Smart Machines: Career Implications for Lean Six Sigma Black Belts

Two trends — web-based talent-exchanges and smart machines — are changing and will continue to change the way the career prospects of millions of people including, quite possibly Lean Six Sigma Black Belts and other Performance Improvement professionals. Talent exchanges such as Elance.com or oDesk.com, handle jobs such as translation that cost much more when performed by traditional translation outfits. ODesk connected its 3 million contractors to 35 million hours of work in 2012; Elance has 2.5 such contractors. Some firms such as Locu are more specialized; they upload local content such as menus to the internet. 20 full-timer and 300 oDeskers  use an algorithm to do the initial menu layout and then people check to make sure the final format look right.

The exchanges are providing opportunities not just to do one-off jobs, but to build a business. In 2009 Josh Warren, an entrepreneur based in Dallas, started earning $15 an hour doing work for e-commerce sites he found on oDesk. Soon he was earning $125 an hour, and had more work than he could do alone. So in 2010 he recruited via oDesk a Polish counterpart, who now runs the Posnan branch of Creatuity, Mr Warren’s web-services company. He now employs 23 people and is earning seven-figure revenues from clients in America, Australia, Britain and even India.

Opinions differ over how much these talent exchanges will transform the global workforce as a whole. Clearly, they are benefiting from a trend for growing numbers of people to work freelance or on temporary contracts. Depending on the definition, between one-fifth and one-third of American workers are now freelancers, contractors or temps, up from 6% in 1989, according to Accenture, a consultancy. Yet the $1 billion of work done through talent exchanges in 2012 is only one-third of one percent of the estimated $300 billion spent worldwide on these “contingent workers”, which suggests that talent exchanges are still barely scratching the surface. However, those they enroll seem to enjoy the experience, which is why the numbers signing up are growing fast.

There is bound to be a limit to the sorts of work that can be offered through online exchanges, but maybe not much of one. So far, most of the jobs on oDesk and Elance require skills in information technology. The top two skills hired on oDesk last year were in web programming and mobile apps. Yet the range of work offered is expanding fast, says Mr Swart. In 2007 just four categories of work accounted for 90% of the dollars billed on oDesk; in 2012, that 90% was made up of 35 sorts of work, with project management, translation and copywriting among the fastest-growing.

Online exchanges are increasingly important even for jobs—such as household repairs and errand-running—that cannot be contracted out to distant workers. A crop of sites cater to local tradespeople such as builders, plumbers and drivers, including RatedPeople and MyBuilder. Workers do not even need a trade to find local work. TaskRabbit, a site for hiring people to do things such as collecting groceries, assembling Ikea furniture or making a delivery (for a flat fee of $10), is booming. It now covers nine American cities, with London likely to follow soon. This is good news for both hirers and those looking for work, though it is not yet clear how attractive a business it will be for the exchanges themselves: Angie’s List, one of the oldest online marketplaces for local tradespeople, has still to turn an annual profit after 17 years.

Work that brings the employee into the hirer’s home clearly presents greater risks than when it is entirely virtual. Screening out a potential Hannibal Lecter is not easy. But the websites’ reputation ratings, providing recommendations from a number of previous hirers, are a big improvement on the old method of picking someone at random out of a phone book.

Critics of the online exchanges claim they are all about undercutting wages in rich countries by shifting work to poor ones. But both Elance and oDesk insist that the flow of work is not all in one direction. For instance, there are around 716,000 registered Elancers in America, double the number in India. Whereas last year America was the biggest-spending country on oDesk, with India the main recipient (thereby fitting the stereotype), the third-biggest earners of dollars on oDesk were freelancers not in some developing country but in America itself. Moreover, workers who start cheap tend not to stay that way: helped by the rating system, workers on oDesk increase their hourly rate by almost 60% on average in their first year, and by around 190% in three years.

As Accenture points out in its report, employers should henceforth think of their workforce as made up not just of current full-time employees but also of the vast army of potential workers that are a click away. This applies just as much to big, established firms as to thrusting young start-ups. (The Economist June 1st 2013.)

So-called “smart machines,” however, are also starting to transform activities that have previously been considered too complex to handle other than by professionals sitting in an office. We can expect to see not only more and more advanced professional work conducted by the hour by people on the web, but performed largely without people at all.

