deal architect

A gesture to welcome the next POTUS

On Tuesday, the US will learn about its next President. While the next POTUS will inherit a number of challenges, one particularly vexing one will be about the growing pessimism about automation destroying tens of millions of jobs and a shrinking middle class.

To help calm some of the fears, starting Monday night, I discounting by 70% the Kindle version of my book on automation and  jobs, Silicon Collar. It is a pragmatic response to all the pessimism and based on study of a century of automation and interviews with practitioners of modern automation in over 50 work settings across industries. Instead of the list price of $ 9.99, for the next week on you can buy it for just $ 2.99 at amazon.com The sale will last a week.

I will go a step further. After you read the book, if you still feel pessimistic about the impact of automation, I  will take your bet about any scenario of large job losses 5, 10, 20 years out. We just need to agree on something measureable, the timeline and the wager. It could be a nice dinner, a charitable donation, whatever.

Look forward to your thoughts on my research and in the meantime, let’s celebrate a fresh start.

Calling Fellow Analysts

In my orientation at Gartner in 1995, a senior analyst forcefully pointed out “Sacred cows make the best hamburger”. I cringed on behalf of all vegetarians of the world but took it to heart. For two decades, I have challenged hype in the tech industry. In different ways, most of my analyst colleagues do the same.

I am reaching out to my fellow analysts because we have the opposite of hype – lots of myths about things in our economies being worse than reality. I want us to broaden our skepticism beyond our industry to many tales being bandied about by politicians, academics and others.  Here are a few:

a) Automation will lead to jobless futures, and soon

In writing my recent book, Silicon Collar I was struck by the pragmatism of over 50 practitioners I interviewed across industries. I heard machines are still crude when it comes to tons of creative, dexterous, social and other skills. And how expensive automation can be. I just look at my county and how much planning and investment it took to put a robotic arm on our garbage trucks, the new bins every single household had to adopt, the training the drivers had to undergo - all that to eliminate maybe 100 jobs with a single, simple task of throwing garbage bags on to the trucks.

Most jobs are way more complex, and much of automation technology is immature and expensive. Look at IBM Watson - so far not one job eliminated and billions spent in last 5 years.

Yet, academics are wildly projecting tens of millions of job losses – imminently. I recently heard of a respected prof who told a group of surgeons in a decade robots would do a better job than they do. I bet he had not bothered to talk to Dr Michael Blum, Chief Medical Information Officer at USCF Medical Center like I did for the book. Dr. Blum had a realistic pov on the state of electronic medical records, cognitive tools applied to medicine, robotic pharmacies and surgeries. Even transcription technology has a long way to go. A decade to replace surgeons? Try a multiple of that.

In the book, I deconstruct a study by Oxford U researchers which says 47% of the US workforce is susceptible to automation. Pretty catastrophic when someone that influential says half the workforce is threatened.   But as I point out in the book, they did not appear to have called practitioners and asked if machines are so capable why do you still keep hiring humans in droves?

“The professors had calculated a high 0.79 "susceptibility to computerisation factor" (with 1.0 being the highest) to heavy truck and tractor-trailer drivers. This, when the U.S. trucking industry says driver shortages could reach as high as 175,000 positions by 2024 (even if the industry adopts autonomous trucks, regulations will likely require a driver as a backup). The professors had assigned an even higher factor of 0.84 to cartographers and photogrammetrists (who deduce measurements from images), which the BLS projects as one of the fastest growing occupations over the next decade. They had assigned a yet higher 0.94 factor to accountants and auditors, whereas hiring at U.S. public accounting firms jumped to reach record levels in 2013-2014.”

b) “The Middle Class is Squeezed”

As analysts, we all know how difficult it is to define the SMB (Small and Midsize Business) market. Some use revenue brackets, others use headcount. Vendors use it to define whatever market segment they see fit.

Something similar is happening with economists and how they define “middle class”, then conclude it has been decimated. Politicians are only to happy to pile on and agree.

Are things really that bad? My analysis of IRS data for the book showed the middle 2/3rd of returns reported $ 6 trillion in Adjusted Gross Income, or roughly $ 8 trillion in Gross Income. If that is decimation, give us lots more!   The US had the highest auto and truck sales last year – ever - over 17 million units, most of it in what the middle class buys. You may have heard most Americans do not have even a paycheck worth in savings. Have you heard we also have over $20 trillion in retirement assets? I can point to many other data points which suggest a vibrant middle class or certainly not at death’s door.

I am no economist but my skepticism antenna rises every time I hear our middle class has been decimated.  Again, I would love to see my fellow analysts dig into this data.

c) “US Manufacturing is dead”

We just accept the myth the US has offshored all its manufacturing. The reality is manufacturers like to produce stuff close to where demand is. Yes China dominates because of its scale but plants have been moving around the world as middle classes blossom. The US has one of the most vibrant economies in the world, and our energy situation has improved dramatically. And plenty of manufacturing has moved back here. The National Association of Manufacturers says we manufactured over $ 2 trillion worth of products in 2015. Many of those 17 million cars mentioned above were made or assembled in the US. Boeing, Airbus, Embraer are all making planes somewhere in the US. Our Chemical production is doing very well with cheaper petroleum.

I could go on.

So, why should we challenge such myths? Because unchallenged they are accepted as gospel and spread doom and gloom.

The Oxford study I mention above has been cited in over 400  academic publications, none of which bothered to question their assumptions. The scepter of jobless societies is leading to serious discussions around the world of a concept called Universal Basic Income (UBI), a welfare payment for every citizen, irrespective of work status.

I am calling on my fellow analysts to spread our wings. We have the credibility to question shoddy analysis. If we don’t, initiatives like UBI will bankrupt some countries and destroy work ethic as I describe here.

Vendor hype is small potatoes compared to the myths being bandied about the shape of economies. It is corrosive to our societies when we glibly talk about how bad things are, when in fact they are not.

Cross-posted at Medium