Beware of this business model, our columnist warns.
By Michael Beygelman
The world is developing an appetite for all things “hybrid,” but what exactly does hybrid mean? When we talk about automobiles, hybrid means a vehicle that combines an internal combustion engine with electric motors. In biology circles, hybrid refers to an offspring resulting from cross-breeding of different plants or animals. In finance, hybrid means an economic vehicle that combines elements of debt and equity.
Typically, the term hybrid refers to something that is made up of demonstrable parts of something else. One can call the economy we see all around us a hybrid economy. No matter where you go in the United States you’ll find areas of poverty and wealth, but mostly people who are doing just OK. You’ll find unemployment that is hovering around 5 percent for certain employee demographics, while unemployment in other employee demographics is well north of 10 percent.
Some would suggest that our workforce is hybrid, because it is made up of men and women of all ages, nationalities, and backgrounds, who work as employees, temporary workers, or entrepreneurs that run their own businesses. However, others would claim that our workforce is not a hybrid at all—that we don’t have equal representation from all the possible constituencies, and until we have more diversity in the workforce and larger inclusion of minorities we can never achieve a truly hybrid workforce. Who can argue with the logic of inclusion?
Hybridization, in business context, is a term that we will define here as the ongoing blending or combining of two or more disparate business models. The risk of hybridization is that sometimes it leads to business model evolution, and not necessarily to evolution in a way in which the new business model is better than its predecessor. Take one business model, RPO, for example.
To Hybrid or Not To Hybrid?
Early in its formation, RPO struggled with being ill defined. Over the past few years—and with a lot of help from service providers, advisors, industry associations, and the media—RPO has matured in terms of what potential RPO services can include and how RPO is defined. Lately, however, I’ve been troubled by seeing a number of potential deals being dubbed, “Hybrid RPO,” to hide the fact that they are not RPO at all. It’s as if by adding the term “hybrid” to both sides, the would-be buyer and the would-be service provider can somehow feel better about their business relationship and demonstrate to their respective peer groups that they really are on the cutting edge of RPO. Not so! For example, Hybrid RPO is not contract recruiting. It is not seeking hourly bill rates for hiring part-time and full-time contract recruiters payrolled by a vendor.
While some might disagree, the devaluation of this RPO business model cannot be healthy for a business that is trying to solidify a new service delivery paradigm, and no matter of Hybrid RPO can ever include the service of payrolling contract recruiters a customer identifies on their own. There is no “P” for process and there is no “O” for outsourcing, therefore it is not RPO but rather faux PO.
I make this point demonstrating what is happening in RPO, but it is happening in every business and industry segment. One driver causing this hybridization is the creativity of service providers whose business is down, and who are willing to do anything to generate new sales—without much regard for whether or not what they are trying to accomplish is viable. Another driver is buyers looking to get deals done that wouldn’t normally get done, so they are being opportunistic in this current economic environment. In fact, this makes me reminisce about one of my favorite sayings that: “There is at least one provider ready to bid on any kind of deal.”
Hybridization might be in vogue right now in the business world because of what is happening economically, but beware the day when the economic tide shifts for the better. On this day, all the ill conceived business models that should not have garnered much attention will be exposed. That’s how all bubbles work—good and bad, economic and political, employment and business models, etc.— they get inflated without much notice but they typically pop loud and everyone notices. Let’s stay clear of business fads and focus on sustainable business models; this is how we will continue to drive positive economic value-add.
Michael Beygelman is SVP, business development, with Adecco Group North America. He can be reached at michael.beygelman@adeccona.com.
