contributor, korn ferry institute
This Week in Leadership
A Wrench in the Hiring Boom?
The triple threat of rising inflation, sooner-than-expected interest rate hikes, and a potential stock market correction could slow down the pace of hiring.
If you consult Wikipedia on Ned Ludd, you will learn that Ned Ludd may or may not have been his name, and that he may or may not have smashed two stocking frames in 1779. The Luddites who emerged three decades later took the folkloric King Ludd or Capt. Ludd as their mythical hero. Ned may have gotten a bad rap, if he ever existed at all, but the organized frame-breakers who followed were surely only expressing their concern about the impact of new technology on the future of work. Today they might go on the lecture circuit.
Or perhaps they’d write books. Search Amazon for “The Future of Work,” and you find three books with that very title, two just published this year, and 157,971 results with some variation on the theme. These run the gamut from the predictably alarmist—robots will steal our jobs—to the wishful utopian—the coming post-capitalist life of leisure.
It’s an enduring theme, the future of work, dating at least since Adam Smith’s 1776 opus, “An Inquiry into the Nature and Causes of the Wealth of Nations,” through Frederick Winslow Taylor’s 1911 “The Principles of Scientific Management,” and on to more contemporary classics like Peter Drucker’s “Management Challenges for the 21st Century,” and Charles Handy’s “The Age of Unreason.” There is no evidence that hunter-gatherers or subsistence farmers gave much thought to the future of work, but ever since humanity began to substitute technology for labor, we have fretted about the outcome.
Some prognostications have clearly come true. Many credit Drucker with coining the term “knowledge worker” in 1957, when he suggested “the most valuable asset of a 21st-century institution, whether business or non-business, will be its knowledge workers and their productivity.” And Handy, who is sometimes referred to as the British Drucker, was similarly apt in foretelling “portfolio careers,” a phrase he came up with in the 1980s to describe people who work for themselves and serve a portfolio of individuals and entities.
Handy took a more pessimistic tone in a 1994 sequel, “The Age of Paradox,” but it was also prescient. Technology has increased wealth and consumption among a few, while reducing employment and incomes for many, he wrote. Opportunities for personal fulfillment are complicated by demands for ever-greater efficiency, and the new freedom to pursue more flexible lifestyles that account for our personal and professional lives only increases the inequities between the skilled or talented haves and the less-fortunate have-nots.
That sounds a lot like today’s workplace. But what about 10 or 20 years from now? What will constitute work? What will people do? What will go away?
Jerry kaplan is a serial entrepreneur, having started pioneering companies in artificial intelligence, Teknowledge; pen computing, GO Corp.; Internet auctions, OnSale; and social gaming, Winster. Clearly, he’s an inveterate optimist. But his outlook on the future of work is more nuanced, as stated succinctly in the title of his new book: “Humans Need Not Apply; A Guide to Wealth and Work in the Age of Artificial Intelligence.”
As Kaplan writes, after 50 years and billions of dollars, we have finally cracked the code on artificial intelligence, and recent advances in robotics, perception and machine learning are enabling new computer systems that rival or exceed human capabilities. These developments could usher in a new period of prosperity and leisure, but there’s a big “but.”
“The transition may be protracted and brutal,” he writes. “Without adjustments to our economic system and regulatory policies, we may be in for an extended period of social turmoil.”
Social turmoil is a byproduct when new technology is introduced in the workplace, but the severity of that turmoil depends on the speed of the transition. Artificial intelligences may displace Drucker’s knowledge workers as thoroughly as tractors replaced farm labor. Indeed, some already have: Computers now execute an estimated 85 percent of stock trades. New technology also creates new jobs, but that takes time. Today’s workers may not be qualified for tomorrow’s career opportunities, and this time their collars will be white.
“There’s a bunch of new technologies that are going to make a lot of current activities susceptible to automation where they haven’t been before,” says Kaplan. “It’s all a question of how fast it happens. We’re not going to run out of things to do. There will ultimately be plenty of work for all the people around; it’s just going to be different work. People may not be skilled for the jobs that come along, and AI technology is just going to accelerate this trend.”
