How to turn slack time into profit

My Financial Times column 12/20/10

We all have slack in our lives, hours when we could be working rather than loafing, talents that go unused and physical assets that sit rusting away in garages, lofts and storage units, which might better be sold or rented out.

If we were managers of factories, supply chains or computer networks we would call this slack “latent capacity” and try to do something to reduce it. What inhibits us tends to be idleness, lack of human networks, an inability to price the value of what we have, and the risk of letting others use it. All these barriers are being eroded by technology, creating the possibility for companies and individuals to exploit their latent capacity in previously unthinkable ways.

London’s airports may respond to the latest snow fiasco by investing millions in extra snow ploughs that will sit idle for most of the year. A better solution might be to co-ordinate all the snow ploughs already rumbling around southern England belonging to local authorities, companies and individuals, to clear the runways. Gatwick had the right idea when it flew in the Swiss to help. One lesson from the recession ought to be that we should be much more efficient with the resources we already have rather than taking on debt to acquire unnecessary assets.

A good example from the holiday season is Toys R Us, the American toy retailer. One of the hardest challenges for toy companies has always been that they do so much of their business around Christmas and yet must take on full-year leases for their stores. Toys R Us’s solution has been to open pop-up shops, 600 of them in the US this Christmas, each around 4000 sq ft, much smaller than its permanent stores, but in shopping malls and high streets where it does not have a year-round presence. These pop-up shops are staffed by 10,000 temporary workers. The abject state of commercial property means landlords are delighted to accept the renters’ terms, to fill their sites for at least a few weeks.

Pop-up shops are an evolution of the fashion trunk show, a way for a designer to take his wares to places he may not have the resources to reach otherwise and target groups of customers without the fixed expense of a store.

On a more personal level, there is an abundance of new companies seeking to use the latest web services, involving location, personal ratings and auction-based price setting, to help individuals monetise their latent capacity.

They are taking an old idea and giving it new life. You can now rent out your own car through services such as Whipcar, or the parking spot in front of your house through You can rent your neighbour’s leaf-blower or lawnmower through The sophistication of these sites, and the level of trust they inspire, varies widely, but the trend seems powerful.

Then you have companies like Solvate, an inspired means of finding freelance workers to do specific tasks. Calling itself “America’s premier on-demand workforce”, Solvate allows you to find people capable of doing all kinds of work, ranging from the purely clerical to 3D modelling and social media programming. Solvate matches a broad array of talent with those who need it in a much more efficient way than the traditional temping agency. For some of those who loan out their services through Solvate it is full-time work. But for others, it is a way of monetising their latent capacity, their nights and weekends and those talents their day job has no use for.

In manufacturing, using latent capacity is an issue of cost, efficiency and return on assets. The further you move away from the factory floor, the more latent capacity leads us to think about choice and exploiting our competitive advantage. It also quickly becomes a philosophy of resource conservation. For small companies in particular, the focus should be on providing a service or product. Instead, their managers must waste huge amounts of time on bureaucracy and building a support system. It is the equivalent of every person on a street having their own ride-on lawnmower. One would do, and everyone could use it.

For any manager considering ways to exploit their company’s latent capacity, or to employ that of others, there remain several obstacles. The first is regulation. It would be wonderful, for example, if we could buy prepared food from each other. If someone in town made terrific lasagne, I’d happily buy it from them rather than go through the agony of trying to make it myself. But there are strict rules requiring that food made for sale is prepared in commercial kitchens, which render my lasagne dream impossible. Another obstacle is our need for ownership. The number and kind of cars sold each year probably has as much to do with the primacy of cars as a status symbol as our need for flexible, personal transport. Issues of privacy and trust also get in the way. A company considering renting out spare office space or technology infrastructure may be leery of what its lessor might do. But these challenges are not insuperable, especially when the potential rewards of efficient use of our time, assets and talents are so vast.



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