Accelerating Towards Digital Transformation
It’s easy to view the current crisis as a catalyst for change. Lying beneath the surface are signals that major change is required, and when crisis emerges, hope for that change emerges with it. In most cases however, that change never materializes. The last two months have brought countless predictions of what is to come. While we need to consider the low percentage of successful post-crisis predictions in the past, two trends look likely to materialize: accelerated digital transformation, and a rapid path to automation.
In a recent Article by Gaby Hinsliff, she referenced a Statement by Microsoft’s CEO that they had seen two years’ worth of digital transformation in two months thanks to the abrupt shift of our lives online. I believe this trend continues, because shocks to the system are likely to be more frequent, and preparedness and resilience are critical. Additionally, changes in human behavior are expected, the permanence of which is open to debate. Ms. Hinsliff describes several drivers of behavioral change, some spawned by how we behave individually, and some forced upon us by changes to the system. Example from the article: you can’t try things on, as changing rooms are expected to stay shut even when fashion stores reopen. Even beauty-counter testers are a relic of our unhygienic past.
The automation aspect of digital transformation will get the most attention going forward. Ms. Hinsliff describes automation as the next wave of coronavirus disruption. She goes on to support her argument with descriptions of bank branches that were already closing in droves before the epidemic, and the likely acceleration of that process. She points to the projection of an Oxford University study that by 2035 it would be possible to automate 86% of restaurant jobs, three-quarters of retail jobs, and 59% of recreation jobs. Those are among the industries hardest hit by an epidemic. Industries that were already operating on razor thin margins will need to realize a Next Generation of Productivity.
While some businesses will continue working from home, others like fast-food restaurants do not have that option; automation likely helps flip burgers in the future. Back in 2013, in the early days of digital transformation, I was advocating for Structural Change as the most critical aspect of transformation agendas. Ms. Hinsliff states: “It has never just been about robots taking work from humans, but technology reinventing processes in ways that mean the work is no longer there to be done.” The obvious downside is that the precarious positions of people in a services economy that supported low paid, low skilled, or older workers gets worse. As wages are forced down, economist Nouriel Roubini warns that a new wave of automation will further fan the flames of populism, nationalism and xenophobia
Ms. Hinsliff concludes: “the idea that taxing our new tech overlords, and redistributing the money to support a happy life of leisure for all, will resolve all this is comforting but scarcely credible.” She believes that a major rethink of tax and welfare systems will obviously be part of the answer. In an interesting take on universal basic income, she does not see it realistically supporting the good life for everyone. One question people ask about a future without work is this: are humans built to live a life of leisure and following their passions? She concludes: “lock down has taught us there’s only so much sourdough most people can bake before starting to crave something real to do.”
For additional thoughts on the pandemic, see my previous posts.
Originally published at http://frankdiana.net on May 4, 2020.