This article was created for and commissioned by Grant Thornton.
In 2017, financial-services giant JP Morgan made an announcement that likely had legions of contract lawyers quaking in their highly polished shoes. The company’s AI-driven program COIN (short for “contract intelligence”) had learned how to review reams of complex contract documents with precision and speed. The killer? In just a few seconds, the program produced the output that would have taken lawyers 360,000 billable hours.
Turns out, however, that the contract lawyers at JP Morgan didn’t have much to worry about. “JP Morgan could have used COIN as a reason to reduce head count,” says JT Kostman, Ph.D., managing director, applied artificial intelligence, at Grant Thornton. “But instead they asked where these people can spend their time adding real value and doing things that the machine can’t do.”
As automation continues to infiltrate industries from car manufacturing to financial services, Kostman says companies are going to be confronted with a simple but critical choice between value and efficiency. Should they take all the time saved with automated robots, AI-based machine learning, and other technological innovations and simply streamline their companies, cutting staff and running as lean as can be? Or should they instead redirect those newfound resources toward new and innovative pursuits?
Kostman believes the choice is clear: “The companies that are looking at efficiencies instead of value don’t get it,” he says. “This can’t just be about reducing head count or making people do more faster. The smart move is to focus on value, not just efficiency.”
THE RISE OF THE ROBOTS?
As a society, we’re getting used to telling our AI-based assistants at home to turn on the lights or turn down the thermostat. Robots are making our burgers and designing our chairs, and algorithms are helping companies decide whom to hire. “With the proliferation of devices like Alexa, some automation technologies like natural language processing are virtually commoditized now,” says Roy Nicholson, a principal in Grant Thornton’s advisory practice and leader within the firm’s digital transformation and management practice.
This trend isn’t new. Automation has been changing how we approach our everyday tasks for generations. Many of the jobs our parents or grandparents had simply don’t exist today, often due to technological advances. But the pace of the shift toward automation may be increasing. A recent report suggested that automation would spur some $8 trillion in investments in the 2020s, and replace as many as 25% of the current jobs in the labor market.
It’s worth noting that the potential for pain is real. Kostman says coping with this shift will require more than companies retraining workers and creating new jobs; it may take massive legislative fixes, including considering the concept of universal basic income, rethinking how wealth is accumulated and distributed, and weighing the benefits of a stronger social safety net. “This is no longer a matter of choice,” Kostman says. “The genie’s out of the bottle. And these effects aren’t coming soon—they’re already here.”
Companies can still play an active role in how they handle the effects of automation. Again, executives will need to confront the question of efficiency versus value any time a new technology is unveiled. The good news, as Nicholson sees it, is that automation often attacks precisely those jobs that humans just don’t want to do, whether it’s reviewing boilerplate legal contracts or tackling other mundane but necessary tasks. “We’re happy to see these kinds of tasks disappear, because then we can spend more time on things that actually add value,” he says.
Consider Moravec’s paradox, which says, in essence, that what is really easy for computers is really hard for people, and vice versa. For instance, a computer with the right programming can make quick work of financial services contracts that would take an army of lawyers weeks to review. But if you asked the computer to tell you which of those attorneys has the best hair, or which is the easiest to work with? At that point, the machines might wave the white flag.
“Ironically, computers tend not to be good at the things that make us most human and, I argue, confer the most value to our clients, our customers, and our colleagues,” Kostman says. “These are qualities like perspective, wisdom, empathy, and compassion.”
Many jobs will be safe from the existential threat of automation, and still more new jobs will be created as companies figure out how to turn the time saved through automation into something of value. To do that, companies need to take an active approach to pushing innovation from the C-suite to the manufacturing floor. “You have to have a culture within the organization that enables that innovation,” Nicholson says. “Companies need to make sure their employees can collaborate and engage in a culture of curiosity. If you don’t have a sound culture of innovation, you won’t see the opportunities for applying the technologies and automations you have available to leverage.”
To drive innovation, Kostman requires his teams to spend 10% to 20% of their time working on an individual or team pet project. The only requirements are that they find the project interesting, and that the project has a goal. “I don’t care if anything comes from it, but there has to be an objective,” Kostman says.
Inevitably, there will be failures. But embracing innovation also means acknowledging that success comes with costs. “We have to go back to Edison celebrating finding 1,000 ways not to make a light bulb,” Kostman says. “Innovation isn’t achieved by some spark of magic. The companies that are doing it best today are constantly encouraging people to be innovative, and they reward attempts and ideas as much as success.”