New Division of Labor: What Does It Mean for Business?
A lot has been discussed about the future of work, also here in various Atos blog entries (like "Digital Workplaces – a transformed approach to the way we work" and "Welcome to the age of the trans-human worker"). The rapid development of technology is continuously changing the way business is done and how we work. Put emphasis on the word continuously: the technology drive is changing and this is beginning to be a norm. Companies must be more agile and this changes the demand for labor. There is less and less will to invest in permanent workforce. Every recruitment is carefully analyzed as there is the possibility to optimize, automate, use robotics or even get rid of redundant tasks. Productivity is not anymore coupled tightly to labor nor human capital.
What will the new division of labor mean for business? Among many other things, it will bring
- Greater productivity for less cost (24/7 workforce)
- High cost for star performers
- Less cost of risk management (lower insurance costs, lower cost of physical security)
- The workforce consisting of technical, digital, human and virtual capital
- All the innovation power of the world available
- More sharing of data, but also more data available
- Operations where the value of the services and products can be consumed as soon as possible
- Higher cost of digital security
- Higher cost of quality management (data integrity)
Talk about the new division of labor started with the topics around artificial intelligence, robotics and automation. These are for sure the most attractive drivers for higher productivity. With them, people could be released from many of the repetitive, standard and routine tasks or even processes. The time spared could be used on more developing and innovate tasks. Most will likely cut out the effort spared completely, ultimately finding cost benefit. Eventually a balance is found between human and digital labor, but the interesting question is that will there be enough work for the human population anymore?
The rise of the machines will happen as well. Physical robots have been already long replacing human labor in factories and have lately become commonplace also in logistics (like with Amazon warehouses and delivery, see them in action here). They will most likely be more common also in other areas as well as their sensory and motoric capabilities develop to rival our own. The use of autonomous vehicles and drones will make it possible to do many things not possible before like quicker deliveries and remote maintenance. They can also take on the more hazardous tasks and may doing so even save lives.
We cannot also count out the productivity increase of combining the digital to the human capital. For the coming years, many benefits will be gained with the combination of AI and the human brain power. Most definitely AI will surpass the human capabilities at some point in time, but meanwhile we need to harness the combinatorial power of both. Our sensory, cognitive and patterning prowess will be combined with the logical power of AI to create new innovations, better workforce and yet unseen products. One supporter of this idea has been Elon Musk, who has initiated his own Neuralink venture to develop the technology (link).
I predict that the cost of human capital will in one end go down and in another end, go up. There will be the most sought-after people and the common labor. There will be a huge income gap between the two. Many businesses will fight for the sought-after people and having these people on board might mean success for the company. The cost of workforce will go down and it will be distributed unevenly.
Changes in the Labor Models
Coming soon is the rise of the gig economy (McKinsey & Co. open the background for it here). Many signs of it already being here can be witnessed: many companies are not hiring workforce into permanent positions, but instead are creating temporary jobs. Body-leasing companies are witnessing a growth in their business. It will be a norm in the future job market that jobs are not permanent and the workforce is totally fine with that. Also, the success of Über is a good example of one flavor of the gig economy: here the role of an enterprise is solely to be the broker for and technical enabler of the workforce.
The digital and robotic workforce and gig economy are not the only things reshaping the division of labor. There are also many productivity models already in use which will change the way human capital will be utilized. These help companies to innovate and create new value without risking much investment in. The future will be all about data and data is easy to be transferred, read and manipulated anywhere and anytime. This means also that wherever internet reaches, you have also potential workforce at hand.
These models include concepts like open innovation and crowdsourcing. Using these models are twofold: you can do it in a open or in a hidden way. Current social media platforms are good examples of doing it in the hidden way: countless people are creating new content like text, video and photos for free and the platforms have made this their business. Many innovations and disruptions will be based on the data created freely. Of course, there is also the content created for free, but will be rewarded if the content will be popular, like the Youtube videos (check the background of the model in Investopedia). Then there are the platforms which companies can use to openly harness the power of the crowd by releasing tasks to be handled for a direct reward (upon completion of the task or when there is value to be gained from the work), like TaskRabbit (recently acquired by Ikea). This way companies can match the task to the skills perfectly.
In my view, the division of labor by geographical location will diminish. Work will be done where the value of it can be consumed as soon as possible. This also means that quality will be the attribute companies need to uphold. The companies, which have the best quality products, will win.
Companies will benefit largely of the new division of labor. The productivity will go up and the in total, the costs will go down. At the same time risks are lower and there are less internal challenges as most of the workforce is non-human or not in your own payroll. People will be engaged with work that is best suitable for them and has a better meaning for them. This attributes a lot to the quality and innovation and will bring forth many benefits to companies. The division of labor will also mean that the gap between the superstar workers and non-superstar workers will be wider. Companies need to invest more to attract the superstars: As many of the roles will be filled by virtual workers - and essentially they are the same for each company - the unique competitive edge will still be, human.