Paying the Price for Over-Specialization

On July 26th, CEO Tobias Lütke published an open letter to the Shopify workforce explaining the company’s 10% layoff.

In it, he specified a plan to let go of “over-specialized” as well as duplicate roles. Facing the consequences of a bet on continued e-commerce growth that didn’t pan out, Shopify evidently didn’t cut specific initiatives or products, but rather a category of employees deemed impossible to sustainably retain—knowledge workers who can only do one very specific thing.

Was Lütke’s focus on over-specialized workers an aberration or part of a new weather pattern? Afterall, despite a certain number of layoffs, the job market for technology workers remains hot. But this scenario and this moment–marked by a perplexing mix of recession fears and record low unemployment–should really give us pause. Because something’s not adding up.

When the plan needs to change, shouldn’t highly educated, so-called “over-specialized” workers be able to shift gears and innovate beyond their narrow job descriptions? Or in our pursuit of data-informed productivity, have we built a workforce that’s missing multi-disciplinary generalists and entrepreneurial spirit?

It’s starting to look like hyperspecialization has gummed up the works of late-stage Capitalism—and nowhere more problematically than in maturing technology sectors. It’s a trend that’s suboptimal for everyone. Overvaluing hyperspecialization seems to set individuals and businesses up for unseen costs, which include:

–  Unemployment and/or turnover

–  Slowed innovation

–  Poor quality of life/work culture

As a business owner and someone with a long history in leadership at both big and small companies, I’ve witnessed– and admittedly participated in –the cultivation of hyperspecialization firsthand. So I want to take a minute to explain how I think we got here, and what the limits of  “here” are, before making some concrete suggestions about a different way forward.

Looking back, it seems clear enough that a real driver behind hyper-specialization has been big data. Advances in technology produced a veritable flood of data, which businesses have struggled to convert to an advantage and an asset. Enter: data science.

When so-called data scientists first came to the rescue roughly ten years back, they seemed tailor-made to respond to the challenge of taking big data and making it useful and meaningful to the wider business. Fueled by large salaries and an endless stream of employment opportunities within the rapidly expanding technology sector, the discipline of data science swelled and professionalized. And it makes sense: Student debt starts to look almost reasonable when a BA-credential in data science can guarantee access to elite jobs with high salaries.

But as data scientists multiplied, they often disappeared into entire departments where their previously blended skills in programming, analytics, and experimentation were divided up among specialists–specialists for whom actionable insights and business objectives may start to seem rather remote.

The atomization of roles hasn’t stopped with data. Specializations have seemed to multiply across engineering, marketing, user experience, and product management to name a few.  And, just like young data scientists, many of these knowledge workers have been trained in highly focused undergraduate programs before assimilating into both large and small tech companies.

The question no one is asking is: what’s going to happen to these highly specialized knowledge workers if the economy continues to shrink–or even if it just changes? If the tech layoffs just keep coming and the overspecialized talent they shed isn’t reabsorbed by hiring managers on higher ground, then shouldn’t we be thinking seriously about the future for those overspecialized among us?

And even in the thoroughly unlikely case of endless economic prosperity, over-specialization doesn’t do people any favors when they decide to start their own enterprise. Murat Bicer, General Partner at the venture capital firm CRV, has coached former Big Five tech company employees on the relative poverty of their professional backgrounds when facing the music at their first startup:

“In FAANG [Facebook, Apple, Amazon, Netflix, Google] organizations, there is so much specialization. People tend to have very narrowly defined scopes and expect to hand the rest off to others.  At startups, if you don’t do it, no one will. Make sure that before you make the leap into your first startup, you’re willing to roll up your sleeves and that you get as much exposure as you can. Learn what other people do in different roles, be a sponge and absorb what you can about performing those roles. You’ll need whatever adjacent skills you can soak up. Wearing multiple hats is a real thing.”

