Robots and AI eating into job market for predictable and routine work

29 August 2016

Robots and early AI are already proficient enough to displace vast tracts of predictable physical work and data process tasks. The effect of automation may see more and more tasks taken away from humans, across a wide range of professions, either creating more time for different tasks – or seeing a reduction in FTEs. Management of people remains an area with a low automation potential – given current technologies.

Automation has the potential to free humanity from the fetters of repetitive, physically demanding and, often, unpleasant work. The loss of such work, particularly where few skills are required, may have undesired effects – such as mass unemployment, and misery of another kind. The first industrial revolution, while in the long term leading to improve human prosperity – particularly in the west – came with mid-term costs, as generations of low skilled and artisan workers were side-lined.

As a new form of the industrial revolution, focused primarily on AI and robotics, appears to be rapidly approaching – questions are being asked about the social and economic consequences. The end of drudgery, may also mean increased unemployment, income inequality and suffering. While ways forward are being considered, including models like basic income, the extent to which AI and robotics will eventually affect workers is being explored by a range of institutions and organisations. McKinsey & Company's latest thought piece on the topic looks specifically at the technical capability of the technology to displace traditionally human tasks. 

The analysis highlights that the rise of robotics and machine learning is more nuanced than a clear cut – robot replaces human – narrative. It is likely that robotics and AI will take specific tasks away from human operators. This may mean that humans are open to doing more, or, if there is no more that they can or need to do, that one person takes on more of a different task, replacing another. The article is based on an analysis of more than 2,000 work related actives in the US across 800+ occupations, derived from the US Bureau of Labor Statistics and O*Net.

Feasibility of replacing human tasks with new automation technology

As it stands, the current line of robotic and AI technologies, will begin to heavily affect around 51% of all work time in the US. Much of this time is spent on data collection, data processing and predictable physical work.

The analysis suggests that predictable physical work, performed in an environment that is relatively stable, such as in food service and accommodations, manufacturing and retailing, is highly susceptible to automation. Particularly manufacturing is open to transformation, with around a third of all work in the environment considered predictable. Given the relative ease of automation, at current technological advancement, up to 78% of tasks could be replaced.

It is not merely low-level production work that is open to this form of automation, however, as data processing and data collection tasks too are open to becoming robotised. The firm calculates that 47% of retail salesperson’s activities have the technical potential to be automated – although this is far below the 86% of mid-level professional activities such as bookkeepers, accountants, and auditing clerks that can be replaced by an automated system.

Sector specific automation of tasks

The research also sought to identify which positions have the most potential for automation. Educational services and management are the areas least likely to be heavily affected by the current best technologies. Educational services, in particular, has low levels of the three most easily automated tasks, data collection, data processing and predictable physical work. Managers can expect some of this work to be automated, particularly those pertaining to data collection and processing. Construction and agriculture, which involve large amounts of unpredictable physical work, will see some automation – although the nature of the tasks currently protects workers in the segment from replacement.

The firm notes that the analysis is focused primarily on the ability for current technologies to displace tasks – not that such tasks will necessarily be replaced. The cost-benefit analysis is not itself part of the analysis, and, in certain situations, workers remain cheaper and more plentiful than the capex for a robotic system. Even here, however, changes in the cost of technologies are rapidly advancing, with in some domains, particularly RPA, the costs of an automated system may far outweigh that of employment. New technologies, particularly those that allow for improved natural language interactions – in which robots can understand and respond – would, according to the firm, open vast new tracts for possible automation.


Four ways digitalisation is transforming car brands and dealers

16 April 2019

From changing expectations from the customer to new stakeholders entering the industry, the digital transformation of global automotive industry means it is facing the wholesale transformation of its business model. In a new white paper, global consulting partnership Cordence Worldwide has highlighted four major digital trends that are transforming the relationships between car brands and dealers with consumers.

With digital transformation drives booming across the industrial spectrum, automotive groups are no different in having commenced large digital transformation programmes to improve productivity, efficiency, and ultimately profitability. Falling sales figures mean the automotive sector is facing an increasingly difficult road ahead, something which means companies in the market are even more hard pressed to find new ways to improve their bottom lines.

While it offers major opportunities, the industry’s move to digitalise is not without complications. It has triggered a series of major internal changes, which have presented automotive entities with the challenge of becoming a “customer-oriented” industry. A new report from Cordence Worldwide – a global management consulting partnership present in more than 20 countries – has explored how automotive companies are navigating the rapidly changing nature of digital business.

New business models

The level of change likely to be wrought on the automotive industry by digitalisation is hard to overstate. Automation could well lead to significant reductions in the number of accidents, higher vehicle utilisation and lower pollution levels, while leading to a $2.1 trillion change in traditional revenues, with up to $4.3 trillion in new revenue openings arising by 2030.

As a result of this colossal opportunity, it is easy to see why almost all automotive groups now have digital departments, with generally strong communication within the digital transformation and the customer approach. The changes to society which this may have are potentially distracting automotive firms from the change it is leading to in its own companies though, according to Cordence’s paper.

