Outlook on situation in 2025
From the standpoint of today we can see three major developments in the areas of emerging markets, technology, and population that will have extraordinary implications for global leaders in the future (Dobbs, R. et al, 2014).
According to Dobbs (2014) in the year 2025 China will host more large corporations than either the United States or Europe and emerging markets will have been the prime growth engine of the world for more than 15 years. Additionally there will be around 2 billion consumers who will have for the first time enough income to support significant discretionary spending, which will create new and powerful multinational companies (Dobbs, R. et al, 2014).
Life expectancy is increasing while at the same time fertility is declining and thus the human population is aging (Kulik, C. et al., 2014). This development is not just evident in developed countries it is already spreading to China and will further sweep across Latin America (Dobbs, R. et al, 2014). Therefore the workforce is shrinking and without a boost in productivity this will lead to lower consumption and constrain the rate of economic growth (Dobbs, R. et al, 2014).
In the field of technology we are experiencing an exponential growth in capacity, power, and speed which will fuel the rise of artificial intelligence (AI), shift global manufacturing, and turbocharge advances in connectivity (Dobbs, R. et al, 2014). This development brings advances in technologies like machine intelligence, the ubiquitous web, and robotics (Avent, R., 2014). If this digital revolution will bring mass job creation or lead to mass job destruction is not yet clear. Furthermore due to this progress businesses can start and gain scale with incredible speed while using little capital and this give start-ups new advantages over established businesses (Dobbs, R. et al, 2014). Additionally the life cycle of corporations is shortening and decisions need to be made as quick as never before (Dobbs, R. et al, 2014).
In this paper I will focus on the challenges that are arising due to the technological advancement. According to Andrew McAfee in a data-driven world the role of managers is going to shift in a direction to figure out where the manager actually can add value and where he should rely on the data and go where it takes him (Kirklan, R., 2014). So this is about rethinking the idea of the managerial intuition (Kirklan, R., 2014). Adding to this in my opinion I think that managers will also be faced with the decision if it is good or bad to replace a large scale of the workforce by robots and other forms of AI. I believe this will be a crucial question by the year 2025 because the exponential development of computer power will create AI and robots that will replace a lot of not only manual but also cognitive professions.
In the following I will first give an outlook on the situation in the year 2025. Afterwards I will present positive and negative implications of this development with a special focus on consequences for employment. Reflecting on these implications I will give a tentative answer to the question how managers will tackle the challenge about employing humans or replacing them by machines.
Outlook on situation in 2025
Computerization has already influenced a lot of manual tasks. However in the future the influence will be extended also to cognitive tasks (Pajarinen, M., Rouvinen, P., 2014). Due to big data a wide range of non-routine tasks will become computerisable and this is beginning to change the nature of work across a wide range of industries and occupations (Frey, C. B. & Osborne M. A., 2013).
In health care for instance Oncologists at Memorial Sloan-Kettering Cancer Center are using IBM´s Watson computer to provide chronic care and cancer treatment diagnostics (Simonite, T., 2014).
Additionally computerization also entered the domains of legal and financial services, where algorithms are used on a number of tasks performed by paralegals, contract, and patent lawyers (Frey, C. B. & Osborne M. A., 2013). Further AI algorithms have the capability to process a greater number of financial announcements, press releases, and other information than any human trader, and therefore act faster upon them (Frey, C. B. & Osborne M. A., 2013).
Besides robots enter the service industry and for example robotic bellhops that can shuttle razors, snacks, and morning papers from the lobby desk to guest rooms in 2 to 3 minutes are already tested in hotel lobbies (DuRant, H., You, J., 2014).
Even in creative industries like journalism jobs are replaced by robots. In some newsrooms algorithms are already used to write data-based stories (DuRant, H., You, J., 2014). The reports are in such a good quality that readers could not really see a difference between robot-generated and human-written articles (DuRant, H., You, J., 2014).
Due to improved sensors robots are capable of producing goods with higher quality and reliability than humans (Frey, C. B. & Osborne M. A., 2013). In the food industry for instance robotics are used to pick up lettuce heads from a conveyer belt (Frey, C. B. & Osborne M. A., 2013). The robots reject automatically heads that do not comply with company standards. (Frey, C. B. & Osborne M. A., 2013). Another example is a robot called Baxter which learns by example and therefore no programming is needed to teach Baxter new tasks (Bohannon, J., 2014). Instead a human worker simply guides the robot arms through the motions that will be needed to accomplish the job and Baxter will memorize them (Bohannon, J., 2014). Also Baxter can perform a relatively broad scope of manual work as a variety of “hands” adapted to specific tasks can be installed (Bohannon, J., 2014).
Robot prices are declining due to technological advances and therefore robots with higher levels of intelligence and additional capabilities will be available for 50,000 to 75,000 USD instead of 100,000 to 150,000 in the next decade (Frey, C. B. & Osborne M. A., 2013).
Declining costs combined with expanding technological capabilities made entirely new uses for robots possible and thus gradually replace human labour in a wide range of occupations (Frey, C. B. & Osborne M. A., 2013).
One big advantage of computers relative to human labour is that in performing the task networks of machines scale better than humans (Pajarinen, M. & Rouvinen, P., 2014). Moreover there are huge costs saving opportunities. A company called SmartAction provides call computerization solutions that realizes cost savings of 60 percent to 80 percent over an outsourced call center consisting of human labour (Frey, C. B. & Osborne M. A., 2013).
Additionally the robot industry itself creates a lot of jobs and helps to create new jobs in other sectors (Gorle, P. & Clive, A., 2013). Gorle, P. & Clive, A. (2013) estimate that by 2020 robotics can be the source for 1 million to 2 million new jobs. They argue that this is due to a created downstream activity necessary to assist manufacturing which can only be done by robots (Gorle, P. & Clive, A., 2013). This establishes new industries, where accuracy and consistency cannot be achieved without AI (Gorle, P. & Clive, A., 2013). The development of electronics and communication technology will lead to a continued advancement of new products for instance in the area of the manufacture of service robots or the development and mass adaption of renewable energy technologies (Gorle, P. & Clive, A., 2013). So new jobs in the production, marketing, selling, and maintaining of the new products are created (Gorle, P. & Clive, A., 2013). A second reason is argued with the expansion of existing economies and industries due to a general economic enlargement (Gorle, P. & Clive, A., 2013). The use of more and more robots in those industries will lead to a higher demand for in-house skilled technicians of the robot systems (Gorle, P. & Clive, A., 2013). The table below shows estimated growth figures in different industries and concludes that 250,000 to 400,000 new robot driven employment can be created by 2020.
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Source: (Gorle, P. & Clive, A., 2013).
As a third reason Gorle, P. & Clive, A., (2013) mention a greater use of robotics in the small- and medium-sized enterprises sectors of the developed world in order to win back production from the low cost countries, or to win back production that had been seen as hazardous. Otherwise employment would be wiped out because the manufacturing costs without robots would be too high in order to stay competitive with low-wage countries (Gorle, P. & Clive, A., 2013).
Besides the positive consequences on employment there are also other benefits to mention. In medical care new techniques and technologies are reducing health-care costs (Avent, R., 2014). Doctors or nurse can diagnose more patients more effectively at lower cost due to machine intelligence that aid diagnosis (Avent, R., 2014). Savings can be realized by the use of mobile technology to monitor chronically ill patients (Avent, R., 2014). For example the Ginger.io application, which silently logs data about what a patient does and where he goes, alerts a nurse if the app finds signs that something in the patient´s life has changed (Simonite, T., 2013). Such advances boost productivity and thus medical care becomes cheaper (Avent, R., 2014).
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