Two things are clear. The first is that smart machines are evolving at breakneck speed. Moore’s law—that the computing power available for a given price doubles about every 18 months—continues to apply. This power is leaping from desktops into people’s pockets. More than 1.1 billion people own smartphones and tablets. Manufacturers are putting smart sensors into all sorts of products. The second is that intelligent machines have reached a new social frontier: knowledge workers are now in the eye of the storm, much as stocking-weavers were in the days of Ned Ludd, the original Luddite. Bank clerks and travel agents have already been consigned to the dustbin by the thousand; teachers, researchers and writers are next. The question is whether the creation will be worth the destruction.

Two academics at MIT’s Sloan Business School (Digital Business Center), Erik Brynjolfsson and Andrew McAfee, have taken a surprisingly Vonnegutish view on this: surprising because management theorists like to be on the side of the winners and because MIT is one of the great strongholds of techno-Utopianism. In “Race Against the Machine”, their 2011 book, they predict that many knowledge workers are in for a hard time. There is a good chance that technology may destroy more jobs than it creates. There is an even greater chance that it will continue to widen inequalities. Technology is creating ever more markets in which innovators, investors and consumers—not workers—get the lion’s share of the gains. The Brynjolfsson-McAfee thesis explains one of the most puzzling aspects of the modern economy: why so much technological creativity can co-exist with stagnating wages and mass unemployment.

(Here is a TED-Talk by Erik Brynjolfsson on Growth and the Race with the Machine.)

A new study by the McKinsey Global Institute (MGI), “Disruptive technologies: Advances that will transform life, business and the global economy”, shines a light on this problem and produces lots of examples of the way the internet is revolutionizing knowledge work. Law firms are using computers to search through masses of legal briefs and precedents. Financial companies are using computers to monitor news feeds and make financial bets on the basis of the information they uncover. Hospitals are using robots to perform keyhole surgery.

The rate of progress, says MGI, is set to increase dramatically thanks to a combination of Moore’s law and the melding of three technologies: machine learning, voice recognition and nanotechnology. Tiny computers will be able to perform jobs once regarded as the peculiar preserve of humans: most middle-class people will soon have access to electronic personal assistants (to book flights or co-ordinate diaries) and wearable physicians (to keep a permanent watch on their vital organs).

MGI puts a typically positive spin on all this. It argues that being spared relatively undemanding tasks will free knowledge workers to deal with more complex ones, making them more productive. It argues that the latest wave of innovation will be good for both entrepreneurs and consumers. Small businesses will be able to act like giant ones, because cloud computing will give them access to huge processing power and storage, and because the internet destroys distance. Innovators will be able to test their new ideas with prototypes, then produce them for niche markets. Consumers captured much of the economic gains created by “general-purpose technologies” like steam and electric power, because they stimulated competition as well as increasing efficiency.

Nevertheless, MGI’s study has some sympathy with Messrs Brynjolfsson and McAfee. It worries that modern technologies will widen inequality, increase social exclusion and provoke a backlash. It also speculates that public-sector institutions will be too clumsy to prepare people for this brave new world. Policymakers need to think as hard about managing the current wave of disruptive innovation as technologists are thinking about turbocharging it. For one thing, the purpose of education systems, and the skills and knowledge that they impart, will need to be rethought: “chalk and talk” instruction will be done best by machines, freeing teachers to become more like individual coaches to their pupils.

Knowledge-intensive industries will also have to rethink cherished practices. For a start, in an age in which information and processing power are ubiquitous, they will have to become less like guilds, whose reflexes are to regulate supply and restrict competition, and more like mass-market businesses, whose instinct is to maximise the customer base. Innovation will disrupt many areas of skilled work that have so far had it easy. (The Economist May 25th 2013.)

What aspects of the Process Improvement professional’s role could we replace with a smart machine? What are the new career and business opportunities for Black Belts and Lean experts given these trends? Rather than reacting to these trends, all kinds of Knowledge workers — Black Belts, management consultants, lawyers, project managers, coaches, financial advisers etc. — ought to consider how to anticipate change and position themselves to stay in front on the curve rather than underneath it.