Why Robots are Putting Employees Out of Work … and Creating Jobs

Automation and outsourcing have been blamed for putting a lot of people out of work.  Ironically innovation is what produces wealth and creates jobs. 

Technological innovation is linked to three-quarters of the Nation’s post-WW II growth rate. Two innovation-linked factors – capital investment and increased efficiency – represent 2.5 percentage points of the 3.4% average annual growth rate achieved since the 1940’s.

In addition, innovation produces high-paying jobs. Average compensation per employee in innovation intensive sectors increased 50% between 1990 and 2007 – nearly two and one-half times the national average.

Robots and JobsUnfortunately many of the workers put out of work by innovation don’t have the education and skills to do the new jobs created and therefore don’t have access to these high-paying jobs. Instead their former jobs with middle class wages are now obsolete and can be performed by workers half-way around the world or by machines for a fraction of the cost.

The poster child for this scenario of course is manufacturing.  No industry has been hit as hard as manufacturing when it comes to technology and outsourcing.  But despite the recession, manufacturing is creating jobs. It’s just that jobs being created by automation and globalization require very different skill sets than those made obsolete by change. As recently as the fall of 2011, a study by Deloitte and the Manufacturing Institute found that U.S. manufacturing companies have as many as 600,000 jobs that go unfilled because companies cannot find workers with the proper skills.

For example, Amazon.com recently announced it was acquiring Kiva Systems, a warehouse-automation systems company, for $775 million.  This undoubtedly will end up costing the economy more jobs. Instead of hiring more human warehouse workers to meet growing demand, robots (manufactured by Kiva) will locate items and transport them to workers to pack and ship. This change will help Amazon lower labor costs and improve accuracy.  Essentially these robots will make up a significant demographic in Amazon’s future workforce.

But robots aren’t created by adding water to powder. Nor are they maintenance free.  That could be the reason that the number of online help-wanted ads seeking robotics expertise shot up 44% in the first two months of 2012 alone, according to research firm Wanted Analytics. Engineers, the most of any occupational field, experience a 51% year-over-year increase. Technology related jobs that required robotics skills increased as well, up 66% from January 2011.

That growth has created a widening chasm between the supply of career line workers and the demand for workers who can operate PLCs, programmable logic controllers. The irony of this situation is that the industry associated with the highest job losses (auto manufacturers) are now scrambling to find robot engineers and technicians.  Unfortunately for many of the laid-off workers, the jobs they left in 2008 no longer exist. And the skills they have used for 20 or 30 years no longer apply. Even when the auto manufacturers are looking for workers, they can’t just hire back former employees.

Cloud computing is another innovation that gets blame for a loss of jobs. And yet this industry is creating millions of new jobs too. 

Global tech research and advisory firm IDC says by the end of 2015 almost 14 million new jobs will be created by the shift to public and private cloud services. Unfortunately most of those new jobs will be outside the U.S. and Canada, although North America will get 1.2 million new jobs, most of them in the U.S.

How does innovation that displaces workers create new jobs? The time and money now spent managing in-house systems will be freed up for other projects. New business innovation, which leads to business revenue, leads to more job creation. Rather than eliminate IT jobs, the migration to cloud computing will create new different jobs.

The Deloitte survey also found 5 percent of current manufacturing jobs are unfilled due to lack of qualified candidates, 67 percent of manufacturers have a moderate to severe shortage of qualified workers, and 56 percent expect the shortage to increase in the next three to five years.

Nearly two in three manufacturing executives surveyed say workforce shortages or skills deficiencies in production rolls are having a significant impact on their ability to expand operations or improve productivity.

Re-work of Work Makes Average Worker Obsolete

The concept of work is getting re-worked.  All this change establishes a new norm. The skills required to get and keep a job are changing dynamically and continuously. Individuals seeking good paying jobs will need to develop and maintain skill sets not for just one lifelong career but skills transfer to multiple and sometimes simultaneous careers.

Tom Friedman in a recent New York Times editorial hit the proverbial nail on the head:

In the past, workers with average skills, doing an average job, could earn an average lifestyle. But, today, average is officially over. Being average just won’t earn you what it used to. It can’t when so many more employers have so much more access to so much more above average cheap foreign labor, cheap robotics, cheap software, cheap automation and cheap genius…Average is over.

Change has always made some jobs obsolete but created new jobs, new products, new services. But the change is happening faster. As a result, we know for sure that with each advance in globalization and the technology revolution, the best jobs will require workers to have more and better education to make them above average.  

Unfortunately discussions about education and re-training miss the scope and magnitude about how work and skills needed to do the work are changing.

Future of Work Skills

The Re-working of Work Requires New Skills

The Institute for the Future (IFTF) recently released new research that suggests that a qualitative shift, perhaps an order of magnitude greater than the outsourcing revolution, could now be taking shape. The very idea of “work” is being re-worked. Talk about telecommuting and the political fetish with the outsourcing football completely miss the big picture.