Nevertheless, barring widespread unemployment, hyper-specialized hires do seem to work well for larger organizations. After all, with thanks to Adam Smith, we tend to believe that the division of labor leads to increased productivity and economic growth. More recently, in his Harvard Business Review article, “The Age of Hyperspecialization,Tom Malone describes how the creation of highly specialized jobs by breaking existing jobs into tiny pieces has produced better, faster, cheaper work. But with due respect to Smith and Malone, I would press that even within a large organization, overspecialization represents a real drag on innovation–and ultimately makes the organizations and employees more susceptible to global competition that can replicate these specializations at lower costs (if there is a market benefit).

Because doesn’t it follow that a narrow focus leads to more narrowed thinking–limiting the kinds of interdisciplinary conversations, creative questions, and problem solving that have defined our technology landscape?

I want to note that expertise is not the enemy–not of business and certainly not of science, technology and innovation. We need experts and specialists with unique concentrations to move the frontier of knowledge forward. There’s real value there. At the same time, though, it worries me to see a new generation of young tech workers and future business leaders becoming hyper-specialized so early in their education and careers.

Because the bottom line is that whether we’re at a big Fortune 500 or a little startup, we need people who are educated across specializations if we’re going to be able to talk to each other, much less build products and businesses together. To put a finer point on it: We need our engineers to understand the basics of business, our designers to understand the basics of statistics, and our leaders to have a working understanding of all of all the above! To use the language of business, we need truly agile workers and leaders.

As the technology industry matures, it makes sense that it has also become increasingly invested in specialists and the division of labor. The fact is that many of our largest technology companies no longer innovate in-house, but rather they acquire or outsource innovation. And even given the human toll we’ve explored, maybe that’s ok from a purely business perspective.

But how might this calculus change if employers knew that the same specialists receiving top salaries to keep their machines humming also had the creativity, drive, and support to invent something new.

Here we are: overspecialized for work yet underqualified to meet the century’s defining challenges much less a recession.  So what are we–and particularly those of us in positions of authority–to do about it?

In order to rebalance the workplace such that existing and new employees find benefits and rewards in a more generalist, diversified approach to work, I propose the following three solutions:

Take a fresh look at job descriptions, hiring, and compensation practices.

Can we begin by reconsidering our hiring practices and job descriptions, which have become laughably narrow? Highly specialized roles tend to confer bigger paychecks, and competitive hiring practices have driven specialized tech salaries up everywhere. With so much money on the line, job descriptions have become anxiously prescriptive.

But what if the hiring process we’ve built is actively eliminating the entrepreneurial generalists we so need? To put it another way, aren’t we overpaying for so-called expertise?

Let’s start by writing job descriptions that attract thoughtful, initiative-takers who are unafraid to ask questions. Then, let’s expect both more and less of our candidates–more transferable skills and fewer narrowly applicable experiences, more latitude in their role and less granularity in their day-to-day. Better yet, let’s hire people with promise, passion, and curiosity with the plan to train them into broad roles that toggle between big picture exposure and detailed execution.

Let’s grant interviews to candidates who are older, who have a broader diversity of experience and at the same time are fully capable of learning new technology. Let’s talk to people who have the skills but lack the formal education.Let’s take an interest in applicants with gaps in their employment history–breaks that often belie wisdom-making interruptions ranging from child rearing to health challenges.

And speaking as an engineering major who comes from a liberal arts college, let’s not overlook liberal arts majors who may have underdeveloped data analytics chops, but whose senior thesis on “Foucault in Social Media” (or the like) taught them how to manipulate qualitative and quantitative data in the interest of articulating defensible claims with the best evidence available to them, all while recognizing the value of their own subjectivity. In other words, let’s value strong communication and reasoning skills at least as much as Figma know-how.

Because regardless of whether a job candidate has deep experience with a particular software or segment, candidates with rich histories or interests and life experiences are already, in many ways, the multifaceted, swiss army knives we so need.

