People Still Beat Machines At Efficiency
Robots are here, but they are laggards compared to humans
Warren Bennis, the late scholar on leadership studies and prolific author (30 books) said:
The factory of the future will have only two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment.
Elon Musk intended to build that factory. At first, he said there would come a day when Tesla cars were manufactured on an assembly line without human workers (beyond a few expert overseers). Teslas would be made in factories where only robots would do the work so there wouldn’t be any lights, the so-called “lights out” factory. And yet recently, he has recanted:
Still, the prospect of these fully-automated workplaces has everyone from the shop floor worker to the World Economic Forum talking about humans losing jobs to robots.
Even people commenting on the legal industry have gotten into the game (though note, as I said in this article, legal industry futurists are notoriously wrong). While in law, the idea is that artificial intelligence can do some tasks better (faster, more consistent, higher quality) than humans and so will replace tasks done by lawyers, the fear of silicon replacing carbon has unnerved many.
Some fear that robots (I’m using AI and robots somewhat interchangeably, which reflects the academic confusion around which is which) will displace humans across the board. Some new evidence from the company that brought us lean thinking, Toyota Motor Company, suggests that humans will still have a place in the world of the future. This is good news for those who want jobs and a warning shot across the bow for service industries, such as law, that have struggled to embrace the benefits that lean thinking has brought to most of their clients.
When lean thinking arrived on American shores some thirty years ago, workers feared the worst. They thought lean thinking would wipe out the world they had known. I would destroy everything good and leave in its wake a new order dominated by production lines with machines crammed next to each other. The worst part was that some of the machines would be people, forced to work in mind-numbing uniformity just like the mechanical machines next to them. To them, lean thinking was the new form of Taylorism.
Reality has been different. Firstly, American manufacturing and then American services businesses have never been that disciplined. Lean has spread throughout all industries, but few have had the courage and fortitude to stick with it to gain the efficiencies American workers feared. Most businesses operate more like Dory the fish in Finding Nemo, easily distracted by the next thing that comes along.
Secondly, the next thing did come along — robotics for manufacturing and computer automation (and now AI) for the rest. Businesses find it easier to buy than to build, so working on lean projects versus spending big on the new shiny things was not a game plan for corporate success. In this newer era of low interest rates and available cash, companies do not fear overspending on tech to get a fraction of the value they could have gotten with an almost cost-free lean program. They embrace that spending and the announcement that by using AI and big data they now know their customers prefer blue between 2pm and 3pm and red after 6pm.
Thirdly, and this is the one that slid under the radar, those production lines filled with human crammed shoulder-to-mechanical arm with robots never materialized. We have learned that the best world involves mostly humans with machines there to do the work that most humans hated or feared.
Resetting Our Ideas About Work
“Lean thinking is just a way to reduce cost.” This erroneous line has been repeated so frequently throughout the years that it has come to define what many believe is the sole function of lean. But, it is this widespread misbelief about lean that has launched a thousand other erroneous beliefs. It also has chilled use of lean in industries, such as law and consulting, where cutting costs sounds more like bargain bin services than improving the quality, efficiency, and timeliness of services.
The idea behind the cost-fallacy is simple. Look at any process and you will see waste. Waste means something that does not add value for the customer. Waste, however, does add cost. It costs the supplier more to produce the product or service. Some of that cost sticks with the supplier and some gets passed along to the consumer. Eliminating waste reduces cost. That helps the supplier and the consumer. If lean thinkers remove waste, lean thinking must focus on cutting cost.
To understand how misbeliefs about lean thinking have derailed progress in adopting it in the legal industry, we need to go to the beginning of the 20th century. Henry Ford built cars on assembly lines. Craft workers became assembly line workers and dissatisfaction grew. A person who once assembled an entire car now did one task over and over again — put the wheels on the left side and tighten the lug nuts. Understandably, the workers started quitting and Ford had a problem. He responded by significantly increasing wages (sounds a bit like associates in large law firms, but I digress).
Ford’s wage increase solved two problems. Higher wages meant workers were less likely to quit (recent surveys show associates have been leaving large law firms at lower rates since the firms increased wages recently). The work may be monotonous, but the pay was hard to match. Over time, assembly line workers become the heart of middle class America. With the wage change, Ford also created a new class of consumers for his cars. Higher wages meant more assembly line workers could afford the cars they built. Still, those workers did monotonous work to get the rewards.
In the mid-20th century, Toyota re-started its nascent car manufacturing business. Assembly lines had come a long way, but the Ford system benefitted from many things a Toyota car business would not enjoy. America had an abundance of workers and raw materials; Japan had neither. Toyota would have to figure out how to do “more with less” (a phrase you may have heard in the legal industry).
Cultural differences existed, though some scholars downplay the differences. Japan had a paternalistic attitude about employing workers. Once a company hired someone the culture dictated it should continue to employ them until they retired. Japanese workers also were more accustomed to standardized practices than their American counterparts. The culture embraced a more orderly, disciplined approach to living. Stability in the workforce and comfort working in a standardized environment did not hurt Toyota as it sought to introduced tight process control in its factories.
Whether it was the culture, an inflection point on the development of the industrialization curve, the lack of resources, W. Edwards Deming’s thinking (a major influence in Japan), or all of the above, Toyota pulled many strands together and assembled the Toyota Production System. TPS emphasized the workers. They were encouraged to drive innovation. They focused on reducing waste, much of which made their jobs harder. They internalized the idea that it was the customer who provided their jobs, not the company. That meant they were empowered to make things better.
