McKinsey: Business Automation is Not a Bad Word

Perspectives
Nov 8, 2017
|
8 Min Read
McKinsey: Business Automation is Not a Bad Word

Automation will complement, rather than replace, human employment.

Anyone working in the business world in this decade can attest to the power of automation. Eliminating manual processes in favor of digital ones increases reliability, speed, and productivity, and reduces the potential for human error. So does this mean that more automation means less room for human workers? Not necessarily. Here, we highlight the key findings from McKinsey’s 2017 Global Institute Report and explore why automation is actually essential to gainful human employment as we approach mid-century.

Automation May Actually Save Us

As we reported here on the Fast Track, a recent report from the Organization for Economic Cooperation and Development (OECD) compared the annual growth rates for labor productivity in 32 countries for two periods, 1995-2004 and 2004-2013.Every country but one (Spain) had slower productivity growth in the second decade than in the first. In particular, the United States’ productivity decreased from 2.2 percent to 1.0 percent. It has since decreased further. The proposed reasons for this slowdown are many, but McKinsey estimates that automation could actually raise productivity growth globally by 0.8 to 1.4 percent annually.

For this new report, McKinsey examined more than 2,000 work activities across 800 occupations globally and estimated that about half the activities people do in the global economy have the potential to be automated by adapting currently demonstrated technology. But here’s the thing: less than five percent of all occupations can be automated entirely. Rather, 60 percent of jobs could automate around 30 percent of their activities. This leaves a lot of room for humans to continue to contribute. And in fact, we have no choice.

“While much of the current debate about automation has focused on the potential for mass unemployment, predicated on a surplus of human labor, the world’s economy will actually need every human working, in addition to the robots, to overcome demographic aging trends in both developed and developing economies,” said the McKinsey report.  This means that a surplus of human labor is much less likely to occur than a deficit of human labor, but the nature of the work we do will certainly evolve. “As processes are transformed by the automation of individual activities, people will perform activities that are complementary to the work that machines do (and vice versa).”

Automation WILL Affect Everything

So how should we prepare? Well, knowledge is power. As you might expect, McKinsey found that the activities most susceptible to automation were physical and present in highly structured and predictable environments, or involved the collection and processing of data. In the United States, these activities are most prevalent in manufacturing, accommodation and food service, and retail trade, and make up a whopping 51 percent of activities in the economy. And as you know from reading Fast Track, most high and low skill occupations have at least some automation potential, even the role of CEO! One of McKinsey’s fun facts: 25 percent of a CEO’s work could potentially be automated, including tasks like analyzing reports and data to inform decisions, reviewing status reports, and preparing staff assignments.

Our organizations, industries, and business models will change too. According to McKinsey, automation will promote the rise of massively scaled organizations, instantly able to propagate changes that come from headquarters. But automation will also help smaller companies and solopreneurs, because the power of technology will allow a single person to take on more and varied responsibilities. “In all sectors, automation could heighten competition, enabling firms to enter new areas outside their previous core businesses, and creating a growing divide between technological leaders and laggards in every sector.”

As a professional who wishes to be productively employed through mid-century, it’s your job to stay ahead of where your industry, organization, and role are currently on the automation continuum, and to upskill accordingly.

It’s always a good thing when a heavily researched report underscores your personal beliefs. I’ve never been afraid of automation. Yes, the business world of 2030 will look different than the one we work in today. More people will collaborate with machines as a matter of course, and more will have job titles we can’t imagine yet. Even if we manage to stay in the same profession, half of the tasks we perform now will most likely be obsolete. But automation affords us humans a major opportunity to do the work we’re most excited about – and leave the rest to our digital counterparts.

 

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