Momenta's Take: Automation and the Future of Work
Automation and the Future of Work
Automation, a force with a rich history of shaping work dynamics, is once again at the forefront of transformation. From the Industrial Revolution to the Information and Communications Technology (ICT) era, it has been a driving force. The recent emergence of Generative AI, with the capability to replace knowledge worker tasks, has raised concerns about the societal risks associated with widespread job displacement. However, the true picture is far more complex, considering the diverse array of evolving automation technologies and the subsequent emergence of new skills, roles, and dependencies.
Automation Impacts a Broad Scope of Tasks
Automation encompasses several categories, each varying in autonomy and integration with physical tasks. Robotic Process Automation (RPA) involves software bots handling repetitive functions like data entry and back-office administrative tasks. Moreover, software-based automation tools increasingly harness Machine Learning and AI for functions such as language translation, medical diagnostics, fraud detection, and customer support through chatbots. At a more advanced level, cognitive automation employs AI, RPA, and rules-based approaches to analyze data, extract insights, and make decisions in domains like law, finance, and healthcare.
Advancements in AI software also extend to the automation of physical and mechanical systems. Robotic Automation, for instance, plays a crucial role in tasks within manufacturing, logistics, and heavy industries, often working alongside human counterparts. Physical Automation extends to IoT applications, linking with sensors and actuators, autonomous vehicles, drones, and 3D printing/additive manufacturing.
Bracing for Accelerating Change in the Workforce
It's no exaggeration that workplace changes accelerated since the global pandemic and the rise of Generative AI. According to a recent McKinsey analysis, the US labor market saw 50% more occupational shifts in 2019-22 compared to the prior 3-year period. Up to 30% of work-hour activities could be automated – and AI is expected to transform how STEM, creative, business, and legal workers do their jobs (rather than eliminating jobs), while roles in back-office administrative support, food service, and customer service are likely to decline.
Researchers at MIT have identified that historically, new technologies often have long gestation periods of 30-40 years before accelerating adoption (what Eric Brynjolfsson calls a "J-Curve"). With the introduction of semiconductors in the 1970s and the embrace of networked computing in the 1990s, we are currently amid an explosive phase of AI-powered technologies.
Framing How to Anticipate the Future of Work
McKinsey estimates that by 2030, up to 12 million additional occupation transitions will be necessitated by AI advancements. Notably, lower-wage workers face a significantly higher likelihood of needing to change jobs compared to their higher-paid counterparts, with women more likely than men to require career changes.
So how will businesses and workers need to prepare for changes ahead? While there's no way to predict with perfect accuracy, there are a number of critical principles practical to frame an informed outlook:
- Prepare for job replacements, especially in lower-skilled and repetitive manufacturing, service, and data entry roles.
- Anticipate the emergence of new job categories centered on collaboration with and adaptation to automation, requiring expertise in artificial intelligence, data science, industrial systems, and robotics.
- Expect existing jobs to evolve, necessitating new skills as specific tasks become automated and the demand for higher-level insights and specialized abilities increases.
- Encourage knowledge workers, including creative and STEM experts, to integrate automation technologies to enhance workflow and productivity.
- Businesses and educational institutions must invest in relevant upskilling and reskilling programs, benefiting lower-paid workers transitioning to new roles and highly skilled workers adapting to changing demands. This may also entail accommodating flexible work arrangements and navigating growing global competition for non-geographically bound jobs and tasks.
While it may not be possible to precisely identify the jobs and tasks likely to be lost to Automation, there are new roles, capabilities, and needs that inevitably will arise out of change. As such, it will be incumbent on employers and workers, educators and students to stay informed and co-create the future of work together and make it even better than we can currently imagine.
From Momenta's perspective, we recognize that pinpointing the exact jobs and tasks susceptible to automation may be challenging. However, we firmly believe that change will give rise to new roles, capabilities, and demands. Therefore, it is our responsibility, as well as that of employers, workers, educators, and students, to remain well-informed and collaboratively shape the future of work. Together, we can envision and create a future that surpasses our current imagination.
Momenta is the leading Industrial Impact venture capital + growth firm. We accelerate entrepreneurs and leaders devoted to the digitization of energy, manufacturing, smart spaces, and supply chains. Since 2012, our team of deep industry operators have invested n over 50 entrepreneurs and helped scale over 150 industry leaders via our award-winning executive search and strategic advisory practices.