The Future of Work is Human

The Future of Work is a topic that many write about.

It is an exciting opportunity for companies and individuals – to make work more interesting and have more meaning.

Sadly so many people think that the best way to get a headline or attention is to use scare tactics – come up with claims about how many jobs are going to be eliminated through AI and automation. Most of these have no or very rudimentary analysis to support these claims.

Our Deloitte Australia team has done a fabulous job in providing a balanced and substantiated view of where the opportunities will be and the skills/roles that will go away and those that will be in short supply.

It talks about work going from the hands to the heads to the heart.

Below is a link to the full report.

I would urge you to take the time to read – it is an informative, easy read. 

What makes this a time of disruption?

Every generation has had its share of shifts and disrupters.

5 years ago really saw the coming of age of cloud to make SAAS a reality.

10 years ago it was mobility and social impacting the way we worked and played – changing retail forever.

15 years saw the emergence of platform businesses such as google and Amazon – creating one of the most significant transformations in business model for a century.

20 years ago was Y2K – in the end a non event but creating a huge update on the financials and technology.

25 years ago was email and ERP changing the way Business was done. This paved the way for standardized processes and the creation of supply chains and ecosystems.

All of these had a significant impact on business, in the day and ongoing. (And all had started well before the year I mentioned)

So why is now the age of greatest disruption?

It is the convergence of all the shifts noted above with the coming of age of AI, the introduction of 4G moving to 5G creating the Internet of Things, the changing expectations of consumers and the connecting of regulation around the world that makes this a momentous time. All of this means that businesses are compelled to address their business model in order to survive and thrive.

Voice on AI, Eye on AI

Recently I posted about AI not being for fast followers. ( see post from May 6).

At the risk of ‘I told you so’ see below an extract of a post today from Jonathan Vanian of Fortune – saying the same thing.

Great minds think a like or ….

“Executives who are afraid of long-term commitments should avoid artificial intelligence.

Like with romantic relationships, using the technology requires an appetite for hard work, planning, and patience. Even then, failure is a real possibility.

“If you are not going to make this investment for the long term, it is not a good idea to do machine learning,” LinkedIn’s vice president of artificial intelligence Deepak Agarwal told Fortune in a recent interview.

Agarwal leads the social network’s many machine-learning projects that power tasks like recommending job openings to users or determining which posts are the most relevant to them and that they are most likely to click on. He’s been involved with machine learning and statistics for years, after previously working at Yahoo and AT&T in senior technology research roles.

One thing Agarwal has learned is that it can take at least a year to see a financial return from machine learning. During that time, companies must navigate the mundane work of cleaning and properly labeling data, and figure out the correct machine-learning algorithms and data infrastructure to use.

Agarwal recommends that small companies, which often have little data, make an effort to collect it before implementing machine learning. Without a large archive of information, the technology is nearly useless.

For some companies, machine learning makes no sense because it requires a lot of computing power to crunch the data. And renting cloud computing infrastructure can cost more than any additional profit that machine learning can create, Agarwal explained.

But when the technology works, the payoff can be huge. For large companies like Google that have embedded machine learning throughout their businesses and apps, a modest 2% improvement on a particularly important metric could result in financial gains in the hundreds of millions of dollars.”

Who are the biggest private employers in the USA?

The answer might surprise you.

Number 1 is Walmart – but the next eight are the major private equity houses through their vast holdings in investee companies. Think the likes of KKR, Carlyle, Blackstone, TPG etc.

It demonstrates the huge shift we are seeing in capital markets – a shift away from public companies to private organizations.

In addition, thanks to Geoffrey Garrett The Dean at Wharton School, the graphs below show that more companies are owned by PE than publicly listed.

The second graph shows that the value of publicly listed is greater, however this will most likely change over time.

The rise of ‘wealth’ funds of all kinds – sovereign, PE, mutual, hedge etc – is fueling this change.

In addition, the move to quarterly reporting and monthly benchmark of returns is accelerating the move away from public companies.

Publicly traded organizations have had to focus on short term results – no longer being able to look at longer term strategies.

Ironically, this a complete flip from ten years ago – now if you want to invest long term or restructure, being in PE’s hands is a better place to be.

#privateequity #PE

Angst that AI will take our jobs ….

There is huge angst about AI taking over human jobs – with talk of 30%-40% of roles disappearing.

What if we were to reframe the discussion and look at it a different way?

What if we were to look at it as an opportunity to really enhance human capabilities?

To look at it in a way that says AI will take away the mundane aspects of our jobs but increase the need to bring the human capabilities of creativity, problem solving, collaboration, driving social purpose and communication.

I firmly believe that AI will create opportunity to do more, enjoy more, be more productive and to live more purposeful lives.

We know that increasing productivity creates wealth and in turn creates more and different jobs.

Every technological change has brought similar cries of job loss – the computer was going to take away jobs, that the ERP wave would eliminate significant parts of the workforce and the internet would eliminate significant numbers of workers.

However, every time, productivity has improved, mundane aspects of work have been eliminated and new roles have emerged. The take up of AI will be no different – it should be seen as an opportunity rather than a threat.

Below is a link to a recent Deloitte report that takes on the view of reframing the way we think about AI.

How do you compete with digital natives?

