McKinsey Quarterly No.1 2016 contains a number of thought provoking articles covering the broad theme of ‘future organisations’. The core argument developed is that every company should be thinking about how it organises for the future, reconciling the need for organisational stability with rapid technology-enabled changes in business processes.
One of the key challenges facing all organisations in this area is workforce automation - the growing potential for artificial intelligence and advanced robotics to perform tasks once reserved for humans.
In an article entitled “Four Fundamentals of Workforce Automation” the authors present preliminary results of a major McKinsey research project investigating the potential that automation technologies hold for jobs, organisations, and the future of work. While the research is based on US data, there is no reason for thinking that other countries will be any different.
One of the main conclusions from the preliminary research is that very few occupations will be automated in their entirety in the near or medium term. Rather, certain activities within occupations are more likely to be automated. This will lead to entire business processes being transformed and a large number of jobs being redefined.
The report suggests that 45 percent of existing work activities could already be automated by currently available technologies. It is not just low-skill, low-wage roles that will be affected. Automation will begin to impact on many high-paid jobs such as financial managers, physicians, senior executives and CEOs.
The organisational and leadership implications of this are enormous according to the authors. Jobs and business processes will need to be redefined to allow organisations to take advantage of automation potential. Massive opportunities exist not only for labour savings but in a range of other areas including increased output, higher quality and improved reliability. The magnitude of those benefits suggests that the ability to staff, manage, and lead increasingly automated organisations will become an important competitive differentiator.
A detailed report of key findings will be published in 2016. In the meantime, four main interim findings are presented suggesting that the road ahead is less about automating individual jobs wholesale and more to do with automating key activities within occupations, redefining roles and processes.
1. The automation of activities - 45 percent of work activities could already be automated using existing technology. Advances in artificial intelligence and machine learning will challenge our assumptions about what is automatable. It will no longer be the case that only routine, codifiable activities are candidates for automation.
2. The redefinition of jobs and business processes - 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. In other words, automation is likely to change the vast majority of occupations - at least to some degree - which will necessitate significant job redefinition and a transformation of business processes.
3. The impact on high-wage occupations - conventional wisdom suggests that low-skill, low-wage activities on the front line are the ones most susceptible to automation. However, a significant percentage of the activities performed by even those in the highest-paid occupations (e.g. financial planners, physicians, and senior executives) can be automated by adapting current technology. For example, the report estimates that more than 20 percent of a CEO’s working time could be automated using existing technologies.
4. The future of creativity and meaning - capabilities such as creativity and sensing emotions are core to the human experience and also difficult to automate. The amount of time that workers spend on activities requiring these capabilities, though, appears to be surprisingly low. Just 4 percent of the work activities across the US economy require creativity at a median human level of performance. Similarly, only 29 percent of work activities require a median human level of performance in sensing emotion.
Can organisations and governments find innovative ways of mitigating the human costs, job losses and economic inequality associated with such large-scale labour market disruption?
As always, comment and feedback are very welcome.
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