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Trump vs. The Robots: US jobs and Promises

Osama Rizvi

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Among political observers, there is a widespread notion that U.S. President-elect Donald Trump will inherit an economy in the best of shape. Inflation is down to historic and desirable levels, the unemployment rate stands at 4.9% and U.S. economic growth is better than expected. Moreover, observers can’t help but hear Mr. Trump’s boastful rhetoric as soon as he steps onto the bully pulpit. But as promising as the picture might seem, it will be very difficult to carry off his promise of ‘getting back our jobs’ in the long term.

Since 1980’s and up to the 2000’s, the world has undergone immense changes. The most prominent and significant being that in the realm of technology. And, the internet generates new, mind boggling marvels with each passing day – and continues to do so. Through the ‘Internet of Things’ and automation people are experiencing massive changes in the way the world works while scientists are signing letters foreboding the dangers of the rising AI. U.S. politicians and the media have typically blamed offshoring [usually to China] and international trade agreements for wrecking the domestic economy. A University of California study asserts that approximately 14 million white collar jobs are susceptible to off-shoring [5]. Ron and Anil Hira, in their book “Outsourcing America, believe that US companies justify off-shoring by arguing that to create more jobs domestically through cost savings are “self-delusion.” (Ron Hira is a professor at the Rochester Institute of Technology and Anial Hira is a professor at Simon Fraser University.)

In other words, it is not the intervention of foreigners which leads to the scarcity of jobs but automation. There are two vocal camps on this issue: One believes that automation, instead of creating a paucity of jobs instead leads to the creation of more job opportunities. And the other camp remains certain that, despite the spread of AI and factory robots, their jobs will remain intact during the next coming years, as reported by a research paper issued by the non-partisan PEW Research Center. Experts surveyed by Pew called for a more optimistic approach: “many jobs currently performed by humans will be substantially taken over by robots or digital agents by 2025. But they have faith that human ingenuity will create new jobs, industries, and ways to make a living, just as it has been doing since the dawn of the Industrial Revolution”. However, there are dissenters as well.

Justin Reich, a fellow at Harvard University’s Berkman Center for Internet & Society, says: “Robots and AI will increasingly replace routine kinds of work − I’m not sure that jobs will disappear altogether, though that seems possible, but the jobs that are left will be lower-paying and less secure than those that exist now. The middle is moving to the bottom.”

One can see very clearly how technologies are replacing even white-collar jobs and thus breaking the presumption that only routine and repetitive jobs are at danger from automation. Take for example, the case of Enlitic: A deep-learning system that is now being tested in Australia. The software can diagnose diseases, analyze X-rays and identify cancer. Moreover, the field of medicine is not the only profession feeling the heat of automation. Jobs in the field of law are also vulnerable. There is software in existence that can rummage through dossiers of legal documents and easily pin-point the desired files.

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“Automation is now “blind to the color of your collar”, declares Jerry Kaplan, author of “Humans Need Not Apply”, a book that predicts upheaval in the labor market.

Another Perspective

The other camp, however, is trying to peddle a more positive future. Debunking the ‘lump of labor’ fallacy which states that there is a finite amount of work and automation, and hence opening a chasm between jobs and peoples, the proponents state that automating a task results in creating more tasks as more people or different processes are now required to operate that ‘automated’ job. Again quoting The Economist, “During the Industrial Revolution more and more tasks in the weaving process were automated, prompting workers to focus on the things machines could not do, such as operating a machine, and then tending multiple machines to keep them running smoothly. This caused output to grow explosively. In America during the 19th century the amount of coarse cloth a single weaver could produce in an hour increased by a factor of 50, and the amount of labor required per yard of cloth fell by 98%. This made cloth cheaper and increased demand for it, which in turn created more jobs for weavers: their numbers quadrupled between 1830 and 1900. In other words, technology gradually changed the nature of the weaver’s job, and the skills required to do it, rather than replacing it altogether,” says James Bessen, an economist at Boston University School of Law said.

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“We already have cars that talk to us, a phone we can talk to, robots that lift the elderly out of bed, and apps that remind us to call Mom. An app can dial Mom’s number and even send flowers, but an app can’t do the most human of all things: emotionally connect with her,” according to Pamela Rutledge, PhD and director of the Media Psychology Research Center.

