How To Compete And Win In An Automated Age
In 1900, 30 million people in the United States were farmers, but by 1990 that number had fallen to under 3 million even as the population more than tripled. So, in a matter of speaking, 90% of American agriculture workers lost their jobs, mostly due to automation. Yet somehow, the twentieth century was seen as an era of unprecedented prosperity.
In the decades to come, we are likely to see similar shifts. Today, just like then, many people’s jobs will soon taken over by machines and many of the jobs of the future haven’t been invented yet. That inspires fear in some, excitement in others, but everybody will need to plan for a future that we can barely comprehend today.
This creates a dilemma for leaders. Clearly, any enterprise that doesn’t embrace automation won’t be able to survive any better than a farmer with a horse drawn plow. At the same time, managers need to continue to motivate employees who fear their jobs being replaced by robots. Clearly, leaders are going to rethink strategy in the age of automation.
Identifying Value At A Higher Level
It’s fun to make lists of things we thought machines could never do. It was said that that only humans could recognize faces, play chess, drive a car and do many other things that are automated today. Yet while machines have taken over tasks, they haven’t actually replaced humans. Although the workforce has doubled since 1970, labor participation rates have risen by more than 10% since then.
The reason why is that advancement in any field always creates confusion at a higher level. Once a task becomes automated, it also becomes largely commoditized and value is then created on a plane that wasn’t quite obvious when people were busy doing more basic things.
So the first challenge is not try to simply to cut costs, but to identify the next big area of value creation. The value of bank branches, for example, is no longer to facilitate transactions, but to solve problems and upsell and there are more branches today than in 1980. In much the same way, nobody calls a travel agency to book a simple flight anymore. They expect something more, like designing a dream vacation.
So the challenge ahead is to figure out how we can use technology to extend the skills of humans in ways that aren’t immediately clear, but will seem obvious a decade from now. Whoever identifies those areas of value first will have a leg up on the competition.
Innovate Business Models
Amazon may be the most successfully automated company in the world. Everything from its supply chain to its customer relationship management are optimized through its use of big data and artificial intelligence. Its dominance online has become so complete that during the most recent Christmas season it achieved a whopping 36.9% market share.
So a lot of people were surprised when it launched a brick and mortar book store, but as Apple has shown with its highly successful retail operation, there’s a big advantage to having stores staffed with well trained people. They can answer questions, give advice and interact with customers in ways that a machine never could.
Notice as well that the Apple and Amazon stores are not your typical mom and pop style operation, but are largely automated themselves, with industrial age conventions like cash registers and shopping aisles disappearing altogether. That allows the sales associates to focus on serving customers rather than wasting time and energy managing transactions.
When Xerox executives first got a glimpse of the Alto, the early personal computer that inspired Steve Jobs to create the Macintosh, they weren’t impressed. To them, it looked more like a machine to automate secretarial work than an important tool for executives. Today, of course, few professionals could function without word processors or spreadsheets.
We’re already seeing a similar process of redesign with new technologies. Scott Eckert, CEO of Rethink Robotics, which makes the popular Baxter and Sawyer robots told me, “We have seen in many cases that not only does throughput improve significantly, but jobs are redesigned in a way that makes them more interesting and rewarding for the employee.
Lynda Chin, who helped develop the Oncology Expert Advisor at MD Anderson believes that automating cognitive tasks in medicine can help physicians focus more on patients. “Instead of spending 12 minutes searching for information and 3 with the patient, imagine the doctor getting prepared in 3 minutes and spend 12 with the patient,” she says.
“This will change how doctors will interact with patients.” she continues. “When doctors have the world’s medical knowledge at their fingertips, they can devote more of their mental energy to understanding the patient as a person, not just a medical diagnosis. This will help them take lifestyle, family situation and other factors into account when prescribing care.”
Humanity Is Becoming The Scarce Resource
Before the industrial revolution, most people earned their living through physical labor. Much like today, tradesman saw mechanization as a threat — and indeed it was. There’s not much work for blacksmiths or loom weavers these days. What wasn’t clear at the time was that industrialization would create a knowledge economy and demand for higher paid cognitive work.
Today we’re seeing a similar shift from cognitive skills to social skills. When we all carry supercomputers in our pocket that can access the collective knowledge of the world in an instant, skills like being able to retain information or manipulate numbers are in less demand, while the ability to collaborate, with humans and machines, are rising to the fore.
There are, quite clearly, some things machines will never do. They will never strike out in Little League, get their heart broken or worry about how their kids are doing in school. These limitations mean that they will never be able to share human experiences or show genuine empathy. We will always need humans to collaborate with other humans.
As the futurist Dr. James Canton put it to me, “It is largely a matter of coevolution. With automation driving down value in some activities and increasing the value of others, we redesign our work processes so that people are focused on the areas where they can deliver the most value by partnering with machines to become more productive.”
So the key to winning in the era of automation, where robots do jobs formerly performed by humans, is not simply more efficiency, but to explore and identify how greater efficiency creates demand for new work to be done. When technology automates tasks, value shifts to humans collaborating with other humans to design work for machines.
An earlier version of this article first appeared in Harvard Business Review