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Align Your Automation Strategy with Your Corporate Purpose

The digital revolution has transformed every industrial sector. Over the last 40 years, businesses deployed computers to improve productivity, boost operational efficiency, reduce cost, and connect with customers in new ways. To remain competitive, businesses embraced wave after wave of computing innovation: mainframes, minicomputers, PCs, multimedia PCs, the internet, mobile devices, and cloud computing. Offices deployed spreadsheets, word processing, email, CRMs, ERP, and all manner of enterprise software. Manufacturers installed computer-controlled equipment, computer-aided design, and robotics. Adoption was more limited in other sectors—farming, retail, hospitality, construction, and to some extent healthcare—where much of the work remained physical in nature.

In the 2020s, every business in every industry will have to embrace new technology to stay ahead of the game. No exceptions, including former slow adopters. Every industry will reimagine how they operate, how they serve customers, and how they create value. Every business, including yours, will need to build new strategies that trample the old playbook and challenge long-held maxims.

Automation Is Inevitable: Make Sure You Get It Right

AI and advanced robotics will automate more physical work and some knowledge work, too. To remain competitive, every organization will automate or semi-automate every business process. Technology will augment and extend the capabilities of employees and elevate human work.

A tsunami of automation is coming. Winning companies will take the time to understand, acknowledge, and retain the core business elements that define their brand as they embrace new ways of doing business. This is as much about understanding what you stand for as it is about anything else. Companies will be so utterly remade by the next wave of digital transformation that they will need to know what to cling on to and what to let go of in the name of progress. The best digital transformation strategies will be driven to a deep understanding of a company's humanistic purpose. The question for every business will be how to use automation to boost the customer-facing humanity of the organization. A fancy restaurant might automate some of the back kitchen, but won't replace the high-end service provided by serving staff.

Every company needs a clear automation philosophy. It's vital to understand and agree on high-level goals before you start the difficult work of deploying new technology. Who are you as a brand? What are you ultimately trying to achieve? And how can technology help you achieve that more effectively?

Most of the top companies on the planet have a clearly stated humanistic purpose that focuses and guides their efforts. Coca-Cola seeks “to refresh people.” Disney's purpose is “to make people happy.” For Southwest Airlines, it's “to democratize flying.” For Nike, it's “to bring innovation and inspiration to every athlete in the world.” These companies align their business processes, their corporate culture, and their management focus to execute flawlessly against their core purpose. Their purpose guides their strategic plan and informs their corporate values.

Purpose and Profit

The leaders of these companies focus on delighting customers and executing against their core purpose, not on financial results. The purpose of a company is not to make money. As the great Simon Sinek points out, strong financial results are the result of excellent execution against your core, humanistic purpose. This can be hard for some business people to accept, particularly those working in finance, so I'll say it again. Profit is not the reason that your organization exists. If making money was truly your company's only purpose, you would be a drug cartel. But you're not a drug cartel, which means you have some other, higher purpose that your organization seeks to fulfill. A clear corporate purpose, combined with strong business process execution, leads to stellar business results.

Clear Purpose + Strong Execution = Results (Profit)

This goes against the orthodoxy of Nobel economist Milton Friedman, who stated that the only social responsibility of business was to “engage in activities designed to increase its profits.” Yet purpose-oriented businesses consistently outperform those that focus purely on profit. The book Firms of Endearment notes that 30 companies driven by a sense of purpose and humanistic principles, that put their customers and employees first, ahead of shareholder considerations, saw a stock market performance eight times the average company. They also saw higher productivity and lower turnover.

Major businesses have taken note, realizing that naked capitalism needs to be balanced with a concern for sustainable operations and a focus on stakeholders beyond shareholders. In August 2019, the Business Roundtable, chaired by JPMorgan Chase's Jamie Dimon, released a statement that updated its view on the purpose of business. The statement seems to recognize the many calls to update capitalism to create what has variously been described as “conscious,” “compassionate,” “sustaining,” “inclusive,” or “shared values” capitalism. Signed by the CEOs of 181 major companies, the statement commits to deliver value to customers, invest in employees, deal fairly and ethically with suppliers, support communities, and generate long-term value for shareholders. This rebalancing of purpose and profit is a big deal and recognizes consumer angst over rising inequality. The general public seems aligned, with 64% of Americans saying the primary purpose of a business should be to “make the world better” (Source: Fortune).