As Karl Marx pointed out, industrial automation substitutes capital for labor, Kaplan says. The new generation of AI, which he calls “synthetic intellects,” can also substitute capital for your mind. The future, he says, will be a struggle of assets against people. But though Kaplan is a technologist through and through, he sees the struggle primarily as a failure of public policy, not malevolent smart machines.
“We don’t move markets. People don’t move markets, it’s algorithms,” Kaplan says. “We didn’t sit down and think about it and design things effectively. Probably we shouldn’t have allowed computer trades. If people could see it, they’d be up in arms. It’s crazy to have cabals of programmers fighting over fractions of a second deciding our markets. Or the bots buying up all the best tickets on Ticketmaster: If you had to buy your ticket by going to the concert hall and you saw 75 percent of the people in line were robots, that would be illegal. ”
Kaplan’s book is longer on description than prescription, but he argues that a comfortable future depends on new policies that get at the heart of inequality, which will otherwise be exacerbated to Pharaonic levels. Laws must change to hold autonomous systems responsible for their actions; education must prepare students for an ever more rapidly changing work environment; and a program of tax incentives, portfolio transparency and increased individual control over assets must encourage corporations to “do the right thing.” Otherwise, look out.
“Advances in information technology are already gutting industries and jobs at a furious clip, far faster than the labor markets can possibly adapt, and there’s much worse to come,” Kaplan writes. “They are also substituting capital for labor in completely new ways, delivering a disproportionate share of new wealth to the already rich.”
Déjà Vu All Over Again
If there’s a ring of “we have all been here before” in today’s lamentations and forecasts about automation and the workplace, it’s because we have. The loss of jobs to machines was a popular meme during the Depression. It rose again with a more hopeful, if fanciful, vibe in the early 1960s, the era of the Seattle World’s Fair that gave birth to the Space Needle and the Monorail.
Paul Saffo teaches future studies at Stanford and Singularity University, and he for one is not stricken by the latest round of robot anxiety. “This subject, this fear of robots stealing our jobs, is a comet on a loopy orbit that comes screaming across the sky every few years,” he says. “This is a profound shift, but everybody is focusing on the wrong thing. It’s not the jobs that are being taken by robots that matter, it’s the jobs that are never developed to begin with, because they’re taken by machines instead of people.”
Saffo points out that today’s most successful companies just aren’t hiring in the numbers that characterized big companies in the past. Facebook has a market capitalization of $260 billion, but just 10,000 full-time employees, compared with I.B.M., valued at $147 billion, with 380,000 employees.
Like Kaplan, Saffo says the other critical element will be how quickly robots gain new capabilities, and that is a mixed bag. “Robots are capable of doing things far beyond the capability of human beings,” he says. “They can see into the infrared and the ultraviolet, but at the same time, some things that ordinary humans do, they can’t do at all, like opening doorknobs. Anybody worried about the Terminator in his or her future can just lock the door. I suspect this is a slow-motion tidal wave, and velocity matters, because the more slowly it happens, the more we will adapt.”
Saffo doesn’t suggest that the changes aren’t real, or that their impacts won’t be profound, but he believes that how well society will accommodate them is a matter of choice. If society values quarterly earnings over workplace integrity, workers will suffer. Apocalypse is unlikely, he says, but jobs will be even less secure, an ever greater percentage of workers will be unwilling independent contractors, and the notion of a job for life will be a quaint bit of nostalgia.
“Automation in the ’60s really did change manufacturing,” Saffo says. “The U.S. is the second-largest manufacturer in the world. The reason is productivity, which is the substitution of capital for labor. Companies grew, but they didn’t hire more people. You cannot blame the insecurity of American workers on robots. There is no reason we have to use this technology to make workers less secure; we’ve chosen to do that. If I had to blame one thing for the plight of workers, it wouldn’t be robots, it would be shareholder value.”
