Small businesses and AI: Accelerating innovation and inclusion

About the Center

(Header) About the Center

Highly confident, women entrepreneurs still face systemic barriers

Focus Areas

(Header) Focus Areas

How data and AI can drive change: 4 ways forward

Events

(Header) Events

Unlocking the power of small businesses to drive climate-smart inclusive growth

Insights

(Header) Insights

(Footer) About the Center

(Footer) Focus Areas

(Footer) Events

(Footer) Insights

PostContent

In a 1930 essay, British economist John Maynard Keynes predicted that the modern machine age would create “<a href="http://www.executiveshift.org.uk/images/site_graphics/downloads/John_Maynard_Keynes.pdf" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">technological unemployment</a>.” Nearly a century later, Keynes’ warning carries more weight than when it was issued. Robots, computers and automated machines will soon drive vehicles, file records, sew garments and perform other tasks on a larger scale – and do it more cost-effectively – than people, inevitably rendering some workers obsolete.A&nbsp;<a href="http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/four-fundamentals-of-workplace-automation" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">study</a>&nbsp;by consulting firm McKinsey &amp; Co. found that 45 percent of work activities could already be automated using existing technology, including three-quarters of fast-food workers’ tasks and more than two-thirds of heavy truck-driving activity. Higher-wage occupations such as doctors, nurses and CEOs are also partly susceptible to automation, the study found.“We are facing a major upheaval individually and corporately,” says&nbsp;<a href="http://www.darden.virginia.edu/faculty-research/directory/edward-d-hess/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Edward Hess</a>, a professor at the University of Virginia’s Darden School of Business in Charlottesville, VA. “I believe that many individuals will find it hard to have full-time employment and many businesses will not be able to transform fast enough or as effectively as some of the big companies.”

InlineImage

<h3>Adapting to economic transitions</h3>Yet as automation, robotics and artificial intelligence (A.I.) take over functions once performed by people, the U.S. is spending a&nbsp;<a href="https://obamawhitehouse.archives.gov/sites/whitehouse.gov/files/documents/Artificial-Intelligence-Automation-Economy.PDF" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">fraction</a>&nbsp;of what other countries belonging to the Organization for Economic Co-operation and Development (OECD) are spending to address the economic transitions. A chorus of academic and industry leaders has warned that the country and its politicians are unprepared for the impending job threat.“What needs to happen is industry and government get together and make sure there is proper training for the transition,” says&nbsp;<a href="http://www.cs.cmu.edu/~./hebert/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Martial Hebert</a>, director of the Robotics Institute at Carnegie Mellon University in Pittsburgh.But are there solutions to the predictions of doom and gloom?Some companies in the private sector are redeploying employees after automation or robotics eliminates their jobs. The CEO of New Jersey-based online big-box retailer&nbsp;<a href="https://www.boxed.com/about-us/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Boxed&nbsp;</a>says it didn’t lay off employees after automating their jobs, but retrained them instead for new roles. Canadian speaker manufacturer Paradigm Electronics Inc. told trade magazine Manufacturing Automation that it&nbsp;<a href="https://www.automationmag.com/operations/automation-in-action/6350-universal-robots-helps-paradigm-achieve-50-production-increase" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">boosted productivity by 50 percent&nbsp;</a>after it installed collaborative robots, without eliminating jobs.These “companies are already doing it because they have to,” says Bob Doyle, director of communications for the&nbsp;<a href="https://www.a3automate.org/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Association for Advancing Automation</a>, a trade group in Ann Arbor, Michigan. “It allows them to be more successful, to grow and create more jobs.”Boxed automated the “picking” function at its Union, NJ, fulfillment center, one of four it owns, to improve efficiency. One hundred workers with jobs taking items off shelves were retrained for new roles. Chief executive officer Chieh Huang – who grew up poor in Baltimore and started the company to give urban dwellers the same access to volume discounts that suburban customers receive at the type of warehouse clubs where his family had shopped – says he had to think about the human impact.“We could have gone in and said, ‘OK, 75 percent of you don’t need to be here tomorrow’,” Huang says. “But all these workers built this company and made us successful. I wasn’t going to go and say to them ‘OK, Mr. Robot over here’s going to do your job now’.”Affected workers learned to operate the machines, making the picking function six times more productive and the facility three to three-and-a-half times as productive. They received an average 13 percent increase in take-home pay because many went from part-time or temporary status to full-time employment, Huang says.While large companies have programs to help workers continuously retrain or upgrade their skills, Hess says workers cannot afford to wait for companies or governments, but need to be proactive.“Every employee should begin upgrading their skills so they can do something valuable that technology is not likely to be able to do in the near future,” Hess says. These include skills that require creativity, higher-order thinking and emotional engagement.

