The robots are coming. They’ve wiped out the luddites now they’re coming for you. It’s a statement easy to believe judging by current hysteria around automation, a hysteria that seems to have reached a new peak.
But as far back as 1978, Prime Minister James Callaghan was enlisting a think tank to tackle, “silicon chips that are programmed to do the dull and repetitive jobs in industry and commerce.”- This at a time when the White House’s first computer was operating on 16kb of memory. It might not be time to stock up on baked beans/protect Sarah Connor just yet, but there are three vital things to consider to realise the opportunity automation presents:
- The social and political climate this new wave of automation exists within.
- What ‘type’ of jobs will be affected.
- The irreplaceable value of human capital.
At the tail end of 2016 a paper was published by the outgoing US administration. “Artificial Intelligence, Automation and the Economy” was delivered by a party that had been ousted by the promise to restore America to its former glory; a promise interpreted by many as a vow to restore blue collar jobs in ‘rust belt’ communities. Barack Obama, in his final presidential address, stated; “the next wave of economic dislocations will come not from globalisation, but from the relentless pace of automation that makes a lot of good middle-class jobs redundant.”
Most speculation around job losses focuses either on manufacturing, where jobs have steadily been replaced and redefined over the past three decades, or the automotive industry, where autonomous cars make the news every second day. But one place overlooked, where jobs have already been replaced, is financial services. Trading jobs at the NYSE have shrunk from 5,500 at the turn of the millennium to less than 400 today. Entry level and graduate jobs, often known as ‘analyst’ roles risk complete extinction. The notoriously gruelling task of sifting through data to create a financial argument could be made redundant by big data and machine learning – combined correctly, this can operate at a fraction of the cost and without the penchant for mistakes. Commerzbank has been brazen about its automation plans, releasing plans to digitalise 80% of its processes within 3 years. The offset? 9,600 full time jobs.
It’s important to recognise the assumptions around automation. It’s not just blue collar jobs that will disappear and, crucially, it’s not just headcount that you lose when you replace a human. Drastically cutting the wage bill may lead to short-term efficiency savings but there’s a huge cost involved. If intangible assets, (specifically culture, discussed in a 2016 EY report can represent up to 80% of a company’s value, how can a company atone for or even measure what is lost. Replace humans and you lose both the good and bad of human intuition. You may be able to eliminate risk from a trading decision but you also eliminate emotion – and crucially, empathy. Automating customer-facing roles will lead to an even lesser understanding of customer needs, which will lead to even less efficiency in the long term.
There are positive signs that executives recognise this. PSA’s chief executive was quick to debunk the idea that mass job losses are the most obvious way to recoup its £1.9bn acquisition of Vauxhall and Opel. He told a press conference in Paris, “We do not need to shut down plants…we believe we need to trust in the talent of people – they always come up with ideas and solutions we could not imagine.” Carolos Taveres hasn’t closed a single factory in the industry most associated with automation. He recognises the value in human capital and has stated he will give employees the chance to reach the necessary, “benchmark of efficiency”. It’s an interesting precedent – Mr Taveres shows clear understanding that you lose more than headcount when you automate jobs.
We’re on the inflection pint of the S-curve right now, at the trough of the wave. This means that automation is happening, will happen and will likely happen faster than expected as early adopters are already creating seismic change. But it needn’t be employment Armageddon. If intelligent machine learning is to remove repetitive tasks, then it is also to improve our creative capability. Let’s not replace jobs, let’s redefine them. Automation needn’t be about simplifying jobs to the point they become tick box exercises, instead it should give people the freedom to contribute beyond their job definition. Automation shouldn’t replace, it should empower. Imagine a world where employees, unencumbered by menial tasks, can operate with a laser-like employee focus. Couple this with advances in machine learning and AI and we have the perfect petri-dish for innovation. This is the opportunity that exists in automation 2.0.