The Automation Transformation
By David Nguyen, Events Director
Illustration by Matt Blease
We’ve seen those robot movies, like the one with Will Smith, I, Robot. In the near future, intelligent machines have been established as security personnel, healthcare experts and even first responders.
In those space movies, artificial intelligence serves as the ship's navigator and guide, and albeit, they serve their purpose a little too well.
Or how about that movie where a robot waiter brings out the person’s food whilst spinning its little wheels as it moves… oh wait a minute, that’s happening to me right now!
We can get caught up thinking about automation as reflective of robots and AI that’s going to control us and bend us to their will. What it really is, is automation becoming more and more prevalent in the world today for me and you.
The world is seeing tremendous growth, innovation, and transformation every day. Perhaps business has always been about increasing shareholder’s wealth and capitalising on market share. What certainly has changed is technology, automation, as well as our perspectives on it.
In a 2017 Pew Research survey, the public opinion regarding automation leans more to the ‘worrier’ side particularly because it will make jobs harder to find for ‘ordinary’ people. This view is shared by almost 8 out of 10 of people in Greece, Argentina, South Africa and Canada[1]. What jobs might this involve and who is affected? It arises that the higher probability of jobs being made redundant by automation is likely manual work involving a low level of skill[2]. Workers with a low level of education and qualifications might be the first affected. If this is managed well, it is very likely the potential impact is an increase in unemployment rates and an increase in wealth inequality[3].
On the flip side, the coexistence of these labour forces, human and machine, can make way for new employment opportunities[4]. The level of this outcome will be ‘determined significantly by the velocity’[5] of automation implementation. Another key factor is the synergy between humans working alongside machines[6].
Decisions about the future of automation in the workforce will ultimately weigh on business leaders. They will need to play the preparatory game to decide how adaptable their workforce will be to the arrival of automation. One main consideration is education and training. In the journal, Debating the Future of Work, the “provision of sufficient internal retraining may be the most important part employers can play in the mitigation of the consequences of automation”[7].
Let’s take a step back and think about automation NOW. Put yourself in the shoes of a business manager and explore the term, technical feasibility. McKinsey Digital defines it as ‘the potential for an activity to be automated by adopting current technologies’[8]. By framing our thinking around the work activities rather than the occupation itself, we can categorise how susceptible jobs are to automation. This discussion may also provide insight on how synergetic work will be between humans and machines.
McKinsey estimates about 78% of predictable physical activities can be automated, especially in manufacturing, food service and accommodations, and retailing industries[9]. Food service and automation in particular is estimated to have 73% of all its activities automated[10]. Imagine not only that robot and its little wheels bringing out your food, it's also cooking and preparing your food. Manufacturing and retailing closely follow food service as the top industries with high technical feasibility for automation.
Illustration by McKinsey & Company
Around the middle range, jobs involving data collection and processing are feasible activities for automation. Roles in financial services, regardless of if you’re a data analyst or executive, involve about 43% of your time collecting and processing data[11]. McKinsey identifies that about 50% of all activities in financial services involve data[12].
In unpredictable environments such as the construction, healthcare and education industries, it is estimated about 25% of current activities have the potential to be automated[13]. This could explode to about 67% with technology advancements, especially machine learning used to understand human communication[14]. For now, managing and developing people, caring for people or making decisions or creative work based on expertise is still a wire’s away from robotic automation.
We have now considered levels of technical feasibility for automation of work activities. However, as a business manager, there is still the interplay of other various factors that will ultimately determine whether automation will be implemented in the workforce[15]:
The cost of automation and deployment of hardware and software
Relative scarcity, skills, and the cost of labour (where an abundant supply of workers is less expensive than introducing automation)
Benefits of automation beyond labour-cost such as higher productivity, level of output and reduced errors
Regulations and social-acceptance
In an article by McKinsey on Australia’s automation opportunity, it was found that about $1.1 trillion to $4 trillion can be added to Australia’s economy over the next 15 years. What that means for every Australian is about an increase of $4,000 to $15,000 in annual income by 2030. The transformation that would take place is about 25-46% of all work activities automated. This shift in the workforce will see Australians spend over 60% additional time using technology and about 1.8 million to 5 million requiring a change in professions[16].
Automation is coming. It may be arriving in the form of robots, machine learning or AI. These techniques will determine how safe and collaborative humans can work together with computers in work environments. Leaders will need to facilitate an organisational culture that is prepared for automation.
How will you decide to change in response to an automated workforce of the future?
References
[1] [2] [3] Wike, R. & Stokes, B. (2018). In Advanced and Emerging Economies Alike, Worries About Job Automation. Pew Research Center. URL: https://www.pewresearch.org/global/2018/09/13/in-advanced-and-emerging-economies-alike-worries-about-job-automation/
[4] [5] [6] [7] Rodriguez-Bustelo, C., Batista-Foguet, J. & Serlavos, R. (2020). Debating the Future of Work: The Perception and Reaction of the Spanish Workforce to Digitization and Automation Technologies. Frontiers in Psychology. doi: https://doi.org/10.3389/fpsyg.2020.01965
[8] [9] [10] [11] [12] [13] [14] [15] Chui, M., Manyika, J. & Miremadi, M. (2016). Where machines could replace humans - and where they can’t (yet). McKinsey Digital. URL: https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/where-machines-could-replace-humans-and-where-they-cant-yet
[16] Taylor, C., et. al. (2019). Australia’s automation opportunity: Reigniting productivity and inclusive income growth. McKinsey. URL: https://www.mckinsey.com/featured-insights/future-of-work/australias-automation-opportunity-reigniting-productivity-and-inclusive-income-growth
Card, D., & Nelson, C. (2019). How automation and digital disruption are shaping the workforce of the future. Strategic HR Review, 18(6), 242-245. doi:https://doi.org/10.1108/SHR-08-2019-0067
Image 1: Illustration by Matt Blease
Image 2: Chui, M., Manyika, J. & Miremadi, M. (2016). Where machines could replace humans - and where they can’t (yet). McKinsey Digital
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See our previous blog posts:
Future of Work: How Technology Can Change Your Career Trajectory
The power of a story: what future scenarios can teach us about our present