<h3>Preparing future generations</h3>Retraining and reskilling existing workers isn’t the only challenge facing American companies and workers, though. Better preparing future generations is another. A Deloitte LLP and Manufacturing Institute&nbsp;<a href="https://www2.deloitte.com/us/en/pages/manufacturing/articles/boiling-point-the-skills-gap-in-us-manufacturing.html" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">survey</a>&nbsp;concluded that 2 million of nearly 3.5 million manufacturing jobs needing to be filled from 2015 to 2025 would go unfilled because of skills shortages, potentially costing companies 11 percent of earnings, or $3,000 per existing employee.As an increasing number of tasks once done by people become automated, more technically skilled people will be needed to operate, repair, improve and manage equipment, Doyle says. These jobs will pay better than the manual jobs they replace but holders will need deeper backgrounds in science, technology, engineering and math – areas where the U.S. has underperformed compared to other large economies.The&nbsp;<a href="https://www.defense.gov/News/News-Releases/News-Release-View/Article/1049127/dod-announces-award-of-new-advanced-robotics-manufacturing-arm-innovation-hub-i/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Advanced Robotics Manufacturing Institute</a>, a public–private initiative launched by the Department of Defense under the Obama administration, comprises technology companies, universities, government agencies and nonprofits. It was established to create and deploy innovative robotic technology to transform American manufacturing, and has more than $1 billion of government funding and $2 billion of private sponsorship. Hebert at Carnegie Mellon, one of the program’s “hubs,” says training “at all levels” is one of its major components.As existing workers leave jobs or new workers complete their education and training, more of them are embracing digital platforms that create online markets for freelance work and match people who have skills with jobs that need doing. These online “talent platforms” have the potential to increase global employment by 2.4 percent and boost global GDP by up to $2.7 trillion by 2025, according to a McKinsey Global Institute&nbsp;<a href="http://www.mckinsey.com/global-themes/employment-and-growth/connecting-talent-with-opportunity-in-the-digital-age" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">report</a>.<h3>Thinking ‘beyond unemployment’</h3><a href="https://ceo.usc.edu/research-scientists/boudreau/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">John Boudreau</a>, a professor of management and organization at the University of Southern California, says this new world of work “beyond employment” is often overlooked but could reduce the length of job searches and time spent unemployed, while introducing workers to opportunities they may not have considered. Expanding use of such platforms will require “deconstructing” job tasks, Boudreau says.“I think that as work platforms become more sophisticated and easier to use, and as the labor market matures to develop a more precise language to translate and match worker characteristics to work needs, we will see more work available through platforms and more workers using them,” Boudreau says. “Platforms often work best when they create a language of work that is more deconstructed than the typical bundle of tasks in a job description.”Will Keynes’ “technological unemployment” ever be fully realized? Even companies using robotics and automation don’t expect technology to eliminate human beings from the workforce. Machines can’t duplicate tasks requiring high levels of creativity, dexterity, decision-making or judgment. There will always be a demand for handmade artisanal cheese or intricately beaded dresses.“There is this feeling that robots can do anything and A.I. is going to make all the decisions,” Doyle says. “It’s still difficult for a robot to look into a container and get something. They can pull something off a shelf but there’s still a long way to go.”Andrea Gerlin&nbsp;is an award-winning international journalist based in the U.K. and a writer for News Deeply.&nbsp;Her reporting has been featured in Bloomberg News, Time, The Philadelphia Inquirer, and the Wall Street Journal.Featured Photo Credit:&nbsp;Factory conveyer belt on production line/Getty Images

Amid sobering predictions of job displacement in advanced economies, experts discuss ways business and government can better prepare workers and think ‘beyond employment’.

Navigating the tsunami of automation