Beyond a clear corporate purpose, every company should have a clearly stated vision and mission. Mission states what the company does on a day-to-day basis in an effort to fulfill its purpose. Vision explains what the world will look like if the company successfully executes their mission and fulfills their purpose.

As businesses deploy AI, leaders will need to stay laser-focused on their core, humanistic purpose and communicate it clearly and relentlessly to every employee. Purpose statements act as employees’ North Star as they train, deploy, and work alongside AI. AIs learn from historical data and from historical behaviors and thus reflect human biases and values. If your employees aren't fully aligned with your purpose, mission, vision, and values, your AIs won't be either. Watch for unintended bias. Reinforce vision and values at every opportunity. Explain how automation will help employees to achieve your purpose and accelerate your ability to reach your vision. If you articulate that story successfully, employees will embrace automation and help you to deploy it throughout the organization.

In the 2020s, automation will be used extensively to optimize business processes execution. Automation technologies—artificial intelligence, autonomous machines, augmented reality, and the Internet of Things, underpinned by Blockchain-based platforms and 5G networks—are vital to every company that wishes to execute flawlessly against their corporate purpose.

The Recipe for Success

The unbeatable recipe for business success in the next two decades is this:

A clearly articulated core purpose, executed flawlessly by well-trained, highly motivated, passionate employees who believe in the mission, feel valued for their contributions, and who are supported by thoughtfully deployed automation and augmentation technology.

High-functioning teams will be formed by a strong partnership of automation technology and human talent. The strongest teams of the future will use automation to augment human talent, to elevate human work, to maximize the human impact of labor, and thus maximize the humanity inherent in the company's brand.

Business leaders who invest the time to set and communicate clear humanistic purpose for their organization, and managers who can translate that purpose into well-implemented, semi-automated business processes, will win in the marketplace.

Examples

Let's consider a few examples of how companies could use automation to up-level their offerings and rally their organizations around a higher-level purpose. Some of these examples are outlined in more detail elsewhere in this book.

• From selling clothes to selling confidence. An apparel store goes beyond selling clothes and focuses on the purpose of styling customers for success. They deploy IoT and analytics tools to offer an automated styling service in their fitting rooms.
• From daycare to relationships and transformations. A doggy daycare company focuses on a purpose of supporting pet owners to maintain strong relationships with healthy, happy pets. They offer more than a safe place for owners to leave their pets. They treat your dog like it's family, keep you connected through the day, and help you to maintain or improve your pet's health and habits. IoT technology, cameras, and digital devices let owners check in on their pup and help them maintain a sense of connectedness. A comprehensive digital dashboard tells the story of the dog's day: the dogs they socialized with and how much they ate, drank, played, and slept. The company offers semi-automated interventions to help dogs become more social, more active, or to lose weight.
• Safety and mass customization. A manufacturing company uses automation to ensure worker safety and delight every customer with tailored products that exactly meet their needs. Sensors turn off dangerous machinery or divert robots when workers get too close. “Industry 4.0” mass-customization capabilities enable them to build one-of-a-kind products at mass-production prices.

Raise Your Aim: Solve a Higher Class of Business Problems with the Intimacy of IoT

In the coming decade, business leaders will need to make tough choices. Advances in robotics, AI, and other technologies will enable many tasks to be automated. The natural temptation will be to use technology as we always have: to increase efficiency, boost productivity, and reduce cost. Those goals remain valid, but a limited focus will not serve businesses well. The intimate cyber-physical connections made possible by the next wave of digital technology offers businesses the ability to reach far beyond these traditional goals. Organizations can and must aim higher than operational efficiency.

The potent combination of AI, sensors, IoT, AR, and autonomous machines solves previously impossible problems. The enormous capability of next-generation automation technologies can be overwhelming, and when overwhelmed, people retreat to their comfort zones. Companies that plow familiar territory will leave value on the table and expose themselves to more progressive competitors. Using automation to optimize for the right goals is crucial to remaining competitive. For every automation effort, leaders should step back, take a breath, and ask one simple question: What are we really trying to optimize for? We need to get philosophical before we get practical.

