People vs. Machines: Amazon and job replacement
For many companies, digital transformation is about replacing people, who are generally limited to working eight hours a day, make mistakes, get sick or ask for vacations from time to time and who in some cases even join labor unions. In contrast, machines work 24/7 without complaining or getting tired, make few mistakes, require only periodic maintenance, never join unions and don’t go on vacation. This somewhat reductionist vision based mainly on cost savings, is, after all, what business schools have been drumming into their pupils for decades: differentiation is for the rich, and even if your company achieves it, any savings will be reflected in the quarterly statement, and will likely be rewarded with a bonus.
In practice, companies that undertake digital transformation tend not to focus purely on reducing costs, and instead to prioritize factors such as improving service, customer experience and building loyalty.
So when Amazon unveils its no checkouts stores, Amazon Go, most pundits assume the move is about saving money. But the reality of shopping in one of these stores is not so much the absence of checkouts, which if you think about it, have always just gotten in the way and slow things down, but the presence of Amazon employees helping users, preparing their food and in general, trying to ensure a good customer experience. The overriding feeling of being in an Amazon Go store is that you have just stepped into the future and that hopefully, soon all stores will be like this.
Amazon Go is now spreading to more cities, while Microsoft is also working on its own technology to eliminate checkouts from stores, along with other retailers keen to quickly follow its lead. And contrary to Amazon’s approach, many companies focused solely on costs will reduce staffing numbers, with the resulting negative impact on the customer experience.
Meanwhile, Amazon continues its process of digital transformation by incorporating more and more machines. The company’s warehouses are already showcases for automation, its army of robots continues to grow, and although humans are still an essential part of the process, they are extremely productive: just one minute of human work per package. The next step is transferring its intelligent machines from warehouses to offices, from blue collar to white collar tasks.
Automation may have begun with the four Ds: Dull, Dirty, Demeaning or Dangerous, but is rapidly being applied to other areas. Now, managers with six-figure salaries negotiating multi-million dollar deals with major brands are beginning to be replaced by algorithms that can predict what buyers want and how much the company should charge for it.
Amazon continues to recruit people like there was no tomorrow, while at the same time employing more and more robots. Meanwhile, the total number of jobs in the retail industry has fallen, indicating that other companies are losing or going out of business, while Amazon thrives. Let’s be clear, what we are witnessing is not a process of substitution: history shows that automation eliminates certain jobs but generates others, different and possibly unimaginable at the time.
Automation, machine learning and algorithms will eliminate many of the jobs we know, and will do so inexorably, incorporating gains in efficiency that will see winners and losers. Whether you’re blue collar or white collar, your industry is subject to greater efficiencies, so you need to acquire the right skills to continue contributing value in a redefined world by understand the new processes, reimagining the previous ones and rethink them from the new perspective, before somebody else does.
The ongoing replacement of workers with machines in Amazon, one of the most valuable companies in the world, is an impressive experiment ushering in the future. Investing in understanding its mechanics is an investment in understanding the future.
(En español, aquí)
