Fastest Way to Create New Jobs? Automate Them Out of Existence!
Last week I was speaking at the MD&M West Expo in Anaheim, California on the “future of manufacturing.” With over 2,000 manufacturing exhibitors filling the convention center, there was no small amount of interest in this topic.
With China and the rest of Asia making massive inroads in manufacturing over the past couple decades and automation threatening many of the remaining industries, a huge underlying theme of this event was jobs. Where will our jobs in the future come from?
Job loss is not an idle threat. As everyone attending this conference knows, businesses have an obligation to hire the fewest number of people they can get away with, and when automation eliminates the need for an employee, the employee has to go.
However, while job loss is very real and happening all around us, job creation is also happening, in way that many have not seen coming.
To be sure, the transition period we are in will cause considerable collateral damage, but we will also experience a period of unprecedented opportunity provided we create the right systems for capitalizing on them.
As I mentioned at the conference, the fastest way to create new jobs is to automate them out of existence. Here’s why!
Lifecycle of an Industry
All industries form a bell curve
As with everything in life, all industries have a starting point and an ending point. Usually the starting point can be traced to an invention or discovery such as Alexander Graham Bell’s invention of the telephone or Henry Bessemer’s discovery of a process for making steel cheaply in large volumes. The end comes when new industry replaces the old, like calculators replacing the slide rule.
In addition, all industries form a bell curve. At some point along the way, every industry will experience a period of peak demand for their goods or service.
Many industry are entering the downside of the curve
Many of our largest industries today are entering the second half of the bell curve.
To understand this, ask the simple question, “What goods and services that we buy today will we be spending less money on in the future?” The list you come up should include energy, transportation, healthcare, publishing, insurance, telecom, education, construction, mining, and many more.
Leading indicators that industries are entering their top-of-the-curve midlife crisis are a growing number of startups attacking key profit centers.
Prior to reaching peak demand for their goods or service, industries experience a period of peak employment.
Using “Peak Steel” as an example, the peak employment for the steel industry was reached in the 1980s. The peak demand for steel itself is projected to happen in 2024. This is when composite materials will gain enough of a foothold and the overall demand for steal will begin to decline.
Many industries have already begun reducing headcount, partly because of automation, but primarily because they are about to enter their waning years.
The True Engines of Job Creation
Startup companies are necessarily sloppy in how they grow, requiring additional headcount to manage their still-to-be-defined business operations. Mature industries have well-defined processes and are better able to find efficiencies along the way.
Job Creation and Destruction
A recent Wall Street Journal article tried to correct the perception that this is a small business vs. large business debate. Instead, it’s a young business vs. old business issue.
Economists John Haltiwanger, Ron Jarmin and Javier Miranda showed in a 2010 paper, what really drives job growth is fast-growing start ups.
Their study showed that even before the recession, starting in 2006, government policy shifts caused a key turning point.
Young businesses created an average of 5.5 million jobs per month from 1992 through the end of 2006. Since then, they only created 4.7 million per month. This is appearing to be a long-term trend.
Since stable old businesses tend to be major campaign contributors, policymakers tend to favor them over young startups. While the writers suggest the key to more jobs is a good start-up lobby, the real path to job creation is more automation.
Older Americans are continuing to work, primarily because they can’t afford to retire. The recession has impacted their household budgets, and particularly the value of their investments and retirement funds.
According to new U.S. Census Bureau data, 12.5% of the population is over 65 and that number will grow to 20% by 2040, possibly more if the birthrate continues to decline.
People age 65-69 who are still working grew from 22% in 1990 to 31% in 2010. For men working between age 70-74, the numbers grew from 16.6% in 1990 to 20.9% in 2010. For 70-74 year old women it was a similar pattern, increasing from 8.4% to 13.5%.
Even before the real age of robots has begun, they are being blamed for stealing people’s jobs.
That’s the view of economists Henry Siu (University of British Columbia) and Nir Jaimovich (Duke University), who point out in a recent article, the reason for this structural change in labor markets is the rise of automation:
“Automation and the adoption of computing technology is leading to the decline of middle-wage jobs of many stripes, both blue-collar jobs in production and maintenance occupations and white-collar jobs in office and administrative support. It is affecting both male and female dominated professions and it is happening broadly across industries – manufacturing, wholesale and retail trade, financial services, and even public administration.”