The No.1 issue for most business executives is ‘the sustainability of their business model’. In other words, they are asking the question ‘is my business model going to be disrupted anytime soon?’

They point to Uber, AirBnB, Amazon etc as great examples of new business models and talk about transformation to a ‘platform’ or ‘flywheel’ model as an imperative.

The trouble is that the companies mentioned are digital natives. They didn’t transform their business model – they were always online platform models . They transformed their industry but not their own model.

Finding organizations that have completely flipped their model is difficult. A lot have transformed components of their businesses through acquiring or developing digital components that impact the customer experience or make them omni-channel rather than purely physical.

So the question is, ‘do you need to completely transform your model?’ The answer? It depends- depends on your industry/sector/business and who your are competing with.

A number of organizations are doing incredibly well by taking on the challenge of a disruptor.

They understand the need to transform but also understand:

– what part of their organization they need to transform to compete, and

– how to leverage their traditional strengths and competencies.

Walmart is a great example. You could argue that they had more to lose than most from the rise of Amazon. Yet, they set out to bring technology into the heart of their business and become truly Omni-channel while leveraging their huge strengths of store coverage, distribution network and buying power. The acquisition of technology and platform businesses into the Walmart business has been successfully achieved.

Pointing to VR

I love it when organizations do something clever with technology.

British Airways have a very clever billboard in Piccadilly Circus that has a young boy pointing to a BA plane flying overhead with the Billboard stating where the plane is going to or coming from.

If you haven’t seen the advertisement there is a link below to YouTube:

It is a taste of what is to come in the future – the use of new technologies such as Virtual Reality and Augmented Reality to change our experiences.

I think these technologies are still underused by most organizations. We do see places like IKEA starting to use it to show how furniture will fit within your own home.

At Deloitte we use them as a good training tool and we are starting to use them increasingly to show clients what an outcome of an initiative would look like.

How important is Innovation?

US$456 billion important.

That is how much the top 1000 Global companies spent on Innovation in 2017.

In fact between 2012 and 2017 they increased their innovation spend at a 6% CAGR.

Those stats would indicate that Innovation is incredibly important and the major companies are only seeing it as increasingly so.

A recent survey indicated that one third of executives expected their innovation spend to increase by 50% in the years 2017 to 2022.

87% of companies have a lab or space dedicated to innovation and there has been a 27% growth in innovation centers since 2016.

And the results of this spend?

No question that results are mixed.

Risk aversion, incrementalism, impatient capital, internal politics and misaligned incentives all hamper the effectiveness of innovation and innovation centers.

But those that are clear on the importance of Innovation, provide top leadership backing and can articulate what they want to achieve are having success.

Innovation can’t be a spray and pray exercise. It needs to be directed and result in tangible outcomes. Gone are the days where the view was that you just needed to spawn innovation everywhere and something of value would pop out.

Innovation is a process and there should be a clear objective in mind.

At Deloitte, we believe it should be about changing all or part of the organization’s business model to compete in a world of Industry 4.0 – a world where physical and digital collide.

Changing culture – repeat, repeat, repeat

I spent a few hours with the CEO of a major organization talking about changing the culture in an organization – something that is easy to say – but incredibly difficult to do.

In most organizations, the rules of how the organization works and how people treat each other and interact are not codified – by that I mean written down and standardized. But despite this, the cultural rules and norms are hard wired – people quickly pick up on ‘that’s how we behave around here’ or ‘that’s how we do it’.

Changing the culture is a step by step process – being very deliberate about what you want to change and demonstrating the change through actions, recognition and reinforcement.

A key component is repeat, repeat, repeat – telling the message again and again until you almost feel ill saying it again – and only then is it starting to sink in.

Without continued demonstration of what is required and repeating of the message, existing behavior quickly reverts.

There is no question that getting the culture right is vital. However, I don’t support the view that ‘culture eats strategy for breakfast’. If either strategy and culture are misaligned or either is poor, you will not be successful.

A great culture doesn’t make up for a poor strategy and a great strategy can’t be implemented if the culture is not aligned and positive.

Nike and all trying to create a platform


Today Gartner put out a story on Nike developing a new AI capability to enable people to get the right shoe size – apparently 3 out of 5 don’t have the right size. (See link below on Nike’s game changer)

Nike, like its competitor Under Amour, have invested heavily in technology to try to create a platform – get customers/users to connect and provide and receive data that enables them to offer services that go beyond shoes and apparel.

The sports companies are no different to every other major brand organization – the top 30 organizations by brand are, or are trying to be, platform organizations.

The likes of Apple, Google, Amazon, Facebook are obvious and all started out as platform organizations. And all are nearing the $1Trillion market capitalization due to their massive reach and flywheel model.

Others that may not be so obvious are the likes of:

  1. BMW, Mercedes Benz, Toyota and Honda – using the car as a platform, both receiving and transmitting data
  2. GE – with IoT technology and sensors, connecting up the huge base of installed engines and machinery
  3. Walmart – have invested heavily in technology to become a ‘smart technology enabled retailer’ to effectively fight the threat of Amazon on retail sales
  1. Disney- creating a digital linkage to customers on all their offerings

Platform businesses can create a leverage effect and spawn the ‘flywheel’ models that are all the latest rage (and the subject of a future post).