Hierarchy of Goals

Automation philosophy can be expressed in terms of a hierarchy of goals, as shown in Figure 7.1. Each level in the hierarchy represents a loftier set of goals around which to optimize an automation project.

As you review this hierarchy you might choose to group these optimization points in slightly differently ways than I have. That's okay, this is not an exhaustive list, and you may have a way to organize goals that makes better sense for your business. This hierarchy is provided as a generalized guide to help you up-level your thinking. A few comments on each of the layers in the model follow:

Figure 7.1 A hierarchy of business goals for automation projects.

Resources

Most automation implementations seek to minimize resource usage as a way to reach higher-level goals. For example, labor utilization is optimized to improve productivity and profitability. The term “materials” is intended to capture everything from fabric and steel to water and fertilizer. Artificial intelligence falls into a curious middle ground where it can almost be thought of as both labor and capital at the same time. As AI becomes a vital resource in every business, its use will be optimized, alongside labor and capital.

Business Results

Every successful business keeps a close eye on key business metrics and seeks to optimize revenue and profit. Top line results are optimized by improving labor productivity, production efficiency, product quality, and production output. No business likes surprises, and so they also try to minimize their risk and limit uncertainty. Note: By optimizing for higher-order goals and carefully managing the use of resources, business results often take care of themselves.

Business Capabilities

Automation will build stronger business capabilities. Stronger capabilities come from improvements to business processes, strengthening corporate culture, and strong governance. Blockchain technology may offer assistance in semi-automating and assuring strong governance. Businesses should use technology to anticipate customer needs and meet them before the customer is even aware of them. Building sustainable operations meets customer expectations for sustainability, but also helps to control costs and ensure the long-term viability of a business. In fast-moving markets, agility and flexibility are key to success. Businesses will need to shift their focus and move into new markets with speed and ease.

Outcomes

Outcomes are higher-order goals; a distillation of corporate purpose, not to be confused with business results, which are a result of executing well against the corporate purpose. Healthcare organizations optimize for positive health outcomes. Factories optimize for worker safety and customer satisfaction. Transportation planners strive to improve human mobility and increase the velocity of goods, services, and waste through a city. Universities want their students to be better informed. A theater group optimizes productions for entertainment value. A logistics company strives to keep its delivery promises.

Human Elements

Sitting above outcomes is a more rarified but important set of business optimization goals. These goals relate to improving the human condition. Disney uses automation to tune their operations with the goal of boosting human happiness. This, after all, is their stated mission as a company. Adobe and Autodesk embrace automation to unleash human creativity. Nonprofit organizations might set the goal of increasing human access to key resources or services such as water, education, and healthcare. Social networking companies and fan clubs might try to optimize human connection. An event company could use automation to boost interpersonal networking. For example, a smart ID badge at a conference might glow a certain color to indicate you are in the proximity of someone with a common interest.

In my experience, the higher up the optimization hierarchy that you can start, the greater the impact you will have and the stronger the business results that you will achieve. Bold, inspiring visions communicated clearly to employees, customers, suppliers, and shareholders give organizations the best chance of eventually achieving those visions.

Get Quick Wins but Keep Your Aim High

There is a lot to be said for getting quick wins and early impact, especially if you're trying to secure future funding. Implement a few small, lower-order projects to give you short-term wins and generate momentum. Once you've proven your team's ability to execute, raise your aim and rapidly shift to tackling higher-order goals that boost your impact. The higher up the hierarchy that you can operate, the more value you will create, the stronger your brand will become, and the more competitive advantage you will enjoy.

To illustrate this thinking, let's consider agricultural automation. Fields are a dynamic environment—some parts of the field will be too dry, others too moist; some will need fertilizer, some will not. With a focus on resource management, a farmer uses drones to survey fields and build digital maps of soil and crop health. The farmer spot-sprays or waters specific areas of the field based on guidance from the drone. This reduces water and chemical usage. Moving up the optimization hierarchy, the farmer looks to IoT, AI, and autonomous machines to boost overall farm productivity (a business result), to make their operation more sustainable (a business capability), to increase the health of livestock (an outcome), and to delight customers by providing fresh, safe produce that they can purchase with confidence. To achieve this top-level goal, sensor data, secured on a Blockchain, is used to tell a story of how produce was grown, processed, packed, and transported from farm to fork. Food provenance information boosts consumer confidence, minimizes food safety issues, and improves public health.