A Failure of Leadership
Don’t blame the robots, blame the leaders, says Jeffrey Pfeffer, a much-published professor at the Stanford Graduate School of Business, whose latest book is piquantly titled “Leadership BS.” Our workplaces are terrible places to be, and our corporate leaders fail at astonishing rates, he says.
“I think the workplace by every measure—job satisfaction, employee engagement, income stagnation, income inequality—is bad,” says Pfeffer. “Some colleagues and I have done work for academic journals about the health effects of work, and we found it causes 120,000 excess deaths in the U.S. every year. This is not from accidents; it’s from the stress of work. We have by every measure, a very unhealthy workplace, and I see no signs that things are getting better. I see every sign that things are getting worse. The workplace is a catastrophe by any measure.”
In “Leadership BS,” Pfeffer places much of the blame on a leadership industry—all those coaches, consultants and conferences—that promotes a lot of feel-good mantras and inspiring stories that are often at odds with the characteristics of real leaders. The industry recommends that leaders inspire trust, be authentic, tell the truth, serve others, be modest and self-effacing, and exhibit empathy and emotional intelligence and other seemingly sensible nostrums. But, Pfeffer asks, where are the successful leaders with these qualities? And most leaders are not successful; they fail their people, their organizations, the larger society and even themselves with unacceptable frequency, he writes.
“Then of course, we evaluate the leadership training efforts, not by whether they’ve made the workplace better, but with these happy sheets that ask, ‘Did you have a good time?’ ” says Pfeffer. “They’re evaluating the wrong thing; they’re evaluating entertainment. The correct prescription is to change how you hire the people who are going to do the leadership development and talks, and to require expertise. We need to do what medicine did in the early 1900s. Evaluate things based on the changes you’re trying to create. If leadership programs are supposed to improve the workplace, that’s what you ought to evaluate.”
In 1910, a report produced by Abraham Flexner for the Carnegie Foundation transformed the training, and also the science and practice of medicine, leading to the closing of one-third of existing medical schools; the formal licensing of physicians; and the biomedical, scientific foundation of modern medical practice. Pfeffer would like to see something like a Flexner report for business education, something with a scientific foundation, but he holds out no hope of such a thing coming to pass.
“Now, do you believe this is possible, in today’s world, where you can’t even get a budget passed?” Pfeffer asks. “It is not that the problems are insolvable; they’re completely solvable.
It is possible to change this, but the odds of it happening in the current situation are close to zero. Maybe instead of the Great Place to Work list, we ought to put out a list of the companies that are killing the most people every year.”
Trading Money for Time
In a recent article in The New York Times, Amazon was portrayed as a notably harsh place to work, and follow-up stories in a number of publications noted that similar pressure-cooker environments were common in today’s high-tech corporations. But people are also working longer and harder days in professional service firms and partnerships, driven by the same technical innovations and the same need to maintain a competitive edge.
Consider the practice of law, says Jeffrey Bleich, a former United States ambassador to Australia, special counsel to President Obama, chair of the California State University Board of Trustees, and president of the State Bar of California.
“It used to be that if you were a very good lawyer, you made a good income, but you didn’t become rich. You just became comfortable, middle class,” Bleich says. “Judges made a bit more because they had to become great lawyers.” The workday for a good lawyer at a major firm was 9 to 6, probably with a two-hour lunch break. “If anybody left voicemail for you after 5, that was considered very bad form. Most things that needed a response from opposing counsel were sent by mail, so once you sent it, you didn’t have to think about it for two weeks.”
Today’s high-level attorneys make many times what a judge makes, many times what a previous generation of lawyers made, but there’s a cost. “The expectation is they are going to be available 24/7 by e-mail; they are going to do filings up until midnight,” says Bleich. “As soon as something crosses their desk, they push it onto the opposing counsel, so things that used to take a month to sort out are done in furious e-mails in the course of a day. The ability to go home and have dinner with your family, or to have predictable vacations—those things have gone away.”
