Automation and the future of jobs

Technology has come a long way since Peter Drucker, having witnessed the first attempts to automate knowledge work in 1967, declared of the computer: ‘…It’s a total moron[i].’ Indeed, one widely cited paper by Carl Frey and Michael Osborne at Oxford University found that as many as 47% of jobs will be highly susceptible to automation over the next two decades.

automation

Questions have been raised over the methodology used in this paper, with the OECD suggesting the method was too blunt and that, in fact, only 9% of jobs in the OECD were at high risk of automation[ii]. The differences between the two papers make for uncomfortable policy prescriptions since high degrees of uncertainty are not generally embraced by politicians. The extent to which cognitive AI will augment rather than replace humans is still to be settled. However, even 9% equates to millions of jobs lost and wider changes to the content of job typologies that do survive. Combined with a rise in freelance work, automation could easily reduce a wider percentage of jobs to a series of mini tasks that would easily be ‘auctioned’ off. The need to redesign economic and social systems is still pressing under such a scenario; the diffusion of work benefits from health insurance to pension provision would not work as intended, for example. Although the Swiss have rejected the universal basic income proposal, we are likely to see similar proposals elsewhere, perhaps even tied together with educational credits – which will surely be needed in the face of the need to reskill and retrain millions of individuals.

Although technology allows both more efficient ways of dissemination educational content (and indeed of creating more relevant curricula), there remain several structural issues in retraining such a wide swathe of people in a timely fashion – especially given the global backdrop of high youth unemployment and underemployment. Whether or not traditional educational models are agile or flexible enough to retrain and reskill at both a personalised level and at scale remains to be seen.

Lifelong accounts that comprise learning credits, benefit credits and other provisions have been floated and could better reflect the needs and wants of an individual than the currently strained welfare state. Issues of provision, tax and eligibility are complex and potentially have far reaching consequences – most notably on the notion of freedom of movement and immigration. Some, no doubt, view such proposals as a solution without a current problem. Given the rise of populism in key geographies and the acceptance by many of the idea that the current system is stacked against them, thinking about the nuts and bolts of a new safety net now would seem prudent. Automation, at either end of the forecasts, holds the potential to destroy the contemporary welfare state and/or result in costly and regressive policy action to preserve jobs. Automation holds great promise for the world, yet in order to benefit from it, we must actively explore a new social contract that doesn’t confine millions of workers to technological unemployment.

[i] https://hbr.org/2015/06/beyond-automation

[ii] http://www.economist.com/news/finance-and-economics/21699930-reasons-be-less-afraid-about-march-machines-im-afraid-i-cant-do

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Changing consumer expectations and the need for outside-in thinking

Whilst businesses are no doubt aware of the need for digital transformation, whether to initiate it through processes, the business itself (including ‘culture’) or through customers has received less attention. There is a strong case for suggesting that customers are the biggest source of disruption and hence would be an appropriate place to start such a transformation. Indeed, executives believe that changing customer behaviour and expectations are a bigger source of disruption than technology – and this is leaving aside the international cultural dimension to changing consumer habits in Asia and elsewhere.

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Perhaps the most important issue for executives to grasp is that technology, whilst disruptive, is essential for understanding, responding to, and anticipating shifting customer trends. The promise of customer-centric predictive analytics can only be achieved if companies merge disparate forms of customer data, or at least allow data to flow between separate departments or systems. Many companies are hindered by systems that are not only non-customer-centric but all too often non work-efficient. Irrespective of industry, companies will increasingly require a nuanced view of customer preferences and to align the insights that flow from this to a new business model.

Customer centric design for new products, processes and even business architecture will become essential. It is even predicted that by 2020, ‘…customers are expected to entirely supplant traditional R&D as the primary source of new product and service ideas[i].’ Customers are set to become key agents in both overall innovation strategies and processes. Since consumers can also become proficient marketers in their own right, the idea of developing an outside-in mindset brings possible cost savings in addition to new revenue generation.

A key place to start lies in amplifying the customer voice within an organisation. This can only be reliably achieved by using real-time data – ensuring the need for a robust data architecture that efficiently captures and standardises data, as well as the ability to extract meaningful insights from it.