It's easy to drift from the core mission when leaders don't communicate it regularly and clearly. As a friend once told me, the Deepwater Horizon disaster didn't happen because a group of oil execs got together and thought, “Screw it, let's risk everything to make a buck.” BP focused on optimizing for the wrong business metric: They did everything they could to reduce the time it took to drill through 10,000 feet. This focus improved operational efficiency and reduced time to money, but it also cost BP $20 billion and created an ecological disaster on the Gulf Coast of the United States. What we optimize for, and what we aim for, matters.

Build Human/Machine Partnerships to Boost Productivity, Improve Quality, and Increase Employee Engagement

Workforces of the future will blend human and digital intelligence. AIs, robots, and other autonomous machines will become teammates. Winning businesses will create high-functioning teams that build strong partnerships between human and nonhuman workers as a way to elevate human work, boost employee engagement, and improve quality, efficiency, and customer service.

The New Diversity: Teams of Humans and Nonhumans Working Together

Workplace diversity is vital to a high-functioning organization. Diverse perspectives, a broad spectrum of life experience, and a range of cultural backgrounds make an organization stronger. Diversity limits the possibility of “group think” and maximizes your chances of matching the diversity of your customers. It's easier to understand customers’ needs when your organization has a similar demographic. It's good business sense to build teams with a diversity of age, gender, race, culture, and experience, quite aside from the need to meet any government-mandated diversity targets.

In the near future, teams will need to add a new dimension of diversity, a mix of humans and nonhumans working together. High-functioning teams of the future will blend human intelligence and human dexterity with machine intelligence and robotic strength. Some team members will be pure human. Some will be pure machine. Many team members will be augmented, a hybrid of human and machine intelligence. All need to come together in a high-performance team that delivers stellar results.

Most businesses tend to have three to five major business processes (a sales process, a manufacturing process etc), though your organization may be different. For each business process in your organization, map out all the individual tasks that need to occur in sequence. Get as granular as you can. Plot how information and data are generated and passed from task to task. Identify the handoffs and the triggers that determine how and when one task hands off to the next. Sensors may play an important role here. Now ask the tough question: Given the latest capabilities of technology, which tasks are best done by humans, which best done by robots, and which best done by software algorithms and AI?

Know When to Use Each of Your Resource Pools: People, Robots, and Artificial Intelligence

To decide which tasks should be offloaded to AI and robots, we must understand the relative strengths and weakness of people, robots, and AIs. In a landscape of rapidly improving tech capabilities, this is a moving target. Let's consider the strengths of each of these three.

1. People have strong problem-solving skills that involve imagination, planning, and creativity. Humans are capable of complex critical thinking. They can generate and test new ideas and think about projects and situations holistically, exhibiting systems-level thinking. Some have entrepreneurial skills. Many have well-developed emotional intelligence and social skills, including leadership skills (the ability to inspire others) and influencing skills (the ability to persuade others). Other vital social skills include interpersonal communication, teaming, and empathy. Human curiosity and adaptability round out some of the many qualities that will continue to separate us from the machines. There are many tasks that only humans can do. We aren't all out of jobs just yet.
2. Robots (and their drone cousins) are best used to perform repetitive physical tasks that require strength and endurance. Robots work long hours, often operate faster than humans, don't call in sick, work at night, and don't generate worker's compensation claims. Robots are a natural fit for noisy, uncomfortable, and dangerous environments.
3. Artificial intelligence and other algorithms. Digital voice agents may be suitable for simple interactions, for example, to take orders by phone, and as the technology improves to handling other customer interactions including customer support. Artificial intelligence is highly suited to tasks that involve finding patterns and insights, including diagnostic or predictive tasks. AIs usually handle complexity and complex data better than humans too. Software algorithms should also be considered for tasks where accuracy or a split-second response is important to a business process. Computers can calculate accurate results and respond far more quickly than humans. Human judgment may be a welcome and integral component of some tasks, while data-driven decision-making that eliminates human bias may be desirable for others. Software, often based on AI, can be a good choice for tasks where human bias must be removed. AI may also provide a valuable boost to human creativity, exploring thousands of design options that help workers to push creative boundaries in an efficient co-creation process.