Once they’re in the door, I’ll be the first to admit that managing and fairly compensating a generalist can be more challenging than managing a specialist. After all, specialists stay in their lanes and do what’s expected. Generalists seem to be penalized because they so often take credit for a larger surface area of work that touches many hands.

But it’s a challenge worth leaning into by attempting to measure real business impacts and, at the same time, reconsidering OKRs and other narrow(ing) metrics for understanding employee contributions. Might quarterly presentations or peer-reviews better capture the work impact of a generalist?

Make an investment in the growth and diversification of current employees

People want to learn. I’ve seen it over and over in my career: when employees don’t learn on the job, they leave the job–and the cost of replacing that employee is HUGE: one and a half to two times their annual salary.

This is a wide spread problem with a built-in solution, which is more on-the-job learning opportunities. According to the Bureau of Labor Statistics, 3-4.5 million employees leave their jobs each month. At the same time, 94% of all employees said they would stay with their current employer if they invested in their long term learning.

The culture of many organizations today is more inclined to swap than to solve or invest in their teams, yet statistics clearly indicate that most employees are seeking to be nurtured, invested in and grown.

When the cost of replacing an employee exceeds 150-200% of their yearly salary, it stands to reason that we should try to cultivate meaningful ways to invest in our people so that they can contribute in new and different ways and find greater meaning in their work. And how hard can it be to empower employees to diversify their portfolio of skills?

On-the-job training needs some institutional and administrative support, but in the grand scheme of things, it’s not an expensive proposition. And just consider the diversity of riches available to employees within their organization–the chance to learn about data science, engineering, marketing, etc, from real practitioners. It’s all right there! We just have to connect the dots with some intention.

Moreover, a well-considered in-house education program opens the door for that most buzzy of employed development initiatives: the paid apprenticeship–allowing early career professionals to “earn and learn” without choosing between work and school. At the same time, it allows employers to cultivate greater diversity in the workplace by training up underrepresented senior talent.

Build a healthy, pro-social company culture that puts multi-disciplinary leaders in charge

Describing a shift in company culture is a bit like nailing jello to the wall, but stay with me because I believe the shift to remote work represents a real opportunity to reframe company “vibes” that lead naturally to worker diversification.

What if we took our office space budgets and invested them bringing everyone together for company-wide events (adventures, gatherings, camping trips). These events would create fertile ground for real friendships to develop across departments and ranks. They would be an obvious boon to worker retention, moral, and hiring–but I’d wager they would also improve work quality and, yes, innovation.

Back at home, instead of expecting employees to work more hours each week now that everything is remote, what if we incentivised people to spend their unused commuter hours mastering a new skill. Afterall, Malcom Gladwell tells us that it “only” takes 10,000 hours to master a new skillset to the point where innovation becomes possible (Outliers 2008).

Finally, I think it’s important within any given company to shine a light on the interdisciplinarity of its leaders. Because in most instances, whether or not they highlight it, successful leaders have far-ranging, diverse backgrounds.

I know that I, for one, would not be where I am today without my varied background in engineering, consulting and business counterbalanced by my liberal arts origins and a passion for design. I think it’s no coincidence that multi-disciplinary leaders sit behind all five of the world’s largest companies: Bill Gates, Steve Jobs, Warren Buffett, Larry Page, and Jeff Bezos.

Of course not everyone needs to become a Gladwell-styled genius or a shaper of industries. There’s room enough for ICs and specialists. But as even Adam Smith himself has cautioned, humans need more from their work than an excessively narrow task can offer. We need variety and socialization and opportunities for growth, and we need these things over more than just the weekends. Employers have everything to gain when employees show up to work, happy and healthy with new ideas to chew over.

Seth Marlatt is Cofounder and Managing Director at Altir, a product studio that helps startups and Global Fortune 500 companies create digital products and businesses to disrupt global industries.

Featured images: ©Saicle