The IFTF’s recent project with the Apollo Research Institute on the future of work skills describe some of the new work skills required to leverage emerging automation technologies. I’m mentioned several of these skills in previous posts and articles – adaptive thinking, cognitive load management, cross-cultural competency, sense making to name a few.  I’ve also mentioned collaboration as a must-have skill going forward. But again, the scope of collaboration is something that most people don’t yet grasp.

When someone mentions collaboration, the immediate image likely projects people working together, teamwork, and cooperative.  But this picture of collaboration is based on Industrial Age conditions. This makes collaboration serves as the perfect starting point of a discussion about how work and work skills are changing. 

Going forward collaboration is not just a relationship between one human and another but between man and machine. Unlike the John Henry legend where man’s skills challenged the productivity of a steam-hammer or chess champion Garry Kasparov’s brilliance competed against the intelligence of Big Blue, future innovation will depend upon people racing with machines, not against them.

A recent article in The Futurist, Thriving in the Automated Economy, expanded this discussion. The authors believe that the key to winning the race is not to compete against machines but compete with them.  You need to look no further than the art and science of data mining to grasp this concept.

Big data is big and only getting growing bigger at a faster pace. For example, man created 150 exabytes of information in 2005. In 2011, it created over 1,200 exabytes of new information. To provide a point of reference, 5 exabytes equals 37,000 new libraries the size of the Library of Congress. By 2013, the amount of traffic flowing over the Internet is expected to exceed 668 exabytes.

This explosion of data is one thing. Competitive edge comes to the organizations who can understand it. The ability to understand it requires analytical skill sets that few people have. Finding a solution requires not only exceptional “making sense” skills but the ability to collaborate with machines. That is why by 2018, the United States alone could be short 140,000 to 190,000 people with the analytical skills necessary to use big data to make effective decisions.

The concept of work is getting re-worked. Collaborative automated systems will blur the line between “tools” and “co-workers” in next few years. The worker with average skills is or will be a low-skill, low-pay worker very soon.

Thriving in an automated economy requires innovative and collaborative skills few of us possess.  What are some of trends in work and skills required to do the work you see developing? 

Related articles:

New Job Era Arrives

What Jobs Should the U.S. Be Creating?

3 Lessons Every Business Can Learn From Kodak’s Bankruptcy

The bankruptcy of former photo giant Kodak is loaded with lessons that business owners can learn.  The fact that Kodak invented the digital camera over 35 years ago, a decade or more before its competition, makes the story even more tragic.  The lessons business owners and management can learn from the fall of Kodak are compelling and relevant.

Besides never capitalizing on the digital-camera technology it helped create, Kodak ignored the marketplace.  That’s what happens when management thinks it knows what’s best for its customers and stops listening and adapting.  It ignored technology even though its world-class laboratories were introducing new products years ahead of the competition. Kodak management continued to believe it could introduce new products when it was ready, not the consumer.

Social media didn’t exist when Kodak decided that paternalism was in its best interest. Today, turning a deaf ear to your customer could be a near-fatal strategy. Just look at the response to the Netflix subscription brouhaha following by the Verizon fee fiasco.  Had social media been a primary mode of communication in the 80s and 90s, Kodak’s fall would have been much faster and deeper.

The truth is that by the time Kodak go into the game, it was too late.  Kodak was outclassed by more nimble competitors with better products that didn’t even exist just a few years earlier.  For nearly 30 years, it was classic David and Goliath and David slayed Goliath over and over again.

Whenever Kodak took a shot at getting into the digital game, it tried to knock one out of the park.  Unfortunately they were playing in the ballpark.  They viewed Fuji and the like as its primary competition. It completely ignored companies like Apple, Intel, Nokia, and Motorola whose technology made film photography obsolete.

In 1975 Kodak invented what was then referred to as a “film-less” camera. Management killed it because if introduced, it believed film-less photography would cannibalize its existing business. How many businesses today are fighting to keep fading products and services alive to preserve its own existence, ignoring revolutionary changes in the marketplace and radically different consumer wants.

Fortunate for Kodak, it got a 2nd chance to revolutionize how consumers took photos.  In 1995 Kodak brought its first digital camera to market, the DC40. This was years before many others would get into the digital game. Kodak never took advantage of its early start. Embracing digital photography meant cannibalizing its own business.

Few people could envision the world today where 2.5 billion photos are uploaded to Facebook daily and shared with family, friends, and even complete strangers. Sharing via the Web is by far the biggest way people use their photos today and again Kodak had a chance to be the leader in this business. It purchased the Ofoto service in 2001 but took four years to relaunch the service as Kodak EasyShare Gallery.  As anyone knows, technology doesn’t wait for you to catch up.  Thinking its history and one time world dominance  could stall change, it dragged its feet. By the time EasyShare Gallery launched, Facebook, Flickr, Picasa, Photobucket and others were becoming household names. Kodak went from industry leader to also-ran.

