Why Automation Will Make Business More Human
If you believe today’s rhetoric surrounding tech and its implications, you could be forgiven for thinking the world as we know it is about to end. In a way that might be true, but does this mean that the future of business will hinge solely on technology? I doubt it.
The rise of the service economy means that more and more people are in in the business of helping people. While technology can replace some aspects of how value is created and captured, anarchists often overlook the fact that business transactions ultimately occur between humans.
Leaders who are investing intelligently for the future understand that technology only makes the human element even more important. This is done by leveraging tech to improve the human experience, and doubling down on people development.
Is Code being Commoditised?
The increased educational focus on STEM reflects a particularly pervasive narrative around the future of work: if people don’t know how to program, they will struggle to add value. This makes sense on the surface, everywhere we look it seems as if Marc Andreessen’s assertion that ‘software is eating the world’ is proving correct.
The trained Taxi driver is all too aware of how technology can quickly change the game, and render one’s career obsolete seemingly overnight. Before them it was factory workers, and before them it was farmers. There is no doubt technology can and does replace people, in certain fields at least.
Do these trends mean that one-day humans will be irrelevant in business? Should all of us without ‘technical chops’ rapidly retool to stay relevant? This seems to be the popular sentiment — among technologists at least. But what if this thinking is completely wrong?
The truth is, code — like many other functions — can and will be commoditised. In fact, this is already happening. Ten years ago I payed multiple thousands for a (substandard) website I never used. Today I can build my own (much more functional) website for a fraction of that cost, all without coding.
I farm it out to a freelancer who can do the job quickly and cheaply within hours. That freelancer’s skills were worth ten times as much ten years ago, today it cost me less than an average night out to hire the same expertise.
Recently Marc Cuban (a pioneer in tech commerce) said that computers will eventually teach themselves to code. The idea is that artificial intelligence will become so smart that it will be less about programming our computers, instead we will train them.
If code is being commoditised, where and how should leaders spend their R&D invest dollars for the future?
Kevin Kelly, the founder wired magazine and author of technology treatise titled The Inevitable observes that we humans have a weird relationship with tech. He has stated that in general we tend to overestimate technologies impact in the present, and underestimate it over longer periods. Often this means people fall into one of two categories; sceptics or fanatics.
The reality is, those who do technology are not necessarily better placed to prosper in a technological future. If that were the case, then programmers would not be bidding for piecemeal prices on freelancing platforms. Instead those whom position themselves to prosper in the future will be those who best understand technology.
Tech = Transformation, not Disintegration.
If we study the past, we can see clear trends in how technology impacts humans. Before the industrial revolution most people worked with their hands. Then as machines took over the grunt work, we worked more with our minds. Today’s tech is often far superior at the logical, sequential data processing tasks, now those who do best, do business with their hearts.
In business, technology does two important things; it reduces friction and increases transparency. Think about how the experience of getting into an Uber differs from getting into a cab five years ago. Before you would be waiting around for a cab to drive by, hurrying to explain where you are going, and wondering how much it would cost.
Now you know exactly when and where to meet, no cash changes hands and the driver already knows where you are going. There are no transactional concerns to worry or think about. So what’s left to discuss?
You and the driver are now much more likely engage in an actual conversation. What’s more, you are also more likely to bring your best selves to the interaction thanks to peer rating systems. These review systems make it much easier to know what you are going to get in any business transaction. This essentially means that over time the driver who is not only effective, but relatable will win.
We can see the same pattern across most industries, technology replaces certain aspects of work — left brain, logical, sequential rational processing — but in doing so, much other aspects more important. Think Air BnB, Instacart, and Menulog.
How to Win Both Ways.
There is an important law of automation; anything that can be done better by a machine, will be, and (eventually) will be commoditised. This inevitably happens because what can be automated can be replicated, and Moore’s law means as tech keeps getting better, it gets cheaper.
The flipside of this is this law is just as true; anything that humans do better than a machine will be done by humans, and will increase in value. This is precisely because ‘human’ skills and tasks are variable and not as easily scaled or replicated.
As always in economics, scarcity drives value. Those firms and people who use the opportunity created by tech to build strong relationships, will dominate share of mind. Tech actually fuels this phenomenon; Think about how a bad rating on yelp or social media can impact a business fortunes.
Jeff Bezos can serve as a useful model for leaders looking for guidance. Amazon has pioneered the use of cutting edge technology to run its business, though everything is aligned toward a very human insight. People are always going to value goods that are low price and convenient.
Can you see the strategy here?
Relentless innovation enables amazon to prosper from what is changing, while an obsession on human relations allows the same company to thrive from what stays the same. This approach acknowledges that business is done between humans, yet technology can and will change things.
But would this work in other industries?
Absolutely, think about the change happening in the financial services sector right now. Low cost index funds are massively popular, and sophisticated algorithms do most of the worlds trading. Most people these days recognise that the human element is better eliminated from investing.
However, when it comes to making money decisions, people are always going to want human reassurance. So once again, the law of automation comes into play. This will favour the financial advisor who wins trust, builds strong relationships, and always exceeds expectations.
Making Trade-offs with Tech
Unfortunately, an emerging downside to tech is that it often creates inequality. In the past productivity gains associated with innovation created a bigger pie for everyone, however today this is not always the case. Nowadays a small group reap most of the benefits.
Billionaire tech investor Peter Thiel calls this a power law. In business, this can be seen by the increasingly obvious trend in which a few firms thrive while most struggle. The winners are those leveraging technology to improve the human experience in every sector.
But what if you can’t do both? Unlike Bezos, few leaders have limitless resources. So how might one choose if forced to trade-off between investments in technology, versus investments in mastering the human element of business?
Assuming you are in the business of selling specialised knowledge, it would make sense to favour the development of people over tech. Tech will continue to fall in cost, while the cost of falling short on the human side of business will only continue to increase.
Despite the dizzying innovations in Medicine, today’s doctors face more litigation than ever. Why? They have forgotten the importance of the human aspect of their job. Copious amounts of research continue to show the majority of lawsuits can be retraced to a poorly handled first experience.
If you look around, the trend is clear. In today’s business world, treating people like machines, and being transactional is the fastest way to irrelevance.
However, choosing to invest in your people does not have to come at the cost of tech. Sticking your head in the sand is not a solution. Forward thinking leaders are doubling down on people development, and creating smart strategic alliances for tech at the same time.
This approach enables firms to avoid becoming distracted by dabbling in technology at the cost of their core competencies. It also ensures tech solutions solve human problems, since ideas for applications will come from practitioners, rather than engineers.
Case in point would be Nike. The global sporting goods manufacturer recently partnered with Apple to move into a more service oriented business model with its Nike + users. This has allowed the company to better understand its customer, in order to build stronger relationships and increase loyalty.
The Take Home.
There is little doubt that business is getting more and more competitive and dynamic. The pace of change is dizzying and it can be hard to know how best to position yourself and or your business for the future.
The key to getting ahead is understanding how technology impacts the human experience, and using it accordingly. Innovation creates change, but the human element of business remains the same. This means the human experience is more important than ever.
Firms that are creating a competitive advantage focus on harnessing what is changing to master what won’t. These firms use tech to streamline business transactions and invest in ensuring their people master the people part of business.