What Happens When R2 D2 Comes to Your Town? And Workplace?

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One of the major trends, which blend demographic changes with technology advances, is the onward march towards greater automation in our economy. That’s a fancy way of saying, “The robots are coming”. And they are not just that warm, fuzzy image we have of R2D2.

If you step back and look at the deeper picture this trend is really about the replacement of human labor in all kinds of activities from manufacturing to housekeeping. What started in the late 1970’s as ‘office automation’ is now starting to reach massive proportions. This is one of those high probability, high impact trends.

The question is: how will your community respond so it can remain a healthy, vibrant, and agile place to live and work?

So, How Big is This Trend?

Depends on whom you ask. There are a number of reliable sources, but all estimates are based on assumptions of progress on the technology side. The Institute for the Future thinks that any job that pays in the $20–30,000 range is subject to robotization.

We think a reasonable estimate would be 30% of the current US workforce could be replaced by these technologies. And that is not just factory workers as we usually think. It extends into the ‘back office’, the analysts desk, and anything that meets our definition stated above. Admittedly, the tactical economics of this replacement technology are still being debated but we are early on (say a five year window).

So to sum up, the scope of this labor market evolution, hear is a quote from the staid, old line Harvard Business Review:

“Left behind may be as many as 40 million citizens of no economic value in the U.S. alone. The dislocations will be profound.”

Now that I have your attention, let’s turn to what industry sectors can be expected to be impacted first.

First to Fall

Manufacturing certainly that’s already here and growing at high rates:

• The number of industrial robots sold in the U.S. will jump nearly 300 percent in less than a decade, according to a projection from ABI Research.

• Already, 40 percent more robots were sold last year in the U.S., compared with four years prior, says data collected from the Robotic Industries Association.

• More robots means fewer jobs. For every new industrial robot introduced into the workforce, six jobs were eliminated, a study published last week from the National Economic Research Bureau found.

Our next target is healthcare — at least in the preventive and diagnostic parts of the industry. We already see the first signs with computer-aided diagnosis. This coupled with ‘wearable health sensors’ could revolutionize preventive and routine medical treatment.

Financial services are ripe for more automation. Let’s face it, most financial transactions and analytics are algorithm driven and repetitive. Except, of course, ‘speculative trading’ but the quants and automated trades may take a hit also. And you do not have to pay a machine a bonus. There is a tremendous amount of R&D work going on now about applying Artificial Intelligence to this sector.

Our final target industry is education. By way of editorial comment, the current US higher education systems is failing and failing miserably at producing graduates capable of competition in this emerging world of robotics.

“However, the big challenge is that by 2020, 60 percent of the new jobs being created will require skills that only 20 percent of the population actually possesses.”

Again, the technology is about to come out of the laboratory. The only question which remains is what will the delivery channel be: public or private?

Implications for Cities

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We see four basic implications for cities and municipalities. And they are all tied together with the assumption that the next generation of workers will be the ones who design, build, and maintain this robotic infrastructure. These people (especially the younger ones) will migrate to towns and cities, which provide them the quality of life they want for themselves and their children. Salary levels and taxation rates are not their primary motivators. So cities need to look at:

Economic development infrastructure. This includes a robust technology platform that supports this technology. This implies an expansion of Internet based networks, which are redundant so the local economy doesn’t crash because of some freak accident. And this takes a highly skilled workforce to support it. How many Internet Service Providers (ISPs) are there in your city?

Workforce development. And not your traditional ‘teach them to write a resume’ kind of content. If you are being replaced by a machine you will need to get clear on what you would like to do to earn a living in the new world and develop those competencies which are now required.

This is going to take a different approach to developing and re-deploying workers. When designing, building and maintaining robotic technology replaces 30% of your workforce, you will need some of them to know how to be more like engineers and less like technicians. We also believe strongly that there will be a need for a long term mentoring component to any re-training program. A lot of this will be on-the-job-training (OJT).

Workforce deployment. This is new area for civic attention. Assuming you can change the educational system to produce a good product and you can have programs, which help people translate that knowledge into value adding abilities, then how do you match that up with industry needs? We suggest an automated system, which matches strengths to needs and has a component, which manages that matching process.

So testing is based on discrete competencies, which can be demonstrated. You will need a portfolio instead of a resume. And on the back end, industries will have to get better at specifying their requirements. You don’t need someone with such and such a degree, but someone who can do X, Y, and Z. And then who is going to do the matching? I don’t think this is a governmental function, but in itself is a business opportunity for a private third party.

Funding. This is the big question. Who is going to pay for all of this? We don’t know right now. Somebody will have to invest a tremendous amount in this new civic infrastructure. Will it be the private sector to solve a labor demand problem? Will it be the cities themselves in order to attract and retain wealth-producing citizens? Or some combination?

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We’d Like to Offer an Alternative Viewpoint

Right now the prevailing view of workers (from the C suite) is that they are a liability to the company and can create losses. However, if that mindset switches to seeing them as an asset that creates a profit. So with robotics people (talent) are the ones who make sure the work gets done, instead of doing the work themselves. A subtle shift, no doubt. But now you have a business rationale to invest in this new technology AND development of the people who make sure it works.

To sum, this could make economic development and human resource management a profit center instead of a cost center.

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