Questions on the Future of Work

Mckinsey has released a long awaited (by me anyway) report on the future of work entitled A Future that Works: Automation, Employment, and Productivity. It is a very interesting look at the technologies which are affecting the future of human work. Every business and organisation should read it in full.

Mckinsey takes a distinctly different approach than the much discussed Frey and Osbourne Oxford report on the susceptibility of jobs to computerisation.

This difference can be best seen in the following graphic from the report:

mckinsey-work-report-2017-exhibit-e1-18-separate-activities-mapped

Instead of looking at what jobs might be replaced the team at Mckinsey have examined all the activities that each job in the USA job market entails and then looked at the various capabilities for each of those activities. They have then mapped those activities against the possible timelines of those activities being able to be performed by technology.

This is important because except for very limited cases technology replaces activities rather than whole jobs.

From this approach Mckinsey have created various forecasts for both the types of activities and the sectors of the economy as shown in the next graphic which shows their view about the ability to automate those activities.

mckinsey-work-report-2017-exhibit-e4-different-sectors-mapped

Taken in aggregate their predictions are shown in the next graphic which I have annotated

mckinsey-work-report-2017-exhibit-e6-adoption-scenarios-annotated

RED: Their median forecast that 50% of all current activities will be replaced by 2055

BLACK: The rapid adoption forecast that 50% of all activities will be replaced by 2035 (only 18 years away)

GREEN – The extrapolation of the rapid adoption forecast from 2035 that shows that over 90% of current activities will be replaced by 2055.

Mckinsey also states that:

 “According to our analysis, fewer than 5 percent of occupations can be entirely automated using current technology. However, about 60 percent of occupations could have 30 percent or more of their constituent activities automated”

Apart from praising Mckinsey (which I do not normally do) for creating such detailed and interesting work, and also in highlighting the inherent uncertainty in any forecast, this raises several interesting questions in terms of impacts and change.

 

From an organisational perspective those questions include::

  1. Setting aside the changes the technology makes to our business models and speed of doing business if 20-50% of activities are going to be replaced over the next 18 years how are we going to lead our people through the continual change that is going to be required? If the average is 50% then many people will have far more of their activities replaced.
  2. If technology takes over more and more of non-routine activities in our organisation what are the skills we are going to need?
  3. If technology pushes people out of the lower skilled activities in the whole economy how many people in the whole community are capable of carrying out the higher skilled activities we will need our people to concentrate on? Will we be in an even fiercer fight to recruit the people we need?

An article in the New York Times on January 30th 2017 describes When the German engineering company Siemens Energy opened a gas turbine production plant in Charlotte, North Carolina:

some 10,000 people showed up at a job fair for 800 positions. But fewer than 15 percent of the applicants were able to pass a reading, writing and math screening test geared toward a ninth-grade education

Eric Spiegel, who recently retired as president and chief executive of Siemens U.S.A. said “People on the plant floor need to be much more skilled than they were in the past. There are no jobs for high school graduates at Siemens today.”

From a societal point of view this raises questions of:

  1. Are we heading into a period of increasing structural unemployment?
  2. How will we design an education/learning system which gives your young people the skills they need to work in the changed economy and our post school/university people the capacity to re-skill?
  3. If education is changing to be more focused on re-skilling people for jobs how do we still supply the wider general benefits of education?

Part of the answer to the second question is contained in the New York Times article where it describes the companies getting heavily involved in educating and training people with guaranteed jobs at the end of the cycle, and just as importantly no student loan debt. This was mirrored in my conversation in a trip to Austin Texas last year. Austin is growing at an enormous rate and part of the reason is that some of the major tech companies have realised that if they do not get involved with students before they graduate they may never get to hire them. So they are moving major parts of their operations closer to the Universities with strong reputations in the skills they need. University of Texas Austin happens to be one of those. Students are becoming heavily involved and supported by the companies.

When I work with clients on these issues they should be focused on the effects on their business or their organisation but the conversation always turns to the wider implications for society.

The techno-optimist argument is that technology has been destroying human jobs for hundreds of years and we have always created new ones. That is partly because we have created new capabilities that need people, but also because we have reduced the costs of inputs to make otherwise uneconomic business models viable. Mckinsey argues in their report that their median forecast results in job losses that have already been experienced in society as we reduced the human employment levels in agriculture, and then again in manufacturing. This is true if the pace remains the same.

On top of that they argue that the productivity improvements are required because we are losing the huge contribution that population growth rates have contributed to economic growth over the last 100 years. That is a good argument.

