Two
months back in a lecture session on strategic management, the PGDM final year
students and an academic were engaged in a discussion on the steps that
Dr.Vishal Sikka, the new CEO of Infosys has taken to script a turnaround for
the IT behemoth. At Ishan Institute of Management & Technology, one of the
top PGDM colleges in Delhi NCR it is a common practice for academics and
students to deliberately stray away from and beyond the academic curriculum.
Needless to say discussions such as the one stated above are like journeys into
the centre of the universe in search of black holes and answers to the
conundrums of the Big Bang theory. While not many students may accept and appreciate
the method to madness of a Stephen Hawking at a business school in Delhi NCR,
fortunately the PGDM program is designed for intellectual and academic
activities that are contemporary and trendy unlike the historic heritage based
academic curricula of an MBA program. Coming back to the discussion though, we
moved to design thinking and tried to identify the different upcoming trends in
the Indian IT industry. We spoke of social media, cloud computing, big data,
data analytics, robotics, artificial intelligence, embedded systems, BITCOIN
and block chain technology. The lecture was indeed productive to the extent
that it gave rise to a conclusive footnote on the rise of SMAC while also
posing a few unsolved questions on the impact that robotics and artificial
intelligence is likely to have on the economies of nations that have been
frontrunners in the race for office and production process automation. What is
also interesting to watch is the effect on key economic metrics of employment,
income generation, displacement of labour, economic growth rates and also
marketing indices like customer satisfaction, user experience, and
marketability of a brand using robotics and so on.
Robotics: The Terminator of Jobs
for Humans?
Just
a few months ago there was an unfortunate accident in Gurgaon, wherein a giant
robot that was installed in the assembly line of an automobile manufacturing
unit malfunctioned. The program of the robot failed and then the robot
disobeyed instructions, went into autopilot mode and finally killed the worker
employed at the workstation of the robot. While this may sound scary, the truth
is that humans are not the most efficient workers on planet earth. A report
published by Techcrunch.com suggests that 57% human workers are at risk of losing
their jobs to robotics in the U.S.A and Western Europe. It is hardly ant rocket
science to anticipate that jobs of customer service and manufacturing are the
most likely to be affected within the next 20 years. Artificial intelligence
threatens to wipe out the jobs of front desk executives, receptionists, retail
sales persons working in house stores and travel agents.
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Economic and Technical Efficiency
of Robotics and AI
The
microeconomic analysis of the use of robotics and AI is based primarily on the
parameters of economic and technical efficiencies. First economic efficiency of
robotics and artificial intelligence stems from the fact that these
applications can be optimized for achieving a very large scale. In the long run
when corporate enterprises have to take decisions for foreign direct investment
and thus transfer of technology becomes an important consideration, the
scalability of operations is likely to be the most important consideration.
Irrespective of the nature of the investment project and the production
automation required therein, robotics and AI offer the highest possible
economies of scale through continuous operations for 24X7 working conditions,
uninterrupted work ethic, unwavering focus unlike human beings and a learning
by doing knack that is very much like humans. Moreover modern industrial
psychology shares the view that learning in itself is a process with three
steps: unlearning the past, learning the present and putting to practice the
learning of the present. This is exactly what challenges human learning ability
and exposes the limitations of humans. Artificial intelligence gets robots,
devices and machines to understand think and feel like human beings but with a
far superior technical efficiency. Machine learning raises the bar for
organizational learning, knowledge management and the development of new core
competencies based on the use of knowledge as a key asset or resource. This is
where robotics, artificial intelligence and machine learning can combine to
revolutionize workplace rules and raise metrics like total quality, acceptable
level of defects, and adherence to six sigma and sky high productivity. The
combinatorial impact of economic and technical efficiency of robotics and
artificial intelligence can indeed break the rules of human workers in
verticals that require repetitive tasks and follow an algorithm bound by
standard operating procedures for work.
The Rent Element in Skill and Walrus
Law: Optimizing Across Markets
While
standard microeconomic analysis can explain the reasons behind embracing
robotics, machine learning and artificial intelligence, it also does explain
the reasons behind the attainment of equilibrium in the labour markets. For
every positive supply side shock that is generated by a new wave of technology
or disruptive innovation, a new frontier opens up with an increase in demand
for that technology and skilled manpower to operate, troubleshoot, innovate,
build and sell that tech based application. This has always been the case since
the times of industrial revolution. It was observed in continental Europe that
in the year 1908 when automobiles first swept across markets, blacksmiths lost
jobs for horse shoe making while new jobs were created in thousands for work
that had to be done in factories producing cars. This is the general exposition
of the Walrus Law in microeconomics and is bound to hold true for robotics as
well.
Moreover
there is a rent element involved in the compensation received by highly skilled
professionals. Take the case of surgical medical science. Surgery is one of the
front runners in the race for automation and use of robotics. Yet it is very
difficult to imagine a scenario where surgeries would be performed by high
precision robots in the absence of a senior surgeon. At best a robot can be a
personal digital assistant in ferrying tools, equipment, measurement and
diagnosis of the effectiveness of a surgery but cannot replace the context
specific learning and experience acquired by a senior surgeon through hundreds
of operations and years of experience in medical science. The unpredictable
element of intuition that is based on experience is impossible to emulate for
the best of programmers working on AI, machine learning and robotics.
At Ishan Institute of Management & Technology, the top PGDM college in Delhi NCR we inject contemporary tracks and upgrade our academic curriculum each year to offer cutting edge managerial know-how. The above piece is dedicated to the final year PGDM students Alka Mishra, Samir Akhtar, Pawan Sinha, Utsav Kundu and Damini Bansal pushed the envelope during that lecture on strategic management, by bringing design thinking to the centre of corporate strategy.