Tag: automation

A Completely Automated Business

Here’s a thought…

how far are we away from kids at Harvard coming up with a fully automated business for a class project?

I said it in that context for a couple:

  1. I suspect fully automated businesses already exist in the fringe but I’m talking about something more widely applicable
  2. By the time the kids at Harvard are doing it, it’ll be big news and government regulators will have to start shifting around this potential

Imagine a company called Widgets.com.  Widgets.com is a market place for widgets where manufacturers of widgets can list their products.  Buyers of Widgets can come to the site, pick the widget they want and place an order for delivery.  When a customer places an order, the order is relayed through to the manufacturer and the manufacturer will ship the widget directly through to the buyer.

Widgets.com outsources it’s live chat and call center.  And their web design.  And their IT.  And their Legal.  And their Accounting. And their digital marketing.

Widgets.com would also have extensive data analytics that would help track key information for making strategic decisions.  These data points would include customer feedback and reviews, website activity, error tracking, legal reporting, financial reporting, and social media stats.  And anything else you wanted to include.

The Widgets.com algorithm would be capable of making executive decisions, but would aim to outsource nuanced details.  For example, if pink widgets were trending on social media, a note would go out to the digital marketing team and manufacturers of pink widgets, while a request would go to the web designer to feature pink widgets.  If the situation was more nuanced, say with a zero star review, the algorithm would track that info, forward it to a capable customer service rep and have them work to resolve the issue.

It’s actually a fun exercise because you can do this with just about any decision being made within a company.  I’m pretty sure these are the steps to building this decision engine:

  1.  Identify the cues to look for when identifying a problem
  2. Use additional cues to verify the problem
  3. Review past solutions to the problem or similar problems
  4. If a past solution has worked, use it again
    1. If a past solution works again, make a note
    2. If a past solution doesn’t work, go back to step 2
  5. If a past solution didn’t work, look to variations of solutions to similar problems.

I know that’s a bit of an oversimplification but what I’m getting at is that with enough time and insight, a top CEO could effectively upload his decision engine into a neural net.  Perhaps a decision engine wouldn’t make the best CEO for a complex company that operates in a rapidly changing environment with an actively engaged customer base… but maybe at that point, a human CEO isn’t cutting it either.

That’s where I see this going, especially because it’s already happening.  Big data analytics is an early stage version of human/digital hybrid CEO.  Right now, we’re mostly using data analytics to provide the human CEO with more information.  If the human CEO sees that everything X happens, Y needs to happen, he can automate it.  Once it’s automated, that’s the responsibility of the digital CEO.  As more information starts to get tracked, more patterns will emerge, and more automation will occur.  As that process progresses further and further, the human side is needed less and less.

I’m not sure how this will play out, but I do know that today’s pundits are suggesting that the CEO’s role will be among the last to be taken out by automation.  That before the CEO role goes digital, manufacturing will be replaced by 3D printing, warehouse workers will be replaced by robots, delivery drivers will be replaced by automated trucks and drones, and even computer programmers will be replaced by computers who programmers have taught to program.  Considering that the new Atlas looks like its about to try out for Cirque, who knows.

A Quick Fix to Wealth Inequality?

I was having a chat with a friend yesterday about the incoming Canadian tax reform and he managed to inspire what I think is a rather interesting idea.

When it comes to modern finance, it’s a mess.  For the last few years, I’ve been trying to figure out a system of finance to account for the deflationary nature of technology and best practices while increasing productivity.  I think I’m close but it requires a complete overhaul of the system, and well as a cultural paradigm shift.  I’ll be patient.  Until then, I thought I’d mention an idea which works within the current system: Adjusting the local minimum wage to reflect the local cost of living.

If you’re working 40 hours a week, you should be able to earn a living.  That’s not to say that we should all be making the same, that’s to say that the floor should be set at what it costs to lead of modest lifestyle in that area.

Consider this, if someone is working 40 hours a week and living in poverty, they’re likely relying on social assistance programs.  Those social assistance programs are ultimately tax-payer funded.  That tax burden falls primarily on those who aren’t in poverty.  When someone grows up in a low-income neighborhood, falls in with the wrong crowd and ends up in prison, it’s the tax payers who pay for that too.  No matter how we look at it, we’re all in this together.  We either keep picking up the tab, or make an investment in the future.

For starters, imagine the impact this would have on the country’s collective anxiety – Knowing that if you work full time, you’ll be alright.  Now imagine the positive cultural impact of an entire generation of kids growing up with parents who aren’t barely getting by.  Now think about the reduction of people needing social assistance programs and the reduced government spending.  Now think about the reduced taxes for all tax brackets.  I guess we would call that trickle-up economics?  Just like trickle-down economics except rather than starting with helping those with the most and letting the residual benefits trickle down to those with the least, we start by helping those who need it the most and letting those residual benefits trickle up to those who need it the least.

The definitive test that trickle-up is better than trickle-down?  Trickle-up helps more people.

That all sounds pretty fantastic for people who are struggling to get by but that’s a rather large stone to toss in the water and it’s important to understand how this will affect everyone else in the pond, especially employers.

First off, businesses that haven’t embraced automation but probably should will likely need to.  The jobs which require the least amount of skill are often the ones which are easiest to automate so businesses will no longer need to rely on cheap labor to sustain their operations.  Fast food is already testing out automated ordering systems and burger flipping robots.

As the automation sector booms, the robotics and AI industries will boom and while not on a 1:1 basis, low-skill jobs will be replaced with high-skill jobs.

While measures like these will dramatically reduce low-skill jobs, I think they’ll also have the opportunity to redefine what we think of as an entry-level job.  If the objective is to have people perform at the best of their abilities, it’s about time we stopped putting young people in roles where they’re underutilized and calling it paying your dues.

The real victim in all of these is the entrepreneur who has to pay those increased wages though right?  Well if your business model relies on paying people a wage below what it costs for them to sustain, then yes – expect to be steamrolled.  If you can’t run a profitable business without the use of government subsidized labor, there’s a good chance you’re not fit to be running a business.

What about the businesses who do adapt, but still have to pay higher personnel costs because the average wage is now higher?  Because that’s real.  Well, it’s going to raise the bar for what we consider to be a well-run business.  Ultimately though, it means more money in the hands of the workers and less money in the hands of the owners.  Considering how the best entrepreneurs are motivated by the opportunity to create change, I don’t see the smaller paycheck making a difference – especially when you know that you’re putting extra food on the table of the team you built.

From an economic standpoint, if you systematically shift income from the wealthy to the working class then you’re looking at a far more robust economy.  More money in more hands makes for a much freer market as more people are inclined to make more decisions with their money.  Culturally, fewer wealthy people will mean mean a smaller market for luxury items and materialism may take on a more utilitarian feel.  From a philosophical standpoint, this is about equality in how we distribute the value we collectively create.

So set the local minimum income to be equal to the local cost of a minimum standard of living – seems reasonable.  Now set the minimum standard of living at a point which allows for a focus on personal development, providing them with the opportunity to become the most productive version of themselves.  Also seems reasonable.