Atomise, Localise, Robotise

India, Monday, April 27, 2020. It is Day 13 of the second tranche of India’s COVID-19 lockdown. There has not been a better time to imagine the future architecture of India’s economy. India’s economy will certainly undergo big changes.

First, some of them would be the direct results of the SARS-CoV-2 virus. Second, some of them would be the results of what we have learned during the COVID-19 lockdown. SARS-CoV-2 causes COVID-19, the deadly respiratory disease. The first two changes belong to the class of the necessary and the reactive.

Third, the remainder would be the results of our appreciation of the first two changes. The third set of changes is a combination of the restorative and the proactive.

The third set of changes deals with households, habitats, livelihoods, and value chains and markets. To understand the third set of changes, ask two questions. First, should India go back to what it left behind on March 24, 2020? That is the date on which the first tranche of the lockdown began. Second, can India leave behind what it had on March 24, 2020 and move on to a new plane? There are no right and wrong answers. However, there are possibilities and flexibilities. Nothing is fixed.

Human activity is GDP additive

To understand why there are no right and wrong answers ask two more questions. First, are rainy days a threat to gross domestic product (GDP)? Second, is illness a threat to GDP?

Quite clearly, rainy days have given rise to businesses associated with umbrellas, raincoats, windshield wipers, gumboots and indoor ballparks and cricket stadiums.

Second, illnesses and diseases have given birth to a gigantic well-being and healthcare complex. This complex comprises clinics, doctors, paramedics, hospitals, surgical instruments and organ performance monitors. It also includes the pharmaceutical industry and their laboratories. Rainy days, illnesses and diseases add to GDP. 

Moving forward

Hence, this article is a statement of direction based on scenarios. It is based on two concurrent and compatible streams of thought. India will go back to what it left behind on March 24, 2020 only because it does not want to leave behind – jettison – what it had on March 24, 2020.

It is wholly possible for India to leave behind a whole lot of its past social and economic structures and move on to a new plane. India should seek to be a healthier, abler and richer society. India will seek to be a healthier, abler and richer society.

Towards this, India’s political, administrative and business leaders will work towards harnessing engineering, microeconomics and governance to forge and shape a new future that is compatible with what we are and what we have. Their efforts will have the objective of making us healthier, abler and richer than what we were before March 24, 2020. Their efforts will have an impact on human and financial capital, empowerment and employment of women, education, public infrastructure, and value chains and markets.

Mantra one of three: atomise

In the main, this article makes a three-part proposition. There are three mantras. India will atomise. India will localise. India will robotise.

Atomisation refers to making things small. An atom – or a molecule, if you are a perfectionist – is the smallest manifestation of an element. An atom possesses all properties of that element. An atom is not massive. It is not a monolith. It is small. It is nimble.

Atomisation exposes all parts of matter to the external environment. Internal combustion engines atomise the liquid fuel into a spray for better combustion and extraction of calorific value.

Atomisation gets the best out of people too. Small, self-propelled businesses and work teams will enable people to sense their environment better. No team member can hide. No team member’s view is impaired.

Everyone has more skin in the game, therefore. Their engagement with their tasks, the risks and the opportunities is organic and dynamic. It is first hand.

Atomisation is similar to miniaturisation. The enormous explosion of microelectronics would not have been possible without miniaturisation. The results have taken our spacecraft to the moon.

Atomisation of businesses and organisations will improve effectiveness and the response to opportunities. It will quicken the response to downsides and threats. It is easier to incentivise and evaluate the performance of twenty teams of five each (that is a hundred on the payroll) than to incentivise and evaluate the performance of two teams of fifty each. It is easier to protect twenty teams of five each (that is again a hundred on the payroll) than to protect two teams of fifty each. I will address the twin concerns of fixed costs and intra-organisation communication soon.

Mantra two of three: localise

Atomisation makes it possible for us to site and place small, full-fledged, fully-empowered business and governance teams to more places in India’s 700 and more districts. Large organisations that work with big teams are seldom close to the ground all over and at all times.

Governance reach and business reach rise when atomised small teams work with the local citizenry and customers. These are not teams that fly in, drive in or chug in at 8 am and leave at 8 pm. These are teams that are in the smallest of locales from 8 am to 8 pm and then from 8 pm to 8 am. It is business 24-by-7. It is governance 24-by-7.

The governance and business teams get to know the dots and the details. They know who is sick. They know how many hospital beds are available in the neighbourhood. They know who has a tractor that can haul produce to the market.      

Mantra three of three: robotise

When governance and business teams atomise and localise, they are closer to the local citizenry and customers. However, individual teams could be separated from one another. Thousands of team members and factory engineers who were in close proximity in a 1,000,000 square metres facility – the super-dome – could now be in small teams separated by 30 kilometres and more.

The massive manufacturing tasks in the big factories will be done by robots. The massed-up, information-processing tasks in the big technology clusters will be done by intelligent remote-controlled devices. Manufacturing, inventory handling in warehouses and information-processing will be aided by internet-enabled devices.

Robotics is interdisciplinary. It combines programmed automation with programmable automation. It combines programmable automation with responsive automation. It can handle mass with ease and repetitive accuracy.

