Is AI the answer to the productivity problem?

We are at the very start of the 4th Industrial Revolution, where, according to The World Economic Forum (i.e. Davos):

“We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before.” - Davos

Big stuff, but what does it really mean? Well, I guess we better define what the 4th Industrial Revolution means. In straight-forward terms, it means combining technologies like Cloud, AI, Blockchain, 3D Printing, the Internet of Things and Compute Power with Big Data to change the way we live and work.

These technologies have matured to a point where they can be combined to create new products, services and ways of working that haven’t been possible before, at a cost that makes sense for organisations to implement them.

Core to this is AI, it is probably the most important part of the jigsaw, as Vladimir Putin recently stated:

“The nation that leads AI will rule the World.” – President Putin

It has been around since the 1950’s but has only recently made the big steps we’ve seen due to the advance of technologies and the abundant supply of data. Imagine AI as the engine and data its fuel, both have made advances in recent years to take it from a Ford Model T to a Focus. (We’re nowhere near the formula one stage yet!)

But if you strip back all the hype and exciting uses for AI such as Bioelectronic healthcare, driverless cars, farm bots and robot lawyers, AI is fuelling two themes across organisations: Efficiency and Growth.

Automation of mundane, low skilled, processes with software robots, like call centres and insurance claims processing, are starting to reduce the number of people working in those areas. Good news for productivity, as a robot doesn’t cost a lot, bad news for people with those jobs. People likely to be impacted in the next few years include:

• Call centre workers
• Drivers (lorries, trains, taxis, planes)
• Lawyers
• Accountants
• Office workers – processing and case management
• Bankers
• Insurance – from brokers to fraud investigators
• The armed forces
• Retail assistants
• Seasonal farm hands

Wages have stagnated since the 2008 recession and the bad news is that automation over the next few years is not going to help with that. Organisations will invest in technologies such as AI to take cost out of their operations. Productivity will improve, but it will also mean downward pressure on low paid jobs and rising unemployment. You can’t compete with a cheap software robot that doesn’t sleep and doesn’t take breaks.

The efficiency gains are largely going to go to shareholders and senior managers.

On the other side of the coin to efficiency, is growth. New combinations of technologies can create new opportunities through innovation. It creates new value and does lead to improvements in wages and living standards. But it also requires investment. Innovation alone can’t create value, it needs funding. That means shareholders and senior managers need to reinvest some of those efficiency profits to invent and build new things.

The good news is that they are competing with other organisations to win and that means they are likely to do so. They won’t do it to improve living standards and wages, they’ll do it to make more cash in the medium to long-term.

On a more positive note, the irony of more automation is that services that involve human interaction will become ever more important. Human-centred jobs will increase in demand as robots take over the mundane and routine. Of course, Engineers and Coders will also be sought after, but front and centre of jobs most likely to see a rise in wages and living standards are those with a real-life person at the centre, jobs like these:

• Content producers (music, film, art, TV, writers)
• Designers
• Change consultants
• Researchers
• Psychologists and mental health workers
• Educators
• Social workers
• Healthcare professionals
• Childcare professionals
• Domestic helpers (maids, butlers, life assistants)
• Coffee shop workers
• Chefs

In summary, AI and specifically robotic automation, is likely to be a key part of solving the productivity problem, but it won’t help with wage stagnation and slow growth. That requires innovation and investment in new things.

AI won’t help with wage stagnation.

Luckily the same psychology driving owners to make more profits will push them to compete with other companies to make more money that will drive up demand and wages for creative, human-centred and engineering based jobs.

The only question is, will the two travel at the same speed? Will we see lots of people lose their jobs before we see more, higher paid ones created? I’m not sure, but as a Dad of 3 teenagers, my advice to them is to look at becoming a designer, engineer or healthcare professional. But given many mums and dads of my parent’s generation recommended the safe and steady professions, such as accountant and lawyer, I’m not sure I should be that specific, maybe I should stick to something more fuzzy; learn how to be creative, friendly, adaptable and live in harmony with the machines.