Once a business process has been parsed into tasks and those tasks have been assigned to humans, algorithms, and robots, the next challenge is to build a plan that enables digital intelligence to understand what is happening in the physical environment. This requires sensors to be installed throughout the business process so that physical activity can be mirrored in the digital world, creating a cyber-physical system. This allows the efforts of the humans, AIs, and robots to be properly coordinated.

Retail Example: The Semi-Automated Changing Room

To illustrate the concept of building human-machine partnerships, let's consider an example from the world of retail. Most of us shop, and many people either work in retail today, or once did, so the example should be familiar to most readers.

In this scenario, human labor and simple machine intelligence work together. Sensors gather information from the physical world so that tasks can be handed off to the digital world. A mobile or wearable device provides the interface to the human worker.

First, let's review the baseline, nonautomated experience. Imagine you visit a high-end clothing store. You peruse the displays, find items you'd like to try on, and head toward the fitting room. A sales associate intercepts you, takes the items, guides you to an open room, and carefully lays the clothes out for you to try on. “What great service!” you think. As the associate arranges the items, he quietly notes the size and colors of your selections and attempts to get a feel for your personal style. Once you are safely installed in the fitting room, the associate runs back into the store and gathers additional items for you to try, and hopefully buy. In retail, this effort is referred to as increasing both “basket” (more items) and “conversion” (getting you to buy). To you, this feels like a value-added “styling service.” To the store, it's an opportunity to sell more product.

To perform well, the sales associate must (a) have a good sense of style, (b) accurately remember your size and which garments you picked, and (c) know the inventory of the store, including which products are in stock and where they are located. This presents a challenge for retailers. Few people have the ability to recognize and cater to another person's sense of style. In a large, fast-moving store, store associates inevitably make mistakes. It's tough for them to know what's in stock and it takes time to locate items. You may have already left the fitting room before they return. Opportunity blown.

Semi-automation of the process would help the sales associate to deliver a high-quality, efficient, and consistent service that results in increased basket and conversion. A well-executed implementation should achieve this without compromising the vital human connection between the store associate and the shopper.

Many manufacturers add RFID (Radio Frequency Identity) tags to their products to monitor the flow of goods through their supply chain. In our semi-automated fitting room, an RFID sensor reads the RFID tags on each of your garments to determine their sizes, colors, and styles. The store's digital intelligence now knows exactly which items you took into the fitting room. A Wi-Fi sniffer reads the unique physical address of your phone, known as a MAC address. The sniffer can't tell who you are from this information, just the address of your phone. By checking a list of known MAC addresses, it's possible for the retailer to determine if you have (or more accurately if your phone has) visited the store before. The retailer may cross-reference previous purchases associated with that phone to understand your purchase history and build a better picture of your personal style. If you have previously loaded the store's app onto your phone and linked it to an account at the store (which opts into their privacy policy) the retailer would also be able to identify who you are. This would allow them to consider any previously expressed preferences. Perhaps you are allergic to natural fibers, don't like to wear stripes, or really love the colors green and black.

The store intelligence now understands which items are in the fitting room and something about you as a customer. Analytics software references a “goes with” database created by the store's fashion designer to get recommendations for items—clothing, shoes, accessories, and so on—that would create a snazzy-looking outfit when combined with the items in your fitting room. The software checks inventory to eliminate out-of-stock items and consults the store planogram (a map of which products go where) to locate the items in the store. The software determines the shortest path between these locations and sends a picking map to the store associate's mobile or wearable device. The associate, guided by the map, whizzes around the store, grabs the items, and brings them to you. The associate's dexterity and visual capabilities mean that the task of picking the items and bringing them to the fitting room is still best done by a human, not a robot. For an enhanced experience, a retailer might display suggested products on a screen located in the fitting room. Photographs or computer-generated images of suggested outfits, built around selected items, might provide value to the fashion-impaired among us.