While that may be true for what’s happening to existing traditional jobs, they fail to account for the wide range of entrepreneurial and new work opportunities that the same technology is creating.
Job losses are easy to count. Startup businesses, however, are far more difficult to monitor because most tend to fly under the radar until they enter a serious growth phase.
Finding the Seeds of Creation in Automation
According to a May 2011 study by the McKinsey Global Institute titled “Internet matters: The Net’s sweeping impact on growth, jobs, and prosperity,” the Internet has accounted for 21% of GDP growth over the last five years.
They also concluded the Internet is a key catalyst for job creation. Among 4,800 small and medium-size enterprises surveyed, the Internet created 2.6 jobs for each one lost to technology-related efficiencies.
We are now transitioning from room-size automation, which only large companies could afford, to desktop automation that allows small and even one-person businesses to be part of.
In much the same way that the 1985 Apple LaserWriter gave birth to desktop publishing, the 2010 MakerBot’s Thing-O-Matic 3D printer gave birth to desktop manufacturing.
Automation is no longer to domain of the elite few, and the quicker we can make the transition to all industries, the quicker everyone can participate.
The Economics of Automation
Our economy is based on people. Humans are the buying entities, the connectors, the decision-makers, and the trade partners that make our economy work.
Without humans there can be no economy. So when it comes to automation, consider this:
- A person with a toolbox is more valuable than a person without one.
- A person with a computer is more valuable than a person without one.
- A person with a robot is more valuable than a person without one.
Automation does not happen simply for the sake of automation. It’s intended to benefit people.
If we only look at what automation will eliminate, we’ll be viewing the world through a glass-half-empty lens.
In Feb 2012, I made the prediction that over 2 billion jobs would disappear by 2030. We seem to be on track for that to happen.
Driverless cars will eliminate millions of driving positions. 3D printers will eliminate millions of manufacturing jobs. If we continue down the list, teacherless schools will eliminate teachers, pilotless planes will eliminate pilots, checker-less retail will eliminate checkout clerks, and so on.
Whenever jobs go away, politicians tend to have a kneejerk reaction trying to implement legislation that enables us to hang on to the past for a while longer.
But job losses will happen regardless of whatever overt attempts are made to stop the hands of time.
Contrary to popular opinion, automation creates jobs. As the McKinsey study has shown, we get a 2.6 to 1 benefit from jobs lost through digital automation on the Internet. Since the physical world is 5 times the size of the online world, we may create even more jobs with physical automation.
Fastest Way to Create New Jobs? Automate Them Out of Existence!
I was thoroughly intrigued when I found out the Colorado School of Mines in Golden, Colorado was offering a degree in asteroid mining.
Yes, the idea of extracting water, oxygen, minerals, and metals from an asteroid sounds like science fiction to most people, but it’s not that far away. In fact, Colorado School of Mines’ newly launched “Space Resources” program will help people get in on the ground floor.
After thinking about the proactive nature of this approach, it became abundantly clear how backward thinking most colleges have become.
When colleges decide on a new degree program, they must first recruit instructors, create a new curriculum, and attract students. As a result, the talent churned out of these newly minted programs is the product of a 6-7 year pipeline.
For this reason, anticipatory-thinking institutions really need to be setting their sights on what business and industries will need 7-10 years from now.
The Risk-Averse Nature of Education
When Harvard professor Clayton M. Christensen released his best-selling book, The Innovator’s Dilemma, his core message that disruptive change is the path to success, was only partially embraced by higher education.
While many were experimenting with MOOCs and smart whiteboards, changes in the subject matter of their courses still evolved at the traditional pace of discovery.
This is not to say colleges are not innovative. Rather, the demands of today’s emerging tech environment are forcing business and industries to shift into an entirely new gear. And that most definitely includes our academic institutions.
From a management perspective, it’s far easier to oversee a contained system where all variables are constrained. But during times of change, we tend to give far more power to the “unleashers,” who are determined to test the status quo and release ideas and trial balloons to see what works.
For this reason, managers and creatives often find themselves on opposing sides, and the winners of these warring factions often determine what we as consumers see as the resulting ripples of change.