Super-domes are virus friendly. They raise the need and the possibility of human contact with other humans. The chances of viral spreading are at least 15 times higher in tightly-occupied spaces than in loosely-occupied spaces. The art and science of social distancing are driven by the lowered probability of viral spreading.

Super-domes raise the cost of testing. Super-domes raise the cost of social distancing. Super-domes raise the costs of prevention. Super-domes, thus, raise the fixed costs of the future.

The big, technology clusters have swung towards work-from-home (WFH) for now. This will be permanent. They will not increase the size of the super-domes. They will not increase the number of super-domes.

The manufacturing and warehousing industries will either have to increase the size of the super-domes or increase the number of super-domes. Both will raise the total fixed costs. Here is my recommendation. Reject these two options. Increase the deployment of robots. Robots will cut the number of people working in the super-domes.

The fixed costs will come down. The density of robotic placements can be raised. They will be unfazed by any virus. Use the cost savings to place the atomised and localised human teams near the citizens and customers. Raise employment. Pay more wages. Raise purchasing power.

Incidentally, manufacturing and warehousing industries are not the only ones that will need super-domes. Government offices and corporate headquarters of most businesses will need bigger and more super-domes. They too can and should robotise, localise and atomise.

Robots will enable human spreading without viral spreading. There is more. Robots can run autonomous vehicles. They can carry cargo, components, medicines and people.

Fixed costs

Massing-up was a response to fixed costs. Massing-up and super-sizing spread fixed costs over a very big denominator. They brought down the average fixed costs allocated to unit production or unit value of services rendered. But massing-up did not necessarily bring down fixed costs.

The emphasis has been on reducing the fixed costs assigned to unit output. Hence, both massing-up and super-sizing have gone up nonlinearly since the 1990s.

SARS-CoV-2 has given us the opportunity to see how we were beguiled into believing that massing-up and super-sizing brought down fixed costs. Massing-up and super-sizing raised urban gridlock to new levels. Carbon fumes filled the air above us. The hidden costs and the costs of negative externalities went up.

Should we incur more fixed costs to deal with the virus of the season and others may show up in the future? Should we add more space because of social distancing? Should we reduce the headcount per square metre?

Big is a burden

Big is now a burden. It is a burden that few governments and businesses will be able to pay for when demand is dodgy and iffy. Tax inflows could decline. The unit contribution – selling price less variable costs – could shrink. It may be difficult for businesses to raise selling prices when households struggle with iffy incomes and shrinking savings.

Moreover, big super-dome facilities could fall within a containment zone. The whole facility could become a no-go resource. Big is now costly, risky and less reliable.

Small is safe and smart

By contrast, small is safe and smart. Atomisation and localisation make every employee a revenue-facing, customer-facing and citizen-facing member of the business. The fixed cost of maintaining small teams is low in an environment defined by viral threats. The risks, the uncertainties and the unknowns are also low.

The aggregate cost of maintaining twenty teams of five each (that is a hundred on the payroll) is lower than the single monolithic cost of maintaining two teams of fifty each. Going small will lead to shaving off fixed costs at the level of the numerator. The gimmick of shaving off average unit fixed costs will die.

Moreover, the collective failure rate of small teams will be lower than the one big failure rate of one big team. Everyone is affected in a big team. But only a small team of five is affected when failure visits a small team. Total system reliability will increase. Total system redundancy will increase. Outages will be localised. They will be easy to fix. There will be hot and cold standbys. Thus, the explicit and implicit costs of insurance will also be low.

Connected by digital networks

The diffusion of real governance will be the principal result when governments choose to atomise, localise and robotise. The diffusion of business reach to customers will be the principal result when businesses choose to atomise, localise and robotise.

The small teams will be more virus-proof and lockdown-proof from a business and governance perspective. After the death of the virus and the total lifting of the lockdown, they will be as productive. Let us now move on to fixed costs and communication.

We have dealt with the fixed costs. They will be lower at the level of the numerator. The average unit fixed costs will plummet. Organisational impact would be very high.

We now need to keep the twenty teams of five each (that is a hundred on the payroll) connected organically. Earlier we had kept two teams of fifty each connected on the inside and with one another. There were a lot of memos and locker-room chat. But communication was hierarchical and top-down.

The number of autonomous units engaged in organisational activity will rise when small teams replace big teams. Quite clearly the communication needs will rise nonlinearly. The twenty teams of five each will now need radial communication. It will not be hierarchical. Moreover, they will need spoke-to-spoke communication to improve system reliability and redundancy.

The problems related to physicality are eliminated when businesses and governments choose to atomise, localise and robotise. If that is an overstatement, we can replace ‘eliminated’ with ‘reduced’.

The residual problem is communication. Digital, digitisation and digital supply chains are for zero-mass and zero-volume ‘things’ such as textual data, numerical data, messages, three-dimensional images, videos, voice and music.

We can design effective digital networks that are not hyped. We will redeem digital networks from the glib artificiality that hides behind the veneer of orchestrated authenticity.

All anew

India is on the threshold of major structural shifts in delivering governance. Businesses will choose new methods to organise production and delivery of value. Big, inflexible, costly, low-traction and vulnerable-to-virus structures will be replaced. Small, sensitive, inexpensive, high-engagement and virus-avoiding structures will emerge. Governments and businesses will atomise, localise and robotise.