Beyond this, companies need to consider how to embed the customer at the heart of their decision making. Having a better handle of preferences is one thing, but how does this impact the wider business? Customer service (including proactive service), crowd-sourcing, the discovery of (perhaps auxiliary) insights from data that add value for customers and ease-of-use all stand out as key areas to investigate in the journey to customer-centricity and an outside-in perspective. Customers do not care whether legacy technology is limiting the ability to connect a to b or if the CIO and CMO of company do not collaborate effectively; all they want is a seamless experience that provides value and satisfies a certain need or desire.  Companies should coalesce around this very fact – technologically, culturally and organizationally, if they are to survive and thrive in a digital environment increasingly favourable towards consumers.

[i] http://thoughtleadership.ricoh-europe.com/eu/thenextdecade/disruption

Society’s problem with technology

Given the broad range of applications, processes, methodologies and gadgets covered under the broad banner of technology, it would be no exaggeration to state that the effective and selective implementation of it is critical to future business success.

tech

Received wisdom would also suggest that technology – or rather the convenience it facilitates – is craved by todays savvy digital consumers. Mobile banking penetration and emptying or closing bank branches stands as but one example of consumer desire for technologically convenient solutions. Given the efficiencies that technologies can generate for consumers, how could there be too much technology?

Despite this narrative, an Edelman study cited 54 percent of consumers as very cynical about new technology, stating ‘business growth or greed/money are the real impetuses behind innovation[1][i].’ It is important that this cynicism does not become internalised within business – digital technologies offer a once in a lifetime opportunity for renewal of a range of business processes and models in the face of a highly uncertain and hyper-competitive business environment. Nevertheless, some important implications need to be drawn from it.

Technology for technology’s sake is a losing proposition, especially if it is perceived as merely a cost-saving tactic. Identifying areas in which it can add value for consumers is essential. Clearly, consumers will not complain about excellent customer service. Predictive analytics, machine learning and the selective use of A.I can all lead to more efficient service, higher levels of personalisation and better customer satisfaction if implemented strategically. It is probable that whilst developing a new value proposition for customer service will act as both a long term revenue generator and perhaps even induce cost savings, the customer perspective is of better service – not more technology.

Providing customer value is absolutely essential to any digital transformation, and this should not be confined to the back-end of the business. Customer facing technology should seek to allow customers to do different things rather than just do things differently – and to simplify the process in question. Increasingly these technologies will become embedded, ‘invisible’ to consumers and provide value rather than an additional clunky interface. Indeed, tomorrow’s winners will be those organisations that selectively and strategically apply digital technologies to be connected, analytical and agile.

[1] There are of course legitimate concerns of security surrounding some technologies such as the IoT, which in the UK is seen as a source of concern to one in every two consumers[1].

[i] http://www.brandingstrategyinsider.com/2016/01/lies-and-the-declining-trust-in-brands.html#.VuloreIrLIU

The post-handset society

Understandably, mobile occupies a key place in companies’ strategies and is without doubt a key pillar of the contemporary digital economy. There is reason to believe, despite the forecasts of global saturation, that the mobile as we know it may be soon replaced.

screenless

Some of the coming changes are undoubtedly iterative; new processes and mediums still using the smartphone as a basis, whilst others are more revolutionary and suggest new ways of obtaining information. Either way, fundamental changes are coming, with HTC CEO Cher Wang already stating that ‘…we have had to rethink phones as a company. Virtual reality is more important[i].’ If virtual and augmented reality, or mixed reality, disrupts the notion of the screen as we know it, advances in artificial intelligence will further question the underpinnings of design. The whole experience – perhaps incorporating audio, haptics and gestural interfaces and even using our own skin as the screen will all help orient the notion of mobile away from the phone as we seek to engage more of our senses.

In fact in 2015 an Ericsson survey found that a majority of smartphone users believed that by 2020, A.I interfaces would take over, replacing smartphones[ii]. Perhaps such a forecast is premature, but the general direction should be noted not just by consumers but those designing the next generation of apps. With numerous wearables including contact lenses able to take photos and provide social media updates, already in the labs – the human is set to become the next interface, rather than the screen.

