Prepare Your Workforce for the Automation Age ?

The internet dramatically changed the way companies operate.

Massive data storage capacity, super-fast data transmission and mobility devices—along with slick application program interfaces—have left companies scrambling to adapt.

Today, innovations in digitization and robotization are quickly laying the foundation for another disruptive corporate transformation. For example, Anheuser-Busch, working with Uber (and Otto), just delivered 2,000 cases of Budweiser in a self-driving truck. Commerzbank has announced plans to digitize 80% of its processes within three years.  

It is estimated that robotization, digitization, digital self-services, distributed digital advice and sales, and robo-advisors could result in a 60-70% reduction in the workforces of service providers, from financial services to telecom. Manufacturers have already seen reductions, albeit at lower levels. The pace of robot adoption may surprise us, just as the internet spread more quickly than many anticipated.

But companies will only be able to realize productivity gains from these new operating models if they skillfully manage the soft side of their automation transformation—the people in what will be a vastly different organization. As companies introduce software bots and digital self-service, and as they transform assembly lines, they must bring along their key employees, leaders, and customers as they redefine jobs, career paths, workforce management, and social contracts.

Executives must think carefully about how to best match people and machines, bearing in mind that many of the decisions they make today will have a long-tail effect on workforce composition, productivity, and profits for years to come.

As workforces hollow out, the remaining employees will be highly specialized and experienced business/technology hybrids—a new breed of professional who can work in highly distributed environments and shift from managing people to managing experiences and technology. In the back-office, the lights will dim, as work is shifted to the customer or other parts of the value chain. In the middle office, risk and compliance management will largely watch bots that are not prone to human error or fraud, supported by sophisticated models to predict quality and compliance issues. In the front office, automation based on predictive analytics will leave only managers who can control sophisticated robo-advisors trusted by customers. Salespeople will be disrupted as customers link with algorithmic bots to obtain products contextually presented at the (digital) point of need—often dominated by the global platforms that link retail, financial services, entertainment and communications in sticky ways.

Will this happen overnight? No!

Disruption rarely occurs as soon as expected. Freeways full of driverless cars and beer trucks are still far off, because of technological and regulatory limitations. But the inflection point always happens faster than expected.

As always with technology adoption, there is an S-curve, already being scribbled by early adopters; when the inflection point is reached, expect sudden acceleration. So early preparation is needed.

Lessons from automakers: Change needs to be evolutionary, even if the impact of automation is ultimately revolutionary. Don’t throw away your core capability, until you are sure automation is better, faster, cheaper. As you prepare for the inflection point, be pragmatic about cost-benefit tradeoffs. Think about the overall organization in an automated world. Be mindful of the critical skills you need to retain, and the skills you need to build up. Take a full end-to-end view. Think both short term and long term. Build strategic advantage through the gains you achieve, beyond cost.

Parallel work streams: The lessons to date on driving digitization and robotics suggest operating on a dual track.To that end, managers should develop a list of 10 to 15 processes that bots can quickly improve. Test and learn, both in the application of the right bots to the right problem, and how to redesign processes end-to-end to maximize results. Simultaneously test and learn on the soft side of automation. Blueprint the broader impact on roles, skills, controls, leadership, workforce and talent management, and social contracts. By doing so, managers can move critical employees and clients closer to their longer term automation ambitions—which can be funded at least in part with returns from the earlier automation of simpler tasks.

Mold the organization: As more processes are digitized in every part of an organization, executives must think at a macro level about the entire enterprise, even as the organization is changing. How do you hire today for a diminished workforce 10 years out? When more and more of your people are replaced by bots, how do you lead, enforce quality control, and audit? The key to navigating through the coming automation age will be identifying and retaining (retraining) the employees who can make one transition after another.

There is time before the inflection point—time to prepare with purpose and pilots. Focus not just on the technology and analytics, the shiny object, but on people and a new form of leadership.