This article excerpt was co-authored by Ravin Jesuthasan and John Boudreau.
If you are a leader wrestling with where, when, and how to apply automation in your organization, you’re in good company. Leaders everywhere are asking how automation will affect their organizations and how jobs— those of their teams, bosses, colleagues, friends, and families as well as their own— might change or even be eliminated. Optimists say that machines will free human workers to do higher- value, more creative work. Pessimists predict massive unemployment or even an apocalypse in which humans merely serve the robots. Of course, both the optimists and the pessimists are partially correct and partially wrong.
But what everyone gets wrong is asking, “In which jobs will automation replace humans?” We see smart and well-meaning leaders get stuck in the typical discourse about job replacement. It’s a dead-end conversation. Simply asking which humans will be replaced fails to take into account how work and automation will evolve. You can’t solve the “how to automate work” problem by thinking only about automation replacing jobs.
Consider the example of the automated teller machine (ATM). A familiar example, for sure, but one that illustrates the myopia that comes from asking, “Which jobs will be replaced by automation?” It’s also a good example to start with because the evolution of banking work, through automation, is continuous.
Did the ATM Mean the End of Bank Tellers?
On June 14, 2011, Barack Obama noted that ATMs allowed businesses to “become much more efficient with a lot fewer workers.” In reality, for decades, the number of teller jobs actually increased, along with the number of ATMs. In 1985, the United States had 60,000 ATMs and 485,000 bank tellers. In 2002, the United States had 352,000 ATMs and 527,000 bank tellers. Understanding how automation affects work clearly requires a more nuanced approach than “how many jobs do ATMs replace?”
Economist James Bessen explains the paradox of more ATMs creating more teller jobs in his book Learning by Doing. Quoted in a Wall Street Journal article, he says, “The average bank branch used to employ 20 workers. The spread of ATMs reduced the number to about 13, making it cheaper for banks to open branches. Meanwhile, thanks in part to the convenience of the new machines, the number of banking transactions soared, and banks began to compete by promising better customer service: more bank employees, at more branches, handling more complex tasks than tellers in the past.”
Why is there such stability in the number of bank employees as automation advances? The work of the teller job has evolved.
Fast-forward to today. Personal devices and cloud-based financial transactions demand even greater changes in banking work. Has automation finally replaced tellers? Again, the reality is more nuanced. In May 2017, “while more than 8,000 U.S. bank branches have closed over the past decade (an average of more than 150 per state) and more than 90% of transactions now take place online, the number of U.S. bank employees has remained relatively stable at more than 2 million.”
Why is there such stability in the number of bank employees as automation advances? The work of the teller job has evolved.
The Wrong ATM Question: “How Many Teller Jobs Can Be Replaced?”
Imagine you lead the workforce of a retail bank in the 1970s. Your technology analysts have run the numbers and estimated huge cost savings from replacing the human tellers with ATMs. In fact, because teller machines need not be attached to a full bank branch, your technology planners estimate that eventually, you can cut costs even more by reducing the number of full branches, creating mini- branches consisting solely of ATMs.
Customers who need services beyond the teller machines will go to one of the fewer traditional bank branches. The technologists are also enthusiastic about risk reduction, because teller machines make fewer mistakes, like failing to complete necessary paperwork or coding transactions incorrectly. They wax eloquent about enhancing the customer experience because ATMs can process transactions faster so customers spend less time waiting in line. These potential benefits are enticing, but as history shows, simply replacing human tellers with automated machines wasn’t the optimal solution.
The first step to a better solution is to take apart, or deconstruct, the job into work elements or tasks. Some tasks, such as processing cash withdrawals, are very amenable to the automation of ATMs. Others, such as counselling customers whose accounts have been frozen due to overdrafts, are not amenable to automation. An ATM can hardly deal with customer frustration and anger.
You must deconstruct jobs into their key elements. Those elements will reveal the optimization patterns, often hidden when the work is trapped in a job description. That does not mean that jobs will disappear, but rather that they will be reinvented, as work that was aggregated into a “job” is constantly reconfigured and continuously deconstructed and reconstructed.
The ATM story is a useful parable for leaders, workers, and everyone else, because it illustrates why the simplistic idea of “technology replaces human worker jobs” is so misleading. That approach can’t predict how work and automation actually evolve. The story also illustrates the pivotal future capability for leaders— optimizing the ever-evolving options for combining human and automated work.
Reprinted by permission of Harvard Business Review Press. Excerpted from Reinventing Jobs: A 4-Step Approach for Applying Automation to Work. Copyright 2018 Ravin Jesuthasan and John Boudreau. All rights reserved.