It is a brave futurist who says this time is different and it is completely plausible that the combination of new jobs being created, and the demographic change we are experiencing, particularly in developed economies will mean that we will still have close to full employment. It is also plausible that:

  • The pace of change will be at the rate that fulfills the rapid adoption scenario that Mckinsey has envisaged, increasing the rate of job losses above previous experience.
  • That as technology pushes people out of a whole range of human capability jobs we will find that a significant minority of people do not have the ability to carry out the jobs that are created.
  • That a significant group of people that have the abilities will be left behind because they cannot gain the skills required to harness those abilities.
  • That the combination of the two groups will either have to work for very low wages in order to not be replaced by technology or be permanently unemployed.

That is a recipe for societal unrest way beyond what we have seen in the rise of Donald Trump and Marie Le Pen. If the political response to the issues of the people that have expressed their frustration at the current system is to promise a greater share of the benefits of the economy and a genuine attempt to do that is derailed because of technology changes we could be in for a very bumpy ride indeed.

 

 

 

 

So Your Daughter Wants to be a Motor Mechanic

Myself and Christopher Rice (@ricetopher) have started writing a book on the life and work skills that a child entering their first year of high school right now will need in 15 or twenty years time. There is a lot of stuff around about the disruptive effects of technology (especially robotics and artificial intelligence) will have on work and the economy over the next twenty years but we wanted to focus on the conversations that parents are having with their teenage children about these things right now.

There are a large range of issues to consider and we will be posting examples of our thinking to this site over the next few months as we write.

As an example of this consider the situation where your sixteen year old daughter or granddaughter is considering becoming a motor mechanic. What advice would you give them.

queens auto mechanic female via nydaily news amd-audra-fordin-jpg

Picture:NYdailynews

In order to train as a motor mechanic the individual concerned must think there are reasonable chances of good employment as well as having a passion for mechanical things. Due to the length of training you would want those prospects to be long term. The prospects for a motor mechanic in 15 years time are highly dependent on a range of interacting factors:

First of all it is clear that robotics and computer technologies have had their greatest impact on routine manual and cognitive (sense making/ intelligence) jobs that can be easily automated. Think robots in car manufacturing plants, online accounting packages, or websites that now sell all sorts of travel products and services.

Secondly it is now obvious that technology is now pushing into areas that have much higher requirements for intelligence and creativity and are less routine and therefore less easily automated. Examples include driverless cars, journalism (An NPR Reporter Raced A Machine To Write A News Story. Who Won?), specialised manufacturing (Cheaper Robots, Fewer Workers), and even senior management (Here’s How Managers Can Be Replaced by Software). Recently there was even a story about machine systems rapping (Machine learning algorithms can ‘bust a rhyme’ better than humans by 21%).

Thirdly it is in the interests of business to make most work more routine because this affects the balance of power between employers and workers and therefore costs. Routine jobs require less skills and therefore on average wage levels will be lower. If wage levels are high in routine jobs they are under more risk of being replaced by technology because the economic case is better.

Fourthly there is a risk of overall disruptive change in the industry you choose to work in.

So let’s look at that from the point of view of a teenage girl thinking of becoming a motor mechanic.

Cars have clearly become more complex over the last decade and are becoming travelling computers and software platforms as much as they are a form of transport. To the extent that John Deere and GM have recently asserted that you don’t own your vehicle, you only purchased the right to use it in order to protect their software(GM says you don’t own your car, you just license it). Tesla updates its cars via software releases over the internet.

Generally one would think that increasing complexity would mean that the skills of the mechanics would have to rise and therefore it would be a good job to have. However there are several factors pushing this in the opposite direction:

  • The software systems are so complex that the job of monitoring and managing them is being increasing taken over by automated machinery that is moving towards a plug and play model that both diagnoses and fixes the car without human involvement.
  • Being a motor mechanic for specific brand of cars is essentially working in a closed system. The cars are all manufactured to a specification that is well known and understood. This means that the system you are working in is much more open to standardisation.
  • Companies such as BMW are introducing augmented reality systems that are able to recognise the car they are looking at and supply instructions and videos and augmented overlays that assist mechanics in doing their work. With massive investment and development of augmented systems around the world for a multitude of uses it is likely that these systems will rapidly improve. These sorts of technologies are very useful but they tend to lend themselves to de-skilling the workforce. If a mechanic is able to follow detailed and useful instructions overlaid on to their field of vision then there is less need for training. Less training means lower skills and easier replacement by others. Both indicators of lower wages

In the longer term the advent of driverless cars will greatly affect the job of the mechanic. There are various views on the timelines for the full scale implementation of driverless car but we view it is inevitable and likely within 15-20 years.

Currently our cars are idle about 94% of their life. The full implementation of driverless cars will mean that a large percentage of cars will be used far more as they move from transport job to transport job as de facto public transport system. Therefore the standard car is likely to do 60-100,000 km a year instead of the current 15,000 km. It also makes sense as a business model for driverless cars to be less personalised than in the past as we move from ownership to rentership[1].. Therefore very large scale model runs of cars that have greater durability and can be easily and systematically maintained make more economic sense. We will probably design cars that have lifetimes of 500,000 km but will still only last 6-8 years.