These changes have come about partly through the adoption of new technology, partly through new billing practices and partly through shifting customs and practices, says Bleich. “Companies are moving at the speed of the Internet, and they expect lawyers billing what they do to move at that speed, too,” he says. “In the course of one generation, there’s been a sea change, but it’s been gradual, so people think it’s always been this way. People who started 20 years ago don’t mourn their old life, but wish they could trade a bit of money for more time.”
Bleich expects advances in automation to have a number of positive impacts, not just for obvious industries like trucking, but also for home-based workers, including artists and publishers. And he’s not worried about robots replacing lawyers any time soon.
“A lot of law is about the emotional connection,” Bleich says. “Can you think how other people do? Can you convey that and bring them around to your point of view? Can you read peoples’ reactions in real time, in a way that allows you to quickly recalculate and change the words you use? This is far beyond what anyone is hoping to train some artificial intelligence project to accomplish.”
The Most Exciting Time Ever
Jerry (Yoram) Wind is the Lauder Professor and professor of marketing at the Wharton School of the University of Pennsylvania, and is the founding director of the Wharton think tank, the SEI Center for Advanced Studies in Management. Wind, who co-wrote a book called “The Power of Impossible Thinking,” about transforming life and business, has a distinctly glass-half-full vision of the future of work. Big changes are under way, he says, but many are for the best.
“Among the key forces driving change, one is obviously that consumers, and employees as well, are getting more empowered and more skeptical,” Wind says. “Today, people want to work for, be part of and buy from companies that have a purpose, that have a positive social impact. Couple this with the desire of people to have a better balance between work, play and family. That’s been coming for years, but it’s much more dominant today.”
Wind sees technology not as a threat, but as a potential source of empowerment. “The other key force for potential workers is the development of AI, what I.B.M. calls cognitive computing, with Watson,” the company’s name for cognitive computing systems that understand natural language and are not programmed, but instead learn by observation. “Think in terms of automation, robotics, but also in terms of the impact on white-collar workers. The nature of work is going to change dramatically because now you have an intelligent assistant that can give you not only a Google search, but validified responses.”
Wind says technology will enable free agents to thrive in new types of business. He points to InnoCentive, a pioneer in the field of open innovation, which connects clients who have a problem, with “Solvers,” freelance experts from around the globe, who supply a crowd-sourced solution. Wind predicts that some large companies will no longer build in-house expertise, but will source it as needed from InnoCentive and its competitors. And as Handy predicted, solvers will build a portfolio of clients, rather than a career within corporations.
“I’m very optimistic,” says Wind. “I think it’s the most exciting time ever. Because if people want to be a free agent they can. If they want to be entrepreneurs, it’s the easiest time ever to start your own company. But let’s put it in perspective. I’m very optimistic for the highly educated segment of the work force. I’m very pessimistic for the uneducated. These guys are not going to make it. It’s not a function of the workplace; it’s what we’re not doing to prepare this huge percentage of the population for jobs in the new world. This calls for a major reinvention of education.”
All Keynesians Now?
A surprising number of the futurists and management thinkers interviewed for this article recommended re-reading John Maynard Keynes, and specifically his essay, “Economic Possibilities for our Grandchildren,” written in 1930, during the depths of the Depression. Keynes took exception to the then-prevailing view that a decline in prosperity was more likely than an improvement in the decade ahead.
“I believe that this is a wildly mistaken interpretation of what is happening to us,” Keynes wrote. “We are suffering, not from the rheumatics of old age, but from the growing-pains of over-rapid changes, from the painfulness of readjustment between one economic period and another. The increase of technical efficiency has been taking place faster than we can deal with the problem of labor absorption.…”
That does have a familiar ring, and it is comforting. Keynes got some things right and some things wrong, of course; his predictions of unbounded leisure were a bit off the mark. Probably something similar is true for today’s prophets as well. That post-capitalist utopia will remain elusive, but the doomsday scenarios will be ameliorated, possibly by solutions yet unimagined. The road to the future won’t be free of bumps, but it needn’t be a dead end either.