Management in the Age of the Smart Machine

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Management in the Age of the Smart Machine

Nearly 50 years ago, as the era of the knowledge worker was just becoming a reality in offices across America, the great management thinker Peter Drucker reflected on the changes that were to come and made an important point that has been all but lost to history.

In a 1967 article for McKinsey Quarterly, Drucker declared, “[W]e are. . . doing something very revolutionary. We are applying knowledge to work. Seven-odd thousand years ago, the first great human revolution took place when our ancestors first applied skill to work. They did not use skill to substitute for brawn. . . . Rather, our ancestors put skills on top of physical labor. And now—a second revolution—we’ve put knowledge on top of both. Not as a substitute for skill, but as a whole new dimension. Skill alone won’t do it anymore.”1

Drucker’s brilliant insight was that, contrary to expectations, whenever the economy demands a new type of worker, that new worker doesn’t simply bring a new capability while the old type becomes obsolete; instead, the new workforce must be able to do what the previous generation did, only more.

This is particularly relevant now because we are at a similar point in the trajectory of the smart machine in the workplace. While most people expect that smart machines—a category that encompasses artificial intelligence, advanced machine learning, and decision-making algorithms—will replace human workers, the Trends editors believe it is far more likely that smart machines won’t be substitutes for skilled knowledge workers. Instead, for the first decade at least, they’ll be complements. Humans will still have jobs, but those jobs will increasingly require people to work in tandem with smart machines.

We can already see an analogy in the retail environment that illustrates how this might work in an office. In supermarkets and in big-box stores like Home Depot, automated scanners have replaced some of the checkout lanes that were once staffed by human cashiers. But invariably, an employee hovers in the vicinity, ready to assist customers when they need help with the technology, or to override the system when the technology doesn’t recognize an item or a customer activity.

In the same way, automated knowledge work will need human interaction.

Automation has swept through the economy, starting with manufacturing. As factory jobs disappeared, workers were retrained for jobs in services, which seemed less vulnerable to automation. But supermarket cashiers, bank tellers, travel agents, and video-store clerks are just some of the routine service jobs in which machines have recently replaced humans...

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