The headlines are scary. A new report released by McKinsey & Company indicates that by 2030:
· As many as 800 million workers worldwide could be replaced at work by robots.
The Upside of Adopting Chatbots in the Workplace
My personal belief is that there will be a tale of two companies:
· Company1: Realizes it cannot scale sufficiently to serve large segments of its market using manual labor. But with Chatbots they can scale to address these underserved segments for the first time, resulting in unprecedented revenue and profitability growth — without needing to cut resources.
· Company2: Continues to try to do business as usual (think of Macy’s and Sears). As revenue dwindles they keep trying to cut expenses (e.g., employees) to stay afloat.
Company1 utilizes chatbots to tap new markets and augment workers instead of replacing workers. This means massive changes in the workplace where virtual digital chatbots free up their human coworkers to do higher value tasks. Company2 did not innovate as fast as its competition, so it lost market share and ended up cutting expenses as a reactionary tactic to stay alive in a rapidly changing world.
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Historical Examples of Automation and the Impact on the Workforce
James Bessen, an economist at the Boston University School of Law, has documented many prior historical examples where automation has allowed companies to tap previously unmet market demand. These examples show that although the number of workers per task is less, the need for workers rises resulting in decades of employment growth because of a) significant revenue growth and b) workers are freed up to do higher value work:
· After ATMs were introduced the number of bank tellers significantly rose as banks were able to open more branches and change the role of tellers from routine tasks to providing higher-end advice and services to customers.
· From 1982 to 2012 Employment grew significantly faster in occupations that made more use of computers, such as graphic design, than those that did not.
Going forward we are starting to see AI allowing companies to address underserved markets and producing employment growth:
· Amazon reports that the deployment of Kiva robots allowed the company to grow both its robot and human workforce by 50% in 2016.
· A Deloitte study of automation in the U.K. found that 800,000 low-skilled jobs were eliminated as the result of AI and other automation technologies. But 3.5 million new jobs were created as well, and those jobs paid on average nearly $13,000 more per year than the ones that were lost.
The Downside of Adopting Chatbots in the Workplace
But why are people suggesting that overall employment will suffer? In short, the pace of technology adoption is accelerating so dramatically that almost all remaining workers must now provide higher end tasks and services — workers who cannot address these higher end tasks will be displaced. Tech shifts used to be gradual and permit many workers to age out of the workforce. But today the pace of change is so fast that there is no gradual transition. To see the acceleration in technology adoption just look at phone adoption rates:
· Landlines: Reached saturation point after a century
· Mobile phones: 20 years
· Smartphones: A decade or less!
It is expected that chatbots and AI will be adopted at an even faster rate.
MORAL OF THE STORY — EARLY ADOPTERS OF AI AND CHATBOTS WILL WIN BIG AND LATE ADOPTERS MAY PERISH
Companies that are early adopters of chatbots to create a growing and more dynamic company will better serve its customers and create jobs while late adopters that ignore this trend will most certainly shed jobs. Chatbots will provide more expert advice and encourage people to buy more complete solutions and justify the return on investment of higher-end products. Just as eCommerce reduced the friction in purchasing versus retail stores, Intelligent Chatbots will make every buyer and seller an expert decreasing the friction further and increasing demand while lowering costs.
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Chatbots in the Digital Workplace: A Tale of 2 Companies in an AI-Powered World was originally published in Chatbots Life on Medium, where people are continuing the conversation by highlighting and responding to this story.