If you're a business builder, chances are technology has been one of your best friends. It has diminished some historic barriers to entry: location and capital. The Internet lets you reach customers most anywhere cheaply. SaaS (software as a service) products make it possible to "rent" various management tools, reducing the capital needed to start and grow a business.
But your friendship with technology is about to get complicated.
Advances of the kind Erik Brynjolfsson and Andrew McAfee discuss in their best selling book The Second Machine Age are likely to transform many businesses--and disrupt the workers in them. Smart robots and smart machines have gotten the most attention recently, but the impact of other technologies could be just as profound. 3D printing could change the operations of many midsize manufacturing, logistics, and distribution businesses. Driver-less vehicles could transform insurance, repair, and delivery businesses. Sensors and big data could drive efficiencies and make customization scalable cheaply. Artificial intelligence (AI) software is already in use in many fields--reading MRIs, sorting through thousands of legal cases to identify pertinent information, and writing news articles.
Carl Frey and Michael Osborne at the University of Oxford conclude that upcoming technology advances will over the next decade or two put 47% of U.S. employees at a high risk of being displaced by technology and 19% at a medium risk. That means that 66% of the U.S. workforce has a medium to high risk of job destruction. If Frey and Osborne are only half right, the numbers are staggering.
The jobs with the greatest risk of being replaced by technology are those that involve repetitive activities that can be performed in a relatively stable environment. So, if you--or your customers--are in a business involving manufacturing, packing, logistics, construction, maintenance, agriculture, food service, cleaning services, or lawn care, for example, big changes are coming.
New technologies could sharply reduce the need for your product or service or allow rivals to produce it at a lower price. If your customers are individuals whose jobs are replaced by machines or businesses that can no longer compete, your revenue could fall because your customers may not be able to afford your products or services.
What businesses may be more defensible in spite of these technology advances? In general, businesses selling products or services that involve, in their production or delivery, critical or innovative thinking or emotional engagement with customers--things that smart machines are not likely to master soon. In skilled trades like plumbing, electrical, and complex machine repair, employees must be able to diagnose complicated problems and have the mental and physical agility to fix them. High emotional engagement is critical in, for example, education, child care, and health care.What should you do to prepare for the technology tsunami?
First, stay abreast of the developments that can affect your business. Follow technology, artificial intelligence, big data, Internet of Things, and robotics writers and media on the Internet and through your trade association. Read about first adopters, and look globally--companies in Asia are on the leading edge in using robots in service jobs.
Second, think about how technology could affect your customers' ability to buy your offerings and their need for your services or products. Could you lose customers?
Third, think about how technology could create new competitors. Will bigger companies be able to enter your market and deliver your products or services better, faster, or cheaper than you can? How could you respond?
Fourth, if you're in a business likely to be transformed by the new technologies, could you move into a related or even a different business that has a lower risk of being disrupted? Could you, for example, produce offerings that involve more skill or that require personal emotional engagement as a key part of the sale or delivery?
Big technology changes are coming--changes that could create some major strategic decisions for you. None of them will be easy. Start thinking about them now.