Automation is biggest technological shift CEOs will face this decade

The rise of smart machines will force an evolution in the way we work.

October 31, 2013

“Shifting to business process automation is the biggest technological change CEOs will face this decade,” says Alexander Mehlhorn, CEO of software development company Framework One. “The rise of smart machines will force an evolution in the way we work and give rise to entire new industries and job functions.”

Mehlhorn says mundane jobs may become obsolete through the introduction of smart machines, but that this opens the door to new types of jobs. “People will need to design, produce and service the smart machines, and train and programme them to work optimally. Entire new job functions will be created even as smart machines replace old ones. CEOs will need to move quickly to reallocate their workforce and meet changing market needs.”

A new revolution

Research companies such as Gartner have likened the rise of smart machines to the Industrial Revolution, which was at the time perceived to be the cause for mass job losses. This, says Mehlhorn, is a misperception.

“When machines started taking over the job of weavers during the Industrial Revolution, it eliminated 98% of labour required to weave cloth. But it also lowered the price of cloth to such an extent that people consumed more, and the greater demand meant that textile jobs quadrupled as a direct result of automation.”

He cites the more recent example of Amazon’s impact on the retail bookstore market. “Amazon automated most of the function of a physical bookstore assistant, leading to several large retail bookstore chains retrenching staff. However, Amazon today employs nearly 100,000 people, compared to the 30,000 employed by the US’ largest book retailer, Barnes & Noble.

Amazon’s emergence has also resulted in a growing number of independent booksellers with knowledgeable clerks that provide a level of expert advice on book choices that Amazon can’t match – giving rise to an entirely new job function.”

A key to economic growth

According to Mehlhorn, automation is a key requirement for economic growth. “Companies need to ensure their processes are optimised so that the economy can grow. Spending more and more money on inefficient business processes leads to higher prices for products, which makes them more expensive. Higher prices mean fewer sales, lower profits and, ultimately, stagnation and decline.”

Automation doesn’t mean you need fewer people, he adds. “By streamlining processes you can deliver more products at a quicker rate and lower cost, growing your business and, by effect, your workforce. And while a machine may replace a box-packing job, it immediately creates a new job of servicing, optimising and managing the same machine – a more skilled job, with more responsibility and a bigger salary. The challenge for CEOs will be to train and upskill staff and deploy them to the new job functions without causing too much disruption to the business and its staff.”