Week 7 - Robots and Platform Business - The Transformation of Contemporary Management and Organisations PDF

The Robots are IMF Working Paper: Should We Fear the Robot Revolution? (The Correct Answer is Coming… yes) by Berg et al. 2018 (Robots, AI and Platform Business - The Transformation of Contemporary Management and Organisations?) Dr Shukrullah Fassehi Department of Management & Organisations UWA Bus...

The Robots are IMF Working Paper: Should We Fear the Robot Revolution? (The Correct Answer is Coming… yes) by Berg et al. 2018 (Robots, AI and Platform Business - The Transformation of Contemporary Management and Organisations?) Dr Shukrullah Fassehi Department of Management & Organisations UWA Business School ‘The factory of the future will have only two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment’. (Warren Bennis, management consultant cited by Berg et al. 2018) 1 Where are we at? Week Lecture Major Themes 1 Introduction: To Management and Organisations Theory & History of M&O 2 Evolution of Management Theory Theory & History of M&O Theory of Organisations: How do we draw boundaries…the 3 Theory & History of M&O internal and the external 4 Ethics, Management & Organisations Critical Examination of M&O Sustainability: Business As Usual Is Killing US! Responsible 5 Critical Examination of M&O Business Models 6 Essay consultation Session Should We Fear the Robot Revolution? Yes Is the Correct 7 Critical Examination of M&O Answer 8 Controlling What do Managers Do? 9 Planning: Decision-making In a Complex World What do Managers Do 10 Organising: Change & Innovation What do Managers Do 11 The World Needs Leadership What do Managers Do 2 12 Subject review and exam structure Exam  The Robots are Coming… IMF Working Paper: Should We Fear the Robot Revolution? (The Correct Answer is yes) by Berg et al. 2018 Dr Shukrullah Fassehi Department of Management & Organisations UWA Business School ‘The factory of the future will have only two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment’. (Warren Bennis, management consultant cited by Berg et al. 2018) 3 Robots & Platform Business: Transformation of management and organisations? “The Fourth Industrial Revolution... will cause widespread disruption, not only to business models but also to labour markets over the next five years, with enormous change predicted in the skill sets needed to thrive in the new landscape” (2016 Future of Jobs report, The World Economic Forum) 4 The Robots are Coming… The CSIRO has predicted 44 per cent of Australian jobs are under a high-risk threat from the new industrial revolution. Hajkowicz et al. (2016) Tomorrow’s Digitally Enabled Workforce: Megatrends and scenarios for jobs and employment in Australia over the coming twenty years. CSIRO, Brisbane. 5  Overview Within this idea of the ‘Robots Are Coming’ we want to explore three interconnected things: 1. Debates about technology and the future of work 2. Technology and new organizational forms (platforms business) 3. Technology and its impact on management (algorithmic management) 6 The Fourth Industrial Revolution? What is it? The convergence of a wide range of mutually reinforcing digital technologies accompanied by advances in computing power and the ability to network things cheaply. This is generating big data which is fuelling growth in the development of artificial intelligence (AI), making many complex tasks potentially automatable. 7 The Fourth Industrial Revolution? The ‘smart factory’ which exhibits production processes supported by digital technologies that connect manufacturing devices, software, robots, warehouses and other equipment and optimise factory operations in real- time, bringing efficiencies to supply chain and inventory management (Tamburini, 2015; Lu, 8 2017). The Fourth Industrial Revolution? Google’s AlphaGo Zero beats humans at GO 9 Science and Technology as Ideology ‘Science and technology have become so pervasive and distorted, they have turned into a new type of theology’ (Bogost, 2015) in The Atlantic 10 Fear or Celebrate the Robot Revolution? Luddites Pragmatist Technophiles 11 The Luddites (Pessimists) Links back to 19th Century Industrial Revolution Automation Job Armageddon, this conceptualisation of the impact of automation is best exemplified by the work of Frey and Osborne (2017) who find that close to 50 per cent of current jobs in the US are highly susceptible to automation over the coming decade. “Without ownership stakes, workers will become serfs working on behalf of robots’ overlords [in] a new form of economic feudalism” (Freeman, 2015) 12 The Luddites (Pessimists) 13 Susskind and Susskind (2015) predict that the coming automation revolution will transform and eliminate the work of many professional Susceptible to Automation? 14 The Pragmatist: A Difficult Transition A Difficult Transition, in this scenario a significant number, 9 per cent across the OECD, of mostly low skilled jobs are seen as highly susceptible to automation (Arntz et al. 2016). Arntz et al. reach this much lower job loss figure because unlike Fray and Osborne’s analysis their research recognises that occupations have a high degree of variability. Emerging trends in retail might suggest the pragmatic view has validity. 