The automotive market is dead, long live the mobility market

Because of this, the sector’s business model is set to transform over the coming decades. With digitalisation speeding up the appearance of concepts such as car-sharing, a subscription package model will likely become more palatable. At the same time, car and ride-sharing models will cater to the sustainability criteria of millennials, who will rapidly become one of the automotive market’s leading consumer demographics in the coming years.

Antoine Glutron – a Managing Consultant with Cordence member Oresys, and the report’s author – said of the situation, “These ‘old school industries’ are now working on creating new opportunities, but in so-doing are facing challenges and threats: new jobs, new technologies, new ecosystem of partners, necessary reorganisation, different relationship with customers, and even new businesses. The customer approach topic is in fact a real challenge for car companies as it implies changing their business model and adjusting their mind-set to address the customer 4.0: from product-centric to customer-centric, from car manufacturer to service provider.”

Digital customer experience

In the hyper-competitive age of the internet, even top companies face an uphill challenge when it comes to holding onto customers through brand loyalty. Digital disruption has resulted in changes to consumer behaviour, which is forcing a range of marketing strategists to reconsider their old, possibly out-dated strategies. As modern customers wield an increasingly impressive array of digital tools and online databases, they and are now able to quickly and conveniently compare prices, check availability and read product reviews.

The automotive sector is no exception to this trend, according to the study. In order to adapt to the needs of the so-called ‘customer 4.0’, car companies will increasingly need to change their business model and move away from product-centric companies to customer-centric ones, from car manufacturers to service providers.

Glutron explained, “As an automotive company, you can no longer expect customer loyalty simply with good products; you must conquer and re-conquer a customer that “consumes” your service. The offer now has to be global, digital and personalised. Your offer has to be adapted to this customer’s needs at any given moment. A key issue related to data control is to build customer loyalty by creating a customer experience 'tailored' throughout the cycle of use of the 'car product': purchase, driving, maintenance and trade-in of the vehicle.”

One way in which the sector may be able to benefit from this desire for a tailored experience is via connectivity. Consumers are generally positive about new connective features for automobiles, and many are even willing to pay upfront for infotainment, emergency and maintenance services. Chinese consumers, where the connected car market is set to hit $216 billion, are already particularly interested in paying a little more for navigation and diagnostic features in their future new car. This can also enable automotive companies to exploit a rich vein of customer data, enabling them to rapidly tailor their offerings to consumer behaviour.

New automotive segments

Digital transformation has also brought with it the rise of completely new application areas. As mentioned earlier, the most well-known example is the autonomous or self-driving car, where the last steps forward were not taken by major automotive groups but by technology companies such as Tesla. While this may have given such firms the edge in the market briefly, a number of keystone automotive names will soon be set to take the plunge into the market themselves, leveraging their car manufacturing prowess and huge production capacities to their advantage.

Before companies rush to invest in this market, however, it is worth their while to remember that the readiness and uptake for such vehicles differs greatly geographically. For example, following a study published in 2018, 92% of Chinese would be ready to buy an autonomous car, compared with only around 35% of drivers in France, Germany and US. Meanwhile, the infrastructure of different nations will also be significantly less accommodating of the new technology.

Use digital for steering thr activity

Elsewhere, Cordence’s analysis has suggested that hooking the cars of tomorrow into the Internet of Things is also likely to see a rapid change in the business model for car maintenance, providing real-time diagnostics for problems. This presents chances for partnerships to improve the connectivity of cars, especially with tech companies; for example, PSA partnered with IBM for a global agreement on services in their vehicle. Meanwhile, data could also be sold to other parties with an interest in this data, such as the government, which could use it to manage traffic levels, or ensure that only adequately maintained vehicles take to the road.

Glutron added, “With the increase in the amount of client data and connected opportunities, the recommendation is to set up data-centric approaches. The value is now in the customer data. The general prerequisites are to rework the data model and the Enterprise Architecture and generally build up a data lake including data from all sources (internal and external, structured and unstructured).”

From automotive to mobility

Relating further to the idea of connectivity, the report claimed that automotive firms must now adjust their models in line with the provision of end-to-end mobility, rather than treating the sale of a car as an end point in their relationship with the customer. In order to realise this transformation, transformations are likely to become more and more important.

A network of partner companies means automotive firms can provide a global mobility experience. As the vehicle is increasingly connected to its environment, new partners can also be cities, governments, and other service providers within the global mobility services industry in which the car brands want to take part.

According to the study, the target is clear. Companies must look to a holistic transport service, offering to move customers from A to B in a unique and pleasant way – otherwise they might as well take public transport. At the same time, they should extend the services reachable “on-board” (especially the enhancement of the connectivity between the car and smartphones or other connected devices), and reach high standards in terms of user experience (online sales, online payment, customised experience during and after the use of the car).

Concluding the report, Glutron stated, “These mobility market transformations could be considered a threat for the car manufacturers. Quite the opposite: if they take up the challenge and review their business model so that they become the service provider – communicating no longer to a driver but to a ‘mobility customer’ – they can then take advantage of their expertise and their position as a historical player. The most convenient means of transport are cars, and building a car is highly-skilled work.”