Critics came from every angle. Many claimed that lean thinking (the democratized name for TPS) was simply a dressed up form of Taylorism. The initiative would fail, they said, because ultimately waste reduction would lead to people working harder and machines replacing humans.
Others claimed that lean thinking did not make any sense. Without buffers in the form of raw material inventory, warehouses holding pre-built product, extra workers, and systemic redundancies — all waste in lean thinking — a lean system would break down. (A fire at a Toyota supplier factory that was the sole source for a component did shut down Toyota factories for a few days.) These surpluses were not nice to have, they were necessary for the modern production system to absorb the shocks of uncertainty. By removing them, lean thinking would leave a system without any room for recovery. One hard hit and it would collapse.
Seventy years have passed and TPS has done more than survive, it has helped Toyota grow past its competitors (for a great article that covers the new Toyota story in detail, go here). The company enjoys higher margins and, with a notable lapse when Toyota took its eye off the TPS ball, high quality ratings. The efficiency of its supply chain is legendary.
Today, a few facts are emerging which show just how successful the lean thinking program has been. Remember the claim that lean thinking would lead to more mechanical machines and fewer people? It turns out that at an automation rate of 8%, Toyota has the lowest automation rate among the car manufacturers. In an industry that seems to adore robotics, Toyota has gone the other way. In fact, according to Toyota its automation rate today is the same as it was 15 years ago. Mitsuru Kawai, a Toyota engineer who has spent 52 years at the company starting there at age 15, sums up the Toyota philosophy this way:
“Humans should produce goods manually and make the process as simple as possible. Then when the process is thoroughly simplified, machines can take over. But rather than gigantic multi-function robots, we should use equipment that is adept at single simple purposes.”
Toyota enjoyed for many years the benefits of being the front-runner in employing lean thinking in manufacturing. But, it succumbed to the desire to be the biggest and sacrificed its lean principles for volume. That loss of focus caused quality to decline, safety problems to rise, and Toyota to stumble — big time.
Toyota leadership recognized that it lost its way and now is doubling-down on its roots. It has installed small manual assembly lines in several plants. Why manual lines? Because Toyota felt its workers were getting too focused on doing one thing (lawyers: stop me if this sounds familiar) and were not able to see the bigger picture when innovating. By not knowing how to build a car just install a part, workers were not the innovative force they had once been. Toyota is swinging the focus back to the workers and how they can help drive the company forward (no pun intended).
As Toyota has reinvigorated its focus on lean, it has seen a new round of waste removal resulting in cost reductions. Again, the focus is on removing waste and all the wonderful things that come from that, not on reducing cost. Cost reduction is a by-product, welcome to be sure, but not the focus.
This new round is bringing Toyota closer to its very long-term goal of “one-by-one” production. Imagine an automobile production line where each car coming down the line can be different. One lean goal is to reduce batch size — the number of like things made at a time — to a size of one. With something as complex as a car which has 30,000 pieces, getting the right combination of parts in the right place at the right time to do batch sizes of one has been a challenge. But now, Toyota is within striking distance.
Toyota’s investment in TPS comes at a time when all around them are fixated on the shiny bauble called artificial intelligence. We are threatened by stories that tell us AI will take over most of our jobs, or at least most of the tasks involved in most of our jobs, very soon.
An oft-quoted Oxford University analysis predicts that over the next two decades, some 47% of American jobs will be lost to automation. In China and India, that figure is even higher: 77% and 69% respectively.
The desire of each author to top the prior story has grown strong enough that we are in the “age of AI hype.”
The reality is much different. There are many tasks — routine, repetitive, and well-defined — where AI performs quite well. But, as those who work with AI has found, the limitations are many. Yes, AI enabled robots can move shelves around an Amazon warehouse in a beautiful ballet. But, robots cannot do the simple (for humans) task of picking an item out of a bin. Even when they can do complex tasks, they are easily outperformed by humans (something Toyota found when it measured humans against machines in building cars).
The dramatic difference comes when you are a company like Toyota and you want your workers to do more than simple, routine, repetitive tasks. In fact, your company’s future depends on them doing more and driving the innovation that will keep you ahead of your competitors.
John Launchbury, director of DARPA’s Information Innovation Office has described AI as lacking the skill of “contextual adaptation” — the ability to understand what they are doing and the decisions they make. The author of an article on Toyota’s reinvigoration with lean put it this way, “AI systems still lack cognition skills to understand and manipulate underlying explanatory models and identify and analyze real-world objects.”
Each day, there is another story about a law firm bringing AI into the fold. In a way, this is good. Lawyers need to learn about technology and what it can do. The fear of tech has been with us too long. But, employing AI without doing the groundwork of making the process as simple as possible through methodologies such as lean thinking take us farther from what should be our ultimate goal — high quality, low cost, timely legal services for clients. The right approach is not to use one or the other, but to use both lean thinking and AI to serve the client. Humans can simplify the processes as much as possible first. At that point, simple, easy to use, flexible and adaptable technology can be brought into the process. This plays to AI’s strength, which is to do one thing extremely well.
The law firm that masters this approach will have succeeded in building a highly defensible place for it in the market. It will meet client needs better than competitors and at lower costs. It will be better positioned to incorporate new technologies as they become available. It will, in short, be the law firm of the future. Today, it is nothing more than a gleam in the futurist’s eye.
Ken is an author on innovation, leadership, and on the future of people, processes, and technology in the legal industry. He also is an adjunct professor and Research Fellow at Michigan State University’s College of Law. You can follow him on Twitter, connect with him on LinkedIn, and follow him on Facebook.