15  The Technophiles: Business as Usual Business as Usual is a view best encapsulated by KPMG’s Bernard Salt, ‘[j]obs of the past have been replaced by jobs of today, jobs for today will be replaced by jobs of the future’ (Thompson et al., 2016). While the research of Autor (2015) reaches a similar job impact conclusion as Arntz et al. (2016), Autor argues, like Salt, there this nothing particularly new here. Technology will free us! In 1930, the economist John Maynard Keynes predicted that technological change and productivity improvements would eventually lead to a 15- hour work week and free us to pursue other things…what 16 happened?! Should We Fear the Robot Revolution? (The Correct Answer is yes) Berg et al. 2018 Why are the authors so concerned? Even in the good case (Technophile) scenarios Berg et al. conclude that: “automation is good for growth and bad for equality; in the benchmark model real wages fall in the short run and eventually rise, but ‘eventually’ can easily take generations” (Berg et al 2018: 1) The issue of job quality and equity (Fleming 2019) 'Robots and Organization Studies: Why 17 Robots Might Not Want to Steal Your Job' Western Australia’s employment by industry 2020-21 Services industries accounted for 73% of Western Australia’s average employment over the 4 quarters to the December quarter 2021, including: Healthcare and social assistance (13.7%). Retail trade (9.1%). Education and training (8.3%). Healthcare and social assistance (up 22,030 or 12.8%) had the largest rise in Western Australia’s employment between the December quarters of 2020 and 2021, followed by manufacturing (up 11,998 or 16.1%). Agriculture, forestry and fishing 1 Original series. 2 Average over the past 4 quarters. Middle month of each (down 5,771 or 15.9%) had the 18 quarter: February, May, August and November. largest fall in Western Australia’s (a) Repairs, maintenance and personal services. Source: ABS 6291.0.55.003 Labour Force, Australia, Detailed (Quarterly). employment between the Lecture Reading: Fleming, P. (2019). Robots and organization studies: Why robots might not want to steal your job. Organization Studies, 40(1), 23-38. ‘…machines are not the real issue here: Organisations are…a robot probably won’t steal your job. But that’s no cause for celebration because “bounded automation” also elucidates why the jobs that do proliferate in the “second machine age” are considerably poorer in terms of skill, responsibility and pay’ (pg. 24). Bounded automation suggests that technological change is not inevitable or predetermined that technology is shaped and limited by social considerations. 19 What Explains Bounded Automation? 1. Price of labour – the price of labour shapes the likelihood of organisations and management investing in technology to replace labour. I. Example: Automation of Banking; Ports; Mining 2. Organisational power relations – high levels of managerial prerogative and low levels of unionisation or worker voice are linked to cheaper labour and precarious work – in short power and where power lays matter. I. Ports in Australia versus warehouse workers 3. The task – the human dimension, while automatable, is not accepted by consumers, regulators, the organisation. 20 I. Pilots, train drivers, doctors, retail assistants Srnicek, N. (2017). The challenges of platform capitalism: Understanding the logic of a new business model. Juncture, 23(4), 254-257. ‘Essential to all of these platform businesses…is the centrality of data. Data is the basic resource that drives these firms, and it is data that gives them their advantage over competitors’ (pg. 254). – ‘if data is a central resource, and capitalist competition places a high premium on getting that data, then our age will inevitably be filled with privacy scandals’ (pg. 255). – The importance of network effects – the ‘more users are using a platform, the more valuable that platform becomes for everyone’ (pg. 256) – It is hard for platform firms to extra profit, hence Srnicek suggest they ‘are not long for this world’ but then oddly goes on to state ‘as they become increasingly central to the global economy it becomes even more important to understand their functioning’ If this is the future or organisations in global capitalism (big if) what does that mean for management? 21  The Growing Use of Algorithmic Management Algorithms – sets of instructions to solve a problem or complete a task based on various inputs (i.e. data). Lee, Kusbit, Metsky, and Dabbish define AM as when “human jobs are assigned, optimized, and evaluated through algorithms and tracked data” (Lee, et al. 2015). Giving self‐learning algorithms the responsibility to make and execute decisions affecting workers is called algorithmic management (AM). AM may further entrenching power imbalances and biases Example: work on care platforms and the AM of ‘Risk’ Uber, Lyft, Deliveroo and other platforms could not exist without algorithms 22 allocating, monitoring, evaluating and rewarding work. A simple example of AM @ Amazon 23 ChatGPT? Artificial intelligence chatbots such as ChatGPT offer new opportunities for organisations, but at present these do not appear to fall into the category of Algorithmic Management. Primarily useful for automation such as customer service (e.g. resolving customer queries, automated prompts, customer care etc.) onboarding employees (training; accessing system, user guides etc.) and augmentation such as drafting content (e.g. email, reports, computer code, marketing materials etc.) 24 Not ‘Can We’ BUT How Should We Respond to the ‘Robot’ ‘AI’ Challenge? Reaction or low level responses: New York taxi drivers call for 50 year ban on autonomous vehicles. Uber has been banned or highly restricted in some countries: e.g. Hungry, Thailand, Japan, Denmark, the Netherlands The human factor Trend toward artesian, locally sourced, crafted products and services… 25 Not ‘Can We’ BUT How Should We Respond to the ‘Robot’ ‘AI’ Challenge? More Systematic Responses: A universal basic income (UBI) Skills and Training Creating ethical boundaries and guidelines: The International Labour Organisation is seeking to create “fair management”, which focuses on how transparent the results and outcomes of algorithms are for workers. 26 Key Takeaways A robot will, probably, not steal your job We need to be more concerned about fair access to good quality jobs: Work that provides economic security, voice (power) and well-being The growing importance of technology and data are not only impacting work (which is inseparable for organisations) but change organisations and the functions of management 27 Next Week Over the next four weeks we move to focusing on the 4 key functions of management: –Organising, Controlling, Planning and Leading Next week’s lecture focuses on Controlling 28