When Mr. Trump assumes office on 20th January, 2017, he says that one of his first priorities, among other things, is to repeal the Trans-Pacific Partners or otherwise known as “TPP.” And Trump intends to lure back U.S. companies by offering lower taxes (if not through sheer brute force as displayed in his negotiations with the air conditioner manufacture, Carrier). And yet, at the same point, Trump promises more government spending e.g. Infrastructure development.   Economists generally agree that lower taxes and increased spending will increase U.S. debt which may potentially lead to a ruinous outcome for the US Economy. Nevertheless, Americans who voted for him count on his actions and his promises, including bringing thousands of jobs back to the US. Therefore, observers must consider the question: What is that is more dangerous? Off-shoring or Automation?

Independent Economic Analyst, Writer and Editor. Contributes columns to different newspapers. He is a columnist for Oilprice.com, where he analyzes Crude Oil and markets. Also a sub-editor of an online business magazine and a Guest Editor in Modern Diplomacy. His interests range from Economic history to Classical literature.

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How Strategy, Technology, and Operations Come Together in “The Symphonic Enterprise”

MD Staff

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New Report shares how leading companies are looking beyond traditional domains to leverage technology broadly across the enterprise.

Deloitte’s Tech Trends 2018 spotlights eight key trends that could potentially impact business strategies and outcomes. This year’s theme, “The symphonic enterprise,” is an idea that describes strategy, technology, and operations working together, in harmony, across domains and boundaries.

Among the trends featured in this year’s report are:

  • Digital reality: represents the next phase in the augmented reality and virtual reality revolution;
  • No-collar workforce: discusses HR strategies for managing environments in which humans and machines work together as equals; and
  • The new core: examines how core systems and the information they contain are driving digital convergence and breaking down traditional operational boundaries.

Tech Trends 2018 features the “Exponential technology watch list” which discusses strategies for exploring and harnessing innovation ideas that may not manifest for five years or more. It also explores two longer-term technology trends: artificial general intelligence and quantum encryption.

“Technology trends are no longer just the CIO’s or CTO’s responsibility. It’s become a CxO, CEO and even board-level conversation,” said Bill Briggs, chief technology officer and principal, Deloitte Consulting LLP. “We now see many forward-thinking organizations approach disruptive change more strategically. Instead of launching separate, domain-specific initiatives, they are thinking about exploration, use cases and deployment more holistically. Increasingly, they are focusing on how multiple disruptive technologies can work together to drive meaningful and measurable impact across the enterprise.”

Here is a closer look at some of the trends that could offer opportunities and challenges across industries during the next 18 to 24 months:

No-collar workforce: The rise of automation, artificial intelligence and cognitive technologies will impact jobs and job families. The organization of the future must rewire talent management for the new hybrid human-machine workforce—simultaneously retraining augmented workers and pioneering new HR processes for managing virtual workers.

Blockchain to blockchains: Blockchain is moving rapidly from exploration into mission-critical production scenarios. Advanced use cases and increased adoption drives the need to coordinate, integrate and orchestrate multiple blockchains across a value chain.

Digital reality: In the next phase of augmented reality and virtual reality’s evolution, companies are focusing less on the novelty of cool devices, and are focusing instead on developing strategies and innovative use cases. As this trend unfolds, IT leaders will work to tackle persistent challenges in core integration, cloud deployment, connectivity and access.

“The old lines are blurring,” Briggs continued. “Instead of thinking within industry and business line verticals, and business process or technology platform horizontals, we’re entering a world of diagonals – transcending technical scope and traditional organizational boundaries. These technology trends are enabling an entirely new way of solving problems and uncovering business opportunities. The symphonic enterprise is unified; it’s the controlled collision of trends, with strategy, technology and operations working in harmony to imagine tomorrow, and get there from the realities of today.”

The report features case studies, perspectives from industry luminaries, and insights from Deloitte practitioners. As in prior years, it provides an 18-24 month outlook on technology trends.

The full Tech Trends 2018 report can be found here.

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Digital Controllership: Finance and Accounting Robotic Process Automation a Priority

MD Staff

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In a recent Deloitte Center for Controllership™ poll of more than 1,700 finance, accounting and other professionals, 52.8 percent say their organizations plan digital controllership improvements—leveraging process automation, analytics and other technologies for financial and accounting processes—in the year ahead. Using finance and accounting robotic process automation (RPA) to increase efficiency and internal controls is the top priority for such efforts (34.7 percent).