Offering Pilot Programs
When Facebook bought Oculus Rift in March 2014 for $2 billion, the job boards went crazy, as there was an instant uptick in the demand for VR designers, engineers, and experience creators. But no one was teaching VR, and certainly not the Oculus Rift version of it.
Colleges have a long history of being blindsided by new technologies:
- When eBay launched, no one was teaching ecommerce strategies
- When Myspace launched, no one was teaching social networking
- When Google launched, no one was teaching online search engine strategies
- When Uber launched, no one was teaching sharing economy business models
- When Apple first opened their App Store, no one was teaching smart phone app design
- When Amazon first allowed online storefronts, no one was teaching the Amazon business model
- When YouTube first offered ways to monetize videos, no one was teaching it
Since most academic institutions are only willing to put their name on programs with long-term viability, the endorsement of half-baked agendas does not come easy. However, that is exactly what needs to be done.
Colleges can no longer afford to remain comfortably behind the curve.
52 Future College Degrees
As a way of priming your thinking on this matter, here are 52 future degrees that forward-thinking colleges could start offering today:
- Space Exploration – space tourism planning and management
- Space Exploration – planetary colony design and operation
- Space Exploration – next generation space infrastructure
- Space Exploration – advanced cosmology and non-earth human habitats
- Bioengineering with CRISPR – policy and procedural strategies
- Bioengineering with CRISPR – advanced genetic engineering systems
- Bioengineering with CRISPR – operational implementations and system engineering
- Bioengineering with CRISPR – ethical regulation and oversight
- Smart City – autonomous traffic integration
- Smart City – mixed reality modeling
- Smart City – autonomous construction integration
- Smart City – next generation municipal planning and strategy
- Autonomous Agriculture – robotic systems
- Autonomous Agriculture – drone systems
- Autonomous Agriculture – supply chain management
- Autonomous Agriculture – systems theory and integration
- Swarmbot – design, theory, and management
- Swarmbot – system engineering and oversight
- Swarmbot – municipal system design
- Swarmbot – law enforcement and advanced criminology systems
- Cryptocurrency – digital coin economics
- Cryptocurrency – crypto-banking system design
- Cryptocurrency – regulatory systems and oversight
- Cryptocurrency – forensic accounting strategies
- Blockchain – design, systems, and applications
- Blockchain – blockchain for biological systems
- Blockchain – large-scale integration structures
- Blockchain – municipal system design strategies
- Global Systems – system planning, architecture, and design
- Global Systems – large-scale integration strategies
- Global Systems – operational systems checks and balance
- Global Systems – governmental systems in a borderless digital world
- Unmanned Aerial Vehicle - drone film making
- Unmanned Aerial Vehicle – command center operations
- Unmanned Aerial Vehicle – municipal modeling and planning systems
- Unmanned Aerial Vehicle – emergency response systems
- Mixed Reality - experiential retail
- Mixed Reality – three-dimensional storytelling
- Mixed Reality – game design
- Mixed Reality – therapeutic systems and design
- Advanced Reproductive Systems – designer baby strategies, planning, and ethics
- Advanced Reproductive Systems – surrogate parenting policy and approaches
- Advanced Reproductive Systems – organic nano structures
- Advanced Reproductive Systems – clone engineering and advanced processes
- Artificial Intelligence – data management in an AI environment
- Artificial Intelligence – advanced human-AI integration
- Artificial Intelligence – streaming AI data services
- Artificial Intelligence – advanced marketing with AI
- Quantum Computing – data strategies in a quantum-connected world
- Quantum Computing – quantum-level encryption and security
- Quantum Computing – quantum computing implementation strategies
- Quantum Computing – AI-quantum system integration
More so than any time in history, we have a clear view of next generation technologies. Naturally, we’re still a long way from 100% clarity, but for most of the technologies listed above, the shifting tectonic plates of change can be felt around the world.
Without taking decisive action, colleges run the risk of being circumvented by new types of training systems that can meet market demands in a fraction of the time it takes traditional academia to react.
The ideas I’ve listed are a tiny fraction of what’s possible when it comes to emerging tech degrees. Should colleges stick their neck out like Colorado School of Mines and offer degrees that may not be immediately useful? Adding to that question, how many college degrees are immediately useful today?
I’d love to hear your thoughts on this topic.