Contemplating Automation and the Future of Small Business

As we contemplate the future of small businesses around the world, we’re struck by how automation is influencing new work models as never before. These models — from work at home to hybrid work to job sharing — will all be increasingly impacted by the rising importance of AI and machine learning in the local and small business ecosystem. 

Today, businesses across America are searching for ways to fill their workforce gaps. A recent Brookings Institution study found that approximately 70% of science and technology-related jobs were not being filled by qualified employees. As a consequence, companies are increasingly turning to automation to fill labor shortages.

This trend involves more than just corporate technology jobs. Worker shortages league the gamut of local and small business establishments. From the dentist to the dry cleaner. So this debate continues to percolate in business circles. That includes everywhere from corporate boardrooms to the weekly Rotary lunch.

Some estimates suggest that as many as 400,000 factory jobs were replaced between 1990 and 2007. Those jobs were filled by the mechanical arms that attach Ford F-150 doors to the chassis. And by the Internet that enabled vacationers to book their own travel. And so on. 

Enter the Pandemic

We’re now almost two years into a pandemic that put roughly 40 million jobs on pause. Certainly, many of those 40 million jobs have been restarted in the two years since March 2020. But some estimate that as many as 40% or 16 million of those jobs will never return.

The exact number of gone-forever jobs is not really the point. The bigger issue is that the pandemic triggered a tectonic shift in the global work patterns. This is as true of employees of the world’s largest bank as it is of the counter worker at the local bagel shop. 

Some form of “robot” could replace as many as 2 million additional jobs by 2025 – just three years away – according to economists at MIT and Boston University. And Daniel Susskind, author of A World Without Work: Technology, Automation and How We Should Respond had this to say.

“This pandemic has created a very strong incentive to automate the work of human beings, machines don’t fall ill, they don’t need to isolate to protect peers, they don’t need to take time off work.”

Once Feared, Now Embraced

For some time, as a society, we were concerned about the role automation would play in eliminating jobs throughout the economy. And we observed during the early days of the pandemic, the challenges small and local businesses faced in flipping their business models from onsite and in-store to offsite and online. Profound issues for local and small business owners to navigate for sure. 

Now, however, those concerns about automation eliminating jobs seem less urgent. Perhaps we should instead be thinking about deploying automation to solve a huge labor crisis. The “great resignation” we’re all hearing about is impacting businesses and institutions of every shape and size. 

Millions of those who are part of the “great resignation” will launch their own local business. And one of the first challenges they’ll face is a shortage of willing and /or qualified employees. Inevitably they’ll turn to technology to help fill the gap caused by the same societal movement they helped create. Funny how that happens.

Wading into the SaaS Morass

So what will these great resigners do as new businesses? They’ll do what existing local and small business owners do. They will seek out simple technology solutions to fill what we believe will be a permanent worker or labor gap. So what will those solutions do and how will the local, small business owner find them?

They will talk to their neighboring business owner. They’ll go to industry trade groups. Maybe they’ll attend an industry convention. Or perhaps they will go online and search for new solutions. They’ll do this in between completing jobs, drawing up estimates, meeting with existing customers, finding new customers, paying bills, finding supplies. The list goes on and on. 

So what will they find? They will find solutions purpose-built for their vertical. And they’ll find broad solutions that could work for their specific industry. They’ll also find solutions that are loaded with unnecessary features. Not to mention solutions that are too expensive. Again the list goes on. 

Any of those solutions will undoubtedly focus on a few core things – marketing, operations, supply chain management, finance, and accounting. Here’s the thing, all of those solutions must include some element of automated conversation communication. Because the thing that will fall through the cracks the most will be those potentially great customers who get frustrated and find another local provider. So why do they get frustrated? Because there’s no one responding to their inbound inquiries. 

AI’s Inevitability

So business owners will necessarily have to turn to some form of AI or machine learning for customer service and customer experience improvements. And rightly. A survey conducted by Replicant found that 80% of consumers indicated they would prefer speaking with a virtual agent or machine to avoid a long hold time. And 57% of consumers are ready to speak to a conversational intelligent agent — i.e., bot — even if the hold time is only 5 minutes.

We think that speaks more of the customer service sector finding it more and more difficult to hire and train individuals who can actually answer a question or resolve an issue. Whatever the core issue, 76% of consumers in the same survey said that poor customer service negatively impacts their perception of a brand and by extension, their loyalty. That is certainly of no surprise at all. 

Some estimates suggest that 85% of customers interactions do not involve any human interaction. We doubt that many of those interactions are today with the local roofing contractor or the independent auto repair shop. But that is today, by our assessment is they will necessarily have to be in short order if local and small and medium businesses want to compete on the same footing with large national or regional players. And those national companies are definitely setting the expectation for fast, intelligent, efficient customer service experiences. 

RIP CSRs

The U.S. Bureau of Labor Statistics estimates that there are some 3 million customer service representatives in the United States. These jobs are the most at risk as intelligent automation becomes more and more a reality. And the money continues to flow into intelligent automation. Roughly $18 billion was invested in this area just in Q4 2021.

There are really profound changes on the horizon as machines become better and better at doing jobs and performing functions that businesses have relied on humans to do for centuries.

The pandemic triggered the “great resignation”. But it was undoubtedly lurking below the surface for years. And it will accelerate these changes in how we do everything from our banking to getting our cars serviced and repaired. No size company or job role will be immune from the implications of automation. The question is not when but how and where to leverage new technologies for driving shareholder and owner wealth.

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