Prepare your workforce for the automation age

The internet has dramatically changed the way companies operate. Massive data storage capacity, superfast data transmission and mobile devices have left companies scrambling to adapt.

Today, innovations in digitization and robotization are quickly laying the foundation for another disruptive corporate transformation. For example, Anheuser-Busch, working with Uber and Otto Motors, recently delivered 2,000 cases of Budweiser beer in a self-driving truck. And Commerzbank has announced plans to digitize 80% of its processes within three years.

We estimate that robotization, digitization, digital self-services, distributed digital advice and sales, and robo-advisors could result in a 60-70% reduction in the workforces of service providers, from financial services to telecommunications. Manufacturers have already seen reductions, albeit at lower levels. The pace of robot adoption may surprise us.

But companies will only realize productivity gains from these new operating models if they skillfully manage the soft side of their automation transformation: their employees. As organizations introduce software bots and digital self-service, and as they transform assembly lines, they must bring along their key employees, leaders and customers. Executives must think carefully about how best to match people and machines, bearing in mind that their decisions will have long-term effects on workforce composition, productivity and profits.

As workforces hollow out, the remaining employees will be highly specialized and experienced business-technology hybrids — professionals who can shift from managing people to managing experiences and technology. In the back office, the lights will dim as work is shifted to the customer or other parts of the value chain. In the middle office, risk and compliance management will largely watch bots that aren’t prone to human error or fraud. In the front office, automation based on predictive analytics will leave only managers who can control sophisticated robo-advisors. Salespeople will be sidelined as customers link with algorithmic bots that present products at the (digital) point of need.

Will this happen overnight? No. Freeways full of driverless cars are still far-off. But the inflection point always happens faster than expected. And when that point is reached, expect sudden acceleration. So early preparation is needed.

LESSONS FROM AUTOMAKERS

To figure out how to integrate software robots and digitization, executives can take cues from the automotive industry. After decades of introducing robots and automation, some factories require three to six months to launch an entirely new vehicle, while others need no more than a day. But the most automated carmakers aren’t necessarily the most efficient.

Instead, the nimblest factories have been pragmatic about integrating automation so that new processes can run smoothly, with continuous improvement. Only the simplest, most repetitive processes are automated. Over the past two decades, leading automakers have automated their paint and body shops — where they see the greatest gains — but have retained and retrained the people who quickly redesign products and processes on more complex tasks.

The lesson: Change needs to be evolutionary. Don’t throw away your core capability until you’re sure that automation is better, faster and cheaper. As you prepare for the inflection point, be pragmatic about cost-benefit trade-offs. Think about the overall organization. Be mindful of the skills you need to retain, and the skills you need to build up. Think both short term and long term.

PARALLEL WORK STREAMS

The lessons on digitization and robotics suggest operating on a dual track. Strike the right balance between implementing short-term automation fixes and seeking solutions to problems that will determine long-term success. It takes time for clients and employees to adapt to major change.

Managers should develop a list of 10 to 15 processes that bots can quickly improve. Test and learn, both in the application of the right bots to the right problem, and how to redesign processes to maximize results. Blueprint the broader impact on roles, skills, controls, leadership, workforce and talent management.

By doing so, managers can move critical employees and clients closer to their automation ambitions — which can be funded at least in part with returns from the earlier automation of simpler tasks.

MOLD THE ORGANIZATION

As more processes are digitized, executives must think at a macro level about the entire enterprise. How do you hire today for a diminished workforce 10 years out? When more of your people are replaced by bots, how do you lead, enforce quality control and audit? The key to navigating the automation age will be identifying and retaining the employees who can make one transition after another.

Companies will experience huge changes as physical infrastructure disappears, offshore capabilities are repatriated, more self-service and virtual opportunities become available, and customers begin to interact with robots. Actively drive early customer adoption by adjusting your pricing and loyalty incentives. Engage local stakeholders and unions in discussions of how you can continue to give back to the community with a smaller workforce. Build a picture of the future and work backward.