“Finance and accounting process automation can really run the gamut. Simpler, enhanced finance automation can address common, industry agnostic accounting issues. RPA can build momentum by performing repetitive, manual financial and accounting processes. And, cognitive computing can be configured to adapt to non-routine, industry and organizationally specific needs,” said Kyle Cheney, Deloitte Risk and Financial Advisory partner, Deloitte & Touche LLP. “No matter the level of process automation complexity, it’s easy to see how efficiency and controls can be improved by well-executed programs.”

Poll respondents report that the biggest benefits of implementing a digital controllership strategy include: Improved talent resource allocation toward higher value, strategic work by reducing manual, repetitive work (40.5 percent); improved internal controls by testing wider sets of data and reducing human error (23.5 percent); and, improved visibility into future risks and opportunities by testing wider data sets and enabling talent to analyze trends and anomalies (16.9 percent).

“Because bots can work 24/7/365, well-honed RPA programs can help organizations improve the quality of their governance, risk mediation, predictive insights, working capital management and financial reporting,” said Dave Stahler, Deloitte Risk and Financial Advisory partner, Deloitte & Touche LLP. “However, digital controllership efforts leveraging process automation really need to start with a good foundation in risk management to keep errors and inefficiencies to a minimum.”

Teams starting or expanding finance and accounting robotic process automation programs typically work to manage common risks in areas including:

  • Technology – Improper bot design may impact existing IT infrastructure. Conversely, routine IT platform changes may impact automation solutions.
  • Regulatory compliance – Automation errors can reduce accuracy of regulatory reports, risking fines and sanctions as well as legal violations.
  • Operations – Increased processing errors can be caused by badly designed automation solutions. Lack of effective oversight procedures can lead to increased operational inefficiencies.
  • Talent – In times of organizational transformation, morale may suffer if communications to employees don’t focus on the higher level work they’ll be able to perform with RPA results. Further, access to and oversight of automated processes must be carefully managed to prevent and detect abuse.
  • Financial reporting – Poorly implemented finance and accounting robotic process automation can result in inaccurate or incomplete financial reports, financial restatements and reputational damage.

Cheney concluded, “Without strong internal controls, thoughtful change management, consistent oversight monitoring, and well-built bots in production, finance and accounting robotic process automation efforts can cause more harm than good. As with any strategic initiative, trying to find shortcuts is unwise. Investing time and attention to honing RPA is essential to realizing its full potential.”

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Consumer Trust in Autonomous Vehicles on the Rise

MD Staff

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Consumers are warming up to the concept of fully self-driving vehicles, but some roadblocks may lay ahead for automakers, according to the “2018 Deloitte Global Automotive Consumer Study.”

Safety first 
Consumers have a brighter outlook on the safety of autonomous vehicles, though concerns remain. Significantly fewer people in the 2018 study feel that autonomous cars will not be safe, with less than half (47 percent) of U.S. consumers holding this view — a dramatic decrease from 2017, when 74 percent felt autonomous vehicles would not be safe.

This view is consistent with other countries covered in the study, including: South Korea (54 percent this year vs. 81 percent last year), Germany (45 percent vs. 72 percent), and France (37 percent vs. 65 percent) who feel driverless cars may not be safe. The most notable change comes from China, where the percentage of people who think autonomous cars will not be safe dropped from 62 percent in 2017 to only 26 percent in this year’s study.

“Overall acceptance of autonomous technology has grown rapidly in just a short time,” said Craig Giffi, vice chairman, Deloitte LLP, and U.S automotive leader. “However, driverless cars are still in an experimental stage, and the industry is at the front-end of a long capital investment cycle required to bring autonomous vehicle technology to the mainstream market. To complicate that cycle, automakers recognize an immediate need to invest in areas including electrified powertrains, advanced light-weight materials, connectivity and mobility services. While the returns will be farther out, it’s important that automakers continue allocating resources to autonomous driving technology. Those who settle for a reactive mindset rather than preparing for the long term will be at greater risk as consumer acceptance for autonomous technology further accelerates.”

