DIGITAL LABOR IS HERE TODAY. HERE’S HOW TO ADAPT YOUR BUSINESS

By Chris Boos, CEO, arago

Advances in technology have so far often made our lives more complicated, not less. As any modern white-collar worker can attest, smartphones and email in particular have tethered us to our jobs during off hours and weekends when we used to be free to pursue leisure activities.

This is the exact opposite of how many predicted things would play out. In particular, economist John Maynard Keynes estimated in 1930 that “our grandchildren would work three hours a day.” In 2015, the average is closer to nine.

However, in light of recent advances in digital labor, that’s not such an outlandish prediction. A dynamic new era is upon us in which the boring bits of work will be excised and we’ll be forced to reexamine our attitudes about work and life. Sweden has recently embraced a six-hour workday. In the heart of Silicon Valley, Google cofounder Larry Page has floated the idea of cutting back on everyone’s work hours to ensure full employment.

At the very least, Artificial Intelligence (AI), Robotic Process Automation (RPA) and other forms of automated tasking have the potential to free workers from drudgery and unlock their creativity.

Break from industrialization

Many will be skeptical of this view. After all, the last major round of creative destruction resulted in the hulking, decrepit factories that comprise the aptly named Rust Belt in the U.S. Will this time be different?

Absolutely. To examine why, let’s look at that last wave, the Industrial Revolution.

When the Industrial Revolution kicked in, in the 18^th Century, the focus was on physical work. Previously, brute force – either via humans or animals like horses – was the primary mechanism for creating material goods.

Once the idea of machine-based labor was in place, all the subsequent innovations came from refining. Titans like Henry Ford realized that economies of scale bestowed a natural advantage on bigger players and the bigger you got, the more you enjoyed the advantage. The catch was that the most efficiency came from offering the most monotonous product line. Hence Ford’s dictum that the company’s customers could have the Model T in any color they wanted “as long as it’s black.” Frederick Winslow Taylor further enhanced efficiency with his scientific approach to eliminating wasted movement on the factory floor.

For workers, industrialization often meant soul-crushing anomie. That’s because by necessity, the work was compartmentalized. A worker might do the same repetitive task all day because that produced the most widgets. More recently, such jobs have disappeared as robots have obviated them and factories have moved overseas, where the labor is cheaper. This has been happening for quite a while. In the mid 1950s, there were about as many people toiling in the manufacturing sector as in service jobs. In 2014, the percentage of U.S. workers in manufacturing was in the single digits, while more than 50% worked in service jobs, according to the Bureau of Labor Statistics.

White-Collar Jobs Get Redefined

Until fairly recently, white-collar workers were insulated from this upheaval. As the U.S. actually produced less stuff, “knowledge work” executed on a PC became the norm for college-educated employees.

In 2015, though, the machines are starting to do the knowledge work, too. In particular, repetitive tasks that require little creativity but nonetheless are part of a knowledge worker’s workload like crunching data, processing transactions and overseeing communication between systems are now being automated. IT workers, who assumed that their jobs were safe, now find that self-learning and self-healing software can handle the bulk of their work. Meanwhile, blue-collar workers like truck drivers and parcel delivery agents may soon find that their livelihoods have been replaced by self-driving cars and drones, respectively.

There’s nothing new about this type of displacement. As Google’s Page pointed out, there was a time in the U.S. when 90% of people were farmers. Now it’s more like 2%. That doesn’t mean that 88% of people are without work. People adapt.

In-Demand Skills

In this new workforce, creativity is valued over brute intellectual force. Since machines can process better and faster than humans, then a tolerance for white-collar drudgery is much less valuable than imagination.

In particular, workers who know how to best harness intelligent machines to their advantage to try out new ideas and launch new projects will be the big winners. The leveling effect of technology means that much of this innovation will occur at startups among entrepreneurs looking to build their fortunes. Smart companies will recognize this and do their best to attract such talent. Smart individuals will realize that they will fare better as entrepreneurs than salarymen.

The other major differentiator among human workers will be empathy. It may sound odd that a keen understanding of human psychology is an important asset against a backdrop of automated labor, but the reality is that people like to and will still need to interact with other people. In fact, having the people to people connection will be more highly valued as we move from execution to service, not only because of the fact that people prefer to interact, but, because empathy is more a human job than a decision making one. I foresee a day when nurses will be paid better than doctors, because machines cannot be empathic to other humans, whereas the latter job, valued for its access to knowledge and decision-making prowess, could be replaced by machines.

As old jobs disappear, goods and services will become cheaper. As more people are able to become sole proprietors and work over the Internet, they will become more geographically flexible and live in cheaper places where they don’t need to work so much to make their mortgages.

How to Navigate This New Environment

The digitization of labor is happening now. Digital labor is like outsourcing, but not to India or China, but rather to machines.  For companies that are aware of the trend and want to do all they can to make the right decisions, the best approach is to experiment with the least intrusive digital labor that’s currently available.

Forward-thinking companies should also allocate a budget for new business models, recognizing that digital labor is about to completely shift the current modes of doing business.

No one knows what these new modes will be, but there’s a good chance that they will improve everyone’s lives. People may work more than three hours a day, but they’ll be working jobs they love while the machines take care of the grunt work.