If there’s one theme that CEOs stress time and time again, it’s the potential of new technology to drive innovation and business growth. This belief has already been validated through the transformative power of the internet and mobile. Could robotics have the biggest technological influence of them all?
There’s often a tendency to frame robotics either in terms of superhuman intelligence – think shiny walking things taking control of the human race - or, at the other extreme, as mere mechanical replacements for blue collar assembly jobs. The reality, however, is somewhere in the middle: increasingly robotics is assuming a more cognitive role – incorporating an element of decision-making once the sole preserve of human employees.
While robotics may still be a long way off world domination, this technology has already moved past the point of simply substituting existing human roles to the beginnings of an augmented and collaborative working model alongside people – what we call the ‘blended workforce’.
In this latest ‘pulse’, we explore CEOs’ current perceptions of how robotics in the workplace is shaping their businesses today and in the near future. We also offer our perspectives on how robotics and automation have the potential to be truly transformative in the way they create value within organisations.
Significant leaps have been made since the first industrial robot was introduced some 50 years ago. Companies today are spending billions on robotics and intelligent automation. They range from basic tasks such as cash machines in banking, self-service check-outs in retail and airport check-ins - to complex industrial robots such as those employed on the car assembly line, robot butlers being trialed in hotels, customer-service androids being used in banks (such as Bank of Mitsubishi's multi-lingual Nao robot), and the drones being prototyped to deliver our groceries. Investment in robotics continues to grow: venture capital companies committed around $172 million in 2013 while technology leaders are already buying into robotics technology.
1. Beyond manufacturing. According to PwC’s The New Hire: How a new generation of robots is transforming manufacturing, an estimated 1.5 million robots currently bustle on assembly lines around the world. So, it’s not surprising that the majority of CEOs we talked to cite manufacturing and production as the key functional area where they’ve already adopted robotics in their organisations or plan to do so in the next five years. But, increasingly, other areas of the business will also feel the robotic touch: CEOs identified IT, sales and customer service as areas where robotics will play a role in the near future.
Role of robotics in IT, customer service and sales to grow significantly
“I see robotics as a consistent way of saving cost and having more efficient processes, especially in the logistics and operational areas.”
2. Positively productive – CEOs are upbeat about the productivity of robotics. CEOs agree that robotics is going to make their companies more efficient, with 94% of those who’ve already adopted robotics saying that it’s increased productivity in their business. That’s not a surprise given that robots are already proving to be more cost effective and more productive workers than humans. In some fields, such as manufacturing and the military, their speed, strength, resilience and lower error rate make them ideal for working in dangerous surroundings or ‘round the clock’.
“I think robotics will be useful in manufacturing. It will reduce headcount significantly…and the quality of production will be clearly predictable.”
3. Robotics as a driver of innovation. The speed of advances in robotics has completely outpaced that of improvements in human productivity. So, it’s likely that the real gains from this technological leap may not only come in improving existing business functions, but in the new business models and new roles that robotics could create. 64% of the CEOs we surveyed told us that robotics will bring new innovations to their business models.
4. Halcyon Days with Hal 9000? Over the next five years, CEOs expect that almost a fifth of their workforce tasks will have an element of robotics to them. Whether this will be pure substitution (58% of them also tell us they intend to reduce headcount because of robotics over the same time frame) or finding new ways of working collaboratively, it’s hard to say.
Indeed, it’s impossible to take a clear look at the impact robotics will have on business without wondering about the fate of the workforce as we know it. Some industry pundits are aggressive in their forecasts as to the extent to which robotics and computerisation in general will impact the workforce. For instance, Oxford University has estimated that, by 2034, robotics and other computerisation could replace 47% of jobs in the US.
Certainly, we believe we’ll see greater collaboration between man and machine as robotics paves the way for more sophisticated ‘augmented’ workforce models. For example, Amazon recently announced the deployment of 15,000 Kiva robots to its US fulfillment centres to make sure no time is lost in dispatching customer deliveries. So, what’s the right blend of human and ‘robot’ employees and how will organisations effectively rescale in this new world?
Do companies need to prepare for a time when they need just a handful of people blended with hundreds or thousands of machines? And do employees need to panic? Probably not. Erik Brynjolfsson and Andrew McAfee, authors of the Second Machine Age argue that ‘smart machines’ don’t necessarily equal ‘unemployment’. They posit that technology will simply create different kinds of work (echoing the sentiment of Keynes’ on technological unemployment). Interpreting the rise of robotics only in terms of direct job losses misses the point of how robotics can also create new jobs and opportunities for workers. It could achieve this by handing off the traditionally low-paid, low-skilled jobs to the bots while freeing workers to pursue alternative or more rewarding career paths. There might be less demand for factory workers but more demand for machine maintenance or programmers.