This ultimately means that how and where people get their information will change. The opportunities that emerge will be significant for a range of industries – perhaps most obviously retail, but could also help revolutionise remote working and provide an effective way of working in regionally or globally dispersed teams. Virtual personal assistants, built on forerunners such as Amazon’s Alexa will increasingly handle our mobile interactions.

Since mixed reality, gestural interfaces and audio provide a more efficient and intuitive way to have a chat with the sophisticated artificial intelligence that will saturate future devices, the future of mobile lies beyond the screen. This will include your advanced Google searches, checking of Facebook and booking your next vacation with Expedia – together with a quick virtual reality tour of your chosen destination’s property. Companies need to start exploring what this means for them and specifically their consumer-centric processes. The immense opportunities to add value to the consumer that could arise from engaging more senses and designing for a complete experience will need to be mapped out and planned for if the potential of the post handset society is to be realised.

[i] http://www.telegraph.co.uk/technology/2016/01/19/htc-ceo-cher-wang-we-had-to-rethink-phones-as-a-company-vr-is-mo/

[ii] http://www.kurzweilai.net/ai-will-replace-smartphones-within-5-years-ericsson-survey-suggests

Ensuring the future of the insurance industry

Too many insurers are overly reliant on old ways of doing things – culturally, organisationally and technologically, to survive the next decade. For sure, insurers have survived many momentous changes in the past whilst only incrementally nudging their underlying processes and business model. The problem for insurers lies in the confluence of several emerging and maturing trends across the spectrum of their business; any one of these could be sufficient to impact business but as a whole, change is unavoidable and for those who fail to act, this will not be a positive experience.

INSURANCE

The barriers to entry the market are gradually eroding; indeed it is somewhat ironic that regulation – long held as a chief challenge for the industry – is perhaps the strongest remaining barrier in many markets to a flood of new competition.

The list of challenges confronting the industry is diverse and unsettling. An aging workforce, a reliance on legacy technology, several potential data driven competitors from adjoining sectors, a lack of public trust in many markets, the decline of certain lines (such as auto) thanks to automation, ill prepared systems for capturing and analysing data predictively, and an incomplete journey towards customer-centricity are just some of the issues confronting insurance companies. These issues also represent a chance, for those with the foresight and execution, to develop new value propositions and capture more of the market.

This will start with staff; having a data literate workforce operating in data informed processes and an agile, more flexible culture will become an increasingly key success factor. The architecture staff operate in must also be renewed since big data analytics represents a structural transformation in how enterprises are managed from top to bottom. The level of data integration and analytics will require many new skills and cross-functional buy-in in order to break down the many data and organisational silos that still exist within businesses. However, expanded data capabilities will enable insurers to design and promote more flexible products that allow consumers and adjust their coverage as circumstances change. New niches will open; for example there is a possibility for insurers to become trusted lifestyle consultants with data driven insights (from IoT for example) given back to customers in a multitude of value adding ways.

In addition, platforms for interconnection between all stakeholders should be investigated as part of the need to provide greater consumer centricity and forge new ecosystem partnerships. The need to cooperate with emerging InsTech and tech companies will be pressing in the quest for innovation; big bang change could easily overwhelm systems and people, hence the need for targeted pilot-runs of technology, and closer third party collaboration. Cultures supportive of failure (as a key part of innovation) and collaboration with potential rivals will need to be nurtured if this is to succeed.

Virtually every part of the business will require rethinking and reimagining, leading many insurers to ask themselves what business they are in. Regardless, all insurers are now tech companies, or at least need to be. They need to start acting like one if they are to survive.

The future of language; how do you say that in French?

For those of us who grew up at school learning French, subsequently being told it was next-to-useless was somewhat disheartening. Spanish quickly became a preferred language of learning given its wider application, and following the appreciation of China’s rise, Mandarin. Whilst French remains a beautiful language, few would have suggested it was a future global language.

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Thanks to demographic trends in Sub-Saharan Africa, French could, in fact, be the most-spoken language in the world, ahead of English and even Mandarin by 2050 -with 750 million native speakers. So, will tomorrow’s schoolchildren be learning French, after all? Perhaps the better question, despite the numerous mental benefits that language learning unquestionably confers, is whether they will be learning a second language at all?