That means that the processes of fast food franchises/manufacturing plants will be applied to car servicing. This will include modularised systems that can be robotically swapped in and out of cars on a production line, with other servicing carried out on the same line Therefore skilled mechanics will be less in demand and will be replaced by a sort of basic manufacturing job.

Therefore our view is that the future job of motor mechanic for your daughter or granddaughter is much less promising than it seems currently. We would recommend that you steer that mechanically minded teenager more towards the field of robotics and drones which show much more promise and likely demand, but more on that later.

We would welcome your comments and debate

Paul Higgins and Christopher Rice

[1] A term used for moving from a system where we own most things to a greater percentage of the physical products we access being rented rather than owned.

My job advice to my nephews and nieces for 2025

I spent a few days over the Christmas break down at my parents house near the beach on the Mornington Peninsula and hung out with my brothers, sisters in law, and my nephews and nieces.

During one of our later night discussions which are always willing but friendly one of my sisters in law posed the question of what my view was on what they should be advising their children on their future work prospects and directions. We had a bit of a discussion on that but then I sat down and collated a few thoughts for them and some things I think they should read. This is the gist of that advice:

Bottom line is that I believe that we are at the edge of a technological revolution in robotics and artificial intelligence.

Advances in robotics that include cheaper and better sensors and intelligence capacity will move them beyond manufacturing and into cooperative manufacturing, and assisting and replacing humans in all sorts of physical tasks.

Advances in artificial intelligence due to massive increases in computing power and moves towards much better natural language computers/semantic knowledge/deep machine learning will move computer intelligence out of just replacement of easily routinised jobs due to data crunching capacity, and into many more areas of human work – e.g. computer assisted journalism

There are really two scenarios here – that we will see more changes than we can imagine as in the industrial revolution, and more and more jobs will be created, or large slabs of jobs will disappear for ever and not be replaced, and that will cause significant disruption and competition for work unless we move to a new way of having an economy. Now you can take the Luddite view or you can take an optimistic view but the key to thinking about the future is to create a strategy that deals with multiple possible futures as well as you can, whilst understanding that most of the futures you can think up will probably not go close to mapping what the world will look like.

Just to put this in context my youngest niece will probably not enter the workforce until at least 2025, and more probably 2030 and will then have a working life which is likely to extend to 2080 so we are talking about long time frames here.

So what advice would I give to a parent of a 5-15 year old at the moment.

The key is involvement in :

  • Jobs that are not easily routinised – my brother mentioned plumbing and other trades and he was right– the capacity to carry out a complicated task that is different every time and interact with people will still be highly human centered.
  • Jobs with high levels of manual dexterity – robotics still find that hard to master although some systems of surgery are better than people already.
  • Jobs that require high levels of empathy and capacity to interact with people – e.g. aged care, teaching, although stuff like retail is likely to become more data and network facilitated than through an individual shopping experience.
  • Jobs that require the capacity to coach and facilitate networks to perform rather than the current emphasis on managers and hierarchies – requires empathy as well.
  • Jobs centred around the ability to find insight in data – assisted by AI but value added by people.
  • Jobs that are highly creative and require visions and connection.
  • Jobs that cross the boundaries of the jobs types I have listed above.
  • Jobs centered around the ability to code

In terms of thinking about this more I would recommend looking at the following

Better Than Human: Why Robots Will — And Must — Take Our Jobs – by the fantastic Kevin Kelly

Algorithms, Robots and the Future of Management – a previous post by me with a great addition from my friend and colleague Stowe Boyd

I also recommend you read Stowe’s :Beneath the chatter about the Future Of Work lies a discontinuity which I think is more about the near future than the long future.

The IFTF report on future work skills – details drivers and skills

In the end we can give all the clinical and logical advice we like but the most important thing for them to do is to pursue what they are passionate about with a weather eye out to the fact that you need passion, skills and a market to make a living and:

  • If you have passion and skills but not market you have a hobby
  • If you have skills and a market but no passion you will be mediocre or burnout
  • If you have a market and passion but no skills you will fail in an increasingly competitive world

The great thing about the modern world is that skills are easier and easier to gain, and markets can span the globe for an individual or a small organisation. So passion is the cornerstone.

Paul Higgins

Some readers have requested some further links and reading on these issues. Here are  a a few from our scanning database:
Robots Can’t End Amazon’s Labor Woes Because They Don’t Have Hands

This was written by RACTER, a computer program that can generate original English language prose and poetry at random

SWARM Quadrotors (Aerial Robots): Coordinated Flight of Small Quadcoptors Interacting with Humans

A Mind-Controlled Exoskeleton Will Kick Off the 2014 World Cup

Brainlike Computers, Learning From Experience