It also ignored what has become a critical blindspot in the vision of many business leaders.  It’s not always your competitor who is the biggest threat to sustainability and growing marketshare. Sometimes it’s a new technology that makes your product obsolete.

While worried about Fuji, Kodak ignored cellphones and how digital sharing would change the way consumers interacted with their photos.  Still thinking that like a print company, Kodak launched a line of digital frames and photo printers. If it couldn’t make photo paper, it could at least help consumers print photos at home and then frame them, right?  Wrong again. Its frames didn’t include wifi and only worked when they were plugged in.  And most recently, it completely ignored the mobile revolution and was a very late entry into the app marketplace.

it was a virtual non-presence in mobile apps (no, SmileMaker doesn’t count), which cemented the company’s irrelevance in the way people experience photos today. There are no Kodak moments in mobile.

There are three critical lessons here for all business owners and management.

  1. Be nimble. Be quick. Change is inevitable and it is happening faster than ever before. You can’t be afraid to cannibalize your own business in the name of progress. Learn from RIM, the owners of the once-dominant Blackberry, who allowed the iPhone and Android phone to erode their marketshare. Learn from Sony whose hesitance to develop a digital Walkman allowed the iPod to replace it.  Learn from Blockbuster which ignored Netflix.
  2. Your competition may not be who you think it is. Learn from Sears and K-Mart which felt that two failing former giants was better than one. Sears had one of the world’s best known brand names – Kenmore. Instead of leveraging this asset, it squandered it.  It focused on Walmart and Target as its biggest threat, despite neither of those retailers selling large appliances. Sears ignored how Amazon was changing the way consumers buy everything, including large home appliances not just books and music.
  3. Listen, listen, listen. Companies may own their brand and they may manage it. But social media changed ownership. You don’t own your brand anymore – your consumers do. Silence is no longer golden. If you are not listening, you are not playing on the same field as your competition.

Kodak’s misguided attempts to slow changing consumer buying habits and a malignant reluctance to innovate killed an industry and American manufacturing icon.  After over a century of inovative leadership, another corporate giant has fallen.  What can you learn from Kodak so that history does not repeat itself?

What Every Organization Ought To Know About Innovation

Without innovative ideas, a company stagnates and may even cease to exist. In other words, innovate or die.

But innovation isn’t just about turning on your right brain, brainstorming, and generating a few “aha” moments. It’s more than just dreaming up new ideas. Innovation is the "act of introducing something new” – with an emphasis on something new.

Harvard Business School professor Clayton Christensen has a little vignette in his book The Innovator's Dilemma about how people were trying to fly in the Middle Ages by fabricating wings, strapping them onto their arms, jumping and flapping real hard. For centuries subsequent innovators framed the problem as: The guys who died just didn't flap hard enough. Yet it still never worked. Once they understood that there were some basic laws of nature that they needed to account for, once Bernoulli understood fluid mechanics well enough to articulate his principle, then there was a law of nature we could actually harness.

A lot of good managers during these challenging times are flapping their wings. They are working very hard to fight some fundamental changes in the way we will do business when they should be harnessing the changes and identifying the opportunities.

What’s standing in their way? Until this century, businesses executed change at a controlled pace.  Market strategies were developed years in advance and product roadmaps extended years into the future.  Today, unprecedented changes in markets, technology, economies, and consumers' taste is continuous, complex, chaotic, and accelerating.  This rapid change has created a new set of challenges – very quickly.

Innovation demands creativity, the ability to develop new ideas.   But despite the entire emphasis about being more creative, every new idea isn't innovative. And many life-altering ideas never see the light of day.  Why? 

Because the only way creative ideas become reality is by taking risks. “The willingness to take risks is not always easy,” according to Jacqueline Byrd, the brain behind Creatrix,“ especially when forced to push an idea against opposition and adversity.  Innovation requires a willingness to accept criticism, to withstand frustration, and to make mistakes. In other words, innovation means that a person or organization is willing to push his or her ideas forward at some potential risk to his or her own security, career, reputation, or self-esteem.

Byrd, the author of The Innovation Equation, suggested in a recent Blog Talk Radio interview, that every organization should be asking, “Do we have the stomach and capacity to innovate?”

Strategically, that’s a fundamental and essential question for every organization and individual. In future posts, I’ll be writing more about how you and/or your organization can assess this innovative capacity, how to determine how much is enough, how to identify the 7 drivers of creativity and risk-taking, and 9 personality traits that shape innovation.

Learn more…listen to Innovative Capacity on Blog Talk Radio.