Does digital transformation create jobs or layoffs?

8 November 2022

Inspired by the recent layoffs in the tech industry, here is my attempt at answering 5 questions closer to our reality:

– What does digital transformation do?
– Why does digital transformation fail?
– How does digital transformation affect employees?
– Does digital transformation ever end?
and somewhere in there:

Does digital transformation create jobs or layoffs?

We cannot avoid hearing about digital transformation. Everyone wants to know how to discern the opportunities from the threats and vote wisely during pivotal conversations that will clearly affect peoples day to day. What if we are too late? What if it fails? Will it ever end?

What does digital transformation do?
Digital transformation can be defined as “equipping people with better tools” as much as “reducing human effort with digital technology”. This nuance sheds an uncomfortable light on digital systems versus traditional ways of doing business. What employees actually hear is: “replacement” which makes them fearful for their jobs — and for good reason.

The media loves to paint innovation with the colors of negative disruption. Think Elon Musk’s takeover of Twitter, think Uber or go way back and think FORD. Driverless trucks will shake the transport industry. News of artificial intelligence (AI) doing a more efficient job than some in the health industry is lurking. Streamlined manufacturing practices has historically been a concern of assembly line workers, giving rise to unions and revolt.

(These are 3 pictures generated by A.I. when I asked to generate A Robotic Version of Aristotle's Statue.)

These are 3 pictures generated by A.I. when I asked to generate A Robotic Version of Aristotle’s Statue.

Aristotle predicted this revolution and the impact of robotization on labor, saying:

“If every instrument could accomplish its own work, obeying or anticipating the will of others, like the statues of Daedalus, or the tripods of Hephaestus, which of their own accord entered the assembly of the Gods’; if, in like manner, the shuttle would weave and the plectrum touch the lyre without a hand to guide them, chief workmen would not want servants, nor masters slaves.“

Whether or not digital transformation will eliminate jobs is a question thought leaders in this space get asked privately, but it’s not that difficult to answer.

Why does digital transformation fail?
Some people adopt a new software and call it digital transformation. Others find ways to included less people for one task (like Elon at Twitter). But isn’t this simply a classic case of “Change Management” or “Organizational Development”?

How does digital transformation affect employees?
When we find ways to do the same work faster, and allow people to do different work or get displaced towards higher value tasks, then, digital transformation becomes synonymous with success, happiness and it even creates new jobs.

But when business models fail to adapt when their industry is affected by digitized processes, improved technology operations, or easier access to information. That’s when the digital transformation underdog becomes the bad guy. (Uber vs Taxi, Streaming vs CD’s, Airbnb vs Hotels)

So, does digital transformation create jobs or layoffs?

The simple answer is “Yes”. Let me explain.

FORD didn’t mean to take away jobs from the horse industry, nor did he mean to create jobs for online car insurance, tire manufacturing or mechanics. When your digital transformation goal is layoffs to save money, you’re short sighted.

Digital transformation, just as organizational development, births job displacement.

It is our job as leaders to apply effective change management, workforce preparation and through strategic planning for the future.

We worked with a mining company who feared that their senior inspectors resist or quit once we replace their paper-based routines with digital forms on a mobile device. Once word would get out, it would affect the culture badly. It would be a waste of their money, create interruptions in their productivity, increase higher churn rates and affect our reputation as well. So these influencing seniors were made into beta testers, and they never looked back.

No longer did they have to transcribe their work into their software (what we like to call Fake Digital Transformation), correct illegible handwriting, redo lost inspections, investigate misplacements and the list goes on. They now could prevent more safety issues, predict maintenance schedules, and even go further into detail with more thorough documentation. Now everyone wanted what they had for lunch.

Just doing changes to do changes and save money lacks humanness. Create a vision within your digital transformation. Improve training, allow personal development, give more responsibility. People who still cannot adapt, will need your help. They must have transferable skills you could easily identify with a series of digital psychometric tests. Maybe they have productive passions like creating content or reinforcing your HR initiatives. Be careful, these people will become your action’s ambassadors, for good or for worst.

Does digital transformation ever end?

I argue that digital transformation started when we decided to count. So No. Not unless you imagine a utopic future where we as humans forgot what work was, in a good way. Where we can’t remember how people use to press buttons on keyboards, charge their devices, and upgrade a bunch of symbols called code, while A.I. takes care of all hard work behind the curtains. No. Even when the economy and productivity will no longer be married and efficiency will no longer be praised, data systems, like our invisible organic systems will transform. Until then, let’s not just point fingers at the employers, and lets all find ways to improve our daily work and anticipate the change which has always been inevitable.

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