Tech experts believe that ‘…within a decade or so, we’ll be able to communicate with one another via small earpieces with built-in microphones[i].’ The value of language learning could certainly diminish in relative terms given the technological probability of effective real-time translation apps. Cultural barriers would certainly still exist and the benefits of working abroad may if anything, be exaggerated, but with language barriers dropping, what would happen to the wider world of work? Talent platforms and other forms of digitally based work would suddenly ensure a range of contract work becomes increasingly competitive. Whilst the outsourcing of English speaking contact centre jobs is mature in its evolution, might such possibilities open up competition in places without such histories. Finnish call centres and Hungarian telemarketing are unlikely to hitherto had much competition from India or the Philippines but with language 2.0, a flatter world could deliver such competition.

Since many transformations occur at the intersection of two or more technologies, it is worth speculating on what happens after what happens next. Will the spoken language remain a principle way of communication? In all likelihood, yes, since we are a social species, yet intriguing opportunities are emerging; Emotiv, for example, is a product that can read your brainwaves and understand their meaning through electroencephalography (or EEG). Married to an instant translation app or algorithm, the prospects for internationalizing (or at least providing remote options for) a whole range of social and scientific fields becomes possible. Various brain to machine interfaces have already allowed people to control airplanes and other machines with the power of their mind. It is only a matter of time – perhaps little more than a decade, before direct brain to brain communications occurs. Irrespective of dominant languages, perhaps the lingua franca of the future will be digital.

[i] http://theconversation.com/could-the-language-barrier-actually-fall-within-the-next-10-years-54805

U.S. election; the biggest loser?

Now that Donald Trump has secured the Republican nomination, Hillary Clinton looking set to wrap up the Democratic nomination, and no viable independent candidate in discussion, the options appear set. The world’s sole remaining superpower (for now) must choose between two individuals that have set records for their unpopularity. Whoever assumes the White House is likely to start with the lowest approval rating in history.

trump

Given Trump’s efforts to alienate women, Hispanics and other minorities, one would assume a clear path for Clinton, but given the uncertain outcome of the civil war within the Republican party and Trump’s populist and xenophobic message, a historic realignment of American politics remains possible. Under such circumstances, all bets and predictions are off.

There can be little doubt however, that the Trump candidacy alone represents a deeply damaging moment for U.S democracy. Not only does it show how antiquated and out of touch its current political system has become with swathes of its electorate, it threatens global stability in myriad ways. Trade wars, an isolationist and mercantilist foreign policy and a seeming lack of ideology (or understanding) underpinning any of the policy u-turns thus announced would radically reduce U.S influence globally, reduce allies’ trust and create global regional chaos in the event of unilateral U.S military withdrawal. Lapsing security guarantees alone would problematize the nuclear proliferation question in eastern Asia and the Middle East and effectively mark the end of American military hegemony. The economy would follow too were Trump to embark on economically ruinous policies of deporting illegal immigrants and confronting China directly over currency manipulation.

If, as many outside the U.S hope, Trump’s reactionary campaign fails, it is hard to argue that a Clinton victory would signal business as usual. In some way, the damage has already been done. The economic, social and demographic forces propelling Trump have been legitimized (even if the majority of his supporters come from declining demographic segments) and he is unlikely to represent the last of a string of strongmen types both cashing in on and fueling populist rage – a situation unthinkable in the U.S even a decade ago.

There can be little doubt that a slow burning political crisis is underway in America that will outlast this election cycle. In an increasingly divided nation that views moderation as a compromise too far, this is likely to result in further gridlock (such a thing is possible) in Congress – rendering void many Presidential plans. The geopolitical and economic forces that propelled the U.S, throughout the 20th Century are evaporating as sources of competitive advantage and its government needs to tackle a host of pressing complex domestic and international issues from social security to climate change. Inaction is not an option, yet 20th Century ideas still prevail. More than ever the U.S. needs an honest and straightforward internal dialogue about the severe economic and social issues it faces and a unifying candidate able to articulate this clearly and confidently – something unlikely when the fight for the most unpopular President in history concludes this November.