We already see that self-service and automation have become business as usual for interacting with customers in sectors such as retail - think self-service supermarket checkouts or self-service check-in and bag drop at airports. That’s just that the start. Teams of smart robots helping with these self-service check-ins or checkouts could be the next stage of automated customer service. Take Geneva airport, for example: not so long ago they trialed mobile robots to direct passengers to services such as currency exchange, toilets and rail connections. Or, Lowes, the US home improvement store, that’s been experimenting with robots to help customers locate items in the store. But, could robotic customer service be more of a hindrance than a help? While the bots might have the upper hand in terms of accuracy, performance and resilience to cope with dull and repetitive tasks, how capable are they of providing a ‘human touch’ or ‘going that extra mile’ – both arguably the secrets to customer service success?
To what extent though will robotics, particularly with the advances in artificial intelligence, also put highly skilled workers out of jobs? 69% of the CEOs we spoke to disagree with that notion but, surely, much will depend on the extent to which thinking (or cognitive) tasks can be automated or ‘delegated’ to robots. Some tasks – those that rely on intuition or leaps of faith, for example - will always be more suited to people. Others – those that are improved by speed, precision or big data - are best suited to machines or automation. Early automation efforts focused on taking thinking responsibilities from employees and putting them into systems. Take the world of credit, for example. Once upon a time a bank manager looked at your reputation, your family, and assets in the bank, among other factors, to arrive at a decision. Today, a credit-scoring algorithm rates you then determines the amount of credit the lender is willing to give. A lending process that was, at one time, completely unstructured is now fully structured and automatable. Which means the bank manager has to migrate on to some other task. Organisations will always be riding that wave of what’s automatable and that wave is always crashing into new shores.
As robotics becomes more integrated throughout the business, employers are going to have to invest in reskilling many parts of the workforce to adapt to working alongside and managing robotic processes and even colleagues. In the healthcare sector, for example, doctors will need to be both expert interpreters of data or communicators with their patients as well as being known for simply their technical skills.
“I think the field of robotics will be able to make a breakthrough in the intellectual function of robotics as well as the physical function.”
As the ability and role of robotics grows, companies will be forced to confront a series of issues that may still feel a bit like science fiction.
In this CEO pulse, we’ve focused on the impact robotics will have on the workforce, but its influence on areas like asset intensity, energy use or location of taxation may well be equally important. As companies start to automate processes and/or introduce more artificial intelligence into white collar ‘thinking’ tasks (like knowledge management, analytics, business services and law) this new automated knowledge workforce will pose real problems for companies in terms of insuring against risk (for instance software crashes, cyber-attacks or systemic fragility) and protecting intellectual property.
It’s not just a challenge for business. There’s likely to be a growing uneasiness among trade unions, governments and regulators as robotics becomes more widespread. You can throw into that mix a potential disquiet from society about the increasing dominance of robotics and automation. In a recent PwC poll of global consumers, 25% of those surveyed thought that robotics would have a negative impact on society. However 58% said this impact would be positive, with higher positivity coming from BRIC countries.
At present, the true transformative power of robotics still seems alien to many. The same was true with digital media, big data and the internet of things (albeit early days). And yet those technological trends are transforming how we live and work. Certainly, the technology that’s come before made certain ways of working and living obsolete. More often, though, new technology has augmented our everyday experiences – think how mobile technology and smartphones have revolutionised the way we communicate, or how second screens and social media have made live TV more relevant and compelling. Robotics will, sooner or later, be incorporated into our business and home life. Could it be that 25 years from now, robotics will be as an essential and integral part of our life as the internet is today?
PwC’s CEO pulse provides a temperature gauge of global CEO sentiment on a variety of topical business issues throughout the year. For this pulse on robotics we spoke to 140 CEOs across Europe, Latin America, Asia Pacific, Africa, North America and the Middle East in the summer of 2014. At the same time, we polled 1,200 consumers from the United States, United Kingdom, Germany, Spain, India, Brazil, Russia, Mexico, Canada, Australia, China and Sweden for their perspectives on the same topic.
Definition of robotics: the scope we gave to pulse CEOs. We probably all have a certain image in our minds of what a robot is. But we asked CEOs to think of robotics in the broadest sense; from those that are capable of carrying out physical tasks in place of humans (in areas such as manufacturing, earth and space exploration, surgery or the military in a pre-programmed automated fashion) through to those with a degree of artificial intelligence that are capable, or will be capable in the near term, of adapting to their environment and continuously learning to perform ‘white collar’ complex thinking or decision-making tasks.
Joint Global Leader, People and Organisation
Tel: +44 20 7804 9000
Centre for Technology and Innovation
Tel: +44 (0)20 7213 5659