In our semi-automated process, the choice of sell-up items, the inventory check, and the planogram search have been shifted to digital intelligence. The store associate still performs the important human tasks: connecting with the customer and providing encouraging feedback on how clothing looks. The result of this human–machine partnership is a high-quality service for the customer. The implementation maximizes sales for the retailer and enables the associate to serve more customers per hour, boosting the pay of commissioned sales associates. The automation results in a win for the customer, a win for the associate, and a win for the retailer. Even associates with poor fashion sense can now deliver terrific service. The style instincts of the store's fashion designer are essentially coded into software and made available to every single customer, channeled through a consistent experience that can be delivered by any associate. This consistency makes it easier to deliver against a strong brand promise.

Some readers may have privacy concerns in the scenario described earlier. These are valid concerns and privacy should always be respected. A few considerations:

• The automated Wi-Fi recognition of your phone and the subsequent look-up of previous purchases is no different than if a store associate who has previously helped you recognizes you and recalls the items you previously purchased. Good personal shoppers already do this.
• The store only knows who you are if you have chosen to load the store app and activated a store account, which is inherently an “opt in.”
• To give away personal data, consumers expect a quid pro quo. Shoppers should get something in return for being recognized, in this case, an improved personal styling service.

That said, privacy issues must remain a key consideration of any automation project. Companies should inform people how their personal data is being used and always ask them to opt in to a service like this, rather than just giving them the choice to opt out.

Your CIO and CHRO Just Became Best Friends

Leaders will soon preside over a blended workforce: a collaboration of digital and human intelligence, working together closely in teams. Digital assistants, collaborative AIs, robots, and drones will become teammates. Any effort to develop such a workforce, improve productivity, strengthen business culture, reorganize, or otherwise deploy new labor strategies necessarily involves both HR and IT since each presides over key parts of the workforce—the human intelligence and the digital intelligence. The entire blended workforce must to be aligned behind the core purpose of the organization and motivated to execute against it. With the continued advance of AI and robotics, this fusion will seem natural and essential.

Empower Your Employees, Elevate Their Work, and Maintain the Humanity in Your Brand

Technology should augment the efforts of humans. Well-designed, thoughtful automation will elevate human work so that people find their jobs more meaningful, satisfying, and rewarding.

Any major automation effort should involve ethnographers and experienced designers on the front end of the project to understand the important steps where the innate humanity of the organizations adds value within the business process. Poor awareness of where humans add unique value may lead to overautomated business processes that destroy market differentiation and reduce the company's ability to deliver against their brand promise and purpose. Well-executed automation projects will support and enhance the humanity in a business process, rather than limiting or removing it. Our semi-automated fitting room retains all the usual human-to-human interactions that we expect in the shopping experience. The store associate's friendly, helpful, and speedy service is what differentiates the experience.

The Importance of a Thoughtful Approach to Automation

Companies may be tempted to deploy AI aggressively throughout their operations as a way to reduce labor costs, boost efficiency, and increase profits. Leaders should proceed with caution and be mindful of being overzealous. Overautomation strips away the differentiation that humans bring to the brand. Consider the consequences of every brand in an industry taking automation to the extreme. If we assume that all companies have similar access to capital and technology, the logical conclusion of this exercise is that every company looks alike. Differentiation is limited to scale, market reach, and historical brand equity. If they all deliver the same level of service and capability to customers, the undifferentiated offering becomes a commodity and everybody fights to the bottom on price. That is no fun for either the businesses or the customers they serve.

Thoughtful leaders will keep an eye on the long term and take a balanced approach to automation. Organizations must remain cost competitive and support their people, so they can deliver ever-improving experiences to customers. Spiral up, not down.

As I discussed in my 2013 TED Talk (www.baldfuturist.com/ted), machines must ultimately make us better humans. Machines should also make our companies better companies. Every company should reflect on their purpose and clearly define what being a better company means to them. Deploy automation that is fully aligned with your values and that accelerates the execution of your core purpose.