Building trust
Many people agree they would trust autonomous vehicles with a proven track record for safety. Almost three-quarters (71 percent) of U.S. respondents said they would be more likely to ride in an autonomous vehicle if they had an established safety record, up just slightly from 68 percent in the 2017 study. Other markets appear to be accelerating, however, with 83 percent of South Korean consumers (up from 70 percent in 2017), and 63 percent of German consumers (up from 47 percent in 2017) holding the same view.

Taking that a step farther, more consumers are turning to trusted brands for reassurance around the safety of autonomous technologies. Nearly two-thirds of U.S. consumers (63 percent) report they would be more likely to ride in an autonomous vehicle if it was from a brand they trust, compared to 54 percent in 2017. Consumers’ faith in brands appears to strengthen with younger consumers, as 70 percent of the Gen Y/Z population reported they would be more likely to accept a self-driving vehicle from a trusted brand, compared to 62 percent of Gen X and 56 percent of Boomer/Pre-Boomer consumers. “The auto industry battle between brands for consumers’ trust is on in a new and heightened way,” said Giffi.

In most regions, consumers favor traditional car manufacturers to bring fully autonomous vehicles to market. In the U.S., nearly half of consumers (47 percent) would put their trust in a traditional car manufacturer, compared to roughly one-quarter each that would trust a technology company (25 percent) or a new-to-market autonomous vehicle maker (28 percent). Consumers across Asia hold widely different views: In Japan, 76 percent trust a traditional car manufacturer to bring the technology to market, compared with 28 percent in China and 13 percent of consumers in Southeast Asia.

Not completely trusting the industry, many consumers would put their trust in federal regulation. More than half of U.S. consumers (54 percent) reported they would feel better about riding in self-driving cars if governments would implement standards and regulations.

Powertrain preferences
While consumers appear more apt to embrace emerging technology in the form of autonomous vehicles, many are brushing off newer powertrain options in favor of traditional engines. Most U.S. consumers (80 percent) still favor either a gasoline or diesel engine, up slightly from 76 percent in 2017, and only 15 percent said they would choose a hybrid engine in their next vehicle.

International consumers show a growing preference for alternative powertrains. More than one-third (38 percent) of Japanese consumers and 36 percent of Italian consumers would prefer a hybrid engine in their next vehicle, and 40 percent of Chinese consumers hold the same view.

“The economics of electric vehicles compared to traditional powertrains are presently not favorable enough for either consumers or automotive companies,” said Joe Vitale, global automotive leader, Deloitte Touche Tohmatsu Limited. “However, two significant trends could move us closer to the tipping point: battery cost reduction and government regulation. The trend toward mandating electrified powertrains — not merely demanding increased fuel efficiency or better carbon footprints, especially in Europe and China — lays out a ‘must-do’ path for global car makers. Also, as automakers simultaneously begin to broadly partner on building out the electric charging infrastructure and developing other value-added services that increase the convenience factor for consumers, electric vehicles can become a desirable alterative for most consumers.”

Deloitte’s research also finds that consumers are not willing to pay much more for autonomous vehicles. Deloitte’s most recent consumer survey data on the topic found that in countries such as Germany (50 percent), the U.S. (38 percent) and Japan (31 percent) consumers were unwilling to pay extra money for these vehicles. The findings were similar for electric vehicles, where 42 percent of German consumers and just over one-third of people in Japan and the U.S. said they are unwilling to cover additional costs to get alternative powertrain technology.

Giffi notes, however: “As exciting as autonomous-vehicle technology looks to be, and despite the current higher interest and acceptance of autonomous technology versus electric vehicles in consumers’ minds, government regulations look to be forcing the investment in electrified vehicle technology. At the same time, consumers around the world are consistent in saying they do not want to pay anything extra for either electrified or autonomous vehicles, leaving automakers with some difficult capital allocation and business model decisions if they expect to make any money at all.”

Deloitte’s study suggests that auto manufacturers developing and bringing advanced vehicle technology to market, such as autonomous vehicles, should simultaneously create new business models that can sustain an appropriate return on investment. Finally, given the over 1 billion conventional vehicles on roads around the world today, and the tens of millions that continue to be sold on an annual basis which are all expected to last well over a decade, the transformation to greater adoption of autonomous driving and electric powertrains will take quite some time to reach a tipping point. Automakers must balance ongoing innovation and new business models with the need to sell, service and delight today’s consumers with improved technology they are most willing to pay for in the near term, such as safety.

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