your network will suddenly blossom at the next layer.)

I’m one of those introverts, and I’m also someone who’s moved around a lot. My close friends, right now, are in England, in Chile, in Vancouver and Montréal — only two are in Toronto where I live now. I’ve also worked in different industries, at different things, and so if you trolled my LinkedIn connections you’d see them flying off to very different places that don’t inter-relate with each other.

And, if I’m not interested (say) in returning to academic administration, all those connections to people in academe really aren’t as much help as they may appear at first blush. (This is the career changer’s problem in a nutshell: your old network, no matter whether large [extrovert’s] or small [introvert’s] is mostly unable to be of obvious help to you!)

Right now I’m doing a project (pro bono) to help fire up a not-for-profit semi-moribund society. One goal is that if this works, the money will be there to fund a part-time executive director role for me (the money part of my portfolio, doing something else I’d like to do). But even if not, I believe in this project, and so am comfortable volunteering time and effort to it.

Through the project, I’m meeting connections in the city’s small business community, in its consultancies (but not in the IT-related areas I would have connected to earlier in my life), in media, etc. That’s because the people I need to work with to do this project are all connected there.

Opportunities, in other words, can be multiplied through the network. Thinking portfolio of things to do, rather than “find another job!”, makes it possible to draw on the possibilities of the network. And having the work at hand to do helps me (the introvert) draw myself out and get to know the 5-8 people I’ll meet through this at least well enough to make that come alive for me.

Networks multiply quickly in this way, and create opportunities — much faster, in fact, than knowing hundreds or thousands of people in your industry or field, and barraging them for job openings.

Now I tell you all this because if you look back, say 120 years ago, you would have found a world where 80 per cent of North Americans didn’t have a job as we know it. They had lots of work, but were artisans, or independents, or worked when there was work to be done.

Henry Ford’s mastery of modern industrial organization, coupled with the spread of electricity, changed that. We got the society we grew up in, where 80 per cent of North Americans worked for someone else, and we had jobs in nice career ladders.

What’s emerging around us — it’s why the economy drags along, and why so many jobs are being shed — is the end of that era.

We’re going back to many more of us permanently having work, but not jobs.

Portfolios of things that help you earn your keep are one arm of the strategy to minimize personal risk, by spreading the risk of any one of them ending around the total pie. 6-8 different income streams (all small) are more secure than one job-sized salary, even if it’s hard to tell someone what you do, exactly.

Networks of people you work with likewise help manage your risk, by creating openings for opportunities. 6-8 is manageable even for an introvert, too.

Together, these are the essence of the twenty-first century work world. It’s why at the top of the Personal Due Diligence website you’ll see “What Works Has Changed”.

Because … from the value of a degree, to the way we work … it has.

A portfolio of micro-ventures

If there’s one thing public policy at all levels of government doesn’t really understand, it’s the notion of the micro-venture. Neither do human resource departments.

Yet micro-ventures — from intermittent pop-up shops, to hobbies turned into product lines, to from-home work, to coding for a smartphone app — are an increasing part of the work world.

In fact, a growing number of newly-minted graduates find themselves moving from and through micro-ventures and never actually establishing a “career” in the traditional sense. In this, they’re joined by parents trying to return from home care to the work world (and discovering no one finds their gap compelling) and all those forcibly early retired trying to make a second life (since they’re not able or ready to actually retire).

Trying to fit this into a standard one or two page résumé is almost impossible. It doesn’t take more than a year or two before a micro-venture life takes up all the room, and its endless overlaps make the story hard to sort out.

Hand that résumé off to one of those websites that “helpfully” parses it for you, and you have an unholy mess on your hands. That’s because the program that reads your file wasn’t designed for any sort of situation that wasn’t linear.

So what is a micro-venture? Simply put, it’s a venture that involves not more than a handful of people — often, it’s a solo affair — and it’s probably located in low commitment spaces. From the consultants for whom “that table in the corner” of a neighbourhood coffee house is their true office to those working from home (often in violation of zoning and business licensing rules) to those who spend a year crafting items and then renting a pop-up space just for one weekend to sell them, micro-ventures come in all shapes and sizes, but mostly under the scale required for a small business.

Most micro-venture types actually have a portfolio of things on the go. I, for instance, have PDD, but I also have relationships with three companies (all of which I am a part of the team, but not on payroll), do some independent consulting, have two different paid writing assignments, and submit other articles on spec for paid publication.

Now, do I want one business — or are these separate ventures? Do I then need multiple business numbers, need to file multiple GST/HST and other tax forms, have multiple business licences? Or do I try to cram all of this activity under one roof.

Before you answer, remember the magic number: $30,000. Below $30,000/year in any venture, you don’t have to worry about the GST/HST. No filings, no collections, nothing. Running six independent proprietorships (under law) none of which hits that magic number makes a raft of paperwork go away.

And let’s face it: in a micro-venture world, you don’t have staff to do it. You probably can’t afford a lot of professional services to take the place of that staff, either.

When you make $250,000 from self-employment, spending $10,000 on accounting and tax services makes perfectly good sense. But you don’t get $1,000 accounting on $25,000 brought in, nor — frankly — do you have the $1,000 to spare out of $25,000. That’s because all your other costs don’t shrink proportionally.

Is it any wonder so many these days decry government burdens? What’s easy to take with one business of size, or in a salaried position, is a true burden on someone managing a portfolio of micro-ventures off a corner of their kitchen table.

So an awful lot of micro-ventures go “off the record”, simply to save on unnecessary paperwork. (I remember, living in Vancouver, making my consultancy “legal”. I didn’t begrudge the $149.00/year the city wanted for a business licence. I did begrudge the regulation that said it had to be at an address other than my home. I rented — at $269/month — an “office service” for really no other reason than to have a “business address” to fit their regulations. Talk about encouraging people to fly under your radar!)

Still, portfolios are becoming a bigger and bigger part of working life. They point out that although jobs may be in short supply, work is plentiful. They point out that there’s more to bringing in the necessary to house, feed, clothe and entertain a family than a career.

Micro-venture portfolios come with one big plus, in this economy. You don’t have all your eggs in one basket.

That’s important. Think about how many major corporations are stretching their accounts payable these days (P&G announced recently that no bill would be paid until it had ripened by at least 75 days — if you’re an independent or small business supplier to a company like that, you’ve essentially been turned into their banker, all for the benefit of P&G management bonuses and shareholder dividends. It’s hard to lay down outstanding invoices at the checkout in Safeway and get groceries in return.)

Elements of your portfolio may come and go; you may get stiffed or slow paid here or there; but you don’t risk everything. That’s a form of security no paycheque, no title, and no single venture can bring you. It’s more robust, even if it’s harder to describe to anyone.

If you’re hiring, don’t look down your nose at a micro-venture CV. (Don’t even do it if you bump into your portfolio neighbour at a BBQ — just because they don’t have a title for you to glom onto, doesn’t make them a loser.)

Micro-venture portfolios are one emerging answer to how we manage risk.